PII - Earnings call transcript Q1 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and welcome to the Polaris First Quarter 2020 Earnings Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded.

I would now like to turn the conference over to Richard Edwards. ahead. go Please

Richard Edwards

call. for Chief at Chairman our and Wine, and us information Jason, we'll have Officer, A everyone. you our Thank presentation Thank our remarks good XXXX Officer; additional quarter Scott joining Mike website take at accessible for this call. and questions. which Executive then and first our morning's for this has Speetzen, Financial Chief of summarizing you, the is morning, ir.polaris.com, quarter slide earnings some

During be should the the various be the Act could discussing considered Litigation in statements. of projections results of forward-looking Securities we purposes differ call, will those topics, materially XXXX. Actual forward-looking which for Private from Reform the

additional All results basis, and details regarding You refer adjusted on can these references XXXX actual the for uncertainties. first are quarter reported otherwise noted. non-GAAP an to our unless XX-K to risks XXXX

G this GAAP at to schedules the refer reconciliation of non-GAAP our to end Please the Reg adjustments. for presentation

Now to I'll our Wine. Scott? turn CEO, Scott it over

Scott Wine

Good support through Richard. months in, to for to this joining you thank for thank morning, and customers do Polaris you few want team sincere with always to they up the and begin as stepping the us. leaning pandemic. first our dealers I and of Thanks, COVID-XX

to our and a recession and certainly our us to is that was positioned out. proving our this and important win come. strength shutdown early crisis this global planful through lockdown and to our commerce aggressive people culture Our most has business, the The remain of their navigate performance the response days in shock of but abrupt

is we highly this priorities customer-centric, guide defined unwavering, but so requires long-term Our crisis to commitment a us. efficient to four focus, growth being company

are we and First committed to safety. employee foremost,

support we ensure viable preferred being of Polaris their will then dealers partner. and that the our with goal is Next,

a good our to continue shareholders steward stakeholders. Finally, we for will be and

employee with his and What the ability Pucel locked to czar, of approach began has been this and risk concerns meet and various Ken team structured prompt issues health assess ahead daily When and with their essential in mantle February, with evolved execution environment dynamic major helpful. state to quickly coronavirus dealer leadership of and early down mandated stay then his focus Ken regulations. closures actions been often in has our abreast assumed a and and China suppliers and as into to thorough immensely safety situation. the

performed quickly similar us management restructuring manageable a cost Mike and demand took flow ownership very each Both turned and protect pleased our significant speed agility dealers. expertly I a QX. with system scenario. were Speetzen He liquidity initiated at and how also our potentially successfully the a floor the recession support reduced with shipments our of by down our we shifts management precision. playbook, cash and implemented our concern activities tested into am and retail overall and And rapid plan enabling end execute as of to to

operations concerns dealer outlook. our managing Through from have the bank support group, reduction capital, around liquidity on on shipment and enterprise generation of pressure consumer cash and with on cost our strong reduced flow. extremely cuts cash across fast the action liquidity we are working and laser-focused flow This the untimely and put coupled in bit quarter earnings of year, a demand quite lowest uncertainty our

XXXX, protecting key in broadly investments. and expenses, reducing strategic and but boldly are product As we

be overall OpEx $XXX already capital will related, of taken have cut mostly operating annualized in of We out million the second and alone. XX% nearly business, the quarter expenses human over

brands evaluate this of FX, our we wind limited we and profitable continue month, and boat reduce will path down Larson with with Our and in lean factory three the of businesses Striper brands, to growth. operations the line will smaller to Earlier hours our Rinker, portfolio strong announced for demand.

We our ongoing accelerating investments, efficiency projects. are while protecting engineering strategic our engineering

best and obtain utilize dealing COVID-XX all other information we things retained can medical experts, many with from for health sources. CDC, protocols Our the departments, WHO, our local

to employees cleaning safe families our and work their with quarantine are we complying tirelessly to protocols. continue We keep and and

We amongst XX,XXX either or seven had have at fully and employees have all confirmed recovered cases COVID-XX recovering home. our

action. our ESG Navigating a other and delivery possibly alternative our communities, to need iPads found rural this the for meal to way grocery are into a vehicles devices in we and to Geared learning emphasizes fill our KLIM to of donation our For pandemic and From Arizona, facilitate autonomous serving deep an donation Ride, and Docs Even commitment Good. model. to $XXX,XXX Optimus putting for community to business distance partner XXX’s use our Goggles in GEM school creating

Overall, point mid-March, positive strong then retail down through quarter that Indian market how and sales North the for were gains first which We the down X%, American the were share two motorcycles final the unfortunately is but quarter. overshadows retail weeks, delivered there. got we up X% salient through XX%

are execution, market but gains and share mid-teens share well. as quarter, the month-to-date lost retail marketing ORV with to retail numerous which likely contributing in advances improvement in made in April

