Polaris Reports Record First Quarter 2013 Results; EPS Increased 26% to $1.07 on 11% Sales Growth

  Polaris Reports Record First Quarter 2013 Results; EPS Increased 26% to
  $1.07 on 11% Sales Growth

First Quarter Highlights:

  *Net income increased 26% to $75.5 million, or $1.07 per diluted share,
    with sales increasing 11% to $745.9 million, setting new records for first
    quarter sales and earnings.
  *Off-Road Vehicle sales increased 7% in the first quarter 2013 despite
    difficult first quarter 2012 comparisons, and PG&A sales increased 27%
    during the 2013 first quarter.
  *Raising guidance for full year 2013 earnings to a range of $5.05 to $5.20
    per diluted share, an increase of 15% to 18% over 2012 based on projected
    full year 2013 sales growth of 12% to 15%.

Business Wire

MINNEAPOLIS -- April 23, 2013

Polaris Industries Inc. (NYSE: PII) today reported record first quarter net
income of $75.5 million, or $1.07 per diluted share, for the quarter ended
March 31, 2013. By comparison, 2012 first quarter net income was $60.1
million, or $0.85 per diluted share. Net sales for the first quarter 2013
totaled $745.9 million, which represents an increase of eleven percent from
last year’s first quarter sales of $673.8 million.

“We are pleased that consumers and enthusiasts around the world continued to
make Polaris their brand and product of choice during the first quarter of
2013. While Off-Road Vehicles (“ORVs”) and motorcycles faced challenging 2012
comparisons, we were again able to outpace the industry and increase market
share in both product lines. Our snowmobile business also generated strong
retail sales and market share growth during the first quarter,” commented
Scott Wine, Polaris’ Chairman and CEO.

“Two key tenets of Polaris’ long-term strategy are growing globally and
growing through adjacencies. Our acquisition earlier this month of Aixam Mega
S.A.S., a profitable European on-road quadricycle business, aligns perfectly
with those two objectives and furthers our penetration into the $4+ billion
global small vehicles market. Aixam Mega broadens our product line portfolio,
complements our GEM and Goupil businesses, boosts our European distribution
network, and enhances our competitive advantage in small vehicles.
Additionally, we finalized the location of our new European manufacturing
facility, which will be located in Opole, Poland. This facility will add much
needed ORV capacity and serve our European markets with locally designed and
manufactured products. We expect to break ground during this years’ second
quarter and the facility should be operational by the fall of 2014.”

“During the quarter, we also launched the highly anticipated Polaris Brutus
and Bobcat utility vehicles, co-developed with Bobcat. We are pleased with the
vehicles’ performance and the initial market reaction from dealers and
customers has been positive. Shipments to both the Bobcat and Polaris’ new
commercial channels will begin in April.”

Wine concluded, “Not unexpectedly, we saw a degree of timidity in some
customer segments that corresponded with the payroll tax increases that took
effect at the start of the year. We remain cautious of the economic risks in
both North America and Europe, but believe our strong team and commercial
plans, along with our near term product pipeline, headed by the new Indian
motorcycle, will enhance growth in the second half of 2013. With our solid
start to the year, we feel confident in raising our 2013 full year sales and
earnings guidance.”

2013 Business Outlook

Based on Polaris’ performance during the 2013 first quarter, projections for
the remainder of the calendar year and reflecting the acquisition of Aixam
Mega completed in April 2013, the Company is increasing its 2013 full year
sales and earnings guidance. The Company now expects full year 2013 earnings
to be in the range of $5.05 to $5.20 per diluted share, an increase of 15 to
18 percent over earnings of $4.40 per diluted share for the full year 2012.
Sales for the full year 2013 are now expected to grow in the range of 12 to 15
percent.


