Polaris Industries Inc. increased fourth-quarter sales 14 percent to $1.6 billion, with the Boat Holdings acquisition adding $145 million of sales for the quarter.
The company reported fourth quarter 2018 net income of $91 million, or $1.47 per-diluted-share, compared with net income of $31 million, or $0.49 per-diluted-share, for the 2017 fourth quarter.
Adjusted net income was $113 million, or $1.83 per-diluted-share, up 14 percent and 19 percent respectively, compared to $100 million, or $1.54 per-diluted-share.
Boats segment sales, which consist of the Boat Holdings acquisition that closed July 2, were $145 million, slightly exceeding company expectations. Gross profit was $26 million or 17.9 percent of sales in the fourth quarter of 2018.
“Growth and market share gains in off-road vehicles, and the acquisition of Boat Holdings, further expanded our position as the global leader in powersports, and established Polaris as a leader in the attractive, profitable and growing pontoon market,” said Polaris CEO Scott Wine in a statement.
“We are encouraged by our growth prospects for 2019 and beyond, but keenly aware of, and prepared for, the challenges and uncertainties presented by global trade and economic complications,” said Wine.
Gross profit increased six percent to $391 million for the fourth quarter of 2018 from $368 million in the fourth quarter of 2017. Reported gross profit margin was 24 percent of sales for the fourth quarter of 2018 compared to 25.7 percent of sales for the fourth quarter of 2017.
Operating expenses increased three percent for the fourth quarter of 2018 to $272 million, or 16.7 percent of sales, from $264 million, or 18.4 percent of sales, in the same period in 2017.
Operating expenses in dollars increased primarily due to the Boat Holdings acquisition completed during the third quarter of 2018 and investments in strategic projects.
Adjusted sales for 2019 are expected to increase in the range of 11 percent to 13 percent, and adjusted net income is expected to be in the range of $6.00 to $6.25 per-diluted-share for the full year 2019, compared to adjusted net income of $6.56 per-diluted-share for 2018.
The full year earnings guidance includes the impacts of tariffs remaining at 10 percent for the year, adverse foreign exchange impacts, and higher interest rates, totaling approximately $1.50 per-diluted-share, on a combined basis. Absent these items, Polaris says it expects to generate positive earnings growth on a year-over-year basis.