Off-road vehicles manufacturer Polaris Industries, Inc. (PII), Thursday, reported higher profit for the fourth quarter that also came above analysts estimates, despite a decline in sales. The company attributed the improvement to continued product cost reduction efforts, lower commodity costs, higher selling prices and favorable currency movements. Going forward, the company expects year-over-year increases in earnings and revenues for both the first quarter and full year 2010.
For the fourth quarter, net income increased 21% to $43.91 million from $36.24 million last year. On a per-share basis, net income was $1.31, up 18% from $1.11 last year. On average, 10 analysts polled by Thomson Reuters expected the company to report earnings of $1.23 per share. Analysts' estimates typically exclude special items.
Sales declined 10% to $471.77 million from $523.60 million last year, yet surpassed six analysts sales consensus of $449.68 million.
Revenue declined 12% for Off-Road Vehicles to $282.82 million, 14% for Snowmobiles to $81.44 million and 12% for On-Road Vehicles, primarily consisting of Victory motorcycles, to $19.14 million compared to last year. Sales from parts, garments and accessories improved 2% reaching $88.37 million compared to last year.
Gross profit improved 8% to $128.61 million from $119.25 million last year, primarily a result of cost reduction efforts, lower commodity costs, higher selling prices and favorable currency movements. Gross margin surged 450 basis points to 27.3% from 22.8%.
For the full year, net income was $101.02 million, down 14% from to $117.40 million last year. On a per-share basis, net income fell 13% reaching $3.05 compared to $3.50 last year. Net sales declined 20% to $1.57 billion from $1.95 billion last year. Analysts expected earnings of $2.96 per share on revenues of $1.54 billion for the full year.
Commenting on the results, Scott Wine, Chief Executive Officer said, "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."
Looking ahead, for the first quarter of 2010, earnings per share is expected to be in the range of $0.45 to $0.47, on a projected sales growth of 1% to 3%, compared to reported earnings of $0.26 for the first quarter of 2009. Analysts expect earnings of $0.45 per share on sales of $310.98 million.
The company expects full year 2010 earnings per share to be in a range of $3.15 to $3.30, an increase of 3% to 8% compared to $3.05 reported for 2009. Sales are expected to grow modestly, in the range of 1% to 3%. For the full year 2010, analysts currently estimate earnings of $3.22 per share on sales of $1.60 billion.
PII shares closed Wednesday's regular trading session at $43.30 per share on the NYSE.
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