Polaris shares fell 6% in premarket trading after the company, known for producing ATVs, UTVs, jet skis, and snowmobiles, surprised investors with guidance for a 65% year-over-year decline in adjusted EPS for 2025, coming in far below expectations.
Citi analyst James Hardiman told clients earlier that the downward revision was very "alarming," warning about President Trump's tariff battle with China could result in additional downward pressure for EPS for the full year.
"While management suggested on their 3Q call that a good starting point for 2025 EPS would be flat with 2024, which was guided to $3.25, at the time, management officially initiated 2025 adjusted EPS guidance at just $1.10," Hardiman said, adding his team maintained a "Neutral" rating on PII shares.
Polaris' Yearly Forecast (courtesy of Bloomberg):
Sees adjusted EPS about -65% from 2024's $3.25; estimate $3.06
Sees sales -1% to -4%
However, Polaris reported better-than-expected revenue in the fourth quarter, though sales fell 23% year-over-year to $1.76 billion. High interest rates deterred consumers from purchasing RZRs, Sportsman ATVs, and other offroad vehicles.
Here's a snapshot of the fourth quarter:
Sales $1.76 billion, -23% y/y, estimate $1.68 billion (Bloomberg Consensus)
Off Road sales $1.44 billion, -25% y/y, estimate $1.36 billion
On Road sales $180.8 million, -21% y/y, estimate $209.8 million
Marine sales $137.4 million, -4.1% y/y, estimate $118.3 million
Adjusted gross profit margin 21.1% vs. 20.8% y/y, estimate 21.3%
Cash and cash equivalents $287.8 million, -22% y/y, estimate $397.8 million
Adj. EPS 92c, estimate 90c
Covid bump ended in 4Q22.
Polaris's YoY revenue growth is the worst since GFC.
Bloomberg noted:
For 2025, expects margin headwinds from negative mix, planned reductions in production leading to negative absorption in addition to the restoration of the company's employee profit- sharing program
Primary factors affecting fourth-quarter sales were lower volume due to planned reductions in shipments as we actively managed dealer inventory in a subdued retail environment
Shares are back to Covid crash levels.
Bottoming fishing is a dangerous game...
Several months ago, Polaris CEO Mike Speetzen warned that "consumer confidence and retail demand remained challenging."
