Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Q2 2017 Earnings Presentation
28 slides from Polaris's earnings presentation, Jul 20, 2017
Slide 1: Second Quarter 2017 Earnings Results
Second Quarter 2017 Earnings Results July 20, 2017 POLARIS INDUSTRIES INC.
Slide 2: Safe Harbor & Non-GAAP Measures
SAFE HARBOR & NON-GAAP MEASURES 2 Q2'17 Earnings Except for historical information contained herein, the matters set forth in this presentation, including management’s expectations regarding 2017 future sales, shipments, net income, and net income per share, and operational initiatives are forward-l
Slide 3: Q2 Non-GAAP Disclosure
Q2 NON-GAAP DISCLOSURE 3 Q2'17 Earnings Reconciliation of GAAP "Reported" Results to Non-GAAP "Adjusted" Results (In Thousands, Except Per Share Data; Unaudited) Key Definitions: Throughout this presentation, the word “Adjusted” is used to refer to GAAP results excluding: TAP inventory step-up purch
Slide 4: Scott W. Wine, Chairman & CEO
Scott W. Wine, Chairman & CEO Second Quarter 2017 Earnings Results July 20, 2017 POLARIS INDUSTRIES INC.
Slide 5: Q2 Summary
Q2 SUMMARY 5 Q2'17 Earnings Q2 Slightly Ahead of Plan – Raising Sales Guidance and Lower End of EPS Guidance Range Foundational improvements gaining momentumOperational execution offset impact of major headwinds:Competitive ORV industryORV retail sales building momentum SxS retail up slightly in Q2;
Slide 6: North American Powersports Retail Sales
NORTH AMERICAN POWERSPORTS RETAIL SALES Polaris N.A. retail down 3% for Q2 2017 vs. Q2 2016Indian Motorcycle retail was up 17% - two new motorcycles launchedORV retail down, but improved sequentiallyNorth American Industry up slightlySxS growth driven by new products; ATVs weakOil & gas/ag industry
Slide 7: North American Dealer Inventory
Polaris Q2 2017 N.A. dealer inventory down 6% vs. Q2 2016ORV down 6%, RZR down double digits %Motorcycles up as expected, new productsSxS RFM implementation to start by year-endDealer inventory at year-end expected flat to prior year Healthy Dealer Inventory Levels; Working to Improve On-time Delive
Slide 8: Racing Dominating the Competition
CRUSHING THE COMPETITIONWON OVER 3/4 OF ALL RACES33 Championship Wins106 Podium Finishes RACING DOMINATING THE FLAT TRACK9 Championship Wins out of 10 Races23 Podium Finishes out of 30 Racing Success a Reflection of Product Expertise Indian Motorcycle Polaris RZR Q2'17 Earnings 8
Slide 9: Transamerican Auto Parts (TAP) Update
TRANSAMERICAN AUTO PARTS (TAP) UPDATE 9 Q2'17 Earnings Acquisition Performing as Expected $209 million in sales in Q2; $411 million year-to-dateOperating performance on plan, integration progressing as expectedOpened four new 4Wheel Parts Stores year-to-dateCost synergies of ~$20 million by 2019; sl
Slide 10: Mike Speetzen, EVP Finance & CFO
Mike Speetzen, EVP Finance & CFO Second Quarter 2017 Earnings Results July 20, 2017 POLARIS INDUSTRIES INC.
Slide 11: Q2 2017 Sales and Income
Q2 2017 Sales and Income Q2 reported sales were $1,365 million, up 21% from Q2 2016; Reported net income was $62 million, down 13% from prior yearAdjusted* sales were up 20% finishing ahead of expectationsAcquisition of Transamerican Auto Parts (TAP) added $209 million of sales in Q2 2017Q2 2016 inc
Slide 12: Sales and Earnings Per Share Guidance
Sales Guidance by Segment (1) Adjusted* Earnings Per Share Guidance Q2'17 Earnings Total Company Adjusted* Sales Guidance Full Year Sales Guidance Increased & EPS Guidance Narrowed 2017 FULL YEAR SALES GUIDANCE Powersports market improving globallyOrganic** revenue expectations flat to +2%TAP FY’17
Slide 13: Gross Profit Margin Guidance
GROSS PROFIT MARGIN GUIDANCE Adjusted* Gross Profit 2017 Guidance Gross Profit Q2 2017 GM Growth Drivers+ VIP+ One-time warranty+ Acquisitions– Quality feature adds – Promos / Incentives– FX Q2 2017 Gross Margin Improvement Driven Primarily by VIP & Product Mix Q2'17 Earnings 13 Increase up to ~180
Slide 14: Off-Road Vehicles / Snowmobiles
