Polaris Inc. · NYSE:PII
Polaris — Q2 2020 Earnings Presentation
24 slides from Polaris's earnings presentation, Jul 28, 2020
Slide 1: Second Quarter 2020 Earnings Results
Second Quarter 2020 Earnings Results July 28, 2020
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, including management’s expectations regarding the impact of the COVID-19 pandemic and the Company’s ability to manage the economic environment resulting from the COVID-19 p
Slide 3: Scott W. Wine, Chairman & CEO
Scott W. Wine Chairman & CEO Second Quarter 2020 Earnings Results July 28, 2020
Slide 4: Second Quarter 2020 Summary
Second Quarter 2020 Summary Outperformed Company expectations in challenging COVID-19 environment Employee health and safety ongoing priority – safety protocols in place system-wide Consumer demand surprisingly strong in the quarter, best ORV retail in Company history Ramping manufacturing facilitie
Slide 5: Q2 2020 North American Powersports Retail Sales
Q2 2020 North American Powersports Retail Sales Q2’20 N.A. Powersports Retail(1) Q2’20 Polaris Retail Sales by Business retail units year-over-year % change Off-Road Vehicles low-sixty % Side-by-Sides & ATVs both up strong +57% Motorcycles low-twenty % APRIL MAY JUNE Q2 Indian mid-teens % Slingshot
Slide 6: Dealer Inventory / Sales Trends
Dealer Inventory / Sales Trends N.A. Dealer Inventory 1H 2020 Sales Trends Shipments ORV/Snow 2018-2019 Qtrs Ended Q2'19 N.A. Retail Sales PRODUCTION SUSPENDED Weighted Average Contribution All production suspended 2019-2020 Qtrs Ended Q2'20 ORV . . . . . . . . . . -45% M ar 23 thru Apr 6; Staggered
Slide 7: Customer Mix Dynamics Resulting from COVID-19 Crisis
Customer Mix Dynamics Resulting from COVID-19 Crisis Customer Growth – Q2 2020 Representative Sample of Customer Demographic Trends* – June 2020 YoY % change YoY % change Exising Owners Gender Family Group Age Group Ethnic Group New Customers 115% 110% Male Families Other 80% 90% Other Ages 80% 70%
Slide 8: TAP Retail-Focused Strategy
TAP Retail-Focused Strategy TAP owns a distinct competitive advantage in B2C Omni-Channel Retail Refocusing TAP’s efforts on retail initiatives yields results: Improved Retail volume & margin with reduced pricing/channel conflict TAP-brand leverage & product exclusivity via retail channels Focus and
Slide 9: Mike Speetzen, EVP & CFO
Mike Speetzen EVP & CFO Second Quarter 2020 Earnings Results July 28, 2020
Slide 10: Q2 2020 Financial Results
Q2 2020 Financial Results Sales Net Income (Loss) Earnings Per share $ in billions $ in millions $1.512 Billion ($235) Million ($3.82) YoY % Chg. GAAP 15% y/y N/M N/M GAAP Net I ncom e (Loss) and EP S includes Afterm arket pre-tax im pairm ent charges of $379 m illion or $4.66 per diluted share rela
Slide 11: Q2 2020 Segment Sales & Gross Profit Margins
Q2 2020 Segment Sales & Gross Profit Margins ORV/Snow Motorcycles GAM Aftermarket Boats $1,049 9% $953 $197 28% 9% $229 $208 $141 $122 $182 28% 28% 36% $78 $132 $131 Q2 2020 Sales ($M) Q2 2019 Q2 2020 Q2 2019 Q2 2020 Q2 2019 Q2 2020 Q2 2019 Q2 2020 Q2 2019 Q2 2020 Q2 2020 GAAP Adjusted Commercial, T
Slide 12: Q2 2020 Financial Position & Liquidity Profile
Q2 2020 Financial Position & Liquidity Profile Capital Summary June 2020 Liquidity Profile $ in millions $ in millions Variance to June 2020 June 2019 Cash $544 +466% Debt /Capital Lease Obligations $1,928 +2% Shareholders’ Equity $753 -21% Total Capital $2,681 -6% Credit Revolver – Capacity $700 -̶
