Sales for the fourth quarter of 2016 increased 10% to $1,217.8
million including Transamerican Auto Parts (“TAP”) sales of $108.7
million
Fourth quarter 2016 reported net income was $0.97 per diluted share;
adjusted net income for the same period was $1.18 per diluted share,
in-line with expectations
ORV dealer inventory was down 11%, year-over-year; total dealer
inventory was down 8%
Full year 2016 reported net income was $3.27 per diluted share;
adjusted net income for the same period was $3.48 per diluted share,
in-line with previously issued guidance. Sales for the full year of 2016
decreased 4% to $4,516.6 million
Polaris announced guidance for the full year 2017. Adjusted
net income is expected to be in the range of $4.25 to $4.50 per diluted
share with sales for the full year 2017 expected in the range of up 10%
to 13%.
Note: the results and guidance in this release, including the highlights
above, include references to non-GAAP operating measures, which are
identified by the word “adjusted” preceding the measure. A
reconciliation of GAAP to non-GAAP measures can be found at the end of
this release.
MINNEAPOLIS--(BUSINESS WIRE)--
Polaris Industries Inc. (NYSE: PII) today reported fourth quarter 2016
sales of $1,217.8 million up 10 percent from $1,105.6 million for the
fourth quarter of 2015. Fourth quarter 2016 reported net income was
$62.6 million, or $0.97 per diluted share, compared with $110.7 million,
or $1.66 per diluted share, for the 2015 fourth quarter. Adjusted net
income for the quarter ended December 31, 2016, excluding purchase
accounting adjustments and certain costs related to the acquisition of
TAP, was $76.1 million, or $1.18 per diluted share.
For the full year ended December 31, 2016 the Company reported sales of
$4,516.6 million, a decrease of 4 percent versus $4,719.3 million in the
prior year. Reported net income was $212.9 million, or $3.27 per diluted
share, compared with $455.4 million, or $6.75 per diluted share, for the
full year 2015. Adjusted net income, excluding purchase accounting
adjustments and certain costs related to the acquisition of TAP was
$226.5 million, or $3.48 per diluted share, for the year ended December
31, 2016.
On November 10, 2016, the Company completed the acquisition of TAP, a
vertically integrated manufacturer, distributor, retailer and installer
of off-road Jeep and truck accessories, for an aggregate consideration
of $669 million.
“2016 was a difficult and challenging year for Polaris, but our culture
is geared to deal head on with adversity and learn from it, and that’s
what we did in 2016. In response to a series of recalls, we took the
necessary steps to ensure that Polaris vehicles deliver the quality,
safety and performance that our customers expect. We are relying on
these enhanced improvements, consistent execution, and aggressive
innovation to regain our footing as the ‘Best in Powersports’,”
commented Scott Wine.
“Our team worked incredibly hard in 2016 to serve our Off Road Vehicle
customers and dealers, and that work is accelerating into 2017. It is a
very competitive ORV market and we will aggressively execute and
revitalize our broad set of tools that built the most successful armada
in Powersports. Significant progress was made across our businesses,
including mid-twenty percent growth in Indian Motorcycle®
retail sales and an eight percent reduction in dealer inventories
year-over-year, while at the same time, reducing factory inventory 16
percent excluding acquisitions, and improving operating cash flow by 30
percent in 2016. Further, we completed the Taylor Dunn acquisition in
the work space and TAP in the aftermarket space, executing our strategy
to enhance profitable growth opportunities in adjacent markets. We
continued to enhance our Quality and Safety organization, production in
our new facility in Huntsville, Alabama is ramping up to become the
enabler to our go to market Retail Flow Management (RFM) process, and
lean initiatives across our network drove approximately $150 million in
gross Value Improvement (“VIP”) savings during the year.”
