Despite Q1 Loss, Polaris Maintains Confidence in Weathering Recession
As the losses from the pandemic and ensuing recession begin to pour in, Medina-based Polaris Inc. is not exempt. The Minnesota Fortune 500 sports vehicle maker on Tuesday reported a net loss of $5.4 million in its first quarter compared to a net income of $48.4 million in 2019.
“Our people and our culture remain our most important strength,” Polaris CEO and chairman Scott Wine said in an earnings call. “The abrupt shutdown of global commerce was certainly a shock to our business, but our aggressive, planful response has positioned us to navigate through this lockdown and the recession to come.”
Sales were down 6 percent, although motorcycles still performed well: Quarter one saw $1,405.2 million in sales this year, as opposed to $1,495.7 million in 2019.
“With the exception of motorcycles, all segments reported lower sales during the quarter driven by the Covid-19 economic slowdown that began impacting our industry and business in the second half of March. Motorcycle’s growth was driven entirely by new products,” CFO and EVP Mike Speetzen said in the earnings call.
The company reported adjusted earnings per share of 22 cents.
“We did not anticipate the Covid-19 pandemic, or the significant stoppage of commerce that became a key part of the virus defense. But we are fighting determinedly to right our ship and deliver on our four priorities,” said Wine, who will forgo his salary for the rest of the year. “First and foremost we are committed to employee safety, next we will ensure that Polaris is viable, and then support our dealers with the goal of being a preferred partner. Finally, we will continue to be a good steward for our shareholders and stakeholders.”
Despite the loss, the company is confident about its ability to endure the recession. From January through the first bit of March, Polaris saw growth in retail sales, until it plummeted later in March, when the pandemic impact became more severe in the United States.
“We expect to generate positive free cash flow in the second quarter, and feel confident in our financial position in that we have adequate liquidity to manage through this crisis. However, we are only a few weeks into the second quarter,” said Speetzen. “This is a very fluid situation. It’s hard to predict how the restart will go in May and June. As a result, we intend to be very prudent with capital until we return to a more predictable environment.”
Right now, Polaris has had seven confirmed Covid-19 cases out of its 14,000 employees, Wine said in the call, but they are all either fully recovered or getting better at home.