MINNEAPOLIS--(BUSINESS WIRE)--
Polaris Industries Inc. (NYSE:PII) today provided an update to its
full-year guidance. The Company now expects full-year 2016 earnings to
be in the range of $3.30 to $3.80 per diluted share, $2.50 to $2.70 per
diluted share lower than previously expected of which approximately
two-thirds is expected to be incurred in the third quarter. Polaris also
expects total Company sales for the full-year 2016 to be down in the mid
to high-single digit percent range compared to previously issued
guidance of flat to down two percent.
Since Polaris last updated its full year guidance and hosted its
investor day in July, the Company has experienced additional RZR
thermal-related issues and was unable to sufficiently validate the
initially identified RZR Turbo recall repair, necessitating a more
complex and expensive repair solution. As a result, the voluntary stop
ride/stop sale notification issued on July 25, 2016 remained in place
significantly longer than originally anticipated, delaying any sales of
the highly-requested RZR Turbo vehicle. Also, given the additional RZR
thermal issues, the Company revalidated many of its recently introduced
model year 2017 ORV products, causing a delay in shipments of those
vehicles. The Company believes its model year 2017 products and the more
aggressive programs it has planned for the second half of 2016 will have
a positive impact on Off-Road Vehicle (‘ORV’) sales. However, given the
delayed model year 2017 shipments and additional recall activity, the
expected positive impact will be deferred later than the Company had
originally estimated.
The earnings revision of $2.50 to $2.70 per diluted share can be
summarized as follows: approximately half is related to the margin
impact from delayed model year 2017 shipments, including the high margin
RZR Turbo vehicles, as the Company revalidated its new model line-up and
protects dealer inventory levels, along with correspondingly lower sales
of the Company’s high-margin Parts, Garments and Accessories (‘PG&A’)
business; and about 25 percent is the result of higher promotional and
customer appreciation costs to rebuild confidence and credibility with
RZR owners. The remaining 25 percent is primarily related to expediting
the product recall repairs, including the recently announced RZR Turbo
recall which, when combined with the one-time warranty, legal and
acquisition related costs recorded in the first half of 2016, totals
approximately $120 million, or about $1.20 per diluted share of costs
that should be considered non-recurring in 2017.
“Our number one priority is to get our loyal owners back to riding
safely,” stated Scott Wine, Polaris’ Chairman and Chief Executive
Officer. “We share the frustration of our customers and dealers and we
are working diligently to expedite the completion of the recall repairs
and significantly improve the quality and safety of our products. We are
providing increased support to our dealers and RZR owners so they can
complete the necessary repairs with minimal disruption. We have engaged
outside engineering experts to help accelerate the remediation process,
we are sending additional repair technicians into the field to assist
our dealers, and we have created a new independent safety and quality
function reporting directly to me. Additionally, we are pleased that the
vast majority of our model year 2017 products have begun shipping, after
undergoing a thorough internal and external review to identify and
address any potential safety risks. While we are disappointed with our
recent performance, our team is aggressively driving improvements that
will make Polaris a better and stronger company.”
About Polaris
Polaris Industries Inc. (NYSE: PII) is a global powersports leader with
annual 2015 sales of $4.7 billion. Polaris fuels the passion of riders,
workers and outdoor enthusiasts with our RANGER®, RZR®
and Polaris GENERAL™ side-by-side off-road vehicles; our Sportsman®
and Polaris ACE® all-terrain off-road vehicles; Victory®
and Indian Motorcycle® midsize and heavyweight motorcycles;
Slingshot® moto-roadsters; and Polaris RMK®, INDY®,
Switchback® and RUSH® snowmobiles. Polaris
enhances the riding experience with parts, garments and accessories sold
under multiple recognizable brands, and has a growing presence in
adjacent markets globally with products including military and
commercial off-road vehicles, quadricycles, and electric vehicles. www.polaris.com
Except for historical information contained herein, the matters set
forth in this news release, including management’s expectations
regarding 2016 and 2017 future sales, shipments, net income, and net
income per share, the impact and costs of the Company’s product recalls
and operational initiatives are forward-looking statements that involve
certain risks and uncertainties that could cause actual results to
differ materially from those forward-looking statements. Potential
risks and uncertainties include such factors as the Company’s ability to
successfully implement its manufacturing operations expansion
initiatives, product offerings, promotional activities and pricing
strategies by competitors; economic conditions that impact consumer
spending; acquisition integration costs; warranty expenses; impact of
changes in Polaris stock price on incentive compensation plan costs;
foreign currency exchange rate fluctuations; environmental and product
safety regulatory activity; effects of weather; commodity costs;
uninsured product liability claims; uncertainty in the retail and
wholesale credit markets; performance of affiliate partners; changes in
tax policy and overall economic conditions, including inflation,
consumer confidence and spending and relationships with dealers and
suppliers. Investors are also directed to consider other risks
and uncertainties discussed in documents filed by the Company with the
Securities and Exchange Commission. The Company does not
undertake any duty to any person to provide updates to its
forward-looking statements.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160912005438/en/
Source: Polaris Industries Inc.