“The entire Polaris team is committed to superior execution, improved
product safety and quality, enhanced dealer relations, and earning the
trust our customers and stakeholders place in the Polaris brand, in 2017
and beyond. We are accelerating our research and development investments
to again win the ORV product game, focusing on the successful
integration of TAP, and developing our competitive position in
Motorcycles, all of which will drive increasing shareholder value in the
future.”
|
|
|
Fourth Quarter Segment Results
(in thousands)
|
|
Reporting segment sales includes their respective parts, garments
and accessories ("PG&A") related sales
|
|
|
|
|
|
Three months ended December 31,
|
|
Year ended December 31,
|
|
|
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
|
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Off-Road Vehicles/Snowmobiles
|
|
$
|
904,971
|
|
|
$
|
862,032
|
|
|
5
|
%
|
|
$
|
3,357,496
|
|
|
$
|
3,708,933
|
|
|
(9
|
)%
|
|
Motorcycles
|
|
105,735
|
|
|
162,558
|
|
|
(35
|
)%
|
|
708,497
|
|
|
698,257
|
|
|
1
|
%
|
|
Global Adjacent Markets
|
|
98,384
|
|
|
81,028
|
|
|
21
|
%
|
|
341,937
|
|
|
312,100
|
|
|
10
|
%
|
|
Other
|
|
108,699
|
|
|
-
|
|
|
N/M
|
|
|
108,699
|
|
|
-
|
|
|
N/M
|
|
|
Total Sales
|
|
$
|
1,217,789
|
|
|
$
|
1,105,618
|
|
|
10
|
%
|
|
$
|
4,516,629
|
|
|
$
|
4,719,290
|
|
|
(4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Off-Road Vehicles/Snowmobiles
|
|
$
|
259,199
|
|
|
$
|
262,827
|
|
|
(1
|
)%
|
|
$
|
930,181
|
|
|
$
|
1,190,630
|
|
|
(22
|
)%
|
|
% of sales
|
|
28.6
|
%
|
|
30.5
|
%
|
|
-185 bps
|
|
27.7
|
%
|
|
32.1
|
%
|
|
-440 bps
|
|
Motorcycles
|
|
1,560
|
|
|
24,025
|
|
|
(94
|
)%
|
|
91,401
|
|
|
97,261
|
|
|
(6
|
)%
|
|
% of sales
|
|
1.5
|
%
|
|
14.8
|
%
|
|
-1,330 bps
|
|
12.9
|
%
|
|
13.9
|
%
|
|
-103 bps
|
|
Global Adjacent Markets
|
|
28,986
|
|
|
22,223
|
|
|
30
|
%
|
|
95,149
|
|
|
84,211
|
|
|
13
|
%
|
|
% of sales
|
|
29.5
|
%
|
|
27.4
|
%
|
|
+204 bps
|
|
27.8
|
%
|
|
27.0
|
%
|
|
+84 bps
|
|
Other
|
|
19,842
|
|
|
-
|
|
|
-
|
|
|
19,842
|
|
|
-
|
|
|
-
|
|
|
% of sales
|
|
18.3
|
%
|
|
-
|
|
|
-
|
|
|
18.3
|
%
|
|
-
|
|
|
-
|
|
|
Corporate
|
|
3,185
|
|
|
1,199
|
|
|
166
|
%
|
|
(30,950
|
)
|
|
(33,060
|
)
|
|
(6
|
)%
|
|
Total gross profit
|
|
$
|
312,772
|
|
|
$
|
310,274
|
|
|
1
|
%
|
|
$
|
1,105,623
|
|
|
$
|
1,339,042
|
|
|
(17
|
)%
|
|
% of sales
|
|
25.7
|
%
|
|
28.1
|
%
|
|
-238 bps
|
|
24.5
|
%
|
|
28.4
|
%
|
|
-389 bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Off-Road Vehicle (“ORV”) and Snowmobile
segment sales, including their respective PG&A related sales, were
$905.0 million for the fourth quarter of 2016, compared with $862.0
million for the fourth quarter for the prior year. Gross profit
decreased one percent to $259.2 million, or 28.6 percent of sales, in
the fourth quarter of 2016, compared to $262.8 million, or 30.5 percent
of sales, in the fourth quarter of 2015. Gross profit percentage
declined primarily due to higher promotional spending and increased
warranty expense.
