Indian Motorcycles upbeat on 2018 outlook at 2Q stage

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Indian Motorcycles – owned by Polaris Industries –  saw a mid single digit bump in unit sales in 2Q18. Gross profit was up 17% in the m/cycles segment although some funnies in the like for likes with the wind down of the Victory brand. Slingshot soft. Polaris Off Road Vehicles strong. Group 2Q ahead of market expectations, even factoring in the buyback and retirement of around 2.2% of outstanding shares in 2Q.

Exciting new launches like the Indian FTR1200 flat tracker next year will keep the registers ticking over. Scout series continues to do well. Heavier Indians finding it tougher going which is in line with market trends. Doing well with limited editions.

Polaris see the Indian brand performing strongly in international markets and expect momentum to improve over the year. Indian market share growing in domestic (at the expense of H-D) and international markets including Europe. Expect a $40mn impact from tariffs across all Polaris lines.

Share Buyback Activity: During the second quarter of 2018, Polaris repurchased and retired 1,429,000 shares of its common stock for $177 million. Year-to-date through June 30, 2018, it has repurchased and retired 1,562,000 shares of its common stock for $192 million. As of June 30, 2018, the company has authorization from its Board of Directors to repurchase up to an additional 4.9 million shares of Polaris common stock equivalent to c.10% of outstanding.

Indian had a contrasting set of results vs Harley. Both complaining of sluggish domestic market in big bikes but Indian remaining the more agile of the two with innovation. FTR1200 will hit it out of the park.

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