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Analyzing the Performance of Polaris’s Segments in 4Q15

Gabriel Kane

Why Did Polaris Industries Fall in 4Q15?

(Continued from Prior Part)

Total sales

Polaris Industries (PII) reported sales of $1,105.6 million in 4Q15, a fall of 13.3% compared to the corresponding period last year.

4Q15 results

Sales for the off-road vehicles (or ORV) and snowmobiles segment fell to $862.0 million, a fall of 18.0% compared to 4Q14. ORV sales fell by 20% due to weak North American retail sales. ORV unit retail sales fell down to low-single digits. Snowmobiles fell by 25% due to the timing of shipments.

Sales in the motorcycles segment rose to $162.6 million, a rise of 33.1% compared to 4Q14 due to strong retail sales for Indian motorcycles and Slingshot.

Sales in the Global Adjacent Markets segment fell to $81.0 million, a fall of 19.8% compared to fiscal 4Q14.

The Work and Transportation segment’s whole good sales fell by 12% due to ongoing currency pressure and tough competition as it began shipping the new co-developed Ariens Gravely Atlas JSV side-by-side vehicles.

The defense business sales fell due to US military budget constraints pushing the timing of shipments for current orders into the future.

Performance of Polaris’s competitors

Harley-Davidson (HOG) reported 4Q15 revenue and EPS (earnings per share) of $1,007.1 million and $0.22 in fiscal 4Q15, a fall of 2.3% and 37.1%, respectively, compared to fiscal 4Q14.

Textron (TXT) reported 4Q15 total revenue of $3,923.0 million, a fall of 4.2% compared to fiscal 4Q14. Its EPS rose to $0.82 in fiscal 4Q15, a rise of 7.9% compared to fiscal 4Q14.

Polaris’s key activities in 4Q15

Some key activities of Polaris Industries in 4Q15 were as follows:

  • Polaris Industries, in cooperation with the US Consumer Product Safety Commission and Transport Canada, has recalled the model year 2015 Polaris RZR 900 and 1000 vehicles due to reports of pinched fuel tank vent lines.
  • It purchased a 51,000-square-foot facility to provide additional liquid paint capacity for Indian and Victory motorcycles made in Spirit Lake, Iowa.
  • It introduced the all-new Polaris GEM, which is more maneuverable, cost-efficient, and sustainable than a truck or van.
  • Polaris Industries and Commercial Distribution Finance (or CDF) have announced a renewal of their US joint venture through 2022. The terms are the same as per the prior agreement. Polaris has just extended the term of its Canadian dealer financing arrangement with CDF through 2022.
  • The company has recalled 2,230 recreational off-highway vehicles (or ROV) due to leakage in the turbo charger’s oil drain line and 4,700 Polaris Snowmobiles due to a crack in the steering pitman arm or drag link.

Some of the key activities of Polaris Industries so far in 2016 are as follows:

  • Polaris has acquired 509, a company that manufactures snowmobile helmets and goggles. 509 will join Polaris’s portfolio of aftermarket apparel and accessories brands, which includes Klim, Kolpin, and Pro-Armor. The terms of this acquisition were not disclosed.
  • Todd Balan, vice president of corporate development, has left Polaris. Guido Neizert, managing director of adjacent-market development, will serve as interim leader.

The Vanguard S&P Mid-Cap 400 Growth ETF (IVOG) invests 0.84% of its holdings in Polaris. The Guggenheim Raymond James SB-1 Equity ETF (RYJ) invests 0.73% of its holdings in Polaris.

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