Polaris' motorcycles segment sales, including PG&A, totalled $197 million, up +15 percent compared to the second quarter of 2018, driven by strength in Indian sales, particularly the new FTR1200 motorcycle, which began shipping globally in the second quarter, offset by declines in Slingshot sales. Gross profit for the second quarter of 2019 was $27m compared to $25m in the second quarter of 2018. The increase in gross profit was primarily the result of higher volume mostly offset by increased tariff costs.
North American consumer retail sales for the Polaris Indian motorcycles decreased high-single digits percent during the second quarter of 2019 in a weak mid to heavyweight two-wheel motorcycle industry that was down low double digits percent. Indian outperformed the market with modest market share gains in North America during the quarter, driven by retail sales of its new mid-size bike, the race-inspired FTR1200, which has experienced strong initial demand both in North America and internationally.
North American consumer retail sales for Polaris' motorcycles segment, including both Indian Motorcycles and Slingshot, decreased mid-teens percent during the second quarter of 2019, while the North American motorcycle industry retail sales for mid to heavyweight motorcycles, including three-wheel vehicles, was down mid-single digits percent in the second quarter of 2019.
"Our second quarter results reflect the deft leadership and disciplined execution of our Polaris team. We worked diligently to overcome the impacts of tariffs, a very wet spring and an aggressive promotional environment, delivering financial results slightly favourable to expectations, but trailing our long-term performance goals," said Scott Wine, Chairman and Chief Executive Officer of Polaris Industries Inc.
"The strength of our industry-leading brands and vehicles enabled us to gain share in Indian Motorcycles and drive growth in Side-by-Sides with RANGER and RZR, although our decision to assume price leadership did impact volume, specifically in our lower margin youth and value segments.
"We are encouraged by our market share gains and year-to-date growth in Boats, as well as the continued improvement at TAP, where retail store sales growth was up nicely. Our operational and dealer fundamentals are in good shape as we head into the critically important model year 2020 product introductions, and we anticipate improved retail performance during the second half of the year."
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| Scott Wine, Chairman and Chief Executive Officer of Polaris Industries Inc. |
North American Side-by-Side retail sales increased low-single digits percent for the quarter compared to last year; Indian retail sales were down high-single digits percent, outperforming the industry and gaining share in an extremely challenging market.
Polaris has reported second quarter 2019 net income of $88m, or $1.42 per diluted share, compared with net income of $93m, or $1.43 per diluted share, for the 2018 second quarter. Adjusted net income for the quarter ended June 30, 2019 was $107m, or $1.73 per diluted share compared to $115m, or $1.77 per diluted share, in the 2018 second quarter.
Gross profit increased +13% to $436m for the second quarter of 2019 from $385m in the second quarter of 2018. Reported gross profit margin was 24.5% of sales for the second quarter of 2019 compared to 25.6% of sales for the second quarter of 2018. Gross profit for the second quarter of 2019 includes the negative impact of $7m of restructuring and realignment costs. Excluding these costs, second quarter 2019 adjusted gross profit was $443m, or 24.9% of adjusted sales.
ORV wholegood sales for the second quarter of 2019 increased four percent primarily driven by increased average selling prices. Polaris North American ORV retail sales decreased low-single digits percent for the quarter, with Side-by-Side vehicles up low-single digits percent and ATV vehicles down high-single digits percent. Shipment unit volume was down during the quarter, in-line with retail sales declines as the Company's retail flow management process (RFM) performed as designed. The North American ORV industry was up high-single digits percent compared to the second quarter last year, partly driven by new competitive product not in the market a year ago.
For the full year 2019, the Company is narrowing its earnings guidance range by increasing the lower end to $6.10 per diluted share and maintaining the upper end at $6.30 per diluted share, including the impact of the China 301 list 3 tariff rate increasing from 10% to 25% effective May 2019, and the benefit of the Company's tariff mitigation actions. The Company is also narrowing its full year 2019 sales guidance range and now expects sales to grow in the range of 12% to 13% compared to the prior year.
