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Polaris Posts Record High Q3 Earnings

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Polaris Industries, Inc. (PII - Free Report) posted record high earnings from continuing operations of $1.64 per share in the third quarter of 2013, reflecting a 23% rise from $1.33 in the year-ago quarter. Earnings exceeded the Zacks Consensus Estimate by 3 cents.

Net income, excluding discontinued operations, increased 24% to $116.9 million from $94.3 million a year ago. Including income from discontinued operations, net income rose 19.9% to $113.1 million or $1.59 per share. During the quarter, Polaris recorded a post-tax loss from discontinued operations of $3.8 million or 5 cents per share due to an unfavorable lawsuit verdict related to its discontinued marine products business.

Total revenue for the third quarter of 2013 rose 25% to a record high of $1.1 billion. Revenues surpassed the Zacks Consensus Estimate of $1.05 billion.

The record breaking earnings and revenues were driven by strong demand for Polaris’ products.

Of the total revenue, revenues from off-road vehicles increased 23% to $702 million. Meanwhile, revenues from snowmobiles went up 25% to $143.6 million and revenues from small vehicles increased 188% to $31.7 million.

Revenues from parts, garments and accessories rose 37% to $176 million. However, revenues from motorcycles declined 6% to $49.4 million.

Operating expenses totaled $165.2 million, up 31% from $126.4 million in the third quarter of 2012. The increase was due to higher sales and marketing costs, increased general and administrative expenses and elevated accrued incentive compensation.

Financial Position

Polaris had cash and cash equivalents of $387.8 million as of Sep 30, 2013, down from $412.9 million as of Sep 30, 2012. Total debt decreased to $107.2 million from $107.3 million as of Sep 30, 2012. Debt-to-total capital ratio declined to 10% as of Sep 30, 2013 from 14% as of Sep 30, 2012.

In the first nine months of 2013, Polaris’ operating cash flow improved 50% to $381.8 million from $254.5 million in the prior-year period.

Looking Forward

Polaris raised its full year 2013 guidance for earnings from continuing operations to $5.30–$5.37 per share, up 20%–22% over 2012. Meanwhile, the company expects 15%–16% revenue growth in 2013.

Currently, Polaris  carries a Zacks Rank #2 (Buy). Other stocks worth considering in the industry where Polaris operates are Smith & Wesson Holding Corporation , Black Diamond, Inc. and Brunswick Corporation (BC - Free Report) . Smith & Wesson carries a Zacks Rank #1 (Strong Buy), while Black Diamond and Brunswick are Zacks Rank #2 (Buy) stocks.

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