Polaris Inc. · NYSE:PII
Polaris — Q3 2019 Earnings Presentation
25 slides from Polaris's earnings presentation, Oct 22, 2019
Slide 1: Third Quarter 2019 Earnings Results
POLARIS INC. THIRD QUARTER 2019 EARNINGS RESULTS October 22, 2019
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, including management’s expectations regarding 2019 and 2020 future sales, shipments, net income, and net income per share, future cash flows and capital requirements, opera
Slide 3: Third Quarter 2019 Earnings Results - Scott W. Wine
THIRD QUARTER 2019 EARNINGS RESULTS SCOTT W. WINE CHAIRMAN & CEO October 22, 2019
Slide 4: Third Quarter 2019 Summary
THIRD QUARTER 2019 SUMMARY Q3 operating results solid; ongoing tariff mitigation/operating leverage Side-by-side retail sales up low-single digits despite numerous competitive introductions Model Year 2020 – Biggest product news in past 5 years – strong early response Strategic sourcing initiative –
Slide 5: North American Powersports Retail Sales
NORTH AMERICAN POWERSPORTS RETAIL SALES Polaris Retail Sales Q3’19 Retail Sales by Business Year-Over-Year Retail % Change (units)* Polaris Retail Comments Flat Off-Road Vehicles ~Flat SxS continues solid SxS growth: RANGER/ Side-by-Sides low-single digits % GENERAL & RZR Snowmobiles 0% ATVs mid-sin
Slide 6: North American Dealer Inventory
NORTH AMERICAN DEALER INVENTORY Weighted Average Contribution 2017-2018 Qtrs Ended Q3'18 ORV . . . . . . . . . . +3% 2018-2019 Qtrs Ended Q3'19 Snowmobiles. . . +1% Motorcycles. . . . Flat +4% Note: Excludes Boats Q4 Q1 Q2 Q3 Polaris Q3 2019 N.A. dealer inventory up 4% ORV up mid-single digits prima
Slide 7: Tariffs / Trade Update
TARIFFS / TRADE UPDATE Tariffs / Trade Costs Update Comments ($ in millions) Further progress on supply chain mitigation ~$80 to $90 previous Supplier negotiations guidance ~$75 to $85 New suppliers outside China (Improved) Existing suppliers moved production Mitigation Actions 301 exclusion request
Slide 8: New Model Year 2020 Product Introductions
NEW MODEL YEAR 2020 PRODUCT INTRODUCTIONS OFF-ROAD VEHICLES BOATS RESEARCH & DEVELOPMENT ($ in millions) RZR PRO XP RANGER 1000 Bennington Bowrider Bennington Center Console Fishing ~$295 $260 $238 RZR PRO XP4 SPORTSMAN XP 1000 S Sanpan Hurricane (6 new models) $185 MOTORCYCLES FACTORY CHOICE PACKAG
Slide 9: Polaris Brand Transformation
POLARIS BRAND TRANFORMATION Add Pic of Water tower Our call for people to experience the outdoors and discover new possibilities. Think Outside Our defining quality of inventing and improving work and play experiences. We believe what’s outside should challenge what’s inside us. We exist to take you
Slide 10: Customer Centric Approach to Growth
CUSTOMER CENTRIC APPROACH TO GROWTH Polaris Adventures Customer Engagement & Growth “Creating an ever expanding lifestyle surrounding our products.” 26% 20% 20% 125+ Total Owner Base 12% 10% 8% Locations 90+% New Owners Since May'19 100,000+ New Customers to Polaris RZR RANGER Slingshot Consumer Rid
Slide 11: Third Quarter 2019 Earnings Results - Mike Speetzen
THIRD QUARTER 2019 EARNINGS RESULTS MIKE SPEETZEN EVP FINANCE & CFO October 22, 2019
Slide 12: Q3 2019 Financial Results
Q3 2019 FINANCIAL RESULTS Sales Net Income Earnings Per Share ($ in millions) ($ in millions) GAAP $1,772 million $88 million $1.42 7% y/y 7% y/y 5% y/y 7% 11% 10% $118 $1.86 $1,653 $1,772 $104 $1.68 ADJUSTED* Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Third quarter 2019 adjusted* results sligh
Slide 13: Gross Profit Margin
Q3 2019 SALES & GROSS PROFIT MARGINS BY SEGMENT $ in millions ORV / Snowmobiles Motorcycles Global Adjacent Markets 11% 11% Motorcycles $1,152 $1,152 6% Commercial, Off-Road Snowmobiles Gov’t & Defense, Vehicles 53% Indian PG&A PG&A Slingshot 8% & Aixam 21% SALES 8% 3% 4% 18% 18% $150 $150 $114 PG&A
