Polaris Inc. · NYSE:PII
Polaris — Q3 2020 Earnings Presentation
26 slides from Polaris's earnings presentation, Oct 27, 2020
Slide 1: Third Quarter 2020 Earnings Results
Third Quarter 2020 Earnings Results October 27, 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, 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: Scott W. Wine, Chairman & CEO
Scott W. Wine Chairman & CEO Third Quarter 2020 Earnings Results October 27, 2020
Slide 4: Third Quarter 2020 Summary
Third Quarter 2020 Summary Polaris performance significantly better than anticipated New customer growth continues to drive strong sales and profitability All businesses outperforming previous Company expectations COVID-19 environment ongoing challenge Health and safety of Polaris team remains param
Slide 5: Q3 2020 North American Powersports Retail Sales
Q3 2020 North American Powersports Retail Sales Q3’20 N.A. Powersports Retail(1) Q3’20 Polaris Retail Sales by Business retail units year-over-year % change Off-Road Vehicles low-double digits % +15% Snowmobiles Side-by-Sides low-double digits % ATVs low-double digits % Side x Sides Motorcycles Moto
Slide 6: N.A. Dealer Inventory
N.A. Dealer Inventory Total N.A. Dealer Inventory N.A. Dealer Inventory by Business Current Inventory Levels Q3 2020 2018-2019 Qtrs Ended Q3'19 Weighted Average Contribution Targeted Inventory Levels 2019-2020 Qtrs Ended Q3'20 ORV . . . . . . . . . . -46% Note: Ex cludes Boats Motorcycles . . . . -4
Slide 7: Polaris Manufacturing Capacity Utilization
Polaris Manufacturing Capacity Utilization North American Capacity Utilization Actions Taken Capacity utilization Expediting supply chain shipping ex pected to rem ain at 55% peak levels throughout Additional capacity needed to m eet Q4 given anticipated Adding shifts on existing equipment dem and a
Slide 8: Polaris Customer Demographics
Polaris Customer Demographics Existing N.A. Customer Base - 2019 New N.A. Customers in 2020 – Year-to-Date ~6.5 Million +~400,000 (estimated installed base) (new customers added through Sept. 2020) Hunters +70% Farmers/ +60% ORV Growth Ranchers +45% +45% Recreation/ Adventure Land Owners Hispanic Af
Slide 9: Polaris Partners with Zero Motorcycles to Co-develop Electric Vehicles
Polaris Partners with Zero Motorcycles to Co-develop Electric Vehicles 10-year exclusive off-road strategic partnership with focus on software, technology, and designs Builds on Zero’s proven motors and controllers in 14hp to 106hp, with capacity to exceed 200hp Increased speed-to-market with proven
Slide 10: Electrification Leadership Change
Electrification Leadership Change Michael F. Donoughe Senior Vice President & Chief Technical Officer Will lead execution of the electrification strategy Joined Polaris on January 22, 2018 Leadership experience with electric vehicle manufacturers including roles at Tesla, Bright Automotive and Prote
Slide 11: Mike Speetzen, EVP & CFO
Mike Speetzen EVP & CFO Third Quarter 2020 Earnings Results October 27, 2020
Slide 12: Q3 2020 Financial Results
Q3 2020 Financial Results Sales Net Income (Loss) Earnings Per share $ in billions $ in millions $1.955 Billion $167 Million $2.66 YoY % Chg. GAAP 10% y/y 89% y/y 87% y/y 10% 71% 70% $1.953 $179 $2.85 $1.772 ADJUSTED* $104 $1.68 YoY % Chg. Q3 2019 Q3 2020 Q3 2019 Q3 2020 Q3 2019 Q3 2020 *See GAAP/No
Slide 13: Q3 2020 Segment Sales & Gross Profit Margins
