According to the law firm press release, Polaris, together with its subsidiaries, designs, engineers, manufactures, and markets off-road vehicles, snowmobiles, motorcycles, and on-road vehicles in the United States, Canada, Western Europe, Australia, and Mexico.
On July 23, 2015, Polaris issued a recall for the Company’s model-year 2016 Youth RZR off-highway vehicle, citing fire hazards. Three other recalls of the Company’s RZR vehicles followed—in October 2015, December 2015, and April 2016—affecting more than 160,000 RZR vehicles of various model years.
Nevertheless, Polaris consistently advised investors that the Company expected full year 2016 net income to be at least $6.00 per diluted share. On January 26, 2016, Polaris issued a press release reporting full-year guidance in the range of $6.20 to $6.80 per diluted share; on April 21, 2016, Polaris issued a press release maintaining the same guidance estimate; and on July 20, 2016, Polaris issued a press release only slightly lowering and narrowing its guidance range to $6.00 to $6.30 per diluted share.
The Complaint alleges that throughout the Class Period, Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) the Company was unable to sufficiently validate the initially identified repair for certain of its recalled RZR vehicles; (ii) as a result, the Company would ultimately need to implement a more complex and expensive repair solution; (iii) the financial impact of RZR vehicle recalls was therefore greater than the Company had disclosed to investors; (iv) consequently, the Company had overstated its full-year 2016 guidance; and (v) as a result of the foregoing, Polaris’s public statements were materially false and misleading at all relevant times.
On September 12, 2016, pre-market, Polaris issued a press release announcing that the Company was lowering its full-year 2016 earnings guidance to the range of $3.30 to $3.80 per diluted share. The Company attributed the lowered guidance to the impact of RZR thermal-related problems, citing, in part, the Company’s inability “to sufficiently validate the initially identified RZR Turbo recall repair, necessitating a more complex and expensive repair solution.”
On this news, Polaris stock fell $4.05, or 5.01%, to close at $76.79 on September 12, 2016.
A consolidated complaint was filed on March 14, 2017.