Polaris Industries Inc. is putting a feminine touch on its all-terrain vehicles. Starting in October, the Medina, Minn., manufacturer will offer its Predator 50, Predator 90 and Phoenix 200 ATV lines in limited-edition Pink Power youth models aimed at females 16 or older.
Polaris, one of IndustryWeek's IW 50 Best Manufacturers for 2006, is responding to an increasing number of young females who now ride ATVs, the company says. About one-third of the youth ATVs Polaris manufactures are ridden by females. The Pink Power models include electric start, automatic transmission, reverse and parental controls and matching helmets.
The limited-edition models are part of several new products introduced by Polaris Industries for 2007. This includes an increased speed capability of 50 mph for its Ranger XP EFI big-bore ATVs and the Hammer S Victory motorcycle. Second-quarter 2006 sales for the company's Victory business unit grew 26% over the year-earlier period.
But overall second-quarter results weren't as positive. Net income fell to $22.7 million, or 53 cents per share, compared with profits of $29.1 million, or 66 cents per share during the same period last year. Sales decreased 13% to $384.3 million from second-quarter 2005.
At A Glance
Polaris Industries Inc.
Primary Industry: Railcars, ships and other transportation equipment
Number of employees: 3,600
2005 In Review
Revenue: $1.9 billion
Profit Margin: 7.51%
Sales Turnover: 2.48
Inventory Turnover: 7.73
Revenue Growth: 5.72%
Return On Assets: 18.07%
Return On Equity: 39.61%
The company attributes the drop off to rising interest rates and high gas prices. "Our second-quarter results met our expectations in a continuing challenging environment," said CEO Tom Tiller in a July 13 statement. "As expected, reduced North American ATV and snowmobile shipments to dealers in the 2006 second quarter resulted in overall company sales and earnings when compared to the same period in 2005. The efforts of both Polaris and our dealers to reduce ATV and snowmobile inventory levels are only part of the important, proactive steps that are being taken to effectively manage the business through a challenging economic period. . . .
"Although dealer ATV inventory levels have decreased sequentially, we expect further reductions as we move through the balance of the 2006 calendar year as dealers continue to desire lower ATV inventory levels. I am confident we and our dealers are taking the necessary steps to bring down inventories to appropriate levels."
Tiller added that the company has been sourcing components from lower-cost suppliers and taken steps to reduce internal operating costs. "As a result of these efforts and positive product mix changes, we are starting to realize improved gross margins despite lower sales levels. In addition to these operational actions, we have continued to develop new, innovative products that will play a critical role in our future revenue growth."
The company has lowered its earnings outlook for 2006 from its previous estimate of $3.08 per share to $3.20 per share to between $3.10 and $3.20 per share. With the expectation that North American dealers will reduce their ATV levels, the company also has lowered its sales projections by 3% to 5% for the year.
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