Polaris Inc. · NYSE:PII
Polaris — Q2 2019 Earnings Presentation
24 slides from Polaris's earnings presentation, Jul 23, 2019
Slide 1: Second Quarter 2019 Earnings Results
POLARIS INDUSTRIES INC. SECOND QUARTER 2019 EARNINGS RESULTS July 23, 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 future sales, shipments, net income, and net income per share, future cash flows and capital requirements, operational in
Slide 3: Scott W. Wine, Chairman & CEO
SECOND QUARTER 2019 EARNINGS RESULTS SCOTT W. WINE CHAIRMAN & CEO July 23, 2019
Slide 4: Second Quarter 2019 Summary
SECOND QUARTER 2019 SUMMARY Results finished strong driven by operating leverage/aggressive tariff mitigation On-going operational improvement: Gross and net margins improved YoY, X-tariffs Strategic sourcing initiative - wave 1, progressing well; kicked-off wave 2 in June Side-by-side retail sales
Slide 5: North American Powersports Retail Sales
NORTH AMERICAN POWERSPORTS RETAIL SALES Polaris Retail Sales Q2’19 Retail Sales by Business Year-Over-Year Retail % Change (units)* POLARIS COMMENTS +6% Remain Clear Market Share Leader in Off-Road Vehicles low-single digits % Higher priced / higher highly profitable margin RANGER/RZR SxS’s category
Slide 6: North American Dealer Inventory
NORTH AMERICAN DEALER INVENTORY Polaris N.A. Dealer Inventory by Quarter Q2 2019 N.A. Dealer Inventory (in units) (Percent Impact on Total Inventory) 2017-2018 Qtrs Ended Q2'18 2018-2019 Qtrs Ended Q2'19 1% +3% +1% +1% At ~95% of -3% inventory profile in aggregate Q3 Q4 Q1 Q2 Q2 2018 ORV Snowmobiles
Slide 7: Tariffs / Trade Update
TARIFFS / TRADE UPDATE Tariffs / Trade Costs Polaris On-going Countermeasures ($ in millions) Supply chain mitigation efforts yielding results: ~$80 to $90 ~$80 to $90 unchanged Supplier negotiations previous from previous Re-sourced to new suppliers guidance ~ $10 ~ $30 guidance ~ $20 Approved excl
Slide 8: Key Updates – Aftermarket / PG&A
KEY UPDATES – Aftermarket / PG&A Transamerican Auto Parts (TAP) – Q2 2019 Network Optimization Other Fernley, Nevada Aftermarket TAP Retail 7% Wholesale 12% 12% Flat Wholesale Distributors Aftermarket and Polaris PG&A Wholesale E-Comm International Brick & Mortar ~500,000 sq. ft. distribution center
Slide 9: Mike Speetzen, EVP Finance & CFO
SECOND QUARTER 2019 EARNINGS RESULTS MIKE SPEETZEN EVP FINANCE & CFO July 23, 2019
Slide 10: Q2 2019 Financial Results
Q2 2019 FINANCIAL RESULTS Sales Net Income Earnings Per Share ($ in millions) ($ in millions) GAAP $1,779 million $88 million $1.42 18% y/y 5% y/y 1% y/y 18% 6% 2% $1,779 $115 $1.77 $1.73 $107 ADJUSTED* $1,505 Q2 2018 Q2 2019 Q2 2018 Q2 2019 Q2 2018 Q2 2019 Second quarter 2019 adjusted* results slig
Slide 11: Gross Profit Margin
Q2 2019 SALES & GROSS PROFIT MARGINS BY SEGMENT $ in millions ORV / Snowmobiles Motorcycles Global Adjacent Markets 6% 6% Motorcycles $1,049 $1,049 15% Commercial, Off-Road Snowmobiles Gov’t & Defense, Vehicles N/M 15% 14% Indian PG&A PG&A Slingshot 11% & Aixam 17% SALES 4% $197 $197 5% 7% $122 PG&A
Slide 12: Supplemental Sales Data
