Polaris Industries Inc. today reported third quarter 2018 sales of $1.65 million, up 12 percent from $1.48 million for the third quarter of 2017.
Overall, adjusted sales for the third quarter of 2018 were $1.65 million, up 12 percent from the prior year period.
Boat segment sales, which consist of the Boat Holdings acquisition that closed in early July, were $134 million in the 2018 third quarter, slightly better than expectations, the company stated in a news release.
Boat Holdings’ four recognized brands include Bennington, Godfrey, Hurricane and Rinker.
Reported gross profit for the boat segment was $20 million or 15.1 percent of sales in the third quarter of 2018.
Adjusted gross profit for the boat segment, which excludes integration costs and purchase accounting, was $23 million or 17.4 percent of sales in the third quarter of 2018.
“We were pleased with the early performance of Boat Holdings, the largest manufacturer of pontoon boats in the U.S. that we welcomed to our growing powersports portfolio earlier in the quarter,” said Polaris Industries Inc. Chairman and CEO Scott Wine.
Overall, Polaris reported third quarter 2018 net income of $96 million, or $1.50 per diluted share, compared with net income of $82 million, or $1.28 per diluted share, for the 2017 third quarter.
Adjusted net income for the quarter ended Sept. 30 was $118 million, or $1.86 per diluted share, up 21 percent and 22 percent respectfully, compared to $98 million, or $1.52 per diluted share in the 2017 third quarter.
Reported net income was up 17 percent over the prior year; adjusted net income for the same period was up 22 percent over the prior year.
Gross profit increased 10 percent to $401 million for the third quarter of 2018 from $364 million in the third quarter of 2017.
Reported gross profit margin was 24.3 percent of sales for the third quarter of 2018 compared to 24.6 percent of sales for the third quarter of 2017.
Gross profit for the third quarter of 2018 includes the negative impact of $8 million of Victory Motorcycles wind-down costs, acquisition-related costs for the acquisition of Boat Holdings and realignment and restructuring costs.
Excluding these items, third quarter 2018 adjusted gross profit was $410 million, or 24.8 percent of adjusted sales.
For the third quarter of 2017, adjusted gross profit of $378 million, or 25.5 percent of adjusted sales, excludes the negative impact of $14 million in Victory Motorcycles wind down costs and other restructuring and realignment costs.
Gross profit margins on an adjusted basis were down slightly primarily due to mix and the impact of tariff, commodity and freight cost pressures during the quarter, partially offset by lower warranty and promotional costs.
Operating expenses increased 7 percent for the third quarter of 2018 to $284 million, or 17.2 percent of sales, from $265 million, or 17.9 percent of sales, in the same period in 2017.
Operating expenses in dollars increased primarily due to the Boat Holdings acquisition completed during the quarter and investments in strategic projects.
As a result of the Boat Holdings acquisition, Polaris' amortization of intangible assets will increase by approximately $20 million on an annual basis.
According to Polaris, given the significant increase in non-cash amortization associated with this acquisition along with intangible amortization from prior acquisitions, the company has moved to an adjusted net income metric, excluding intangible amortization from all acquisitions including prior year acquisitions of approximately $24 million for full year 2018.
The company believes this treatment will provide additional transparency into the true, ongoing earnings performance of its business.
Polaris Industries Inc. will host a 10 a.m. CST conference call and webcast this morning to discuss its 2018 third quarter results.
The call will be hosted by Wine and feature 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 ir.polaris.com.
To listen to the conference call by phone, dial 1-877-883-0383 in the U.S., or 1-412-902-6506 internationally. The Conference ID is 1886245. A replay of the conference call will be available by accessing the same link on the company’s website.