Polaris Industries Inc. (NYSE:PII) Q1 2015 Earnings Conference Call Transcript

Apr 23, 2015 • 10:00 am ET

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Polaris Industries Inc. (NYSE:PII) Q1 2015 Earnings Conference Call Transcript

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Operator
operator

Good morning. My name is Susan, and I will be your conference operator today. At this time, I would like to welcome everyone to the Polaris First Quarter and Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions).

Mr. Richard Edwards, Director of Investor Relations. You may begin your conference.

Executive
Richard Edwards

Thank you, Susan and good morning and thank you for joining us for our first quarter 2015 earnings conference call. A slide presentation is accessible at our website at www.polaris.com/irhome, which has additional information for this morning's call.

The speakers today are Scott Wine, our Chairman and Chief Executive Officer; Bennett Morgan, our President and Chief Operating Officer; and Mike Malone, our Chief Financial Officer, Ken Pucel, our Executive Vice President of Operations, Engineering, and Lean is also here and is available to answer questions.

(Forward-Looking Cautionary Statements).

Now, I'll turn it over to CEO, Scott Wine. Scott?

Executive
Scott Wine

Thanks, Richard. Good morning and thank you for joining us. With a great deal of ups, downs and noise impacting our business in industry. I'm simply going to refer to the start of the year as first quarter as a quarter of excess. We exceeded our sales and earnings targets, although the beat would have been notably better ex-currency. But once again, we did not execute nearly as well as we could or should.

Retail sales were below expectations which partially contributed to excess inventory at our dealers and on our balance sheet. We too often fell short of our own high expectations requiring explanations of how we will improve. We will not make excuses, but we will rely on extraordinary talented team to deliver exciting performance, our stakeholders expect.

First quarter revenue was up 16% to a record $1.03 billion. A strong global demand for motorcycles and improved availability of off-road vehicles, offset of volume and currency driven sales decline in EMEA. In North America, we saw mixed consumer demand for much of the quarter. With regional weakness and an elevated competitive environment combining to limit overall first quarter retail sales growth to 8%, which is actually our best first quarter retail performance in the past three years.

Motorcycle retail was especially strong with Indian and Victory combined up nearly 40% and overall motorcycle retail including Slingshot up over 100%. This dramatic increase in motorcycle retail sales would have been even higher if production issues had not restricted shipments for much of the quarter.

Operating profit was up 19% in the first quarter surpassing sales growth, as we exercise control over operating expenses still up 11%. It felt good to reap the rewards of our heavy OpEx investment over the past few years. Although no one should be concerned that we are curtailing our growth focus. We are merely slowing our operating expense growth from a torrid government-like pace.

Net income rose 9% yielding record earnings per share of a $1.30. We closed