Polaris Inc. · NYSE:PII
Polaris — Q2 2023 Earnings Presentation
20 slides from Polaris's earnings presentation, Jul 25, 2023
Slide 1: Second Quarter 2023 Earnings Presentation
Second Quarter 2023 Earnings Presentation July 25, 2023
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 2023 Overview
Second Quarter 2023 Overview Total Company Results* Drivers Q2’23 Y/Y Change • Demand story improved with N.A. retail up 14% and down 1% vs 2019 Sales $2,217M 7% o Off Road gained share Utility up high teens, Recreation up modestly o Indian Motorcycle gained significant share with strong retail Ad
Slide 4: Customer Demand Indicators
Customer Demand Indicators N.A. ORV Retail Trends Customer Trends and Insights • Polaris ORV YTD retail up 3% y/y, down 1% versus 2019 • Accessory attachment rates and part sales remain healthy • Utility demand indicators improved • Total leads (paid and organic) up double digits % • Recreation reta
Slide 5: Recent New Product Introductions
Recent New Product Introductions 2024 Polaris RZR XP 2024 Polaris XPEDITION • All-new platform with rugged design and stronger chassis • All-new, category defining, industry-first Adventure model for new customer type • Superior fit and finish with roomier cockpit and new seats • Largest accessory p
Slide 6: North American Dealer Inventory and Seasonality
North American Dealer Inventory and Seasonality N.A. ORV Historical Seasonality N.A. ORV Dealer Inventory (in units) (in units) 2016 - 2019 AVERAGE RETAIL & DEALER INVENTORY Q2'23 Retail Q1'23 2017 2018 2019 2020 2021 2022 Q2 2023 Retail Total Polaris Call-outs • 2023 Q2 dealer inventory was down ~2
Slide 7: 2022 Geared for Good Report Launches Environmental Goals
2022 Geared for Good Report Launches Environmental Goals Continually tuning to be good stewards for our industry, employees, riders, communities, and the outdoors THINK PRODUCT THINK PRODUCTION THINK PLACES THINK PEOPLE Original 5-Year Goals Achieved New 2035 Environmental Goals 2022 Goals* vs 2022
Slide 8: Q2 2023 Financial Results
Q2 2023 Financial Results Sales Financial Highlights (Y/Y) $2,217 • Quarterly sales of $2.2B, up 7% o Strong contribution from ship volumes and net pricing more than $2,063 offset higher finance interest o International sales were up 6% Good contribution from Latin America o PG&A sales were up 12%
Slide 9: Off Road Q2 Summary
Off Road Q2 Summary Q2 Results & Y/Y Change PII Call-outs Sales: $1,631M 9% • Demand metrics improved across Utility and Recreation • Gained share in ORV during the quarter Wholegoods North America • N.A. ORV retail up 14%, down 5% vs 2019 7% PG&A 11% International 17% 5% • Strong interest in new Re
Slide 10: On Road Q2 Summary
On Road Q2 Summary Q2 Results & Y/Y Change PII Call-outs Sales: $362M 21% • N.A. Indian Motorcycle share gains in midsize and heavyweight Wholegoods North America • Indian Motorcycle N.A. retail was up 40%+ year-over-year 31% PG&A International 22% o Market share is over 13% 12% 20% • Strongest moto
Slide 11: Marine Q2 Summary
Marine Q2 Summary Q2 Results & Y/Y Change PII Call-outs • Year-to-Date pontoon industry is down low-double digits percent Sales: $224M 18% • Dealers seeing soft retail due to higher interest rates for consumers Gross Profit • Bennington gained share 25.7% 130 bps Margin: • Actively managing variable
Slide 12: Financial Position
Financial Position Operating Cash Flow Adjusted Free Cash Flow $ in millions $ in millions Up Up Significantly Significantly $535 $199 FY 2022 FY 2023 FY 2022 FY 2023 Expectations Expectations 2023 Capital Deployment Priorities Key Financial Metrics $ in millions #1 Priority – Organic Investment ~$4
Slide 13: Full Year 2023 Guidance & Expectations
Full Year 2023 Guidance & Expectations Total Company Sales Segment Sales Outlook Assumptions $ in Millions • Revenue driven by higher shipments and favorable mix Increased HIGH-SINGLE Off Road DIGITS % • Expect industry full-year retail to be up low-single digits 3% to 6% Increased • Positive price
Slide 14: Closing Comments
Closing Comments • Share gains in Off Road, On Road and Marine; increased confidence in Off Road and On Road consumer demand signals while Marine weakened • Expect industry full-year N.A. powersports retail to be up low-single digits relative to 2022 • Strong product innovation continues; Accelerati
Slide 15: Q&A
Q&A
Slide 16: Appendix
Appendix • Non-GAAP Reconciliations – Total Company • Non-GAAP Reconciliations – Net Income to Adjusted EBITDA • Non-GAAP Reconciliations – Segments / Cash Flow • 2023 Guidance Adjustments Q2'23 Earnings 7/25/23 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) Six months ended June 30, Full Year 2023 2022 2022 Gross profit 974.2 827.3 1,959.5 Restructuring & realignment (2) — 0.2 0.2 Adjusted gro
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) Six months ended June 30, Full Year Adjustments: 2023 2022 2022 Sales 4,396.3 3,844.3 8,589.0 (1) Represents distributions received related to an impaired investment held
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, Six months ended Jun
Slide 20: 2023 Guidance Adjustments
2023 Guidance Adjustments 2023 adjusted guidance excludes the pre-tax effect of supply chain transformation, restructuring and network realignment costs of approximately $5 million, and approximately $10 million for class action litigation-related expenses. Intangible amortization of approximately $