ORV wholegood sales for the fourth quarter 2016 increased
three percent as the Company’s model year 2017 vehicle revalidations
were completed and shipments resumed, including the RZR Turbo vehicles
which have higher average selling prices. Polaris North American ORV
unit retail sales for the fourth quarter 2016 were down mid-single
digits percent from the 2015 fourth quarter, which included consumer
purchases for side-by-side vehicles down low-single digits percent and
ATV retail sales down about ten percent. The North American ORV industry
was flat compared to the fourth quarter last year. ORV dealer inventory
was down 11 percent in the 2016 fourth quarter compared to the same
period last year.
Snowmobile wholegood sales in the fourth quarter 2016 increased
13 percent due to the timing of shipments, year-over-year and a
favorable mix of higher priced snowmobiles shipped during the quarter.
Motorcycle segment sales,
including its PG&A related sales, decreased 35 percent in the 2016
fourth quarter to $105.7 million. Both Indian and Victory reported lower
sales in the fourth quarter due to difficult comparables as product
availability for all brands improved significantly in the 2015 fourth
quarter, and as the Company reduced motorcycle production in the 2016
fourth quarter to complete the final paint system upgrade in Spirit
Lake, IA. Slingshot® sales were down due to low product
availability related to recall activity. Gross profit for the fourth
quarter 2016 decreased 94 percent to $1.6 million compared to $24.0
million in the fourth quarter of 2015 due to lower production rates and
higher warranty expense.
North American consumer retail demand for the Polaris motorcycle
segment, including Victory®, Indian Motorcycle®
and Slingshot®, was down mid-single digits percent during the
2016 fourth quarter while the overall motorcycle industry retail sales,
900cc and above, declined low-single digits percent in the 2016 fourth
quarter. Indian Motorcycles retail sales increased about 20 percent
while Victory retail sales were down mid-single digits percent during
the quarter. Slingshot retail sales were down significantly due to tough
comparable in the fourth quarter last year as the Company experienced
unseasonably strong retail sales in the initial year of Slingshot
product availability in 2015.
Global Adjacent Markets segment
sales along with its PG&A related sales, increased 21 percent to $98.4
million in the 2016 fourth quarter compared $81.0 in the 2015 fourth
quarter. Gross profit increased 30 percent to $29.0 million, or 29.5
percent of sales, in the fourth quarter of 2016, compared to $22.2
million, or 27.4 percent of sales, in the fourth quarter of 2015. Sales
and gross profit were up primarily due to increased sales in the
Company’s Defense business in the 2016 fourth quarter. Sales to military
customers were up approximately 95 percent driving the quarter. Work and
Transportation group wholegood sales were up seven percent during the
fourth quarter of 2016 primarily due to increased Aixam sales and
Taylor-Dunn sales.
Supplemental Data:
Parts, Garments, and Accessories (“PG&A”) sales,
which are included in each of the three respective reporting
segments, excluding TAP sales of $108.7 million, increased nine percent
for the 2016 fourth quarter. All three reporting segments experienced
higher PG&A sales during the quarter primarily due to higher parts sales
during the quarter.
International sales to customers outside of North America
totaled $178.2 million for the fourth quarter of 2016, including PG&A,
down two percent, from the same period in 2015. International sales on a
constant currency basis were flat for the 2016 fourth quarter.
Gross profit increased one percent to $312.8 million for the
fourth quarter of 2016 from $310.3 million in the fourth quarter of
2015, including the negative impact of $8.8 million in purchase
accounting adjustments related to the TAP acquisition. As a percentage
of sales, gross profit margin was 25.7 percent compared with 28.1
percent of sales for the fourth quarter of 2015. Adjusted gross profit
was $321.6 million, or 26.4 percent of sales. Increased warranty and
promotional costs and negative foreign exchange impacts, partially
offset by favorable product mix and product cost reduction efforts, were
the primary reasons for the gross margin erosion.
