Why Automotive Manufacturer Polaris Shares Are Falling After Q4 Earnings Today

Polaris Inc. PII reported a fourth-quarter FY23 sales decline of 5% year-on-year to $2.289 billion, above the analyst consensus estimate of $2.247 billion.

Polaris said the primary factors affecting fourth-quarter sales were lower volume, net pricing driven by higher promotional spending, and higher finance interest.

Powersports retail sales for the quarter were up 7%, driven by growth in snow and utility ORV, more than offsetting softness in On Road and Marine. 

Adjusted EPS of $1.98 missed the analyst consensus estimate of $2.57.

The adjusted gross profit margin of 21% decreased by 287 basis points, primarily driven by lower net pricing driven by higher promotional activity and higher finance interest, compared to the fourth quarter of 2022.

Operating expenses were $357 million in the fourth quarter of 2023 compared to $331 million in the fourth quarter of 2022 due to higher general and administrative expenses. 

The company held $367.8 million in cash and equivalents as of quarter end.

“As reflected in our outlook, segments of our industry are expected to remain challenged in 2024, but we believe we will continue to capture market share with our robust lineup and new products coming later this year,” said Polaris CEO Mike Speetzen.

Outlook: Polaris expects 2024 sales to be down 5%-7% year over year (sales in 2023 were $8.934 billion)—the street view pegs at $8.53 billion.

The company expects adjusted EPS to be down 10%-15% year over year (adjusted earnings per share in 2023 was $9.16). The analyst consensus stands at $8.87.

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Price Action: PII shares are trading lower by 3.14% at $89.80 on the last check Tuesday.