Polaris Inc. · NYSE:PII
Polaris — Q3 2023 Earnings Presentation
20 slides from Polaris's earnings presentation, Oct 24, 2023
Slide 1: Third Quarter 2023 Earnings Presentation
Third Quarter 2023 Earnings Presentation October 24, 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: Third Quarter 2023 Overview
Third Quarter 2023 Overview Total Company Results* Drivers Q3’23 Y/Y Change • Share gains across all three businesses • N.A. retail up 5% y/y Sales $2,249M 4% o Utility ORV up double digits y/y; gained multiple share points o Recreational ORV down mid-single digits y/y; but gained share Adjusted o I
Slide 4: Customer Demand Indicators
Customer Demand Indicators N.A. ORV Retail Trends Customer Trends and Insights • Polaris ORV YTD retail up 4% y/y, down 8% versus 2019 • Website build and quote leads up year-over-year • Cautious on Utility demand • Accessory retail dollars/unit up modestly year-over-year • Recreation demand remains
Slide 5: Recent New Product Introductions
Recent New Product Introductions 2024 Polaris XPEDITION 2024 Polaris RANGER XD • All-new, category defining, industry-first Adventure model • First new category Extreme Duty Utility SxS for new customer type • Strongest, most capable and most comfortable RANGER • Largest ever accessory portfolio at
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 Q1'23 Q3'23 Retail 2017 2018 2019 2020 2021 2022 Q3 2023 Retail Total Polaris Call-outs • Q3 2023 dealer inventor
Slide 7: Q3 2023 Financial Results
Q3 2023 Financial Results Sales Financial Highlights (Y/Y) $2,341 • Quarterly sales of $2.2B, down 4% $2,249 o Lower shipment volumes and higher finance interest o International sales were down 3% Latin America contribution offset by EMEA and Asia Pacific o PG&A sales were up 12% • Adjusted* EBITD
Slide 8: Off Road Q3 Summary
Off Road Q3 Summary Q3 Results & Y/Y Change PII Call-outs Sales: $1,844M 6% • Demand metrics remained healthy for new and premium products Wholegoods North America • Gained share in ORV during the quarter 3% PG&A International 15% 6% 2% • N.A. ORV retail up 5%, down 20% vs 2019 • Margin pressured by
Slide 9: On Road Q3 Summary
On Road Q3 Summary Q3 Results & Y/Y Change PII Call-outs Sales: $270M 19% • N.A. Indian Motorcycle gained share • Indian Motorcycle N.A. retail was down low-teens % year- Wholegoods North America over-year 21% PG&A International 25% o Market share is ~13%, N.A. #1 in Midsize 6% 9% • Strongest motorc
Slide 10: Marine Q3 Summary
Marine Q3 Summary Q3 Results & Y/Y Change PII Call-outs • Year-to-date pontoon industry is down high-single digits percent Sales: $134M 48% • Dealers seeing soft retail due to higher interest rates for consumers Gross Profit • Dealers cautious on adding new inventory 18.1% 338 bps Margin: • Benningt
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 ~$
Slide 12: Full Year 2023 Guidance & Expectations
Full Year 2023 Guidance & Expectations Total Company Sales Segment Sales Q4 Outlook Assumptions $ in Millions • Volume flattish year-over-year Narrowed HIGH-SINGLE Off Road DIGITS % • Retail growth driven by snowmobile shipments 3% to 5% Unchanged • Higher finance interest and negative net price FLA
Slide 13: 2024 Initial Thoughts
2024 Initial Thoughts • Economic factors pressuring consumers resulting in continued retail softness • Manage the business to align to consumer demand trends • Positive contribution from Polaris XPEDITION and RANGER XD as well as continued innovation • Dealer inventory at target levels • Teams focus
Slide 14: Closing Comments
Closing Comments • Share gains across all three businesses; Strong demand for new premium products • Retail trends weakened across the business in the third quarter • Expect industry full-year N.A. powersports retail to be flat relative to 2022 • Focused on improving production inefficiencies • Comm
Slide 15: Q&A
Q&A
Slide 16: Appendix
Appendix • Non-GAAP Reconciliations – Total Company • Non-GAAP Reconciliations – Net Income to Adjusted EBITDA • Non-GAAP Reconciliations – Segments / Cash Flow • 2023 Guidance Adjustments Q3'23 Earnings 10/24/23 16
Slide 17: 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 September 30, Nine months ended September 30, Full Year 2023 2022 2023 2022 2022 Gross profit 508.8 559.2 1,483.0 1,386
Slide 18: 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 September 30, Nine months ended September 30, Full Year 2023 2022 2023 2022 2022 Sales 2,248.9 2,340.6 6,645.2 6,184.9 8,589.0 Net income from continui
Slide 19: 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 September 30, Nine months e
Slide 20: 2023 Guidance Adjustments
2023 Guidance Adjustments 2023 adjusted guidance excludes the pre-tax effect of restructuring, network realignment and acquisition/integration costs of approximately $7 million, and approximately $10 million for class action litigation- related expenses. Intangible amortization of approximately $18