Polaris Inc. · NYSE:PII
Polaris — Q1 2023 Earnings Presentation
19 slides from Polaris's earnings presentation, Apr 25, 2023
Slide 1: First Quarter 2023 Earnings Presentation
First Quarter 2023 Earnings Presentation April 25, 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: First Quarter 2023 Overview
First Quarter 2023 Overview Total Company Results* Drivers Q1’23 Y/Y Change • Demand story remains mixed with N.A. retail down ~5% and up 14% vs 2019 Sales $2,180M 22% o Utility stable, Recreation soft and Snow strong o Indian Motorcycle stable with strong share gains Adjusted • Production inefficie
Slide 4: Customer Demand Indicators
Customer Demand Indicators N.A. ORV Retail Trends Customer Trends and Insights • Polaris ORV Q1 retail down 10% y/y, up 6% versus 2019 • Accessory attachment rates are healthy • Utility demand indicators are stable • Both long- and short-term owner repurchase rates remain strong • Recreation retail
Slide 5: Retail Finance Metrics
Retail Finance Metrics Weighted Through Q1 Approval Rate Penetration the Door FICO 2023 687 62% 27% 5-year Average 680 61% 29% Polaris Partner Lenders Retail Credit Contracts Written $ in millions $326 Sheffield $301 $257 Synchrony Octane Performance Finance Q1 2021 Q1 2022 Q1 2023 4-year Average: $
Slide 6: North American Dealer Inventory and Seasonality
North American Dealer Inventory and Seasonality N.A. ORV Historical Seasonality N.A. ORV Dealer Inventory (in units) (in units) 2016 - 2019 AVERAGE RETAIL & DEALER INVENTORY Q2'23 Retail Estimate 2017 2018 2019 2020 2021 2022 Q1 2023 Q1'23 Retail PII Call-outs • 2023 Q1 dealer inventory was down ~20
Slide 7: Q1 2023 Financial Results
Q1 2023 Financial Results Sales Financial Highlights (Y/Y) • Quarterly sales of $2.2B, up 22% o Strong contribution from ship volumes, product mix and net pricing more than offset higher finance interest o International sales were up 16% ▪ Good contributions from Australia, Mexico and France o PG&A
Slide 8: Off Road Q1 Summary
Off Road Q1 Summary Q1 Results & Y/Y Change PII Call-outs Sales: $1,592M 19% • Demand metrics remain mixed o Utility stable o Recreation soft Wholegoods North America 25% PG&A 20% International • Gained share across all product categories Flat 6% • ORV N.A. retail was down 10%, up 6% vs 2019 • PG&A
Slide 9: On Road Q1 Summary
On Road Q1 Summary Q1 Results & Y/Y Change PII Call-outs Sales: $324M 42% • N.A. Indian Motorcycle continued to gain share in the quarter, driven by both midsize and heavyweight Wholegoods North America • Indian Motorcycle N.A. retail was up 11% vs 2019 48% PG&A International 54% 19% 30% • Strongest
Slide 10: Marine Q1 Summary
Marine Q1 Summary Q1 Results & Y/Y Change PII Call-outs • Sales growth was driven by favorable net pricing, product mix and volume Sales: $264M 25% • Supply chain very close to normal • Gross profit margin benefitted from product mix and net Gross Profit pricing 23.3% 129 bps Margin: • 12-month roll
Slide 11: Financial Position
Financial Position Operating Cash Flow Adjusted Free Cash Flow $ in millions $ in millions Up Up Significantly Significantly $535 $199 FY 2022 FY 2023 FY 2022 FY 2023 Expectations Expectations 2023 Capital Deployment Priorities Key Financial Metrics $ in millions #1 Priority – Organic Investment ~$4
Slide 12: 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 • Expect full-year retail to be close to flat Flat to 5% Off Road DIGITS % • Positive price offsetting increased promoti
Slide 13: Closing Comments
Closing Comments • Industry demand signals are mixed • Expect overall full-year 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
Slide 14: Q&A
Q&A
Slide 15: Appendix
Appendix • Non-GAAP Reconciliations – Total Company • Non-GAAP Reconciliations – Net Income to Adjusted EBITDA • Non-GAAP Reconciliations – Segments / Cash Flow • 2023 Guidance Adjustments Q1'23 Earnings 4/25/23 15
Slide 16: 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) Three months ended March 31, Full Year 2023 2022 2022 Gross profit 469.2 352.9 1,959.5 Restructuring & realignment (2) — 0.2 0.2 Adjusted
Slide 17: 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) Three months ended March 31, Full Year Adjustments: 2023 2022 2022 Sales 2,179.7 1,781.5 8,589.0 (1) Represents distributions received related to an impaired investment h
Slide 18: 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 Adjusted Free Cash Flow (In Millions, Unaudited) (In Millions, Unaudited) Three months ended March 31, Three months ende
Slide 19: 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