And delivered small was are vehicle slightly relatively market. market our retail is the share and for market gained also demand which seeing our strong utilize first boats, for in in quarter retail. for gains and year. PG&A to We for parts, the large down sales and aftermarket share quarter Pontoon install outperform the growing season, and base while Snow down the should a although segment

fully shipment support new our in Dealer the as inventory more strong late Motorcycle with retail inventory up in was our demand in bike. drop for of X% rose the Challenger quarter reductions. to sharp too occurred offset

the our dealer best end profiles and covering flooring in to upon of and through We costs undershipping requests are practices. learnings RFM sharing May, addition COVID-XX

problem than are more Dealer becoming and of less this as early in but now April, ORV a motorcycle closures huge were tractable XX% is dealers closed.

and retail customer factor engagement bolster steps and online have a in virtual is sales more becoming we significant taken Our presence accessibility. significant to

our institution Click. popular of both them. our to digital support for launch we and of innovative will Ride., leverage are shopping to consumers appointment fast enhance continue with dealers, and and efforts Deliver. Our

we We to requirements March distancing adjust paused everywhere operations have supply Monterrey. our the social to business, essential Under our implement since CISA previously that plant lower met network chain, almost global we facilities in assess up procedures. ramped all demand our and for communicated circumstances, so have except

to to are every obtain need CISA Polaris that and suppliers option We in pursuing equivalent rulings the reopen Mexico. our

finally team of work XXX That argument team List extensions. affairs now the through. for must We our securing substantial adept legal at instrumental global has tariff relief, also government Fortunately, in network. our in X and making is this support was come which

adjusted to program operating Our deliver is new savings year beyond. remains strategic throughout but sourcing a rhythm, to on and increasing track this

to over Officer, you our Financial to I financial our will Chief on Mike results and plans. now update it Speetzen turn

Michael Speetzen

Thanks Scott, and good morning.

our storm. diligently adapt As we to weather Scott stand our calls and ready indicated, conditions adapt change. aggressively times business these past to I the are working as recession in to we and activated plan that We are unprecedented have referenced

the of and the current at most coming remarks what our anticipate environment, and Given my months liquidity we will quarters. targeted profile in be

quarter, versus first were the year. For X% the prior down sales

impacting by motorcycles, segments reported in the second business of the all our began half the the lower slowdown industry driven of that With COVID-XX quarter, and during March. related economic exception sales

in new the continue Motorcycles new quarter. Slingshot growth to was began the sales model driven well, Indian and as AutoDrive the Challenger entirely sell products by

earnings taken and a a to loss points employees under-absorption $X.XX. half volume was basis per down margin per First quarter. related a gross of XXX and of by about dealers XX% loss GAAP Adjusted COVID-XX. and half protect down quarter on driven support remaining the share our cost year-over-year, factories the to share and actions as at basis result due were Adjusted $X.XX, earnings for was margins

began were that the and quarter nonessential have all to programs we visibility before enhanced future in investments the either Operating have demand. until made or sales X% COVID-XX up and in impact expenses Since demand. into canceled expenditures postponed to we better due time, and been marketing development research pandemic

negative first a exchange quarter, on negative $X.XX by on pandemic. of had impact a versus foreign impacted global all had with pretax the In or exchange million $X quarter the per the currencies Foreign approximately being profit XXXX impact share.

share/bonus share profile profit typically our given our and driven the program also million We point negative cash that use environment QX. for had QX reduction, out the when price market cash we significant by been would cash to that in our in was cease Operating the balance activity payout in is liquidity a profile low of sheet I $XX on income. flow quarter. shares worsened. the Moving given but QX repurchasing

we company crisis. liquidity amount a As spending our capacity to the you levels monitoring are position the debt would cash time our of through expect, to adequate enable and sustain significant

Cash billion. $X.X million. Our levels quarter total just was at under finished end $XXX quarter the hand debt on

under accordion agreement our actions capital substantial safety resulting a million, We reductions. share feature April cash credit product component loan expenditures revolving in the including XXX-day our programs. down adjusting and and plans, working credit additional expenses solidify impact or program, purchase X, have material of repurchase availability, $XXX Suspended term facility. under executed build taken operating not and cash credit that reductions or drawing our quality capital and to strategic postponed number critical do facility, further to optimized our quickly incremental into by needs an we entered and And our on unsecured finally, our

on to stands date, hand April Total April XX, $XXX as outstanding billion. million million along under of and as had actions shipments Following debt available of line at these $X.XX our we cash with $XXX of of credit. revolving limited XX

to Given we Scott and cash the our manage in adequate the that positive position this actions measure spoke feel the free we to and crisis. financial taken liquidity to through expect in confident earlier, and second flow have generate quarter

