Financial reports: Polaris, Husqvarna, United Rentals, Textron
Polaris sales off 23 percent
On Oct. 22, Polaris announced its third quarter 2024 financial results, stating its sales for the period were $1,722 million, down 23 percent compared to last year. Third quarter reported diluted earnings per share was $0.49, down 81 percent versus last year; adjusted diluted earnings per share was $0.73, down 73 percent versus last year.
The company cited primary factors affecting third quarter sales as lower volume, product mix, and net pricing driven by elevated promotional activity. Third quarter market share was down modestly in off-road vehicles (ORV), motorcycles, and pontoons.
Powersports retail sales for the quarter were down 7 percent versus last year driven by a decline in ORV. Polaris North America ORV unit retail sales were down three percent. Estimated North America industry ORV unit retail sales were down low-single digits percent. Sales were driven by lower volume, mix, and net pricing driven by higher promotional spend. Gross profit margin performance was driven by lower volumes, negative mix, lower net pricing driven by higher promotional activity and unfavorable plant absorption, partially offset by operational improvements.
“As consumer confidence and retail demand remain challenging, we have maintained our focus on managing dealer inventory and delivering better operational efficiency. A healthy dealer network is one of the critical components to our long-term success, which is why we have anchored our current production and shipment plans to our goal of lowering dealer inventory by 15 to 20 percent by the end of the year, and I am encouraged by the progress being made. We expect a challenging retail environment throughout the rest of 2024 and into next year. However, with our team’s unwavering commitment to industry-leading innovation, alongside the headway we’ve made in driving cost out of our manufacturing and operations, I believe the actions we are taking today will enable us to emerge stronger and deliver on our long-term targets of growth, meaningful margin expansion, and value to shareholders. — Mike Speetzen, Chief Executive Officer of Polaris Inc.
Polaris’s Outlook
The Company updated its 2024 sales outlook to be down approximately 20 percent relative to 2023 versus its previous outlook of down 17 to 20 percent relative to 2023. The Company now expects adjusted diluted EPS attributed to Polaris Inc. common shareholders to be down approximately 65 percent relative to 2023 versus the prior outlook of down 56 to 62 percent.
Husqvarna sales drop by 7 percent
On Oct. 23, Husqvarna announced its third quarter 2024 financials, citing “growth in the strategic areas, robotics and battery,” while also mentioning the impact of “planned exits of low-margin petrol-powered business have been completed, with no sales impact in the quarter.”
From its headquarters in Stockholm, Sweden, Husqvarna reported that net sales decreased by 7% to SEK 9,739 MM, that’s down from SEK 10,512 MM. (Note, 1 SEK equals $0.09 USD). Changes in exchange rates impacted by -3%. Organic sales decreased by 4%.
What does the financial world mean by “organic sales“?
For the year to date (January – September 2024), Husqvarna reported its net sales decreased by 11% to SEK 39,888m (down from SEK 44,655). Changes in exchange rates impacted by -1%. Planned exits of low-margin petrol-powered business impacted with -3%. Organic sales decreased by 7%.
CEO statement
“In the third quarter, we delivered growth in our strategic focus areas robotic mowers and battery-powered products, as well as a strong cash flow. However, organic sales for the Group decreased by 4%, which reflects a challenging market situation with restrained consumer spending.”
“Organic sales in the Husqvarna Forest & Garden Division (Note: that’s the power equipment sold worldwide) decreased by 1%. We grew in robotic mowers, in both the professional and residential markets as well as in battery-powered products. The division achieved growth in Europe, while the business decreased in North America.”
“Organic sales in the Gardena Division (Note: Gardena-branded tools and equipment for residential buyers outside the U.S.) decreased by 8%, with good performance for hand tools and battery-powered products. However, sales of watering products decreased during the start of the quarter, due to challenging weather conditions, but improved gradually.”
“In the Husqvarna Construction Division, organic sales decreased by 8%. The challenging market situation, with weak demand in North America continued, while sales in Europe grew.”
“Further mitigating activities to reduce fixed costs and enhance efficiency across the Group are announced today. Savings will amount to SEK 500m, with the majority realized in 2025. As part of this plan, the Group expects to reduce 400 positions. Non-recurring costs related to these savings are expected to amount to SEK 600m and will be recognized in the fourth quarter. We are committed to identifying and implementing additional efficiency measures to further enhance our operational structure and effectiveness.”