Operating expenses increased 38 percent for the fourth quarter of
2016 to $233.3 million from $169.1 million, including $12.7 million in
TAP deal-related expenses. Excluding these costs, operating expenses
increased primarily due to higher general and administrative expenses
from higher product liability expenses, increased research and
development expenses for ongoing product refinement and innovation and
the addition of operating expenses from acquisitions.
Income from financial services was $19.3 million for the fourth
quarter of 2016, up seven percent compared with $18.0 million for the
fourth quarter 2015. The increase is attributable to higher penetration
rates in the retail credit portfolio and higher income from the sale of
extended service contracts.
Non-operating other expense, net, which primarily relates
to foreign currency exchange rate movements and the corresponding
effects on foreign currency transactions related to the Company’s
foreign subsidiaries, was $6.2 million for the fourth quarter of
2016, versus $3.4 million in the fourth quarter of 2015.
The provision for income taxes for the fourth quarter of 2016 was
$22.9 million, compared with $40.4 million for the fourth quarter of
2015, or 26.8 percent, versus 26.7 percent of pretax income for the
fourth quarter of 2015.
Financial Position and Cash Flow
Net cash provided by operating activities was $571.8 million for the
full 2016 year, compared with $440.2 million for the year ended December
31, 2015 due to lower working capital requirements. Total debt at the
end of 2016, including capital lease obligations and notes payable, was
$1,141.9 million. The Company’s debt-to-total capital ratio was 57
percent at December 31, 2016, compared to 32 percent a year ago. Cash
and cash equivalents were $127.3 million at December 31, 2016, compared
with $155.3 million at December 31, 2015.
Share Buyback Activity
During the fourth quarter 2016, the Company repurchased and retired
1,105,500 shares of its common stock for $91.4 million, bringing total
share repurchases to 2,908,000 shares or $245.8 million for the full
year 2016. As of December 31, 2016, the Company currently has
authorization from its Board of Directors to repurchase up to an
additional 7.5 million shares of Polaris stock.
2017 Business Outlook
The Company expects full year 2017 adjusted net income to be in the
range of $4.25 to $4.50 per diluted share, compared with adjusted net
income of $3.48 per diluted share for 2016. Full year 2017 sales are
anticipated to increase in the range of 10 percent to 13 percent over
2016 sales of $4,516.6 million.
Wind down of Victory Motorcycles
Polaris announced on January 9, 2017 its intention to wind down its
Victory® Motorcycles operations. The decision is expected to
improve the long-term profitability of Polaris and its global motorcycle
business, while materially improving the Company’s competitive position
in the industry. The Company will record one-time costs associated with
supporting Victory dealers in selling their remaining inventory, the
disposal of factory inventory, tooling, and other physical assets, and
the cancellation of various supplier arrangements. These one-time costs
will be recorded in the 2017 income statement in respective sales, gross
profit and operating expense beginning in the first quarter of 2017.
These costs will be excluded from Polaris’ 2017 sales and earnings
guidance on a non-GAAP basis.
Use of Non-GAAP Financial Information
This release and our related earnings call include a discussion of the
Company’s 2016 fourth quarter and full year 2016 results on a constant
currency basis, which is a non-GAAP measure, as well as on a GAAP basis.
For purpose of comparison, the results on a constant currency basis uses
the respective prior year exchange rates for the comparative period to
enhance the visibility of the underlying business trends, excluding the
impact of translation arising from foreign currency exchange rate
fluctuations.
