Victory Motorcycle Sales Surge 83% in Q1

If you’re looking to exchange a few thousand dollars for stock in a growing powersports brand perhaps Polaris should be your first consideration.  The American company which sells ATV’s,side by sides,  snowmobiles, Victory and KTM motorcycles enjoyed an overall  16% increase in sales to $361.7 million from last year’s first quarter.  Polaris Industry Inc, (PII 64.47, +4.58, +7.65%) released a report today in which all of its numbers were up across the board from the first quarter of 2010.

When other OEM’s were cutting back on advertising and laying off workers, Polaris took advantage of weaker competitors and forged ahead.

“Our first quarter results demonstrate that the investments we made throughout the economic downturn have prepared us well to accelerate growth in 2010. Our first quarter sales and earnings growth exceeded our expectations driven by solid execution of our long-term strategy, which includes successfully developing and marketing innovative new products and improving operational efficiencies across our business,” commented Scott Wine, Polaris’ Chief Executive Officer.

Victory Sales Increase 83% Over Last Year

Continuing agressive advertising campaigns, and innovative new motorcycle lines help push sales of the On-Road division, which primarily consists of Victory motorcycles, to an 83% increase during the first quarter of 2010 when compared to the same period in 2009. This marks the 2nd straight quarter of market share gains and retail sales growth for Victory and reflects the acceptance of the new model year 2010 motorcycles including the new Cross Country(TM) and Cross Roads(TM) touring models.

The heavyweight cruiser and touring motorcycle industry remained weak during the quarter, but Victory continued to benefit from aggressive and innovative efforts to accelerate growth. Victory motorcycles had strong retail sales during the 2010 first quarter, increasing in the mid-teens percent range in North America compared to the first quarter last year, resulting in market share gains for the quarter. North American dealer inventory of Victory motorcycles declined 25 percent in the 2010 first quarter compared to 2009 comparable levels.

First Quarter Performance Summary

(in thousands except per share data)

Three Months ended March 31,2010

Product line Sales 2010 2009 Change

Off-Road Vehicles $ 250,403 $ 215,461 16 %

Snowmobiles 5,554 8,166 -32 %

On-Road/Victory Motorcycles 25,353 13,836 83 %

Parts, Garments & Accessories 80,398 74,561 8 %

Total Sales $ 361,708 $ 312,024 16 %

Gross profit $ 94,914 $ 76,434 +24 %

Gross profit as a % of sales 26.2 % 24.5 % +170 bpts

Operating expenses $ 67,234 $ 58,047 +16 %

Operating expenses as a % of sales 18.6 % 18.6 % —

Operating Income $ 31,936 $ 22,791 +40 %

Operating Income as a % of sales 8.8 % 7.3 % +150 bpts

Net income $ 19,771 $ 8,458 +134 %

Net income as a % of sales 5.5 % 2.7 % +280 bpts

Diluted net income per share $ 0.59 $ 0.26 +127 %

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