Automotive Manufacturer Polaris Shares Tumble On Q2 Earnings Miss And Guidance Cut Amid Inventory Focus

Polaris Inc. PII  shares are trading lower after the company reported worse-than-expected second-quarter financial results and cut its guidance.

The company reported adjusted earnings per share of $1.38, missing the analyst consensus of $2.23. Quarterly sales of $1.961 billion missed the street view of $2.180 billion and were down 12% year over year.

Lower volume and net pricing were the primary factors affecting sales, which were driven by higher promotional spending and partially offset by a favorable mix.

“Reducing dealer inventory is a central priority, both through intentional retaildriving efforts and adjusting our production forecasts to further cut back on dealer shipments,” said Mike Speetzen, Chief Executive Officer of Polaris.

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Adjusted gross profit margin of 21.8 percent decreased 99 basis points primarily driven by higher promotional activity, unfavorable plant absorption and higher finance interest partially offset by favorable operational costs, as compared to the second quarter of 2023.

“We have lowered our full-year guidance to reflect the decision to cut shipments and our expectations that current industry challenges remain in place for the remainder of the year,” Speetzen added.

Outlook: The company updated its 2024 sales outlook to be down 17% to 20% versus its previous outlook of down five to seven percent versus 2023. The company now expects adjusted diluted EPS attributed to Polaris common shareholders to be down 56% to 62% versus the prior outlook of down 10% to 15%.

Price Action: PII shares are trading lower by 10.6% to $73.45 premarket at last check Tuesday.

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