Polaris Inc. · NYSE:PII
Polaris — Q2 2022 Earnings Presentation
28 slides from Polaris's earnings presentation, Jul 26, 2022
Slide 1: Second Quarter 2022 Earnings Presentation
Second Quarter 2022 Earnings Presentation July 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 press release are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Pote
Slide 3: Key Call Outs
Key Call Outs • On July 1, 2022, Polaris Inc. completed the sale of the Company’s Transamerican Auto Parts (TAP) business. Starting with the second quarter of 2022, historical results of this business are now reported as discontinued operations. Figures and guidance statements for all periods in thi
Slide 4: Second Quarter 2022 Overview
Second Quarter 2022 Overview Total Company Results* Drivers Q2’22 YoY Change • Demand remains stable o Closely monitoring demand indicators Sales $2,063M 8% • Supply chain getting better with trends improving throughout the quarter Adjusted o Continues to dictate performance Gross Profit 23.0% 312 b
Slide 5: Recent Highlights & Wins
Recent Highlights & Wins Expanded Polaris Adventures Select nationwide Celebrated a record year of patent awards Strong engagement with International Female Ride Day and National Get Outdoors Day Launched our 2021 Geared for Good ESG report Continue to Lead From the Front Q2'22 Earnings 7/26/22 5
Slide 6: Geared For Good ESG Report
Geared For Good ESG Report Geared For Good Vision 2021 Framework 2021 Report Highlights Driven by innovation, • Achieved record low safety recordable incident rates across many of our facilities integrity, and accountability, we continually tune to be • Began a 5-year, $5 million partnership with th
Slide 7: Customer Demand Indicators
Customer Demand Indicators North America ORV Trends Powersports PG&A • Retail up 13% sequentially from Q1 2022 • Accessory attachment rates remain above 2021 and 2020 o Total retail per unit remains elevated • Pre-solds as % of retail remains elevated near ~60% o Shipments improved by ~10,000 units
Slide 8: North American Dealer Inventory Remains at Historic Lows
North American Dealer Inventory Remains at Historic Lows Total N.A. Dealer Inventory(1) PII Call-outs (in units) • Dealer inventory remains at historic low levels o Q2 2022 dealer inventory is down ~70% versus Q2 2019 o FY 2022 dealer inventory is also expected to be down ~70% compared to 2019 • 202
Slide 9: Managing Supply Chain Constraints
Managing Supply Chain Constraints Progress at Ports Part Shortages Highlights Polaris Containers at U.S. Ports Suppliers with Part Shortages • Suppliers with part shortages Impacting more than 100 Units impacting more than 100 units down Import Containers at Port 400 Delayed Containers at Port ~50%
Slide 10: 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 11: Change to Reporting Segments
Change to Reporting Segments Old Segments = 4 New Segments = 3 OFF-ROAD ON-ROAD MARINE AFTERMARKET OFF-ROAD ON-ROAD MARINE Transamerican ORV Indian Bennington ORV Indian Bennington Auto Parts Snowmobiles Slingshot Godfrey Kolpin Snowmobiles Slingshot Godfrey Gov’t / Defense Aixam Hurricane Pro Armor
Slide 12: Q2 2022 Financial Results
Q2 2022 Financial Results Sales Financial Highlights (YoY) • Sales were up 8% o Strong contribution from mix and price more than offset volume declines o International sales were up 1% o PG&A sales were flat • Supply chain negatively impacted volume and margins • Adjusted* EBITDA margin down 182 bps
Slide 13: Off-Road Q2 Summary
Off-Road Q2 Summary Performance PII Call-outs Q2’22 YoY Change • Supply chain challenges persist, but seeing modest improvement in component availability and shipments Sales $1,490M 7% • Demand metrics remain stable Wholegoods North America • Recreation ORV held share in 1H 2022; Lost share in Utili
Slide 14: On-Road Q2 Summary
On-Road Q2 Summary Performance PII Call-outs Q2’22 YoY Change • Supply chain challenges persist, but seeing modest improvement in component availability and shipments Sales $299M ~Flat o Trends improved throughout the quarter Wholegoods North America International • Demand metrics remain stable 5% P
