Polaris Inc. · NYSE:PII
Polaris — Q2 2021 Earnings Presentation
26 slides from Polaris's earnings presentation, Jul 27, 2021
Slide 1: Second Quarter 2021 Earnings Presentation
Second Quarter 2021 Earnings Presentation July 27, 2021
Slide 2: Safe Harbor & Non-GAAP Measures
Safe Harbor & Non-GAAP Measures Except for historical information contained herein, the matters set forth in this presentation, are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Pote
Slide 3: Mike Speetzen, Chief Executive Officer
Mike Speetzen Chief Executive Officer Second Quarter 2021 Earnings Results July 27, 2021
Slide 4: Second Quarter 2021 Summary
Second Quarter 2021 Summary • Company exceeded financial expectations for the quarter • Retail demand remained strong, customer pre-orders are at all-time highs • New customer growth continues at record levels • Market share gains continued: ATVs, Side-by-Sides, Boats • PG&A and International grew s
Slide 5: Q2 2021 North American Powersports Retail Sales
Q2 2021 North American Powersports Retail Sales vs. Q2 2020 vs. Q2 2019 Q2 2021 Retail & Market Share year-over-year % change (in units) • Polaris Q2’21 N.A. retail down 28% o On a two-year basis, retail sales up 14% to Q2 2019 high- Total Polaris mid- twenties % N.A. R etail Sales (1) teens % • N.A
Slide 6: North American Dealer Inventory
North American Dealer Inventory Total N.A. Dealer Inventory N.A. Dealer Inventory by Business (in units) Note: Excludes Boats (77%) Q2 2021 vs. Q2 2020 2-year pre-COVID basis Q2 2021 vs. Q2 2019 (Q2 2021 vs. Q2 2019) ORV Snow Motorcycles 0% (57%) ~(40%) On-going Strong Dem and & ~(45%) Supply Chain
Slide 7: Dealer Pre-sold Orders / Shipment Distribution
Dealer Pre-sold Orders / Shipment Distribution ORV Open Pre-sold Orders ORV Shipments by Region I ncreased from ~3% of 2019 2020 2021 YTD pre-COVI D m onthly retail sales levels to ~80% at the end of Q2 Q1 Q2 Q3 Q4 Q1 Q2 Great Lakes, Mid-Atlantic, Rocky Mountain 2020 2020 2020 2020 2021 2021 Northea
Slide 8: ORV Sourcing Challenges / Capacity Utilization
ORV Sourcing Challenges / Capacity Utilization Manufacturing Capacity Utilization Sourcing Challenges Top Challenges Unconstrained Available Capacity • COVID pressures continue offshore Adding OR V o Primary challenges in India and SE Asia Holidays/ Factory Capacity in scheduled I nventory M onterre
Slide 9: New Customer Growth
New Customer Growth 2021 Customer Mix New Customer Growth Trends (in units) Existing New Custom er M ix Owners 30% R em ains at Sim ilar New Levels as 2020 Customers 70% 1H 2019 1H 2020 1H 2021 New Customers Remain a Key Driver of Retail Growth Q2'21 Earnings 7/27/21 9
Slide 10: Bob Mack, Chief Financial Officer
Bob Mack Chief Financial Officer Second Quarter 2021 Earnings Results July 27, 2021
Slide 11: Q2 2021 Financial Results
Q2 2021 Financial Results Sales Net Income (Loss) Earnings Per share $ in billions $ in millions Q2 ’20 Q2 ’21 Q2 ’20 Q2 ‘21 Q2 ’20 Q2 ’21 YoY % Chg. GAAP 40% Significantly Significantly $1.512 $2.117 ($235) $158 ($3.82) $2.52 40% Significantly Significantly $2.117 $169 $2.70 $1.510 ADJUSTED* YoY %
Slide 12: Q2 2021 Segment Sales & Gross Profit Margins
Q2 2021 Segment Sales & Gross Profit Margins ORV/Snowmobiles Motorcycles Global Adjacent Markets Aftermarket Boats* 38% 50% $1,314 $212 98% 15% 49% $154 $240 $953 $208 $198 Q2 2021 Sales ($ in millions) $141 $78 $132 Q2 2020 Q2 2021 Q2 2020 Q2 2021 Q2 2020 Q2 2021 Q2 2020 Q2 2021 Q2 2020 Q2 2021 Com
Slide 13: Full Year 2021 Sales & EPS Guidance
Full Year 2021 Sales & EPS Guidance* Total Company Adjusted* Sales Guidance Adjusted* Earnings Per Share Guidance $ in millions 19% to 21% 21% to 24% $8,375 to $8,500 $9.35 to $9.60 (narrow ed) (increased) $7,025 $7.74 FY 2020 FY 2021 FY 2020 FY 2021 Actual Guidance Actual Guidance • Full-year power
Slide 14: 2021 Sales & Adjusted Earnings Cadence
