Polaris Industries Inc. (NYSE:PII) announced slightly better-than-expected second-quarter 2017 results on Thursday morning, thanks to broad-based improvements across the business, even with continued powersports market headwinds. Let's take a deeper look at what the motorcycle and off-road vehicle (ORV) specialist accomplished in its latest quarter, as well as what investors can expect for the remainder of the year.

Polaris Indian Roadmaster motorcycle

IMAGE SOURCE: POLARIS INDUSTRIES VIA BUSINESSWIRE.

Polaris Industries results: The raw numbers

Metric

Q2 2017

Q2 2016

Year-Over-Year Growth

Sales

$1.365 billion

$1.131 billion

20.7%

Net income

$62.0 million

$71.2 million

(12.9%)

Earnings per diluted share

$0.97

$1.09

(11%)

Data source: Polaris Industries.

What happened with Polaris this quarter?

  • On an adjusted basis -- which excludes expenses from the wind-down of Victory Motorcycles and Polaris' acquisition of Transamerican Auto Parts (TAP) -- net income increased 6.4%, to $73.9 million, or $1.16 per share, slightly above management's expectations.
  • International revenue climbed 12% year over year, to $191.2 million, including double-digit percentage gains in all segments.
  • Parts, garments, and accessories (PG&A) sales rose 4%, excluding aftermarket-segment sales.
  • ORV and snowmobile segment sales grew 6% year over year, to $845.5 million, thanks to improved ORV side-by-side shipments. ORV wholegood sales also rose 6%, as Polaris started shipping RZR vehicles at a more normalized rate as the impact of previous recalls waned.
  • Motorcycle segment sales fell 13% year over year, to $198 million, including $6.2 million of Victory motorcycle wholegood, accessory, and apparel sales -- down from $54 million in last year's second quarter.
    • Indian motorcycle sales "increased significantly" thanks to new-product introductions and brand-awareness initiatives, but were offset by lower Slingshot volumes.
  • Global adjacent markets sales rose 7%, to $97 million, including a 13% gain in work and transportation group revenue driven by higher sales to commercial customers and strength in both Aixam quadricycles and Goupil light-utility businesses.
  • Aftermarket sales jumped to $224.4 million, up from $12.1 million in the same year-ago period, driven by the inclusion of TAP's results. TAP, for its part, increased revenue 6% on a pro forma basis.
  • Repurchased 502,000 shares of common stock for $43.8 million, leaving 6.7 million shares remaining under Polaris' current buyback authorization.

What management had to say

Polaris CEO Scott Wine stated:

Performance improved in many parts of our business during the quarter, particularly within our international and PG&A businesses. The powersports industry remained very competitive and headwinds persist, but we were encouraged by the return to growth in our Side-by-Side business and continued strength and aggressive share gains for Indian Motorcycles. [...] We still have a lot of work to do, but we are seeing results from the strong and sustainable improvements we are making to the fundamentals of our business, as we establish the foundation of a renewed growth platform.

Looking forward

Polaris also made some positive changes to its full-year 2017 guidance. As it stands, the company expects revenue to increase 12% to 14% over 2016 (up from 10% to 13% previously), which should translate to adjusted net income in the range of $4.35 to $4.50 per share (compared to $4.25 to $4.50 per share before).

In the end, putting aside the tough market conditions Polaris continues to endure, there was little not to like about this quarterly beat and raise. It's no surprise to see Polaris shares up modestly on the news.

Steve Symington has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Polaris Industries. The Motley Fool has a disclosure policy.