OFF-ROAD VEHICLES (ORV) / SNOWMOBILES Q2 2017 ORV/Snow Segment Sales ORV up 6% in Q2 2017 vs. Q2 2016Growth in all product linesPG&A up 5%ORV average selling price up 3% in Q2’172017 Guidance: Approx. Flat (increased)PII ORV improving worldwidePromotional levels remain elevated Regaining Footing as
Slide 15: Motorcycles
4% 17% 1% 90% 8% Reported sales down 13%; Adjusted* sales down 16%Motorcycles up 10% excluding $54M of Victory sales reported in 2016Indian shipments up; Slingshot sales lowerAverage selling price, excl. Victory, was down 1% in Q22017 Guidance: Down high-teens %** (lowered)On a comparable ba
Slide 16: Global Adjacent Markets (GAM)
13% 5% GLOBAL ADJACENT MARKETS (GAM) Q2 2017 GAM Segment Sales GAM 7% due to Aixam and Goupil strong performance; PG&AAverage selling price for GAM was down 1% in Q2’172017 Sales Guidance: Up mid-single digits % (increased) Aixam and Goupil Driving Increase in Q2 Q2'17 Earnings 16 7%$97 PG&A $9
Slide 17: Aftermarket
AFTERMARKET Q2 2017 Aftermarket Segment Sales TAP added $209 million to Q2 salesIntegration on plan, moving Pro Armor® production to TAP facility2017 Sales Guidance: Up significantly from TAP sales (unchanged) TAP Performing Well; Integration on Track Q2'17 Earnings 17 ($ millions) Significantly $
Slide 18: 2017 Polaris Financial Position
2017 POLARIS FINANCIAL POSITION 18 Q2'17 Earnings Capital Summary June 2017 Cash Drivers Variance toJune 2016 Cash $ 127 -13% Debt /Capital Lease Obligations $1,068 +128% Shareholders’ Equity $ 854 -8% Total Capital $1,922 +38% Debt to Total Capital 56% -22 % points 2015Operating cash flow down, as
Slide 19: Income from Financial Services
Retail Credit Wholesale Credit PA Receivables 19 Q2'17 Earnings Income from Financial Services Portfolio Remains Healthy INCOME FROM FINANCIAL SERVICES Polaris Acceptance (PA) receivables down, trending with dealer inventoryQ2 income from financial services down – lower wholesale and retail incomeFY
Slide 20: Scott W. Wine, Chairman & CEO
Scott W. Wine, Chairman & CEO Second Quarter 2017 Earnings Results July 20, 2017 POLARIS INDUSTRIES INC.
Slide 21: Closing Comments
21 Q2'17 Earnings CLOSING COMMENTS 2nd Half Performance Expected Up Significantly on a Year-over-year Basis Powersports market outlook improved globally; remains highly competitive Polaris ORV business, particularly SxS, regaining footingIndian Motorcycle market share gains continueSafety and Qualit
Slide 22: Thank You Questions?
Thank You Questions? POLARIS INDUSTRIES INC.
Slide 23: Appendix
APPENDIX Q2 2017 SUPPLEMENTAL SALES PERFORMANCE (PG&A / INTERNATIONAL)Q2 YEAR-TO-DATE NON-GAAP DISCLOSURE2017 GUIDANCE ADJUSTMENTS2017 OTHER FULL YEAR EXPECTATIONS
Slide 24: Q2 2017 Supplemental Sales Performance
International** Core Parts, Garments & Accessories (PG&A)* 24 Q2'17 Earnings Q2 2017 SUPPLEMENTAL SALES PERFORMANCE Motorcycles Global Adjacent Markets (GAM) 2% Snowmobiles Motorcycles Global Adjacent Markets (GAM) Apparel LatinAmerica 20% 11% 11% 19% 9% 11% Q2 Sales 4% to 193 Million Q2 Sal
Slide 25: Q2 Year-to-Date Non-GAAP Disclosure
Q2 YEAR-TO-DATE NON-GAAP DISCLOSURE 25 Q2'17 Earnings Reconciliation of GAAP "Reported" Results to Non-GAAP "Adjusted" Results (In Thousands, Except Per Share Data; Unaudited) Reported GAAP Measures Reported GAAP Measures 2017 Adjustments(3) 2017 Adjustments(3) Adjusted Measures Adjusted Measures Si
Slide 26: 2017 Guidance Adjustments
2017 GUIDANCE ADJUSTMENTS 26 Q2'17 Earnings 2017 guidance excludes the pre-tax effect of TAP inventory step-up purchase accounting of approx. $15 million, acquisition integration costs of approx. $15 million, manufacturing network realignment costs of approx. $10 million to $15 million and the impac
Slide 27: 2017 Other Full Year Expectations
2017 OTHER FULL YEAR EXPECTATIONS 27 Q2'17 Earnings Gross Margins: increase up to 180 bps (unchanged)Adjusted operating expenses: increase in the 60 to 70 bps range, as a percent of sales (lowered) Increased R&D – up high-teens % excluding TAP; quality & innovationHigher variable compensation costsT
Slide 28: Q2'17 Earnings
28 Q2'17 Earnings