Slide 1: Third Quarter 2022 Earnings Presentation
Third Quarter 2022 Earnings Presentation October 25, 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 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 2022 Overview
Third Quarter 2022 Overview Total Company Results* Drivers Q3’22 YoY Change • Record quarterly sales • Demand story is mixed with retail down ~8% Sales $2,341M 32% o ORV mixed o Indian Motorcycle strong Adjusted • Supply chain continues to improve sequentially Gross Profit 23.9% 15 bps Margin • Deal
Slide 4: Customer Demand Indicators
Customer Demand Indicators N.A. ORV Retail Trends Customer Trends and Insights • Polaris ORV retail down 4% sequentially from Q2 2022 • Accessory attachment rates remained healthy • Utility industry: demand indicators remain healthy • Short-term repurchase rates remained strong o Long-term repurchas
Slide 5: North American Dealer Inventory
North American Dealer Inventory Total N.A. Dealer Inventory(1) PII Call-outs (in units) • Dealer inventory remains below optimal levels o Q3 2022 dealer inventory is down ~50% versus Q3 2019 • Dealer inventory was building in Q3 and is expected to continue building • Optimal dealer inventory level i
Slide 6: New Model Year 2023 Product Highlights
New Model Year 2023 Product Highlights RANGER RZR RIDE COMMAND+ Marine RANGER XP 1000 Northstar Connected Vehicle Technology Godfrey Pontoons Trail Boss Vehicle-to-cellular connectivity Mighty G LED rear work light Vehicle health monitoring and Brand’s first pontoon optimized for an 12V cargo box po
Slide 7: Q3 2022 Financial Results
Q3 2022 Financial Results Sales Financial Highlights (YoY) • Record quarterly sales of $2.3B, up 32% o Strong contribution from volume, price and mix more than offset FX headwinds o International sales were up 10% o PG&A sales were up 17% • Adjusted* EBITDA margin up 153 bps o Strong pricing and vol
Slide 8: Off-Road Q3 Summary
Off-Road Q3 Summary Performance PII Call-outs Q3’22 YoY Change • Demand metrics were mixed • Recreation ORV held share in Q3 Sales $1,746M 33% o Lost share in Utility driven by supply constraints Wholegoods North America • ORV N.A. retail was down ~8% 38% PG&A 36% International o ORV N.A. retail was
Slide 9: On-Road Q3 Summary
On-Road Q3 Summary Performance PII Call-outs Q3’22 YoY Change • Demand metrics remain stable Sales $334M 30% • Improving supply chain led to higher shipments • Indian Motorcycle gained share in the quarter Wholegoods North America PG&A International 32% 38% 17% 17% • Strong gross profit margin despi
Slide 10: Marine Q3 Summary
Marine Q3 Summary Performance PII Call-outs Q3’22 YoY Change • Sales growth was driven by volume, price and mix • Dealer inventory continues to right size, but still down Sales $260M 42% ~25% vs 2019 • Gross profit margin impacted by supply chain inefficiencies Gross Profit partially offset by highe
Slide 11: Strong Financial Position
Strong Financial Position Operating Cash Flow Free Cash Flow $ in millions $ in millions Up significantly Up modestly $287 $22 FY 2021 FY 2022 FY 2021 FY 2022 Expectations Expectations 2022 Capital Deployment Priorities Key Financial Metrics $ in millions #1 Priority – Organic Investment Cash $319 E
Slide 12: Full Year 2022 Guidance & Expectations
Full Year 2022 Guidance & Expectations Total Company Sales Segment Sales Outlook Assumptions $ in Millions • Supply chain challenges persist, but seeing sequential improvements Narrowed MID-TEENS % • Expect full-year retail to be down Off-Road Narrowed • Spending on demand creation 15% to 16% On-Roa
Slide 13: 2023 Initial Thoughts
2023 Initial Thoughts • Continue to invest in the business to drive the best customer experience, rider- driven innovation and agile and efficient operations • Manage the business to consumer demand trends • Dealer inventories are expected to reset to new optimal levels • Supply chain challenges con
Slide 14: Closing Comments
Closing Comments • Industry demand signals are mixed • Supply chain continues to improve, driving inventory improvements • Expect overall powersports retail to be down in 2022 • Committed to winning in a competitive environment by delivering high quality and innovative products while remaining agile
Slide 15: Polaris
PSLARIS,
Slide 16: Appendix
Appendix • Full Year 2022 Financial Assumptions • Non-GAAP Reconciliations – Total Company • Non-GAAP Reconciliations – Total Company Net Income to Adjusted EBITDA • Non-GAAP Reconciliations – Segments / Cash Flow • 2022 Guidance Adjustments Q3'22 Earnings 10/25/22 16
Slide 17: 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 7
Slide 18: 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 2022 2021 2022 2021 2021 Gross profit 559.2 420.0 1,386.5 1,349
Slide 19: Non-GAAP Reconciliations – Total Company
Non-GAAP Reconciliations – Total Company Reconciliation of Net Income to Adjusted EBITDA (In Millions, Unaudited) Three months ended September 30, Nine months ended September 30, Full Year 2022 2021 2022 2021 2021 Sales 2,340.6 1,777.7 6,184.9 5,446.6 7,439.2 Net Income from continuing operations 19
Slide 20: 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 Free Segment Gross Profit Cash Flow (In Millions, Unaudited) (In Millions, Unaudited) Three months ended September 30, Nine months ended Sept
Slide 21: 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