Polaris Industries Inc. beat Wall Street's estimates Tuesday by posting strong fourth-quarter earnings that were driven by off-road vehicle sales and robust reaction to the firm's redesigned 2014 Indian motorcycle.
But the Medina company's guidance for 2014 was below analysts' forecasts, causing shares to fall almost 4 percent in early trading Tuesday. Polaris' stock closed at $128.12 a share, down 3 percent.
During a conference call Tuesday, Chief Financial Officer Michael Malone said Polaris faces headwinds in 2014, including the end of a one-time tax benefit plus an unfavorable currency exchange rate in Canada. The company also faces new expenses as it finishes a factory in Poland and plans to begin manufacturing at its Eicher joint venture in India in late 2014.
CEO Scott Wine said Polaris will also see increased competition in 2014 from companies that "became significantly more aggressive" in launching their own version of side-by-side ATVs, a category in which Polaris leads the industry.
Research analyst Jimmy Baker with B. Riley Caris said Tuesday that Polaris' competitors "will compete on price rather than product merit."
During the quarter, Polaris' largest product line — ATV and side-by-side vehicles — grew 16 percent to $659 million amid new product introductions and ramped-up international sales.
Meanwhile, snowmobile sales fell 13 percent to $135 million as expected as officials shifted dealer deliveries from the fourth to the third quarter. By contrast, Polaris' motorcycle sales nearly doubled to $69 million due to its highly anticipated 2014 Indian motorcycle.
Polaris now has 60 dealers selling the Indian brand, which Polaris bought in 2011. Some 140 dealers have signed to sell the Indian bike, so distribution and sales will increase as the year progresses, officials said. Polaris President Bennett Morgan said the Indian brand has "really been a home run from a customers and dealer standpoint."
Citing several new products, including the 2014 Indian, a new three-wheel "slingshot" roadster and new Sportsman ACE ATV, company officials said they now expect Polaris sales to grow to at least $4.19 billion in 2014 and earnings should range from $6.17 to $6.37 per share. That's down from previous analyst forecasts of full year sales of $4.31 billion and earnings of $6.67 per share.
For the quarter, company sales jumped 20 percent to $1.08 billion, while earnings grew 23 percent to $108.7 million, or $1.56 a share. Results beat the consensus estimate of Wall Street analysts, who expected a $1.55 a share profit and sales of $1.06 billion.
Dee DePass • 612-673-7725