This press release also contains certain non-GAAP financial measures,
consisting of “adjusted gross profits, operating expenses, net income
and net income per diluted share” as measures of our operating
performance. Management believes these measures may be useful in
performing meaningful comparisons of past and present operating results,
to understand the performance of its ongoing operations and how
management views the business. Reconciliations of adjusted non-GAAP
measures to reported GAAP measures are included in the financial
schedules contained in this press release. These measures, however,
should not be construed as an alternative to any other measure of
performance determined in accordance with GAAP.
Fourth Quarter and Full Year Conference Call and Webcast Presentation
Today at 9:00 AM (CST) Polaris Industries Inc. will host a conference
call and webcast to discuss the 2016 results released this morning and
expectations for 2017. The call will be hosted by Scott Wine, Chairman
and CEO; Ken Pucel, Executive Vice President – Operations, Engineering
and Lean; and Mike Speetzen, Executive Vice President – Finance and CFO. A
slide presentation and link to the webcast will be posted on the Polaris
Investor Relations website at http://ir.polaris.com.
To listen to the conference call by phone, dial 877-706-7543 in the U.S.
and Canada, or 478-219-0273 internationally. The Conference ID is #
45015597.
A replay of the conference call will be available approximately two
hours after the call for a one-week period by accessing the same link on
our website, or by dialing 855-859-2056 in the U.S. and Canada, or
404-537-3406 internationally.
About Polaris
Polaris Industries Inc. (NYSE: PII) is a global powersports leader with
annual 2016 sales of $4.5 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 globally
in adjacent markets 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 2017 future sales, shipments, net income, and net income per
share, 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; product recalls, 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.
(summarized financial data follows)
|
|
POLARIS INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF
INCOME
(In Thousands, Except Per Share Data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31,
|
|
Years ended December 31,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Sales
|
|
$
|
1,217,789
|
|
|
$
|
1,105,618
|
|
|
$
|
4,516,629
|
|
|
$
|
4,719,290
|
|
Cost of sales
|
|
905,017
|
|
|
795,344
|
|
|
3,411,006
|
|
|
3,380,248
|
|
Gross profit
|
|
312,772
|
|
|
310,274
|
|
|
1,105,623
|
|
|
1,339,042
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Selling and marketing
|
|
97,423
|
|
|
76,159
|
|
|
342,235
|
|
|
316,669
|
|
Research and development
|
|
48,870
|
|
|
41,734
|
|
|
185,126
|
|
|
166,460
|
|
General and administrative
|
|
87,039
|
|
|
51,179
|
|
|
306,442
|
|
|
209,077
|
|
Total operating expenses
|
|
233,332
|
|
|
169,072
|
|
|
833,803
|
|
|
692,206
|
|
Income from financial services
|
|
19,303
|
|
|
17,958
|
|
|
78,458
|
|
|
69,303
|
|
Operating income
|
|
98,743
|
|
|
159,160
|
|
|
350,278
|
|
|
716,139
|
|
Non-operating expense:
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
5,601
|
|
|
2,608
|
|
|
16,319
|
|
|
11,456
|
|
Equity in loss of other affiliates
|
|
1,434
|
|
|
2,086
|
|
|
6,873
|
|
|
6,802
|
|
Other expense, net
|
|
6,249
|
|
|
3,368
|
|
|
13,835
|
|
|
12,144
|
|
Income before income taxes
|
|
85,459
|
|
|
151,098
|
|
|
313,251
|
|
|
685,737
|
|
Provision for income taxes
|
|
22,878
|
|
|
40,416
|
|
|
100,303
|
|
|
230,376
|
|
Net income
|
|
$
|
62,581
|
|
|
$
|
110,682
|
|
|
$
|
212,948
|
|
|
$
|
455,361
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.98
|
|
|
$
|
1.69
|
|
|
$
|
3.31
|
|
|
$
|
6.90
|
|
Diluted
|
|
$
|
0.97
|
|
|
$
|
1.66
|
|
|
$
|
3.27
|
|
|
$
|
6.75
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
63,578
|
|
|
65,415
|
|
|
64,296
|
|
|
66,020
|
|
Diluted
|
|
64,327
|
|
|
66,592
|
|
|
65,158
|
|
|
67,484
|
|
|
POLARIS INDUSTRIES INC.