Q2 2019 SALES & GROSS PROFIT MARGINS BY SEGMENT con’t. $ in millions Aftermarket Boats International ORV / Snow Motorcycles 1% 41% Other 1% TransAmerican 13% Aftermarket 2%** Adjacent $229 Auto Parts $231 12% Markets Flat $182 15% SALES SUPPLEMENTAL SALES DATA EMEA Latin America 18% 3% Asia Pacific
Slide 13: 2019 Full Year Sales & EPS Guidance
2019 FULL YEAR SALES & EPS GUIDANCE Full Year Total Company Adjusted* Sales Guidance Full Year Adjusted* EPS Guidance** ($ in millions) 15% to 18% 12% to 13% $0.99 to $1.19 $7.55 to $7.75 ~($1.45) $6,800 to $6,900 (narrowed) (narrowed) (unchanged) 4% to 7% (narrowed) $6.10 to $6.30 $6,083 $6.56 (nar
Slide 14: FY 2019 Sales Guidance by Segment
FY 2019 SALES GUIDANCE BY SEGMENT $ in millions ORV/Snowmobiles Motorcycles Adjacent Markets Aftermarket Boats International mid-single mid to digits % high-single $805 (increased) digits % mid-single (expanded) digits % $3,923 Supplemental Sales Data (unchanged) low to $889 More than Segment Sales
Slide 15: Q2 2019 Financial Position & 2019 Expectations
Q2 2019 FINANCIAL POSITION & 2019 EXPECTATIONS Capital Summary June 2019 Cash Drivers ($ millions) ($ millions) Variance to $203 June 2019 June 2018 Cash $ 96 -47% ($74) Debt /Capital Lease Obligations $ 1,898 +71% $161 Shareholders’ Equity $ 952 +8% ($137) ($7) $96 Total Capital $ 2,850 +43% ($50)
Slide 16: Scott W. Wine, Chairman & CEO
SECOND QUARTER 2019 EARNINGS RESULTS SCOTT W. WINE CHAIRMAN & CEO July 23, 2019
Slide 17: Summary
SUMMARY First half results creating positive momentum for remainder of the year Powersports industry growth continuing despite wet spring, particularly SxS’s Polaris SxS’s remains clear industry leader against increased competitive product/promotions Boats segment performance tracking Company expect
Slide 18: Questions?
SECOND QUARTER 2019 EARNINGS RESULTS QUESTIONS? July 23, 2019
Slide 19: Appendix: Non-GAAP Reconciliations
APPENDIX GROSS PROFIT MARGINS – Q2 2019 ACTUAL & FY 2019 GUIDANCE NON-GAAP RECONCILIATIONS NON-GAAP RECONCILIATIONS - SEGMENTS 2019 GUIDANCE ADJUSTMENTS PII Q2'19 Earnings 7/23/19 19
Slide 20: Gross Profit Margins
GROSS PROFIT MARGINS Q2 2019 Gross Profit Margin FY 2019 Adjusted* Gross Profit Margin Guidance** 25.6% 25.9% 24.9% +80 to +110 24.5% bps ~(140 bps) (unchanged) (unchanged) 25.1% ~(30 bps) 24.2% to 24.5% (unchanged) (unchanged) Productivity Volume/Mix Q2 2018 Q2 2018 Q2 2019 Q2 2019 Price GAAP* Adju
Slide 21: 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 June 30, Six months ended June 30, Key Definitions: Throughout this presentation, the word “Adjusted” is 2019 2018 2019 2018 used to r
Slide 22: Non-GAAP Reconciliations - Segments
NON-GAAP RECONCILIATIONS - SEGMENTS In Thousands, Unaudited) Three months ended June 30, Six months ended June 30, (In Thousands, Unaudited) Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 2019 2018 2019 2018 SEGMENT SALES SEGMENT GROSS PROFIT ORV/Snow segment sales $ 1,049
Slide 23: 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 $15 million to $20 million for cla
Slide 24: Second Quarter 2019 Earnings Results
SECOND QUARTER 2019 EARNINGS RESULTS July 23, 2019