Slide 13: Financial Services Arrangements
Financial Services Arrangements Financial Services Income by Category Wholesale Credit Retail Credit Contracts Written* $ in millions $ in millions $ in millions Receivable Balance – U.S. Dealers $25.3 67% $1,391 $1,423 $1,404 $575 $19.7 $1,272 Other Activities $344 Performance Finance $764 Wholesal
Slide 14: Full Year 2020 Sales & EPS Guidance
Full Year 2020 Sales & EPS Guidance Full Year Adjusted* Total Company Sales Full Year Adjusted* EPS $ in millions $6.65B to $6.75B 1% to 4% $6,783 Flat to Down 2% $6.32 $6.40 to $6.60 38% to 44% $4.85 to $5.06 11% 7% to 9% $2,915 46% $1.52 FY 2019 1H 2020 2H 2020 FY 2020 FY 2019 1H 2020 2H 2020 FY 2
Slide 15: Full Year 2020 Sales Guidance – Segments
Full Year 2020 Sales Guidance – Segments FY 2019 1H 2020 2H 2020 FY 2020 Sales Sales Sales Sales Actual Actual Expectations Expectations ($ in Millions) (% change y/y) (% change y/y) (% change y/y) ORV/Snow $4,209 -7% Motorcycles $584 -15% Global Adjacent Markets $461 -22% Aftermarket $907 -9% Boats
Slide 16: Scott W. Wine, Chairman & CEO
Scott W. Wine Chairman & CEO Second Quarter 2020 Earnings Results July 28, 2020
Slide 17: Closing Comments
Closing Comments Second half expectations significantly improved Production chasing demand at-present Remain diligent in keeping employees safe Social distancing, masks, temperature checking, etc. Maintain dealer health Manage dealer inventory levels via RFM Drive growth/market share in 2H 2020 Rein
Slide 18: Q&A
Q&A Second Quarter 2020 Earnings Results July 28, 2020
Slide 19: Appendix
Appendix Q2 2020 Gross Profit Margin Q2 2020 Supplemental Sales – International & PG&A Q2 2020 Non-GAAP Reconciliations Q2 2020 Non-GAAP Reconciliations – Segments 2020 Guidance Adjustments Q2'20 PII Earnings 19
Slide 20: Gross Profit Margin – Q2 2020
Gross Profit Margin – Q2 2020 Q2 2020 Gross Profit Margin – GAAP* Q2 2020 Gross Profit Margin – Adjusted* 24.5% 24.9% 23.0% 22.0% Q2 2019 Q2 2020 Q2 2019 Q2 2020 GAAP* GAAP* Adjusted* Adjusted* Q2 2019 Q2 2020 Q2 2019 Q2 2020 Segments Segments GAAP* GAAP* Adjusted* Adjusted* ORV/Snow 28.4% 26.4% ORV
Slide 21: Q2 2020 Supplemental Sales – International & PG&A
Q2 2020 Supplemental Sales – International & PG&A Q2 2020 International Sales ($ millions) Sales by Segment Sales by Region International $231 18% $190 Motorcycles Europe, Latin America ORV / Snow 29% Middle East 10% 1% and Africa Global Adjacent 28% Asia Pacific Markets 28% 37% Q2 2019 Q2 2020 Q2 2
Slide 22: Non-GAAP Reconciliations
Non-GAAP Reconciliations Reconciliation of GAAP "Reported" Results to Non-GAAP "Adjusted" Results Key Definitions: This presentation contains certain GAAP financial measures which have (In Millions, Except Per Share Data; Unaudited) been "adjusted" for certain revenues, expenses, gains and losses as
Slide 23: Non-GAAP Reconciliations – Segments
Non-GAAP Reconciliations – Segments ($ in Millions, Unaudited) Three months ended June 30, Six months ended June 30, ($ in Millions, Unaudited) Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 2020 2019 2020 2019 SEGMENT SALES SEGMENT GROSS PROFIT ORV/Snow segment sales $ 95
Slide 24: 2020 Guidance Adjustments
2020 GUIDANCE ADJUSTMENTS 2020 guidance excludes the pre-tax effect of supply chain transformation, restructuring and network realignment costs of approximately $35 million to $40 million, and approximately $20 million to $25 million for class action litigation-related expenses. Intangible amortizat