“Despite the challenging environment, we are focused on executing our strategy and positioning the Group for long-term value creation. We continue to invest in our growth areas and look forward to our ambitious product launch program for the gardening season 2025. This will feature a wide range of new products, including 13 new robotic mower models equipped with the latest generation of intelligence and boundary wire free navigation.” – Pavel Hajman, CEO
Half of the 400 job cuts referenced by Husqvarna’s CEO are reportedly in Sweden. The company said, during the earnings call, “The 400 positions affected will be across all divisions and central functions globally. The focus is on back-end operations, such as administration and R&D consolidation, rather than front-end sales positions.”
Following sales gains through the pandemic, Husqvarna has struggled to maintain sales momentum, and job cuts have continued. In October 2022, the company said it needed to cut 1,000 jobs as part of a restructuring and a shift away from its low-margin gas-powered products. Last year, it announced another job cuts due to its decision to “consolidate the Nashville, Ark., production facility into the Sao Carlos, Brazil, Changzhou, China, and Orangeburg, SC facilities. These actions will affect approximately 650 positions in Nashville. The process will take place over the next 18 months,” it said in a 2023 statement.
United Rentals up 7 percent
On Oct. 23, United Rentals, Inc. announced financial results for the third quarter of 2024. Rental revenue increased 7.4% year-over-year to a third quarter record of $3.463 billion; the company’s total revenue for the period was $3.992 billion. Fleet productivity increased 3.5% year-over-year including the impact of the Yak acquisition and increased 1.9% excluding the impact of the Yak acquisition, while average original equipment at cost increased 3.8%.
Used equipment sales in the quarter decreased 12.3% year-over-year. Used equipment sales generated $321 million of proceeds at a GAAP gross margin of 45.2% and an adjusted gross margin9 of 49.5%. The year-over-year declines in the GAAP and adjusted gross margins primarily reflected the continued normalization of the used equipment market, including pricing.
Adjusted EBITDA for the quarter increased 2.9% year-over-year to a third quarter record of $1.904 billion, while adjusted EBITDA margin decreased 140 basis points to 47.7%. The decrease in adjusted EBITDA margin primarily reflected a decrease in adjusted gross margin from used equipment sales and increased SG&A expenses as a percentage of revenue, both of which are discussed above.
CEO Comment
Matthew Flannery, chief executive officer of United Rentals, said, “We were pleased with our record third-quarter results, which were in-line with our expectations and reflected continued growth across both our construction and industrial end-markets. Our one-stop shop strategy, supported by world-class service and innovative solutions, is helping our customers achieve their goals across safety, productivity and sustainability. The hard work of our dedicated team members enables us to continue to lead the industry.”
Textron Industrial down nearly 10 percent
On Oct. 24, Textron Inc., the parent company of a range of brands including Jacobsen, E-Z-Go, Cushman and Bell Helicopters among others, reported its third quarter 2024 financials. The company reported total revenue for the quarter of $3,427 million, a slight gain over the $3,343 million in revenue it reported in Q3 2023. For the year to date, Textron reported revenue of $10,089 million, up from the $9,791 in YTD revenue it reported in 2023. The majority of Textron’s revenue comes from it Aviation and Bell brands, which combined for a reported $2.25 billion in revenue in Q3 2024.
Industrial
The company’s Industrial – including Jacobsen, Cushman, EZ Go, Arctic Cat and others – counted revenue of $840 million for Q3 2024, down $82 million from last year’s third quarter. Segment profit of $32 million was down $19 million from the third quarter of 2023, primarily due to lower volume and mix.
On the earnings call, CEO Scott Donnelly said, “The (Industrial) segment experienced lower revenues and operating profit in the quarter, driven by continuing softness in Specialized Vehicles end markets. Specialized Vehicles continue to take cost actions to align with lower production volumes.”
He continued during the Q&A, “So, on the Industrial front … we’ve seen softness all year. We’ve talked about that each quarter. So, I think as we’ve revised the guidance, beyond just giving color, we’re trying to give you guys some specific in each one of the segments. And so, I think our expectation right now is that those softnesses in that end market are going to continue. As we’ve talked about in previous quarters, we’re just cutting way back on production volume. We don’t want to put stuff out in the channel. I don’t think deal is one thing is in the channel until we get better perspective and view on where things are going in terms of interest rates and their end market.”
