Slide 1: Fourth Quarter & Full Year 2022 Earnings Presentation
Fourth Quarter & Full Year 2022 Earnings Presentation January 31, 2023
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. Poten
Slide 3: 2022 In Review
2022 In Review Grew shipments despite greater Delivered record sales and earnings Navigated Exceeded EPS supply chain challenges Macroeconomic Guidance Executed $505M of share repurchases Challenges Offset higher inflation and FX Enhanced Rider-Driven Innovation with RZR Pro R & Turbo R and 2023 pro
Slide 4: Fourth Quarter and Full Year 2022 Overview
Fourth Quarter and Full Year 2022 Overview Total Company Results* Drivers • Record Sales and EPS Q4’22 Y/Y Change FY’22 Y/Y Change o Exceeded FY EPS guidance • Demand story is mixed with N.A. powersports Sales $2,404M 21% $8,589M 15% retail down ~6% in Q4** o ORV mixed Adjusted o Indian Motorcycle s
Slide 5: Customer Demand Indicators
Customer Demand Indicators N.A. ORV Retail Trends Customer Trends and Insights • Polaris ORV Q4 retail down 4% y/y and down 1% • Accessory attachment rates are healthy sequentially • Both long- and short-term owner repurchase rates remain • Utility demand indicators are healthy near historical norms
Slide 6: North American Dealer Inventory
North American Dealer Inventory N.A. ORV Historical Seasonality Total N.A. Dealer Inventory(1) (in units) (in units) PII Call-outs • 2022 dealer inventory was down 35% vs 2019 and up 116% vs 2021 • Dealer inventory was building in Q4 and is expected to reach optimal levels in first half 2023 • Optim
Slide 7: Q4 2022 Financial Results
Q4 2022 Financial Results Sales Financial Highlights (y/y) • Record quarterly sales of $2.4B, up 21% o Strong contribution from volume, price and mix more than offset FX headwinds o International sales were up 7% o PG&A sales were up 7% • Adjusted* EBITDA margin up 272 bps o Strong pricing and volum
Slide 8: FY 2022 Financial Results
FY 2022 Financial Results Sales Financial Highlights (y/y) • Record sales of $8.6B, up 15% o Price and mix contribution more than offset FX headwinds Mix favorable due to premium product demand o International sales were up 4% o PG&A sales were up 8% • Adjusted* EBITDA margin down 33 bps o Increas
Slide 9: Off Road Q4 Summary
Off Road Q4 Summary Performance PII Call-outs Q4’22 Y/Y Change • Demand metrics were mixed o Utility stable Sales $1,857M 19% o Recreation down • Gained share in ATV and SxS sequentially Wholegoods North America 22% PG&A 21% International • ORV N.A. retail was down 4% 8% Flat o ORV N.A. retail was d
Slide 10: On Road Q4 Summary
On Road Q4 Summary Performance PII Call-outs Q4’22 Y/Y Change • N.A. Indian Motorcycle continued to gain share in the quarter, driven by heavyweight Sales $302M 29% • Consumer interest remains high measured by lead volume Wholegoods North America 35% PG&A 42% International • Healthiest dealer invent
Slide 11: Marine Q4 Summary
Marine Q4 Summary Performance PII Call-outs Q4’22 Y/Y Change • Sales growth was driven by volume, price and mix • Healthy inventory at mid-level, remains light in entry and Sales $245M 36% high-end • Gross profit margin benefitted from mix somewhat offset by Gross Profit promotions 21.9% 209 bps Mar
Slide 12: FY 2022 Segment Summary
FY 2022 Segment Summary Off Road On Road Marine FY’22 Y/Y Change FY’22 Y/Y Change FY’22 Y/Y Change Sales $6,436M 15% $1,163M 13% $989M 30% Gross Profit 23.7% 18 bps 17.7% 215 bps 22.5% 4 bps Margin N.A. Market Off-Road Vehicles Indian Motorcycle Pontoons(1) Share Snowmobiles (season-to-date) Pricing
Slide 13: Strong Financial Position
Strong Financial Position Operating Cash Flow Free Cash Flow $ in millions $ in millions $199 $535 $287 $22 FY 2021 FY 2022 FY 2021 FY 2022 2022 Capital Deployment Key Financial Metrics $ in millions #1 Priority – Organic Investment Cash $325 $307 million capital expenditures; 4% of sales on R&D Cap
Slide 14: Full Year 2023 Guidance & Expectations
Full Year 2023 Guidance & Expectations Total Company Sales Segment Sales Outlook Assumptions $ in Millions • Revenue driven by higher shipments and favorable mix LOW to MID-SINGLE Flat to 5% Off Road DIGITS % • Expect full-year retail to be close to flat • Positive price offsetting increased promoti
Slide 15: 2022-2026 Targets
PuslLARiS Think Outside GLOBAL LEADER IN POWERSPORTS Powering passion and pioneering new possibilities for all those who play, work and THINK OUTSIDE Best Customer Experience © Rider-Driven Innovation ce Best Team, Best Culture 4+ Inspirational Brands Agile & Efficient Operations #4 Geared For Good
Slide 16: 2023 Closing Comments
2023 Closing Comments • Industry demand signals are mixed • Expect overall powersports retail to be close to flat relative to 2022 • Accelerating rider-driven innovation with new product launches • Interest expense and FX headwinds continue • Committed to winning in a competitive environment by deli
Slide 17: Q&A
Q&A Replace Replace 17
Slide 18: Appendix
Appendix • Non-GAAP Reconciliations – Total Company • Non-GAAP Reconciliations – Net Income to Adjusted EBITDA • Non-GAAP Reconciliations – Segments / Cash Flow • 2023 Guidance Adjustments Q4/FY'22 Earnings 1/31/23 18
Slide 19: Non-GAAP Reconciliations – Total Company
Non-GAAP Reconciliations – Total Company Reconciliation of GAAP "Reported" Results to Non-GAAP "Adjusted" Results (In Millions, Except Per Share Data; Unaudited) Q4/FY'22 Earnings 1/31/23 19
Slide 20: Non-GAAP Reconciliations – Net Income to Adjusted EBITDA
Non-GAAP Reconciliations –Net Income to Adjusted EBITDA Reconciliation of Net Income to Adjusted EBITDA (In Millions, Unaudited) Q4/FY'22 Earnings 1/31/23 20
Slide 21: Non-GAAP Reconciliations – Segments / Cash Flow
Non-GAAP Reconciliations – Segments / Cash Flow Reconciliation of GAAP Segment Gross Profit to Non-GAAP Reconciliation of GAAP Operating Cash Flow to Non-GAAP Segment Gross Profit Free Cash Flow (In Millions, Unaudited) (In Millions, Unaudited) Key Definitions: This presentation contains certain GAA
Slide 22: 2023 Guidance Adjustments
2023 Guidance Adjustments 2023 guidance excludes the pre-tax effect of supply chain transformation, restructuring and network realignment costs of approximately $5 million, and approximately $10 million for class action litigation-related expenses. Intangible amortization of approximately $20 millio