Polaris is one of few large Minnesota companies set to finish 2020 ahead of projections made before the coronavirus pandemic hit the U.S.
Led by its boat segment, demand for its outdoor vehicles from all-terrain vehicles to motorcycles increased in its third quarter.
For the quarter ended Sept. 30, the Medina-based company earned $166.8 million, or $2.66 per share, an increase of nearly 90% over the same period a year ago. Adjusted earnings per share was $2.85, up 70% from the year-ago quarter and better than analysts forecast of $2.19.
Sales for the quarter increased 10% to $2 billion as Polaris dealers worked through their inventory of available products to meet the demand of new customers seeking outdoor recreation activities.
"Our continued strength in the third quarter reflects the broad-based consumer demand for our industry leading Powersports products, and tremendous execution by our Polaris team and dealers," said Scott Wine, Polaris' chief executive. "Demand has remained strong to start the fourth quarter and we expect our sales and earnings momentum to continue for the rest of the year."
Other makers of recreational vehicles from canoes and kayaks to motor homes and travel trailers also have fared well as Americans head outdoors. The struggling Harley-Davidson said on Tuesday that while U.S. motorcycle sales were down 10% for its third quarter, it is still better than the 27% drop in the Wisconsin company's second quarter.
Polaris' motorcycle division did better with sales for its Indian motorcycles and Slingshot three-wheel vehicles rising 11% in the third quarter to $167 million, while North American retail sales of Indian motorcycles and Slingshot were up mid-40% in a North American retail market that was up less than 10% during the quarter.
Winnebago, which has management offices in Eden Prairie, reported earlier this month a 39% increase in revenue for its latest quarter.
For Polaris, the third-quarter results are strong enough that officials raised its financial guidance for the remainder of the year.
The Polaris' boat segment, which sells pontoon and deck boats, had the greatest sales increase as customers sought solace and space on the water. The segment had revenue of $155.1 million, a 30% increase in sales from the third quarter of 2019.
The company's off-road vehicles and snowmobile segment, its largest, saw a 12% increase in sales to $1.3 billion, most coming from sales of ATVs and side-by-side vehicles.
Wine praised Polaris dealers and production teams for their flexibility in meeting the increased demand from customers, but he suggested on an earnings call with analysts that results could have been better were it not for supply chain disruptions during the quarter.
Other recreational vehicle makers also have struggled with smaller manufacturers in their supply chains who have had relatively more difficulty returning to their full production schedules due to coronavirus impacts.
"We can ramp factory output reasonably quickly because of our flexible assembly lines, training and standard work and outstanding production teams," Wine told analysts. "Not unexpectedly, some of our suppliers are not yet capable of meeting the same rapid demand spikes."
The company said it is raising its sales guidance for 2020 to between $6.9 billion and $7 billion for the year and adjusted earnings between $7.15 and $7.30 per share.
Shares of Polaris closed Tuesday at $92.04, up 49 cents. Shares of Polaris started the year trading over $100 per share.
Patrick Kennedy • 612-673-7926
