MINNEAPOLIS, Minn. – Polaris Industries Inc.’s (NYSE: PII) personal watercraft (PWC) sales for 2003 increased 1 percent compared to a year ago, the company reported in a statement today.
However, its fourth quarter PWC sales declined 25 percent during the fourth quarter 2003 compared to the fourth quarter 2002.
Timing of shipments at the beginning of the PWC season and a later transition to 2004 model year production in preparation for manufacturing of the new four stroke MSX personal watercraft were the primary reasons for the fourth quarter sales decline, according to Polaris.
Company reports record net income
Polaris reported record net income of $1.68 per diluted share (pre-split) for the fourth quarter ended December 31, an 11-percent increase over prior year fourth quarter net income of $1.51 per diluted share (pre-split).
Higher sales volume primarily from Victory motorcycles and Parts, Garments and Accessories (PG&A) along with favorable currency rate movement, expanded gross margins and higher income from financial services contributed to the fourth quarter earnings increase, according to Polaris.
Reported net income for the fourth quarter 2003 was $38.0 million, a 9-percent increase over prior year fourth quarter net income of $35.0 million. Sales for the fourth quarter 2003 totaled a record $467.1 million, up eight percent from last year’s fourth quarter sales of $431.5 million.
For the full year ended December 31, Polaris reported record net income of $110.9 million or $4.92 per diluted share (pre-split), a 12-percent increase over $4.39 per diluted share (pre-split) for the year ended December 31, 2002. Sales for the full year ended December 31, 2003 totaled a record $1,605.9 million, up 6 percent from $1,521.3 million for the full year 2002.
“2003 marked our 15th consecutive year of record earnings per share for Polaris. The company continues to benefit from the strength of our diverse product portfolio with growth in ATVs, motorcycles, PG&A and financial services offsetting a weak snowmobile business due to a lack of snow in key riding areas and increased costs related to investments in research and development and sales and marketing during 2003,” said Tom Tiller, president and chief executive officer.
Gross profit, as a percentage of sales, was 23.2 percent for the fourth quarter 2003, an improvement of 60 basis points from 22.6 percent in the comparable quarter of 2002. For the full year 2003, gross margins improved 60 basis points to 22.4 percent compared to 21.8 percent for the full year 2002.
The gross profit margin for the fourth quarter and full year 2003 continued to benefit from several ongoing initiatives, including continued efficiency gains from the Roseau facility redesign; savings from various cost reduction initiatives; and higher margins in the international business generated from the new dealer direct distribution models in Great Britain, Sweden and Norway, according to Polaris.
A positive impact of currency fluctuations during the quarter and full year 2003 also contributed to improved gross margins. These improvements, in aggregate, were offset somewhat by a higher level of promotional expenses required in the 2003 periods.
For the full year 2004, Polaris is expecting earnings to rise to be in the range of $2.65 to $2.77 per share, on a post-split basis, an 8-percent to 13-percent increase over 2003 results of $2.46, on a post-split basis. Sales growth for the full year 2004 is expected to be in the range of 5 percent to 8 percent compared to 2003 with sales increases expected across all business lines.
“I am very encouraged regarding the growth prospects for Polaris in 2004, which will mark the company’s 50th year of providing customers with innovative, high quality products,” said Tiller.
Polaris is a manufacturer of snowmobiles, all terrain vehicles (ATVs), personal watercraft and Victory motorcycles.