First Quarter Performance Summary  (in thousands except per share
data)
                                    Three Months ended March 31,
Product Line Sales                   2013       2012       Change
Off-Road Vehicles                    $ 541,272  $ 504,567  7%
Snowmobiles                          14,714     4,647      217%
On-Road Vehicles                     62,856     64,656     -3%
Parts, Garments & Accessories        127,067    99,880     27%
Total Sales                          $ 745,909  $ 673,750  11%
Gross Profit                         $ 216,648  $ 194,963  11%
Gross profit as a % of sales         29.0%      28.9%      +10 bps
Operating Expenses                   $ 124,753  $ 110,599  13%
Operating expenses as a % of sales   16.7%      16.4%      +30 bps
Operating Income                     $ 101,969  $ 91,547   11%
Operating Income as a % of sales     13.7%      13.6%      +10 bps
Net Income                           $ 75,464   $ 60,078   26%
Net income as a % of sales           10.1%      8.9%       +120 bps
Diluted Net Income per share         $ 1.07     $ 0.85     26%
                                                          

Off-Road Vehicle (“ORV”) sales increased seven percent from the first quarter
2012 to $541.3 million. This increase reflects continued market share gains
driven by new product offerings, including the highly successful RANGER XP^®
900 ^ and RANGER^® 800 mid-size utility vehicles. Polaris’ North American ORV
unit retail sales were up single digits percent from the very strong
mid-twenties percent increase in the first quarter last year. Retail sales for
side-by-sides continued to grow during the quarter, but ATVs experienced a
slight decline in retail sales in the 2013 first quarter compared to a strong
double digits percent increase in the 2012 first quarter. Both ATVs and
side-by-side vehicles continued to gain market share again in North America
during the first quarter 2013. Polaris ORV dealer inventory was up 26 percent
in the 2013 first quarter compared to a year ago reflecting the continued
focus on increasing availability in both established and new market segments
in addition to preparing for the spring selling season. The Company estimates
North American industry ORV retail sales in the first quarter 2013 declined
single digits percent with core ATV industry retail sales down double digits
percent during the quarter primarily attributable to unseasonably warm weather
in 2012 and a late start to the spring in 2013. Sales of ORVs outside of North
America decreased two percent in the first quarter 2013 when compared to the
first quarter 2012, primarily due to weaker industry conditions in Australia
and Europe.

Snowmobile sales totaled $14.7 million for the 2013 first quarter compared to
$4.6 million for the first quarter of 2012. The North American snowmobile
industry finished the season strong with industry retail sales up over 20
percent in the 2013 first quarter and up mid-single digits percent for the
entire season ending March 31, 2013 due to more normal snowfall levels and
later snow cover this snowmobile riding season. Polaris’ North American retail
snowmobile sales once again outpaced the industry, resulting in increased
market share for the season ending March 31, 2013 and four percent lower
season-end North American dealer inventories for Polaris snowmobiles. During
the quarter, the Company introduced eight new model year 2014 snowmobiles,
including seven all-new models under the legendary INDY^® name. Sales to
customers outside North America increased over 100 percent in the first
quarter 2013 as the Company moved additional product into the Scandinavian and
Russian markets where snowfall levels drove healthy snowmobile retail sales
increases.

On-Road Vehicle sales, comprised primarily of Victory motorcycles, but also
including Indian motorcycles and our GEM and Goupil electric vehicles,
decreased three percent from the first quarter 2012 to $62.9 million. North
American industry heavyweight cruiser and touring motorcycle retail sales
decreased about ten percent during the first quarter 2013 when compared to a
strong mid-teens percent increase in the 2012 first quarter, which was
primarily driven by the unseasonably warm weather in 2012 and a late start to
spring in 2013. Over the same period, Victory North American unit retail sales
decreased as well, albeit less than the overall industry, resulting in
continued market share gains. This year marks the 15^th anniversary of Victory
motorcycles and to commemorate the occasion, Victory introduced a limited
edition 15^th anniversary Cross Country Tour, inspired by the first Victory
motorcycle ever built. Additionally, as Polaris marches toward the full
re-launch of Indian motorcycles later this year, the Company unveiled the all
new Thunder Stroke 111™ engine that will power the new model year 2014 Indian
motorcycles. The engine features 111 cubic inch displacement and delivers the
raw power and iconic styling that have long been hallmarks of the legendary
Indian Motorcycle brand. The Company’s small vehicle business grew sales
double digits percent during the 2013 first quarter through added distribution
and improved sales efforts for GEM and Goupil electric vehicles.

