Polaris Inc. · NYSE:PII
Polaris — Q2 2024 Earnings Presentation
20 slides from Polaris's earnings presentation, Jul 23, 2024
Slide 1: Second Quarter 2024 Earnings Presentation
Second Quarter 2024 Earnings Presentation July 23, 2024
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: Second Quarter 2024 Overview
Second Quarter 2024 Overview Total Company Results(1) Second Quarter Drivers • North America retail down 8% Q2’24 Y/Y Change • Held share in ORV and Pontoons, lost share in Motorcycles Sales $1,961M 12% • Dealer inventory down ~4% sequentially • Sales down due to lower retail leading to reduced ship
Slide 4: Our Clear Vision to Win: Global Leader in Powersports
Our Clear Vision to Win: Global Leader in Powersports Deliver for Our Customers Advance Our #1 Powersports Market Share Position Position Polaris for Long-Term Financial Growth Strategy Remains Intact | Journey Will Take More Time Q2’24 Earnings 7/23/24 4
Slide 5: Progress on Strategy
Progress on Strategy EXECUTING HEADWINDS • Aligned portfolio to focus on powersports • Softer retail environment • Innovation and Customer Experience o Inflation impacting share of wallet for discretionary purchases o Off Road: Polaris XPEDITION, RANGER XD 1500, Full-size RANGER, RZR XP, RANGER XP K
Slide 6: Second Quarter North America Retail Trends and Sentiment
Second Quarter North America Retail Trends and Sentiment • Retail Trends ORV Recreation and Utility Retail In Units o ORV Utility flat with continued strength in RANGER -10% 14% 5% 7% 3% -4% o ORV Recreation down for seven quarters in a row o On Road and Marine saw increased pressure, down 20%+ o Pr
Slide 7: Q2 2024 Financial Results
Q2 2024 Financial Results Sales Financial Highlights (Y/Y) $2,217 • Quarterly sales of $2.0B, down 12% $1,961 o Lower volumes and net price ($4) o International sales down 15% o PG&A sales up 7% • Adjusted* EBITDA margin down 188 bps o Negative plant absorption due to lower volumes o Unfavorable net
Slide 8: Off Road Q2 Summary
Off Road Q2 Summary Q2 Results & Y/Y Change PII Call-outs • N.A. ORV Sales: $1,534M 6% o Retail down 4% y/y; Utility was flattish while Recreation remains soft Wholegoods North America o Sequentially, dealer inventory down 2%; RZR down 8% 11% PG&A 5% International 10% 14% • ORV share flat year-over-
Slide 9: On Road Q2 Summary
On Road Q2 Summary Q2 Results & Y/Y Change PII Call-outs • N.A. Indian Motorcycle retail was down ~20% year-over- Sales: $293M 19% year Wholegoods North America • Indian Motorcycle lost modest share in N.A. 21% PG&A International 22% 10% 15% • Successful launch of new Indian Scout • Slingshot sales
Slide 10: Marine Q2 Summary
Marine Q2 Summary Q2 Results & Y/Y Change PII Call-outs • Held share in Pontoons Sales: $134M 40% • Dealer inventory down ~20% sequentially and relative to 2019 levels • Dealers continue to be cautious on adding new inventory Gross Profit 20.3% 542 bps • Margins negatively impacted by lower volumes
Slide 11: Financial Position
Financial Position Operating Cash Flow Adjusted* Free Cash Flow $ in millions $ in millions $926 $507 ~$500 ~$250 FY 2023 FY 2024 FY 2023 FY 2024 Expectations Expectations 2024 Capital Deployment Priorities Key Financial Metrics $ in millions #1 Priority – Organic Investment Lighter than expected ca
Slide 12: Full Year 2024 Guidance & Expectations
Full Year 2024 Guidance & Expectations Total Company Sales Segment Sales 2024 2H Outlook Assumptions $ in Millions • Lowering guidance due to Q2 performance and lower 2H Lowered HIGH-TEENS % Off Road expectations Lowered o Ship volume lower due to decision to help cut dealer inventory 20% to 17% MID
Slide 13: Shipment and EPS Walks
Shipment and EPS Walks Shipments In Units FY23 FY24 Initial Plan FY24 Revised Plan Revised plan cuts Down shipments an 15% to 20% additional ~10% vs initial plan Q1 Q2 Q3 Q4 Mid-Point Adjusted EPS Walk vs Initial Guidance $8.00 Primary Factor: Cut spending in non-critical areas Primary Factor: and r
Slide 14: Closing Comments
Closing Comments • Second quarter earnings performance was challenged by volumes associated with lower retail and shipments • Continued to launch new innovation: RZR XP, 2-Up Sportsman and Indian Scout Motorcycle • Held share in ORV and Pontoon while On Road lost share • Collaborating with dealers t
Slide 15: Polaris
PssLARIS
Slide 16: Appendix
Appendix • Non-GAAP Reconciliations – Total Company • Non-GAAP Reconciliations – Net Income to Adjusted EBITDA • Non-GAAP Reconciliations – Segments / Cash Flow • 2024 Guidance Adjustments Q2’24 Earnings 7/23/24 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 June 30, Six months ended June 30, Full Year 2024 2023 2024 2023 2023 Gross profit 424.0 505.0 754.3 974.2 1,959.9 Rest
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 June 30, Six months ended June 30, Full Year 2024 2023 2024 2023 2023 Sales 1,961.2 2,216.6 3,697.6 4,396.3 8,934.4 Net income 68.9 134.3 72.8 247.9 50
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) Six months ended June 30, Full Year 2024 2023
Slide 20: 2024 Guidance Adjustments
2024 Guidance Adjustments 2024 adjusted guidance excludes the pre-tax effect of restructuring costs of approximately $25 million, and approximately $20 million for class action litigation-related expenses. Intangible amortization of approximately $18 million related to all acquisitions has also been