Polaris Inc. · NYSE:PII
Polaris — Q1 2022 Earnings Presentation
22 slides from Polaris's earnings presentation, Apr 26, 2022
Slide 1: First Quarter 2022 Earnings Presentation
First Quarter 2022 Earnings Presentation April 26, 2022
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 and discussed in the corresponding earnings call are “forward-looking statements” intended to qualify for the safe harbor provisions of the Private Securities Litigation Ref
Slide 3: First Quarter 2022 Overview
First Quarter 2022 Overview Total Company Results* Drivers Q1’22 YoY Change • Demand remains at high levels o Repurchase and pre-sold rates remain strong Sales $1,957M ~Flat • Focused on supply chain, which continues to dictate performance Adjusted • Dealer inventory levels remain low Gross Profit 2
Slide 4: 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 5: Recent Highlights
Recent Highlights Capacity expansions in Wilmington, OH and Roseau, MN Launched over 20 new MY’23 Snowmobile products and several new Indian Motorcycles, including the Scout Rogue & Scout Rogue Sixty 27th consecutive annual dividend increase PII and Zero Motorcycles jointly named to Fast Company’s l
Slide 6: Customer Demand Indicators
Customer Demand Indicators ORV Pre-Sold Orders Polaris Adventures Rides ORV Pre-Sold Units as a • Ride participation consistent year-over-year % of Retail Sales ~75% ~70% ~60% o Supply chain impacted snowmobile availability ~55% • Polaris Adventures Select added four more states in the ~15% Midwest
Slide 7: North American Dealer Inventory Remains at Historic Lows
North American Dealer Inventory Remains at Historic Lows Total N.A. Dealer Inventory N.A. Dealer Inventory by Business (in units) Note: Excludes Boats (~75%) Q1 2022 vs. Q1 2021 2+ year pre-COVID basis Q1 2022 vs. Q1 2020 (Q1 2022 vs. Q1 2020) ORV Snowmobiles Motorcycles ~5% 0% ~(10%) (~20%) Continu
Slide 8: Managing Supply Chain Constraints
Managing Supply Chain Constraints Part Shortages Challenges Countermeasures Suppliers with Part Shortages • Logistics: U.S. import volume continues to • Price: Agile pricing model with recent price Impacting more than 100 Units overwhelm port and inland logistics increases on new and pre-sold vehicl
Slide 9: Q1 2022 Financial Results
Q1 2022 Financial Results Sales Financial Highlights (YoY) • Sales were flat o Strong contribution from mix and price more than offset volume declines o International sales were up 1% o PG&A sales were up 8% • Supply chain still negatively impacting volume and margins • Adjusted* EBITDA margin down
Slide 10: Off-Road Q1 Summary
Off-Road Q1 Summary Performance PII Call-outs Q1’22 YoY Change • Supply chain challenges persist leading to missed shipments and share loss Sales $1,309M 2% • Strong double-digit growth in Snow, Commercial & Wholegoods North America Government/Defense 1% PG&A 2% International 8% 6% • N.A. retail was
Slide 11: On-Road Q1 Summary
On-Road Q1 Summary Performance PII Call-outs Q1’22 YoY Change • Supply chain challenges persist leading to missed shipments and share loss Sales $219M 4% o Seeing modest improvements in supply chain in April Wholegoods North America International • Demand remains strong 8% PG&A 4% 19% 5% • Dealer in
Slide 12: Marine Q1 Summary
Marine Q1 Summary Performance PII Call-outs Q1’22 YoY Change • Supply chain challenges persist leading to missed shipments • Production trends slowly improving Sales $212M 6% • Positive mix and favorable pricing across all brands o Pricing up high-teens Gross Profit 22.0% 137 bps • 12-month rolling
Slide 13: Aftermarket Q1 Summary
Aftermarket Q1 Summary Performance PII Call-outs Q1’22 YoY Change • Supply chain challenges persist Sales $218M 5% • Inflation negatively impacting margins • Slowdown in auto industry is a headwind Transamerican Powersports Auto Parts Aftermarket • Powersports Aftermarket sales up due to strong in-s
Slide 14: Strong Financial Position
Strong Financial Position Operating Cash Flow Free Cash Flow $ in millions $ in millions Up significantly Up significantly $294 $13 FY 2021 FY 2022 FY 2021 FY 2022 Expectations Expectations 2022 Capital Deployment Priorities Key Q1 Financial Metrics $ in millions #1 Priority – Organic Investment Ena
Slide 15: Full Year 2022 Guidance & Expectations
Full Year 2022 Guidance & Expectations Total Company Sales Segment Sales Outlook Assumptions $ in Millions Unchanged Unchanged • Supply chain challenges persist in the near term with modest improvements in the back half of the year 12% to 15% Off-Road LOW TO MID-TEENS % • Market share and retail sal
Slide 16: Closing Comments
Closing Comments • Industry demand remains elevated • Biggest driver for results is the health of the supply chain; expect modest improvement beginning in the third quarter • Expect overall powersports retail to be down slightly in 2022 • Focused on delivering high quality and innovative products wh
Slide 17: 2PiLARis
2PiLARis
Slide 18: Appendix
Appendix • FY 2022 Financial Assumptions • Q1 2022 Non-GAAP Reconciliations – Total Company • Q1 2022 Non-GAAP Reconciliations – Segments / Cash Flow • 2022 Guidance Adjustments Q1'22 Earnings 4/26/22 18
Slide 19: Full Year 2022 Financial Assumptions
Full Year 2022 Financial Assumptions (Updated vs Initial Expectations on 1/25/22) Worldwide Unit Sales Cadence Adjusted* Gross Profit Margin Initial Updated FY 2021* 2022 Expectations 2022 Expectations Off-Road 23.7% unchanged On-Road 14.7% unchanged Marine 22.5% unchanged Aftermarket 26.6% unchange
Slide 20: Non-GAAP Reconciliations – Total Company
Non-GAAP Reconciliations – Total Company Reconciliation of GAAP "Reported" Results to Non-GAAP "Adjusted" Results Reconciliation of Net Income to Adjusted EBITDA (In Millions, Except Per Share Data; Unaudited) (In Millions, Unaudited) Three months ended March 31, Three months ended March 31, 2022 20
Slide 21: Non-GAAP Reconciliations – Segments / Cash Flow
Non-GAAP Reconciliations – Segments / Cash Flow (In Millions, Unaudited) Three months ended March 31, Reconciliation of GAAP Operating Cash Flow to Non-GAAP Free Cash Flow 2022 2021 (In Millions, Unaudited) SEGMENT GROSS PROFIT Off-Road segment gross profit $ 251.1 $ 337.5 No adjustment — — Three mo
Slide 22: 2022 Guidance Adjustments
2022 Guidance Adjustments 2022 guidance excludes the pre-tax effect of supply chain transformation, restructuring and network realignment costs of approximately $10 million, and approximately $5 to $10 million for class action litigation-related expenses. Intangible amortization of approximately $30