Parts, Garments and Accessories (“PG&A”) sales increased 27 percent during the
first quarter 2013 compared to the same period last year. The growth was
driven by double digit sales increases in all segments and product lines, with
snowmobile related PG&A performing exceptionally well due to more normal
snowfall and later snow cover this past riding season, which ended March 2013.
Additionally, sales from the recently acquired Klim business contributed to
the increase in PG&A sales in the 2013 first quarter.

Gross profit was 29.0 percent of sales for the first quarter of 2013, an
increase of 10 basis points from the first quarter of 2012; while over the
same period, gross profit dollars increased eleven percent to $216.6 million.
The first quarter 2013 increase in gross profit dollars and margin percentage
was driven by lower commodity costs, higher selling prices and production
efficiencies, largely offset by unfavorable currency movements and higher
promotional activities.

Operating expenses for first quarter 2013 grew 13 percent to $124.8 million or
16.7 percent of sales, compared to $110.6 million or 16.4 percent of sales for
the first quarter of 2012. Operating expenses in absolute dollars and as a
percent of sales for the first quarter of 2013 rose primarily due to planned
strategic investments, higher sales, marketing and advertising expenses
primarily related to Indian motorcycles, and increased research and
development activities related to new products under development.

Income from financial services was $10.1 million during first quarter 2013, an
increase of 40 percent compared to $7.2 million in the first quarter of 2012,
largely due to higher income from Polaris Acceptance’s dealer inventory
financing and increased volume and corresponding profitability generated from
the retail credit portfolios with Sheffield, GE and Capital One.

Equity in income (loss) of affiliates was $0.4 million of expense for the
first quarter 2013, which represents the Company’s portion of the start-up
costs related to the Polaris/Eicher joint venture in India established in
2012.

Non-operating other income which primarily relates to foreign currency
exchange rate movements and the corresponding effects on foreign currency
transactions related to the Company’s foreign subsidiaries  was $2.5 million
in the first quarter of 2013 compared to $2.6 million in the first quarter of
2012.

The provision for income taxes for the first quarter 2013 was recorded at a
rate of 26.4 percent of pretax income compared to 35.1 percent of pretax
income for the first quarter 2012. The significantly lower income tax rate for
the first quarter 2013 reflects a non-recurring $8.2 million benefit resulting
from a combination of a) the United States Congress reinstating the research
and development income tax credit retroactively for calendar year 2012 during
the first quarter of 2013, and b) favorable conclusions of federal tax audits
during the 2013 first quarter which allowed the release of certain income tax
reserves.

Financial Position and Cash Flow

Net cash provided by operating activities was $47.8 million for the first
quarter ended March 31, 2013 compared to net cash used for operating
activities of $0.7 million for the first quarter of 2012. The quarter over
quarter change in net cash from operating activities is the result of higher
net income for the quarter and decreased working capital requirements during
the 2013 first quarter period primarily due to increased accounts payable.
Total debt at the end of the first quarter 2013 was $106.4 million. During the
2013 first quarter, the Company increased its quarterly dividend payment for
the 18^th consecutive year by 14 percent to $0.42 per share and paid a total
of $28.7 million in dividends to shareholders. The Company’s debt-to-total
capital ratio was 13 percent at March 31, 2013, compared to 16 percent a year
ago. Cash and cash equivalents were $380.8 million at March 31, 2013, an
increase of 33 percent compared to $285.9 million for the same period in 2012.