CONSOLIDATED BALANCE SHEETS
(In
Thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
December 31,
2015
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
127,325
|
|
|
$
|
155,349
|
|
Trade receivables, net
|
|
174,832
|
|
|
150,778
|
|
Inventories, net
|
|
746,534
|
|
|
710,001
|
|
Prepaid expenses and other
|
|
91,636
|
|
|
90,619
|
|
Income taxes receivable
|
|
50,662
|
|
|
46,175
|
|
Total current assets
|
|
1,190,989
|
|
|
1,152,922
|
|
Property and equipment, net
|
|
727,596
|
|
|
650,678
|
|
Investment in finance affiliate
|
|
94,009
|
|
|
99,073
|
|
Deferred tax assets
|
|
188,471
|
|
|
166,538
|
|
Goodwill and other intangible assets, net
|
|
792,979
|
|
|
236,117
|
|
Other long-term assets
|
|
105,553
|
|
|
80,331
|
|
Total assets
|
|
$
|
3,099,597
|
|
|
$
|
2,385,659
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
Current portion of debt, capital lease obligations and notes payable
|
|
$
|
3,847
|
|
|
$
|
5,059
|
|
Accounts payable
|
|
273,742
|
|
|
299,660
|
|
Accrued expenses:
|
|
|
|
|
|
Compensation
|
|
122,214
|
|
|
106,486
|
|
Warranties
|
|
119,274
|
|
|
56,474
|
|
Sales promotions and incentives
|
|
158,562
|
|
|
141,057
|
|
Dealer holdback
|
|
117,574
|
|
|
123,276
|
|
Other
|
|
162,432
|
|
|
88,030
|
|
Income taxes payable
|
|
2,106
|
|
|
6,741
|
|
Total current liabilities
|
|
959,751
|
|
|
826,783
|
|
Long term income taxes payable
|
|
26,391
|
|
|
23,416
|
|
Capital lease obligations
|
|
17,538
|
|
|
19,660
|
|
Long-term debt
|
|
1,120,525
|
|
|
436,757
|
|
Deferred tax liabilities
|
|
9,127
|
|
|
13,733
|
|
Other long-term liabilities
|
|
90,497
|
|
|
74,188
|
|
Total liabilities
|
|
$
|
2,223,829
|
|
|
$
|
1,394,537
|
|
Deferred compensation
|
|
8,728
|
|
|
9,645
|
|
Total shareholders’ equity
|
|
867,040
|
|
|
981,477
|
|
Total liabilities and shareholders’ equity
|
|
$
|
3,099,597
|
|
|
$
|
2,385,659
|
|
|
POLARIS INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In Thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
|
2016
|
|
2015
|
|
Operating Activities:
|
|
|
|
|
|
Net income
|
|
$
|
212,948
|
|
|
$
|
455,361
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
167,512
|
|
|
152,138
|
|
|
Noncash compensation
|
|
57,927
|
|
|
61,929
|
|
|
Noncash income from financial services
|
|
(30,116
|
)
|
|
(29,405
|
)
|
|
Deferred income taxes
|
|
(26,056
|
)
|
|
(16,343
|
)
|
|
Tax effect of share-based compensation exercises
|
|
(3,578
|
)
|
|
(34,654
|
)
|
|
Other, net
|
|
13,462
|
|
|
6,802
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