Q3 2020 Segment Sales & Gross Profit Margins ORV/Snowmobiles Motorcycles Global Adjacent Markets Aftermarket Boats* 12% $1,289 11% ~Flat $1,152 $167 6% $236 $237 30% 29% $150 $114 $107 $155 $154 $119 Q3 2020 Sales ($M) Q3 2019 Q3 2020 Q3 2019 Q3 2020 Q3 2019 Q3 2020 Q3 2019 Q3 2020 Q3 2019 Q3 2020 Q
Slide 14: Full Year 2020 Sales & EPS Guidance
Full Year 2020 Sales & EPS Guidance* Total Company Adjusted* Sales Guidance Adjusted* Earnings Per Share Guidance $ in millions 2% to 3% 13% to 16% $6,925 to $7,000 $7.15 to $7.30 (increased) (increased) $6,783 $6.32 FY 2019 FY 2020 FY 2019 FY 2020 Sales Actual Sales Guidance EPS Actual EPS Guidance
Slide 15: Full Year 2020 Sales Guidance by Segment
Full Year 2020 Sales Guidance by Segment Global Adjacent ORV/Snowmobiles Motorcycles Markets Aftermarket Boats International low- single $836 digits % mid to Supplemental Sales Data ($ in millions) high-single $4,209 digits % Segment Sales ($ in millions) mid- $907 single digits % FY 2019 FY 2020 GA
Slide 16: Q3 2020 Financial Position & Liquidity Profile
Q3 2020 Financial Position & Liquidity Profile Capital Summary September 2020 Liquidity Profile $ in millions $ in millions Variance to Sept. 2020 Sept. 2019 Cash $821 NM Debt /Capital Lease Obligations $1,864 +5% Shareholders’ Equity $948 -6% Total Capital $2,812 +1% Credit Revolver – Capacity $700
Slide 17: Scott W. Wine, Chairman & CEO
Scott W. Wine Chairman & CEO Third Quarter 2020 Earnings Results October 27, 2020
Slide 18: 2021 Initial Thoughts
2021 Initial Thoughts Remain diligent protecting the health and safety of our employees Pandemic/election outcome uncertain - will respond real-time Consumer retail demand anticipated to remain healthy throughout 2021 New and existing consumer growth, new product launches expected to support strong
Slide 19: Q&A
Q&A Third Quarter 2020 Earnings Results October 27, 2020
Slide 20: Appendix
Appendix Q3 2020 Gross Profit Margin Q3 2020 Financial Services Income Q3 2020 Supplemental Sales – International & PG&A Q3 2020 Non-GAAP Reconciliations Q3 2020 Non-GAAP Reconciliations – Segments 2020 Guidance Adjustments Q3'20 PII Earnings 20
Slide 21: Gross Profit Margin – Q3 2020
Gross Profit Margin – Q3 2020 Q3 2020 Gross Profit Margin – GAAP Q3 2020 Gross Profit Margin – Adjusted* 27.3% 27.5% 24.6% 24.9% Q3 2019 Q3 2020 Q3 2019 Q3 2020 GAAP* GAAP* Adjusted* Adjusted* Q3 2019 Q3 2020 Q3 2019 Q3 2020 Segments Segments GAAP GAAP Adjusted* Adjusted* ORV/Snow 26.8% 29.3% ORV/Sn
Slide 22: 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 13% $1,391 $1,423 $1,404 $387 $21.7 $18.1 $341 Other Activities $764 $733 Wholesale Financing Retail Fina
Slide 23: Q3 2020 Supplemental Sales – International & PG&A
Q3 2020 Supplemental Sales – International & PG&A Q3 2020 International Sales ($ millions) Sales by Segment Sales by Region 9% International $187 $203 Motorcycles Europe, Latin America ORV / Snow 11% Middle East 1% 12% and Africa Global Adjacent 6% Asia Pacific Markets 29% 2% Q3 2019 Q3 2020 Q3 2020
Slide 24: 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 (In Millions, Except Per Share Data; Unaudited) have been "adjusted" for certain revenues, expenses, gains and losses as
Slide 25: Non-GAAP Reconciliations – Segments
Non-GAAP Reconciliations – Segments (In Millions, Unaudited) Three months ended September 30, Nine months ended September 30, (In Millions, Unaudited) Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 2020 2019 2020 2019 SEGMENT SALES SEGMENT GROSS PROFIT ORV/Snow
Slide 26: 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