Conference Call and Webcast Presentation

Today at 9:00 AM (CDT) Polaris Industries Inc. will host a conference call and
webcast to discuss Polaris’ 2013 first quarter earnings results released this
morning. The call will be hosted by Scott Wine, Chairman and CEO, Bennett
Morgan, President and COO, and Mike Malone, Vice President - Finance and CFO.
A slide presentation and link to the audio webcast will be posted on the
Investor Relations page of the Polaris web site at
www.polarisindustries.com/irhome.

To listen to the conference call by phone, dial 877-706-7543 in the U.S. and
Canada, or 973-200-3967 internationally. The Conference ID is # 48224205.

A replay of the conference call will be available approximately two hours
after the call for a one-week period by accessing the same link on our
website, or by dialing 855-859-2056 in the U.S. and Canada, or 404-537-3406
internationally.

About Polaris

Polaris is a recognized leader in the powersports industry with annual 2012
sales of $3.2 billion. Polaris designs, engineers, manufactures and markets
innovative, high quality off-road vehicles, including all-terrain vehicles
(ATVs) and the Polaris RANGER^® and RZR^® side-by-side vehicles, snowmobiles,
motorcycles and on-road electric/hybrid powered vehicles.

Polaris is among the global sales leaders for both snowmobiles and off-road
vehicles and has established a presence in the heavyweight cruiser and touring
motorcycle market with the Victory and Indian motorcycle brands. Additionally,
Polaris continues to invest in the global on-road small vehicle industry with
Global Electric Motorcars (GEM), Goupil Industrie SA, Aixam Mega S.A.S., and
internally developed vehicles. Polaris enhances the riding experience with a
complete line of Polaris and KLIM branded apparel and Polaris accessories and
parts.

Polaris Industries Inc. trades on the New York Stock Exchange under the symbol
“PII”, and the Company is included in the S&P Mid-Cap 400 stock price index.

Information about the complete line of Polaris products, apparel and vehicle
accessories are available from authorized Polaris dealers or anytime at
www.polaris.com.

Except for historical information contained herein, the matters set forth in
this news release, including management’s expectations regarding 2013 sales,
shipments, net income, net income per share, new manufacturing operations
initiatives, joint venture projects and savings in logistical and production
costs, are forward-looking statements that involve certain risks and
uncertainties that could cause actual results to differ materially from those
forward-looking statements. Potential risks and uncertainties include such
factors as the Company’s ability to successfully implement its manufacturing
operations initiatives, product offerings, promotional activities and pricing
strategies by competitors; acquisition integration costs; joint venture
projects; warranty expenses; impact of changes in Polaris stock price on
incentive compensation plan costs; foreign currency exchange rate
fluctuations; environmental and product safety regulatory activity; effects of
weather; commodity costs; uninsured product liability claims; uncertainty in
the retail and wholesale credit markets; changes in tax policy and overall
economic conditions, including inflation, consumer confidence and spending and
relationships with dealers and suppliers. Investors are also directed to
consider other risks and uncertainties discussed in documents filed by the
Company with the Securities and Exchange Commission. The Company does not
undertake any duty to any person to provide updates to its forward-looking
statements.

                     (summarized financial data follows)


POLARIS INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
(Unaudited)

                                      For Three Months Ended March 31,
                                       2013             2012
Sales                                  $  745,909        $  673,750
Cost of sales                            529,261         478,787  
Gross profit                              216,648           194,963
Operating expenses:
Selling and marketing                     54,493            45,133
Research and development                  31,450            30,466
General and administrative               38,810          35,000   
Total operating expenses                  124,753           110,599
Income from financial services           10,074          7,183    
Operating income                          101,969           91,547
Non-operating expense (income):
Interest expense                          1,473             1,512
Equity in loss of other affiliates        412               —
Other income, net                        (2,468   )       (2,577   )
Income before income taxes                102,552           92,612
Provision for income taxes               27,088          32,534   
Net income                             $  75,464        $  60,078   
Basic net income per share             $  1.10          $  0.88     
Diluted net income per share           $  1.07          $  0.85     
Weighted average shares outstanding:
Basic                                     68,793            68,637
Diluted                                   70,762            70,825
                                                                     

