Polaris Reports 2009 Fourth Quarter and Full Year Results

  • Fourth quarter net income of $43.9 million, increased 21% from $36.2 million in the fourth quarter 2008, resulting in record earnings per diluted share of $1.31, up 18% from the prior year period

  • Fourth quarter 2009 sales of $ 471.8 million were down 10% from the 2008 fourth quarter. Full year 2009 sales of $1,565.9 million, decreased 20% from full year record 2008 sales

  • Full year 2009 net income of $ 101.0 million decreased 14% from 2008, and full year 2009 diluted earnings per share of $3.05 decreased 13% from 2008

  • Gross profit margin percentage for the fourth quarter and full year 2009 improved by 450 basis points and 220 basis points, respectively

  • Factory inventory decreased 19% contributing to strong cash flow and a record year end cash balance of $140.2 million. North America dealer inventories decreased 24% at year end 2009 compared to the 2008 year end

  • On January 21, 2010, Polaris declared a 3% increase in the regular quarterly cash dividend to $0.40 per share per quarter, marking the 15th consecutive year of increased dividends

MINNEAPOLIS, MN – January 28, 2010 – (Motor Sports Newswire) – Polaris Industries Inc. (NYSE:PII) today reported record net income of $1.31 per diluted share for the fourth quarter of 2009, an 18 percent increase from $1.11 per diluted share for the prior year period. Net income for the fourth quarter 2009 was $43.9 million, representing an increase of 21 percent from the prior year’s fourth quarter net income of $36.2 million. Sales for the quarter decreased 10 percent to $471.8 million, compared to last year’s fourth quarter sales of $523.6 million.

For the full year ended December 31, 2009, Polaris reported net income of $101.0 million, or $3.05 per diluted share, compared to $117.4 million, or $3.50 per diluted share, for the year ended December 31, 2008, representing a 13 percent decrease on a per diluted share basis. Sales for the full year 2009 totaled $1,565.9 million, a decrease of 20 percent compared to record sales of $1,948.3 million for the full year 2008.

“Our record fourth quarter earnings per share represent a fitting end to a challenging year for Polaris. Our team and businesses effectively balanced significant cost reductions with a relentless focus on innovation and winning the competitive battle, which enabled us to exceed expectations and position the business well for 2010. We are pleased with the retail sales and operational excellence momentum established during the fourth quarter 2009 and anticipate a return to growth in 2010,” commented Scott Wine, Chief Executive Officer of Polaris. “After a full year of weak retail sales demand across our business, we did experience improving trends throughout the second half and in the fourth quarter of 2009, largely driven by market share gains in our Off-Road Vehicle business. Our Victory motorcycle business also had strong retail sales growth and market share gains in the fourth quarter, demonstrating important progress in our plans to improve the Victory business.

“During 2009, we also expanded the gross profit margin percentage by 220 basis points despite a 20 percent decline in sales, and we were able to drive a 50 basis point improvement in net income margin to 6.5 percent for the year. Continued net margin expansion remains a key initiative for the Company for 2010 and going forward. Our fast reaction during the economic downturn and continued focus on operational excellence enabled us to support our dealers with reduced inventories and drive factory inventory down 19 percent.”

Wine continued, “Our strategic decision to drive aggressive cost reductions, while continuing to invest in the highest return opportunities, has positioned us well as for 2010. In the near-term, however, we do not anticipate a rapid recovery of the overall economic environment or the powersports industry. We expect consumer spending to remain weak throughout 2010 which will limit sales growth in both the U.S. and Europe. However, we have proven in the past that we can perform well in weak markets and difficult economies. In 2009, we again gained market share in most of our businesses, and we will continue to execute our global growth strategy and make growth happen in 2010 and beyond.”

2010 Business Outlook

Full year 2010 earnings are expected to be in the range of $3.15 to $3.30 per diluted share, an increase of three to eight percent compared to 2009 net income of $3.05 per diluted share. Full year 2010 net income is expected to increase in the range of seven to eleven percent over 2008 net income of $101.0 million. Net income is expected to increase at a higher percentage rate than diluted earnings per share as a result of an anticipated increase in the diluted shares outstanding throughout 2010 compared to 2009 due to the elimination of open market share repurchases in 2009, and the dilutive effect of an anticipated higher share price in 2010. Sales for the full year 2010 are expected to grow modestly, in the range of up one to up three percent. For the first quarter 2010, earnings are expected to be in the range of $0.45 to $0.47 per diluted share, compared to earnings of $0.26 per diluted share for the first quarter 2009, on projected sales of up one to three percent. First quarter 2009 earnings per share included a non-cash impairment charge of $9.0 million, pretax, or $0.18 per diluted share related to the Company’s investment in KTM.

Wine explained, “While our outlook reflects a steady, but muted economic recovery, Polaris has taken significant steps to position the Company well for 2010. Our balance sheet is strong with record cash balances and we continue to generate strong earnings and cash flow. Cost reduction initiatives are in place and we continue to realize significant benefits, which we believe will contribute to an expanded gross profit margin percentage and higher net income for full year 2010 over full year 2009. Our model year 2010 product introductions are being well received in the markets and, once again, the future product pipeline is full of exciting new products.”

Wine concluded, “A top priority for Polaris in 2010 will be to drive growth through the diversification of our business, while continuing to outperform and excel in our Off-Road Vehicle business. International growth will be a primary focus, as we allocate more focus and resources to our opportunities outside of the United States. We plan to expand our operational excellence initiatives, which will play a key role in our ongoing efforts to expand margins. In addition, 2010 will be an important year for our On-Road division as we accelerate our efforts to drive retail sales and profitable growth in our Victory motorcycle business. We will also accelerate growth in our new low emission vehicle product line. While we are prepared for another challenging year in the external environment, we have a solid foundation and strong momentum to deliver growth and improved results in 2010.”

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SOURCE: Polaris Industries Inc.