Slide 15: Marine Q2 Summary
Marine Q2 Summary Performance PII Call-outs Q2’22 YoY Change • Supply chain challenges persist • Shipments up 20% year-over-year Sales $273M 38% o Dealer inventory remains down ~50% versus 2019 • Positive mix and favorable pricing across all brands Gross Profit 24.4% 39 bps o Pricing up high-teens M
Slide 16: Strong Financial Position
Strong Financial Position Operating Cash Flow Free Cash Flow $ in millions $ in millions Up significantly Up modestly $286 $21 FY 2021 FY 2022 FY 2021 FY 2022 Expectations Expectations 2022 Capital Deployment Priorities Key Financial Metrics $ in millions #1 Priority – Organic Investment Cash $314 E
Slide 17: Full Year 2022 Guidance & Expectations
Full Year 2022 Guidance & Expectations Total Company Sales Segment Sales Outlook Assumptions $ in Millions • Guidance updated to reflect 2021 continuing operations as baseline Updated to reflect TAP divestiture Off-Road LOW TO MID-TEENS % • Supply chain challenges persist, but seeing modest improvem
Slide 18: Closing Comments
Closing Comments • Industry demand remains stable; consumers are healthy • Biggest driver remains the health of the supply chain; saw modest improvement in the second quarter and expect modest improvement in the back half of 2022 • Expect overall powersports retail to be down slightly in 2022 • Focu
Slide 19: 2PiLARis
2PiLARis
Slide 20: Appendix
Appendix • Full Year 2022 Financial Assumptions • Non-GAAP Reconciliations – Total Company • Reconciliation of Net Income to Adjusted EBITDA • Non-GAAP Reconciliations – Segments / Cash Flow • Segment and Discontinued Ops Restatement – GAAP • Segment and Discontinued Ops Restatement – Non-GAAP • His
Slide 21: Full Year 2022 Financial Assumptions
Full Year 2022 Financial Assumptions Worldwide Unit Sales Cadence Adjusted* Gross Profit Margin (Updated vs Initial Expectations on 1/25/22) Initial Updated FY 2021* 2022 Expectations 2022 Expectations Off-Road 23.9% unchanged On-Road 15.6% unchanged Marine 22.5% unchanged Total Polaris 23.6% Down 6
Slide 22: 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 June 30, Six months ended June 30, 2022 2021 2022 2021 Sales $ 2,062.8 $ 1,911.1 $ 3,844.3 $ 3,668.9 No adjustment — —
Slide 23: Non-GAAP Reconciliations – Total Company
Non-GAAP Reconciliations – Total Company Reconciliation of Net Income to Adjusted EBITDA (In Millions, Unaudited) Three months ended June 30, Six months ended June 30, Full Year 2022 2021 2022 2021 2021 Adjusted Sales 2,062.8 1,911.1 3,844.3 3,668.9 7,439.2 Net income from continuing operations 142.
Slide 24: Non-GAAP Reconciliations – Segments / Cash Flow
Non-GAAP Reconciliations – Segments / Cash Flow Non-GAAP Reconciliations – Segment Gross Profit Reconciliation of GAAP Operating Cash Flow to Non-GAAP Free Cash Flow (In Millions, Unaudited) (In Millions, Unaudited) Six months ended June 30, Full Year (In Millions, Unaudited) Three months ended June
Slide 25: Segment and Discontinued Ops Restatement
Segment and Discontinued Ops Restatement GAAP (in millions, except per share data, unaudited) FY-20 Q1-21 Q2-21 Q3-21 Q4-21 FY-21 Q1-22 Off-Road Sales $4,810.0 $1,301.8 $1,397.5 $1,316.2 $1,559.1 $5,574.6 $1,342.1 Gross profit $1,302.0 $344.9 $382.2 $293.8 $308.9 $1,329.8 $258.7 On-Road Sales $806.7
Slide 26: Non-GAAP Segment and Discontinued Ops Restatement
Non-GAAP Segment and Discontinued Ops Restatement NON-GAAP (in millions, except per share data, unaudited) FY-20 Q1-21 Q2-21 Q3-21 Q4-21 FY-21 Q1-22 Off-Road Sales $4,810.0 $1,301.8 $1,397.5 $1,316.2 $1,559.1 $5,574.6 $1,342.1 Gross profit $1,302.0 $344.9 $382.2 $293.8 $308.9 $1,329.8 $258.7 On-Road
Slide 27: Historical Non-GAAP Reconciliations – Segments / Discontinued Ops
Historical Non-GAAP Reconciliations – Segments / Discontinued Ops FY 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Q1 2022 Sales $ 6,281.4 $ 1,757.8 $ 1,911.1 $ 1,777.7 $ 1,992.6 $ 7,439.2 $ 1,781.5 Restructuring & realignment (3) (2.9) — — — — — — Adjusted sales 6,278.5 1,757.8 1,911.1 1,777.7 1,992
Slide 28: 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 $20