                                                             
POLARIS INDUSTRIES INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
                                                                
Subject to Reclassification                    March 31, 2013   March 31, 2012
                                                                
Assets
Current Assets:
Cash and cash equivalents                      $   380,750      $   285,889
Trade receivables, net                             129,332          139,626
Inventories, net                                   370,856          314,042
Prepaid expenses and other                         30,740           30,844
Income taxes receivable                            9,194            —
Deferred tax assets                               85,488          79,666
Total current assets                               1,006,360        850,067
Property and equipment, net                        274,737          219,779
Investment in finance affiliate                    56,432           44,221
Investment in other affiliates                     12,421           5,000
Deferred tax assets                                24,240           10,709
Goodwill and other intangible assets, net          105,096          78,187
Other long-term assets                            21,603          14,870
Total Assets                                   $   1,500,889    $   1,222,833
Liabilities and Shareholders' Equity
Current Liabilities:
Current portion of capital lease               $   2,627        $   2,736
obligations
Accounts payable                                   215,187          182,645
Accrued expenses:
Compensation                                       65,666           71,461
Warranties                                         40,941           40,430
Sales promotions and incentives                    109,601          84,887
Dealer holdback                                    75,659           60,407
Other                                              71,930           72,271
Income taxes payable                              18,017          167
Total current liabilities                          599,628          515,004
Long term income taxes payable                     3,616            8,120
Capital lease obligations                          3,727            5,314
Long-term debt                                     100,000          100,000
Other long-term liabilities                       62,080          45,136
Total liabilities                              $   769,051      $   673,574
Shareholders’ Equity:
Total shareholders’ equity                        731,838         549,259
Total Liabilities and Shareholders’ Equity     $   1,500,889    $   1,222,833
                                                                
Certain reclassifications of previously reported balance sheet amounts have
been

made to conform to the current year presentation.


                                            
POLARIS INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
                                              
Subject to Reclassification                   For Three Months Ended March 31,
                                              2013             2012
Operating Activities:
Net income                                    $  75,464         $  60,078
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization                    19,906            16,807
Noncash compensation                             10,351            7,066
Noncash income from financial services           (1,052   )        (743     )
Noncash loss from other affiliates               412               -
Deferred income taxes                            (1,170   )        (2,006   )
Tax effect of share-based compensation           (5,379   )        (6,484   )
exercises
Changes in operating assets and
liabilities:
Trade receivables                                (10,393  )        (23,110  )
Inventories                                      (26,897  )        (13,249  )
Accounts payable                                 46,342            35,452
Accrued expenses                                 (80,823  )        (92,236  )
Income taxes payable/receivable                  21,463            31,063
Prepaid expenses and others, net                (450     )       (13,300  )
Net cash provided by (used for) operating        47,774            (662     )
activities
Investing Activities:
Purchase of property and equipment               (40,113  )        (20,957  )
Investment in finance affiliate, net            1,607           (1,227   )
Net cash used for investing activities           (38,506  )        (22,184  )
Financing Activities:
Borrowings under capital lease obligations       119               1,319
Repayments under capital lease obligations       (750     )        (766     )
Repurchase and retirement of common shares       (25,687  )        (5,871   )
Cash dividends to shareholders                   (28,662  )        (25,328  )
Tax effect of proceeds from share-based          5,379             6,484
compensation exercises
Proceeds from stock issuances under             4,995           6,529    
employee plans
Net cash used for financing activities           (44,606  )        (17,633  )
Impact of currency exchange rates on cash       (927     )       1,032    
balances
Net decrease in cash and cash equivalents        (36,265  )        (39,447  )
Cash and cash equivalents at beginning of       417,015         325,336  
period
Cash and cash equivalents at end of period    $  380,750       $  285,889  
                                                                            

Contact:

Polaris Industries Inc.
Richard Edwards, 763-542-0500
 
Press spacebar to pause and continue. Press esc to stop.