Trade receivables
|
|
2,030
|
|
|
48,798
|
|
|
Inventories
|
|
111,999
|
|
|
(148,725
|
)
|
|
Accounts payable
|
|
(62,693
|
)
|
|
(46,095
|
)
|
|
Accrued expenses
|
|
145,261
|
|
|
9,182
|
|
|
Income taxes payable/receivable
|
|
(1,997
|
)
|
|
(247
|
)
|
|
Prepaid expenses and others, net
|
|
(14,916
|
)
|
|
(18,510
|
)
|
|
Net cash provided by operating activities
|
|
571,783
|
|
|
440,231
|
|
|
Investing Activities:
|
|
|
|
|
|
Purchase of property and equipment
|
|
(209,137
|
)
|
|
(249,485
|
)
|
|
Investment in finance affiliate, net
|
|
35,179
|
|
|
19,440
|
|
|
Investment in other affiliates
|
|
(11,595
|
)
|
|
(17,848
|
)
|
|
Acquisition of businesses, net of cash acquired
|
|
(723,705
|
)
|
|
(41,195
|
)
|
|
Net cash used for investing activities
|
|
(909,258
|
)
|
|
(289,088
|
)
|
|
Financing Activities:
|
|
|
|
|
|
Borrowings under debt arrangements / capital lease obligations
|
|
3,232,137
|
|
|
2,631,067
|
|
|
Repayments under debt arrangements / capital lease obligations
|
|
(2,552,760
|
)
|
|
(2,385,480
|
)
|
|
Repurchase and retirement of common shares
|
|
(245,816
|
)
|
|
(293,616
|
)
|
|
Cash dividends to shareholders
|
|
(140,336
|
)
|
|
(139,285
|
)
|
|
Proceeds from stock issuances under employee plans
|
|
3,578
|
|
|
32,535
|
|
|
Tax effect of proceeds from share-based compensation exercises
|
|
17,690
|
|
|
34,654
|
|
|
Net cash provided by (used for) financing activities
|
|
314,493
|
|
|
(120,125
|
)
|
|
Impact of currency exchange rates on cash balances
|
|
(5,042
|
)
|
|
(13,269
|
)
|
|
Net increase (decrease) in cash and cash equivalents
|
|
(28,024
|
)
|
|
17,749
|
|
|
Cash and cash equivalents at beginning of period
|
|
155,349
|
|
|
137,600
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
127,325
|
|
|
$
|
155,349
|
|
|
|
|
POLARIS INDUSTRIES INC.
Reconciliation of GAAP "Reported" Results to "Adjusted" Results
(unaudited)
|
|
|
|
|
|
|
|
|
|
Q4 2016
|
|
Reported GAAP Measures
|
|
Adjustments
|
|
Adjusted Measures
|
|
|
|
Q4 2016
|
|
Q4 2015
|
|
$
Chg
|
|
%
Chg
|
|
Q4 2016
|
|
Q4 2015
|
|
Q4 2016
|
|
Q4 2015
|
|
$
Chg
|
|
%
Chg
|
|
Sales
|
|
$
|
1,217,789
|
|
$
|
1,105,618
|
|
$
|
112,171
|
|
|
10
|
%
|
|
$
|
-
|
|
|
-
|
|
$
|
1,217,789
|
|
$
|
1,105,618
|
|
$
|
112,171
|
|
|
10
|
%
|
|
Gross Profit
|
|
|
312,772
|
|
|
310,274
|
|
|
2,498
|
|
|
1
|
%
|
|
|
8,803
|
(1)
|
|
-
|
|
|
321,575
|
|
|
310,274
|
|
|
11,301
|
|
|
4
|
%
|
|
Gross Profit %
|
|
|
25.7%
|
|
|
28.1%
|
|
|
-
|
|
|
(238)
bps
|
|
|
|
|
|
|
26.4%
|
|
|
28.1%
|
|
|
-
|
|
|
(165)
bps
|
|
Operating Exp.