2021 Sales & Adjusted Earnings Cadence Sales Adjusted* Earnings Per Share $ in millions 2020 2021 2020 2021 Up mid to 309% high- $6.22 single digits % Down high- 41% single digits $4,110 $4,068 $4.99 to low- teens % Input costs Volume Volume (components, labor, $2,915 Promotional Costs Pricing (May
Slide 15: Full Year 2021 Sales Guidance by Segment
Full Year 2021 Sales Guidance by Segment Global Adjacent ORV/Snowmobiles Motorcycles Markets Aftermarket Boats International low- thirties % (increased) high- $841 Supplemental Sales Data ($ in millions) teens % high- (unchanged) single Segment Sales ($ in millions) digits % $4,533 low- (increased)
Slide 16: Financial Position & Liquidity Profile
Financial Position & Liquidity Profile Capital Summary YTD June 2021 Liquidity Profile $ in millions $ in millions Variance to June 2021 June 2020 Cash $289 -47% Debt /Finance Lease Obligations $1,331 -31% Shareholders’ Equity $1,121 +49% Total Capital $2,452 -9% Credit Revolver – Capacity $1,000 +4
Slide 17: Mike Speetzen, Chief Executive Officer
Mike Speetzen Chief Executive Officer Second Quarter 2021 Earnings Results July 27, 2021
Slide 18: Final Thoughts
Final Thoughts • We continue to effectively manage a challenging environment • Demand for our products remains strong • Supply chain challenges expected to continue • Product innovation ongoing • Earnings power of Polaris remains strong Second Half Focus on Successfully Meeting Customer Demand Q2'21
Slide 19: Questions?
Questions?
Slide 20: Appendix
Appendix • Q2 2021 Gross Profit Margin – Actual by Segment • Q2 2021 Supplemental Sales • Q2 2021 Financial Services Income • Q2 2021 Non-GAAP Reconciliations • Q2 2021 Non-GAAP Reconciliations – Segments • 2021 Guidance Adjustments Q2'21 Earnings 7/27/21 20
Slide 21: Q2 2021 Gross Profit Margin
Q2 2021 Gross Profit Margin Q2 2021 Gross Profit Margin – GAAP Q2 2021 Gross Profit Margin – Adjusted* 26.0% 26.1% 22.0% 23.0% Q2 2020 Q2 2021 Q2 2020 Q2 2021 GAAP GAAP Adjusted* Adjusted* Q2 2020 Q2 2021 Q2 2020 Q2 2021 Segments Segments GAAP GAAP Adjusted* Adjusted* ORV/Snow 26.4% 27.7% ORV/Snow 2
Slide 22: Q2 2021 Supplemental Sales – International & PG&A
Q2 2021 Supplemental Sales – International & PG&A Q2 2021 International Sales ($ millions) 64% Sales by Segment Sales by Region $311 International $190 ORV / Snow Motorcycles Europe, Latin America 55% 52% Middle East 93% and Africa Global Adjacent 67% Asia Pacific Markets 40% 101% Q2 2020 Q2 2021 Q2
Slide 23: Financial Services Arrangements
Financial Services Arrangements Financial Services Income by Category Wholesale Credit Retail Credit Contracts Written $ in millions $ in millions $ in millions $25.4 Receivable Balance – U.S. Dealers $575 $764 $733 $772 $13.7 Other Activities 50% $519 Wholesale Financing $391 $288 Retail Financing
Slide 24: Non-GAAP Reconciliations
Non-GAAP Reconciliations Reconciliation of GAAP "Reported" Results to Non-GAAP "Adjusted" Results (In Millions, Except Per Share Data; Unaudited) Key Definitions: This presentation contains certain GAAP financial measures which have been "adjusted" for certain revenues, expenses, gains and losses as
Slide 25: Non-GAAP Reconciliations – Segments
Non-GAAP Reconciliations – Segments (In Millions, Unaudited) Three months ended June 30, Six months ended June 30, (In Millions, Unaudited) Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020 2021 2020 2021 2020 SEGMENT SALES SEGMENT GROSS PROFIT ORV/Snow segment sales $ 1,314.
Slide 26: 2021 Guidance Adjustments
2021 GUIDANCE ADJUSTMENTS 2021 guidance excludes the pre-tax effect of supply chain transformation, restructuring and network realignment costs of approximately $5 to $10 million, and approximately $10 million for class action litigation-related expenses. Intangible amortization of approximately $35