Polaris Rides On: Fool by Numbers

On April 12, all-terrain-vehicle, snowmobile, and motorcycle manufacturer Polaris Industries (NYSE: PII  ) released first-quarter results for the period ended March 31.

• Weakening demand for ATVs, Polaris' leading product, contributed to a 4% drop in net sales.
• While still in the red, cash flow from operations did improve, primarily from lower accounts receivable and fewer cash payments against accrued expenses.
• Management's outlook for 2007 remains gloomy, with expected sales growth of 1% to 3% as dealers continue to lower their inventories.
• Polaris, along with peer Arctic Cat (Nasdaq: ACAT  ) , carries a lowly one-star rating in The Motley Fool's CAPS community. In contrast, eco-friendly automobile giant Honda (NYSE: HMC  ) , a rival in the ATV segment, boasts a full five-star rating. Find out why Honda has an opportunity to ride high as the best international stock for 2007.      

(Figures in thousands, except per-share data)

Income Statement Highlights

	Avg. Est.	Q1 2007	Q1 2006	Change
Sales	$311,640	$317,713	$333,509	(4.7%)
Net Profit	--	$12,393	$11,530	7.5%
EPS	$0.32	$0.34	$0.27	25.9%
Diluted Shares		36,552	43,124	(15.2%)

Get back to basics with a look at the income statement.

Margin Checkup

	Q1 2007	Q1 2006	Change*
	20.44%	20.21%	0.23
	5.05%	4.82%	0.23
	3.90%	3.46%	0.44

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets	Q1 2007	Q1 2006	Change
Cash + ST Invest.	$45,115	$10,913	313.4%
Accounts Rec.	$51,957	$60,712	(14.4%)
Inventory	$236,739	$220,005	7.6%

Liabilities	Q1 2007	Q1 2006	Change
Accounts Payable	$105,795	$97,959	8%
Long-Term Debt	$243,000	$80,000	203.8%

The balance sheet reflects the company's health.

Cash Flow Highlights

	Q1 2007	Q1 2006	Change
Cash From Ops.	($15,007)	($43,752)	(65.7%)
Capital Expenditures	$14,307	$14,023	2%
Free Cash Flow	($29,314)	($57,775)	(49.3%)

Free cash flow is a Fool's best friend.

Related Foolishness:

• Warren Buffett's Priceless Investment Advice
• Foolish Forecast: Polaris Launches a New Year
• 70 Times Better Than the Next Microsoft

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.