|
|
|
233,332
|
|
|
169,072
|
|
|
64,260
|
|
|
38
|
%
|
|
|
(12,651
|
)(2)
|
|
-
|
|
|
220,681
|
|
|
169,072
|
|
|
51,609
|
|
|
31
|
%
|
|
Net Income
|
|
|
62,581
|
|
|
110,682
|
|
|
(48,101
|
)
|
|
(43
|
%)
|
|
|
13,515
|
(3)
|
|
-
|
|
|
76,096
|
|
|
110,682
|
|
|
(34,586
|
)
|
|
(31
|
%)
|
|
Diluted EPS
|
|
$
|
0.97
|
|
$
|
1.66
|
|
$
|
(0.69
|
)
|
|
(42
|
%)
|
|
$
|
0.21
|
|
|
-
|
|
$
|
1.18
|
|
$
|
1.66
|
|
$
|
(0.48
|
)
|
|
(29
|
%)
|
|
|
|
|
|
|
|
|
|
FY 2016
|
|
Reported GAAP Measures
|
|
Adjustments
|
|
Adjusted Measures
|
|
|
|
FY 2016
|
|
FY 2015
|
|
$
Chg
|
|
%
Chg
|
|
FY 2016
|
|
FY 2015
|
|
FY 2016
|
|
FY 2015
|
|
$
Chg
|
|
%
Chg
|
|
Sales
|
|
$
|
4,516,629
|
|
$
|
4,719,290
|
|
$
|
(202,661
|
)
|
|
(4
|
%)
|
|
$
|
-
|
|
|
-
|
|
$
|
4,516,629
|
|
$
|
4,719,290
|
|
$
|
(202,661
|
)
|
|
(4
|
%)
|
|
Gross Profit
|
|
|
1,105,623
|
|
|
1,339,042
|
|
|
(233,419
|
)
|
|
(17
|
%)
|
|
|
8,803
|
(1)
|
|
-
|
|
|
1,114,426
|
|
|
1,339,042
|
|
|
(224,616
|
)
|
|
(17
|
%)
|
|
Gross Profit %
|
|
|
24.5%
|
|
|
28.4%
|
|
|
-
|
|
|
(389)
bps
|
|
|
|
|
|
|
24.7%
|
|
|
28.4%
|
|
|
-
|
|
|
(370)
bps
|
|
Operating Exp.
|
|
|
833,803
|
|
|
692,206
|
|
|
141,597
|
|
|
20
|
%
|
|
|
(12,651
|
)(2)
|
|
-
|
|
|
821,152
|
|
|
692,206
|
|
|
128,946
|
|
|
19
|
%
|
|
Net Income
|
|
|
212,948
|
|
|
455,361
|
|
|
(242,413
|
)
|
|
(53
|
%)
|
|
|
13,515
|
(3)
|
|
-
|
|
|
226,463
|
|
|
455,361
|
|
|
(228,898
|
)
|
|
(50
|
%)
|
|
Diluted EPS
|
|
$
|
3.27
|
|
$
|
6.75
|
|
$
|
(3.48
|
)
|
|
(52
|
%)
|
|
$
|
0.21
|
|
|
-
|
|
$
|
3.48
|
|
$
|
6.75
|
|
$
|
(3.27
|
)
|
|
(48
|
%)
|
|
Adjustments:
|
|
(1) Represents inventory step-up related to the TAP
acquisition
|
|
(2) Represents the acquisition costs and integration
expenses related to the TAP acquisition
|
|
(3) The company used its estimated statutory tax rate of
~37% for the non-GAAP adjustments
|
|
|
|
2017 Adjusted Guidance: 2017 guidance excludes the pre-tax
effect of TAP inventory step-up purchase accounting of approx. $15
million, acquisition integration costs of approx. $15 million and
the impacts associated with the Victory wind down which could be
in a range of $50 to $70 million in 2017. The Company is in the
process of finalizing its analysis of the anticipated total costs
to wind down the Victory motorcycle business and will provide more
clarity as the analysis is completed and the costs are incurred
throughout the year. 2017 sales guidance excludes any Victory
wholegoods sales as the Company is exiting the brand beginning in
2017.
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170124005486/en/
Source: Polaris Industries Inc.