A snowmobile slump didn't keep the Medina company from posting a 25 percent increase in first-quarter revenue.
At Frontier Powersports in Fergus Falls, Minn., the flow of snowmobile buyers slowed to a trickle this winter as the full impact of a snow-deprived season took effect.
"We started off strong in September, October, November, and then it all shut off," said sales manager Bill Meis. The dealership, which carries both Polaris and Arctic Cat snowmobiles, sold just one in December, far below normal sales of about 20, he said.
The scenario at Frontier played out across North America for Polaris Industries Inc. in its first quarter, but failed to slow its overall momentum, the company said Thursday.
Despite a 48 percent decline in snowmobile sales, the Medina-based recreational vehicle maker posted record first-quarter sales of $673.8 million, up 25 percent from the same period a year ago. The gain was fueled by a robust demand for off-road and on-road vehicles.
Earnings increased 27 percent to $60.1 million or 85 cents a share, for the quarter ended March 31. That topped analysts' estimates of 77 cents a share.
Polaris' shares shot up more than 10 percent to $80.50, a 12-month high. Mark Smith, an analyst at Feltl and Co. in Minneapolis, said investors seemed especially impressed by the 30 percent jump in off-road, all-terrain vehicles sales.
"This was the best quarter of retail growth we have seen in off-road vehicles in years," said James Hardiman, an analyst at Longbow Research, in a report. Smith noted that the gain came in more intense competitive conditions. Polaris' Japanese competitors have been heavily promoting their ATV models, while Arctic Cat rolled out the Wildcat, its first pure-sport side-by-side off-road vehicle designed to compete against the Polaris RZR.
"Once again, we gained market share in both [single-seat] ATVs and side-by-sides," said President Bennett Morgan on a conference call.
Meis said ATV sales at his dealership have accelerated in just the last few weeks. "I can tell that it's the same thing across our region," he said. Calls from other dealers seeking models have "gone through the roof," he said.
Morgan said the company's ATV plant in Monterrey, Mexico, now employs 1,000 workers and is in the midst of adding another shift. In an answer to an analyst's question, CEO Scott Wine said Polaris will evaluate adding other foreign manufacturing facilities, although none is planned in the near term.
"Long-term we're going to need a footprint in Asia," Wine said. Polaris' international sales in the first quarter rose 20 percent to $109.3 million.
On-road vehicle sales increased 44 percent in the quarter. The company said about half that growth came from the 2011 acquisitions of Indian Motorcycle, Global Electric Motorcars (GEM) and another electric vehicle business, Goupil Industrie SA.
Morgan said North American retail sales of Victory brand motorcycles rose 40 percent, outpacing industry-wide growth in heavyweight bikes. He also said the company is in process of expanding its motorcycle plant in Spirit Lake, Iowa to accommodate ramped-up production of Indian and GEM vehicles. Earlier this month, Polaris said it would add 89 people to its workforce in Osceola, Wis., to support the additional production.
Polaris boosted its earnings forecast for the year. It now expects earnings-per-share of $3.85 to $4, vs. a previous estimate of $3.65 to $3.80. Last year the company earned $3.20 per share.
The company's stock closed at $73.13 a share on Tuesday.
Staff writer Jim Buchta contributed to this report. Susan Feyder • 612-673-1723