Polaris Industries Inc. (NYSE:PII) announced third-quarter 2017 results on Tuesday morning, highlighting significant improvements in sales of its RZR side-by-side vehicles, market-share gains for its Indian motorcycle brand, and impressive bottom-line growth.

Now that the dust has settled, let's pump the brakes to get a better look at how Polaris kicked off the second half of the year, as well as what investors can expect from the company in the months ahead.

A man sitting on a Polaris Indian motorcycle that's on a field


Polaris Industries results: The raw numbers


Q3 2017

Q3 2016

Year-Over-Year Growth


$1.479 billion

$1.185 billion


Net income

$81.9 million

$32.3 million


Earnings per diluted share




Data source: Polaris Industries. 

What happened with Polaris this quarter?

  • On an adjusted basis -- which excludes expenses related to Polaris' wind-down of Victory Motorcycles -- net income climbed 189% year over year to $93.5 million, or $1.46 per share.
  • International sales grew 11% year over year to $156.8 million, including mid-single-digit percent growth in Latin America, and low double-digit growth in both the EMEA and Asia-Pacific regions.
  • Parts, garments, and accessories (PG&A) sales climbed 7%, excluding aftermarket segment sales.
  • Off-road vehicle (ORV) and snowmobile sales (including PG&A) climbed 12% year over year to $1,007.4 million, helped primarily by higher side-by-side unit shipments. 
    • ORV wholegood sales rose 13%, driven by strong RZR shipments. Both side-by-side vehicles and ATV unit retail sales increased in the mid-teens range.
    • Snowmobile wholegood sales jumped 20% year over year to $144.2 million, albeit primarily due to timing of shipments as Polaris shipped snowmobiles later in 2016.
  • Motorcycle sales (including PG&A) fell 14% year over year to $155.1 million, primarily as last year's third quarter included $39.4 million of Victory Motorcycle wholegood, accessory, and apparel sales. Indian Motorcycle sales went up in the low 20% range, with the brand's market share exceeding 10% in the month of September. This growth was partially offset by lower Slingshot sales. 
  • Global adjacent market segment sales gained 17% year over year to $91.6 million, driven by a 17% increase in work and transportation group wholegood sales on the strength of Aixam quadricycles and Goupil light-utility vehicles.
  • Aftermarket revenue increased to $224.7 million, up from $29.9 million in last year's third quarter due to the inclusion of $190.6 million in TAP sales. On a pro forma basis, TAP sales grew 4% year over year.
  • Polaris repurchased and retired 257,000 shares of stock for $23.3 million during the quarter, leaving 6.4 million remaining under its current repurchase authorization.

What management had to say

Polaris CEO Scott Wine stated:

Our emphatic return to profitable growth in the third quarter was a testament to the power of the Polaris brand, the strength of our dealer network and the competitive drive of the Polaris team. During the quarter, strong retail growth in both North America and nearly all of our International markets drove record sales and highlighted our ongoing product innovation, improving product quality and sharpened execution. [...] Results were strong throughout our portfolio, led by Indian Motorcycles' exceptional performance as they accelerated share gains and outpaced a declining North American motorcycle market while also delivering strong growth in Europe, Australia and Asia. I am particularly proud of the improved performance from our Off-Road Vehicle business, which was fueled by a well-planned and executed Factory Authorized Clearance sale and the strong reception of our model year 2018 introductions.

Wine also noted that RZR retail sales were "especially strong," and the company enjoyed its best ATV retail quarter in two years. In addition, Polaris was able to drive its significant bottom-line growth despite hurricane-related complications and higher-than-expected warranty and rework costs.

Looking forward

Polaris now expects 2017 adjusted sales to increase 18% to 19% year over year (up from previous guidance for 12% to 14% growth), which should result in adjusted net income per share in the range of $4.75 to $4.85 (up from prior guidance for $4.35 to $4.50). This marks the second time in as many quarters that Polaris has significantly increased its full-year outlook despite operating in a difficult market.

With that in mind, it was no surprise that Polaris stock revved more than 15% higher on Tuesday as the market absorbed the news. And I see no reason Polaris can't continue delivering market-beating gains if it can sustain this momentum going forward.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.