PowerSports Business

August 14, 2017

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FINANCIAL Polaris Industries Inc. on July 20 reported second quarter 2017 sales of $1,364.9 million, up 21 percent, from $1,130.8 million for the second quarter of 2016. Adjusted sales, which excludes the impact from Victory Motorcycles net sales for the second quarter of 2017, were $1,358.8 million compared to $1,130.8 million in the prior year period. The company reported second quarter 2017 net income of $62.0 mil- lion, or $0.97 per diluted share, compared with net income of $71.2 million, or $1.09 per diluted share, for the 2016 second quarter. The reported net income included costs related to the wind down of Vic- tory Motorcycles, cer- tain Transamerican Auto Parts (TAP) integration and inventory step up costs, and manufactur- ing network realignment costs. Adjusted net income for the quarter ended June 30, 2017, excluding these costs, was $73.9 million, or $1.16 per diluted share. "Performance improved in many parts of our business during the quarter, particularly within our international and PG&A busi- nesses," said Scott Wine, chairman and chief executive officer of Polaris Industries. "The powersports industry remained very com- petitive, 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 Motor- cycles. In a weak motorcycle industry, Indian continues to demonstrate how a complemen- tary combination of exciting new bikes, strong dealer execution and overall brand momentum can prevail. Dealer engagement is a corporate priority and from profitability to delivery and communications, the consistent progress we are making is augmenting our retail results. 10 • August 14, 2017 • Powersports Business www.PowersportsBusiness.com Wine: 'Performance improved' in Polaris Q2 STOCK MARKET WATCH DEALER FINANCIAL SNAPSHOT JUNE 2017 Same Store Sales for 1,644 CDK Global Recreation dealers were down 1 percent overall in June, in comparison to the same period in 2016. The ser- vice department was up 1.5 percent overall, and it increased in all five regions. The Northwest and West both saw increases in all four categories. The North- east had the largest decrease, down 5.5 percent overall and 6.5 percent down in major unit sales. PARTS SALES Parts sales saw 747 dealers up and 897 down. SERVICE SALES 856 dealers were up in service, while 746 were down. MAJOR UNIT SALES In major unit sales, 663 dealers were up, and 736 were down. NORTHWEST 4.7% Parts Department 1.4% Service Department 2.0% Major Units 2.2% Overall MIDWEST -0.6% Parts Department 2.9% Service Department -0.8% Major Units -0.2% Overall NORTHEAST -4.6% Parts Department 0.3% Service Department -6.5% Major Units -5.5% Overall SOUTH -4.4% Parts Department 1.5% Service Department -3.3% Major Units -2.6% Overall WEST 2.0% Parts Department 0.9% Service Department 3.3% Major Units 2.6% Overall UNITED STATES -1.2% Parts Department 1.5% Service Department -1.5% Major Units -1.0% Overall Stock Price Percent Company Ticker 7/21/17 Change ARI Network Services, Inc. ARIS $7.05 9.5% ArvinMeritor ARM $17.78 9.4% Cooper Tire & Rubber CTB $38.60 8.0% Polaris Industries, Inc. PII $94.33 6.7% CDK Global CDK $65.09 4.5% Intl. Speedway Corp. Cl. A ISCA $34.75 -2.9% General Electric Co. GE $25.91 -10.0% Harley-Davidson, Inc. HOG $48.26 -13.0% MarineMax, Inc. HZO $14.65 -20.8% Spy Inc. XSPY $0.05 -54.5% POWERSPORTS BUSINESS WINNERS AND LOSERS See Harley Q2, Page 11 MARKET WATCH Change 7/21/17 from 6/16 % Change Powersports Business Index 276.998 7.98 2.97% Dow Jones Index 187.700 1.70 0.92% S&P 500 Index 168.286 2.67 1.62% Source: Wells Fargo Securities LLC 0 50 100 150 200 250 300 12/2/16 12/30/16 1/20/17 2/22/17 3/10/17 4/7/17 5/4/17 5/19/17 6/16/17 7/21/17 PSB INDEXED DOW JONES INDEXED S&P 500 INDEXED STOCK MARKET ACTIVITY FOR MORE ON THE SAME STORE SALES DATA For more information on this report and other industry data, contact: cdkrecreation.com/dataservices See Polaris Q2, Page 11 H-D Q2 U.S. retail sales drop 9 percent Harley-Davidson, Inc. reported its second quarter 2017 results, with worldwide motor- cycle retail sales seeing a 6.7 percent decrease as compared to the same period in 2016. The company's diluted EPS decreased 4.5 percent to $1.48 compared to $1.55 in the second quarter of 2016. Second quarter net income was $258.9 million on consolidated revenue of $1.77 billion versus net income of $280.4 mil- lion on consolidated revenue of $1.86 billion for the same period in 2016. "We are pleased with our ability to deliver strong margins in the quarter despite challeng- ing market conditions, particularly in the U.S.," said Matt Levatich, presi- dent and CEO, Harley- Davidson. "Given U.S. industry challenges in the second quarter and the importance of the supply and demand bal- ance for our premium brand, we are lowering our full-year shipment and margin guidance." Harley-Davidson retail motorcycle sales in the U.S. were down 9.3 percent compared to the year-ago quarter, with the overall U.S. industry down for the same period. Harley- Davidson's U.S. market share for the quarter was 48.5 percent in the 601cc-plus segment. Harley-Davidson's international retail sales decreased 2.3 percent compared to the second quarter in 2016. Through six months, Harley-Davidson's 2017 diluted EPS was $2.53, down 13.1 per- cent from $2.91 in the year-ago period. For the first six months, Harley-Davidson's 2017 SCOTT WINE MATT LEVATICH

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