Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Q1 2017 Earnings Presentation
25 slides from Polaris's earnings presentation, Apr 25, 2017
Slide 1: First Quarter 2017 Earnings Results
POLARIS INDUSTRIES INC. First Quarter 2017 Earnings Results April 25, 2017
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 2017 future sales, shipments, net income, and net income per share, and operational initiatives are forward-looking statements
Slide 3: Non-GAAP Information Disclosed in This Presentation
NON-GAAP INFORMATION DISCLOSED IN THIS PRESENTATION Key Definitions: Throughout this presentation, the word “Adjusted” is used to refer to GAAP results excluding: TAP inventory step-up purchase accounting, TAP integration expenses and impacts associated with the Victory Motorcycles® wind down Reconc
Slide 4: Scott W. Wine, Chairman & CEO
POLARIS INDUSTRIES INC. Scott W. Wine, Chairman & CEO First Quarter 2017 Earnings Results April 25, 2017
Slide 5: Q1 Summary
Q1 SUMMARY Financial results ahead of expectations amidst weak powersports industry ORV retail sales momentum improved in Q1 RANGER/GENERAL growth accelerated; RZR down as expected; PII promo high, as is industry Overall market share stabilizing Indian Motorcycle® retail up 11% with ongoing share ga
Slide 6: Q1 2017 Sales and Income
Q1 2017 SALES AND INCOME Q1 2017 Adjusted* Sales Q1 2017 Adjusted* Net Income ($ millions) ($ millions) $1,158.9 $983.0 $46.9 $48.3 Q1 2016 Q1 2017 Q1 2016 Q1 2017 Reported Adjusted* Reported Adjusted* Q1 2017 adjusted* sales and adjusted* net income finished ahead of expectations Acquisition of Tra
Slide 7: N.A. Powersports Retail Sales
N.A. POWERSPORTS RETAIL SALES Polaris Retail Sales Q1’17 Retail Sales by Business (vs. Q1’16) Year-Over-Year Retail % Change (units) (# vehicle units) POLARIS INDUSTRY +6% Off-Road Vehicles mid-single digits % mid-single digits %* Side-by-Sides low-single digits % -4% ATVs low-double digits % -6% -7
Slide 8: N.A. Dealer Inventory
N.A. DEALER INVENTORY Polaris N.A. Total Dealer Inventory Q1 Total N.A. Dealer Inventory Year-Over-Year Change (units) -10% Q1’17 2017 YE +3% -2% +1% -8% -8% expectations ~flat vs. LY 2015 2016 2017 2015 2016 2017 Q1 2016 Existing ORV New ORV Snowmobiles Motorcycles Q1 2017 Models Models Q1 YEAR-END
Slide 9: Product Recall Update
PRODUCT RECALL UPDATE Recall repair completion rates at all-time highs Enhanced Quality & Safety Processes RZR 900/1000 & RZR turbo >75% Design / Engineering Quality and Safety Organization Established baseline metrics Post Sales Supplier Surveillance Measuring/analyzing daily Improving Implementing
Slide 10: Strategic Objectives
Strategic Objectives Best in Powersports PLUS 5-8% annual organic growth Growth through Adjacencies >$2B from acquisitions & new markets Global Market Leadership >33% of Polaris revenue LEAN Enterprise is Competitive Advantage Significant Quality, Delivery & Cost Improvement >$8 Billion by 2020 12%
Slide 11: Mike Speetzen, EVP Finance & CFO
POLARIS INDUSTRIES INC. Mike Speetzen, EVP Finance & CFO First Quarter 2017 Earnings Results April 25, 2017
Slide 12: 2017 Full Year Sales Guidance
2017 FULL YEAR SALES GUIDANCE Total Company Sales Guidance (unchanged) Segment Sales Guidance (unchanged) ($ millions) +10% to +13% Down $4,950 to $5,100 low-single $4,517 digits % PG&A Snow ORV 2016 Actual 2017 Guidance Down Up low-double Up Significantly Powersports market remains weak digits %(2)
Slide 13: 2017 Full Year Guidance – Adjusted EPS