Slide 14: Supplemental Sales Data
Q3 2019 SALES & GROSS PROFIT MARGINS BY SEGMENT con’t. $ in millions Aftermarket Boats International ORV / Snow Motorcycles 3% 1% 23% $236 TransAmerican Other 8% Adjacent Auto Parts Aftermarket $187 Markets 2% 5% 11% 20% SALES SUPPLEMENTAL SALES DATA $119 EMEA Latin America 12% 1% Q3 2019 Asia Pacif
Slide 15: 2019 Full Year Sales & EPS Guidance
2019 FULL YEAR SALES & EPS GUIDANCE Full Year Total Company Adjusted* Sales Guidance Full Year Adjusted* EPS Guidance** ($ in millions) 16% to 17% $1.04 to $1.14 $7.60 to $7.70 ~($1.40) ~12% (narrowed) (narrowed) (improved) 4% to 5% (narrowed) $6.20 to $6.30 $6,083 $6.56 (narrowed) Mitigation effort
Slide 16: Supplemental Sales Data: FY 2019 Sales Guidance by Segment
FY 2019 SALES GUIDANCE BY SEGMENT $ in millions ORV/Snowmobiles Motorcycles Adjacent Markets Aftermarket Boats International mid-single digits % high-single $805 (unchanged) digits % mid-single (increased) digits % $3,923 Supplemental Sales Data (unchanged) high-single $889 More than Segment Sales d
Slide 17: Q3 2019 Financial Position & 2019 Expectations
Q3 2019 FINANCIAL POSITION & 2019 EXPECTATIONS Capital Summary September 2019 Cash Drivers ($ millions) ($ millions) Variance to $436 Sept 2019 Sept 2018 Cash $ 122 -33% ($112) Debt /Capital Lease Obligations $ 1,784 -4% Shareholders’ Equity $ 1,013 +13% $161 ($189) ($7) Total Capital $ 2,797 +1% $1
Slide 18: Third Quarter 2019 Earnings Results - Scott W. Wine
THIRD QUARTER 2019 EARNINGS RESULTS SCOTT W. WINE CHAIRMAN & CEO October 22, 2019
Slide 19: 2020 Initial Thoughts
2020 INITIAL THOUGHTS Economy slowing, but consumer confidence and low unemployment remains positive Trade resolution / election unknown Powersports industry remains positive driven by product introductions Industry side-by-sides up; ATV’s and motorcycles remain challenged Polaris retail expected po
Slide 20: Questions?
T H I R D Q U A RT E R 2 0 1 9 E A R N I N G S R E S U LT S QUESTIONS? October 22, 2019
Slide 21: Appendix
APPENDIX GROSS PROFIT MARGINS – Q3 2019 ACTUAL & FY 2019 GUIDANCE NON-GAAP RECONCILIATIONS NON-GAAP RECONCILIATIONS - SEGMENTS 2019 GUIDANCE ADJUSTMENTS PII Q3'19 Earnings 10/22/19 21
Slide 22: Gross Profit Margins
GROSS PROFIT MARGINS Q3 2019 Gross Profit Margin FY 2019 Adjusted* Gross Profit Margin Guidance** 24.3% 24.8% 24.6% 24.9% 26.2% to 26.4% +105 to +125 bps (improved) 25.1% 24.5% to 24.7% (improved) Productivity Volume/Mix ~(135 bps) ~(30 bps) Q3 2018 Q3 2018 Q3 2019 Q3 2019 Price (improved) (unchange
Slide 23: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Reconciliation of GAAP "Reported" Results to Non-GAAP "Adjusted" Results (In Thousands, Except Per Share Data; Unaudited) Three months ended September 30, Nine months ended September 30, Full Year Key Definitions: Throughout this presentation, the word “Adjusted” is 2019 201
Slide 24: Non-GAAP Reconciliations - Segments
NON-GAAP RECONCILIATIONS - SEGMENTS In Thousands, Unaudited) Three months ended September 30, Nine months ended September 30, Full Year (In Thousands, Unaudited) Three months ended September 30, Nine months ended September 30, Full Year 2019 2018 2019 2018 2018 2019 2018 2019 2018 2018 SEGMENT SALES
Slide 25: 2019 Guidance Adjustments
2019 GUIDANCE ADJUSTMENTS 2019 guidance excludes the pre-tax effect of acquisition integration costs of approximately $5 million to $10 million, supply chain transformation and network realignment costs of approximately $25 million to $30 million, and approximately $17 million to $20 million for cla