2017 FULL YEAR GUIDANCE – ADJUSTED* EPS Adjusted* Earnings Per Share Guidance (unchanged) Other 2017 Expectations (unchanged) (diluted) Gross Margins: increase up to 180 bps +22% to +29% $4.25 to $4.50 Adjusted operating expenses: increase mid-teens % (slight $3.48 increase as a % of sales) Increase
Slide 14: Gross Profit Margin Guidance
GROSS PROFIT MARGIN GUIDANCE Adjusted* Gross Profit Q1 2017 Adjusted* Gross Profit 2017 Guidance +17 bps Increase up 25.2% 25.4% to ~180 bps Q1 2016 Adjusted* FY 2017 Adjusted* Q1 2017 Guidance Product Mix Promos / Incentives VIP Safety & Quality feature adds VIP Warranty One-time warranty Promos /
Slide 15: Off-Road Vehicles (ORV) / Snowmobiles
OFF-ROAD VEHICLES (ORV) / SNOWMOBILES Q1 2017 ORV/Snow Segment Sales ($ millions) 2% $724.1 %∆ $708.1 13% PG&A PG&A 3% Snow Snow Flat ORV ORV Q1 2016 Q1 2017 Reclassified(1) RANGER® 1000 ?? ORV flat in Q1 2017 vs. Q1 2016 Oil & gas/Ag remains weak PG&A up 13%; increased part sales ORV average sellin
Slide 16: Motorcycles
MOTORCYCLES Q1 2017 Motorcycles Adjusted* Segment Sales ($ millions) $185.3 PG&A 32% Victory $125.4 %∆ PG&A 8% 35% Indian Indian Slingshot Slingshot Q1 2016 Q1 2017 Reclassified(1) Adjusted* Motorcycle shipments down 32%, as adjusted* Victory sales in 2016 were $46 million Indian shipments up Slings
Slide 17: Global Adjacent Markets (GAM)
GLOBAL ADJACENT MARKETS (GAM) Q1 2017 GAM Segment Sales ($ millions) 24% $91.6 %∆ $74.1 PG&A 31% PG&A 22% W&T / W&T / Defense Defense Q1 2016 Q1 2017 GAM 24% due to Taylor-Dunn® acquisition and Government & Defense Average selling price for GAM was up 3% in Q1’17 GEM®, MRZR® and Work vehicle product
Slide 18: Aftermarket
AFTERMARKET Q1 2017 Aftermarket Segment Sales ($ millions) Significantly $217.8 Other Aftermarket Brands TAP $15.5 $202.0 Q1 2016 Q1 2017 Reclassified* TAP added $202 million to Q1 sales Integration on plan, moving Pro Armor® production to TAP facility 2017 Sales Guidance: Up significantly from a fu
Slide 19: 2017 Polaris Financial Position
2017 POLARIS FINANCIAL POSITION Cash Drivers Capital Summary March 2017 ($ millions) ($ millions) +$51 -$36 Variance to Mar 2016 -$38 +$34 -$22 $137 +$21 $127 Cash $ 137 -6% Debt /Capital Lease Obligations $1,178 +121% Shareholders ’ Equity $ 836 -10% Total Capital $2,014 +38% Debt to Total Capital
Slide 20: Income from Financial Services
INCOME FROM FINANCIAL SERVICES Income from Financial Services Wholesale Credit PA Receivables Retail Credit ($ millions) ($ millions) 5% Approval Rate Penetration Rate $19.5 $20.4 $1,282 10% 57% 59% $1,156 Retail 40% Retail Financing Financing 31% Wholesale Credit Wholesale Credit Other Q1 2016 Q1 2
Slide 21: Scott W. Wine, Chairman & CEO
POLARIS INDUSTRIES INC. Scott W. Wine, Chairman & CEO First Quarter 2017 Earnings Results April 25, 2017
Slide 22: Closing Comments
CLOSING COMMENTS Decent start to an important year ORV poised for improvement: Advances in innovation, inventory, sales & marketing focus Indian momentum continues into Spring selling season Enhanced quality and safety process maturing TAP represents solid growth potential POSITIVE START TO THE YEAR
Slide 23: Thank You
POLARIS INDUSTRIES INC. Thank You Questions?
Slide 24: Q1 2017 Supplemental Sales Performance
Q1 2017 SUPPLEMENTAL SALES PERFORMANCE Core Parts, Garments & Accessories (PG&A)* International** Q1 Sales 13% to 178.8 Million Q1 Sales 2% to $166.2 Million ∆ from Q1'16 Snowmobiles 10% GAM 10% ORV / 17% ORV Motorcycles Motorcycles 13% 11% Motorcycles Snow 69% 56% 10% ORV/ 4% Global Adjacent 27% Sn
Slide 25: Q1'17 Earnings
Q1'17 Earnings 25