the to and only will very second It's go fluid in how and weeks June. are situation. a predict Scott May However, a we is into hard as this few the noted, quarter restart

even a very we we anticipate capital until to intend returned clear, as more just do for liquidity. QX, environment. not result, the landscape, and any a predictable scenarios As But we modeled current be to given economic to prudent downside be with COVID-XX we concerns with

covenants managing If work the lenders. our we additional financing out with We are, partners. with needed, believe flexibility however, can long-term we certain our leverage

a and optimal of or this stage. that know We dividends. the investors at of stakeholders. to want set do think is dividend all the of some make that suspended our our We decision necessary competitors not reduced the We to for have importance considerable understand their

enable meeting the our delay later that quarter will second of allow proposing declaring of are end April more assess mid-June. We us in to the prudent performance pay to we late best is our This May. still will on approach until covenants the around to through measured this get and the the timing the dividend to the believe even allow this decision same decision. At and make on much us to environment May comfort Board and we this possible time financial in Board week, dividend and more a

arrangements also retail of services for is wholesale Financial consumers very health finance a the in X% and quarter income of income, service the was XX% credit miscellaneous principally up Retail position. remains in during solid sale The and XXXX. quarter. comprised dealer income and was our income, of was income, dealers credit X% which financing contracts, first up up from income extended the of wholesale credit

Our Acceptance, financing its to to venture joint of long-term continues wholesale existence, credit XXrd-year in dealers. supply now ample Polaris

decline quarter XXXX, increased in first sequential XXXX billion For $X.X and the of wholesale the approximately business the quarter growth but fourth was receivable quarter of from balance. first last XXXX the the a of year, given the over portfolio

well the XXXX. than which we in Acceptance losses what is last during to reasonable, averaging the venture less joint Credit remained recession very similar X%, Polaris in experienced

height recession. credit time, XXXX, but through the and approximately at year, peaked losses, of them exceed would some expect levels anticipate this to do that one at progressed we experienced the X% in we the half at dealer As we not which failures of

better our the believe dealer help are in and this Scott support and his to initiatives remarks months we the weather mentioned our the as now equipped compared stronger that dealers storm XXXX. dealer believe base will to handle coming We in quarters, and

and credit finance retail Performance Sheffield, our programs Moving with now to Finance. Synchrony

the Polaris credit $XXX approximately wrote to new During products U.S. these pandemic given the The quarter, of to sold contracts to demand impact would three of we first rate quarter the in similar year-ago, in the consumer a second first United the on of level but retail of contracts credit the in which customers States, the in providers XX% consumers expect the is approval first quarter. represents quarter written decline XXXX, late million about to

of Financial retail services primarily into reserves programs certain up of the previous to retail program income. change our one providers, income allowed was due release with which the maintained financing a in under

been retail given Excluding last than have year services lower this financial sales. adjustment, would lower income

continue credit are stable. relationships to believe retail We our

performance. to our segment Turning

the of quarter pressure pandemic segments the as all to final downward With the sales the to during exception experienced in the the quarter, on take sharp hold motorcycles, of due lower began country. two weeks

under paid partially Gross seen I profit These cost for favorability. add that to the ability offset negatively by recover impacted margins which employees absorption being granted, along and across the of protect we with fixed the by impacts and were tariffs. segment were would our dealers. have actions to costs, past funds tariff modest continued include exemptions success taken

decline. has exposure this, of as full-year down tariff come a anticipated as result Our substantial as volume a well

full-year we provide We this additional will not we color will spend forecast. time the on more projections tariff and as get during around comfort call

in full-year of the impact to the withdrew we on results. that limiting March back our COVID-XX recall estimate will the given our pandemic guidance sales visibility and nature earnings dynamic accurately You our

view demand to quarter a take will year-over-year second likely quarter weakest, be the that down range. economic second somewhere in the over the We is estimated XX% that half about in more were current the decline. the range anticipate improve be down will U-shape Our of will and quarter QX recovery the the the to XX% of third in be of

year-over-year from that to percentage than expect still decline. to are begin necessary that next quarter prepared and the multitude while take down actual we could quarter we of a the over there down few scenarios are deviate steps our results finally, less the much And out the quarters Obviously, to if sales play fourth third current thinking. year-over-year be

back I'll some that, turn final for it With over Scott to thoughts.

Scott Wine

did and four stoppage our our anticipate part became a We that the the priorities. Mike. on defense, virus pandemic are right commerce to ship of we key significant determinately not fighting Thanks, the COVID-XX but deliver or of

some our employees social so can best is products our on We use there distancing water they will keep work of as who tirelessly and our safe as through customers to well support dealers the roads, trails, the mountains.

to or to and last cycle. idea this We create our leverage found and reduce have our growth team will culture efficient not win cost we through our more

crisis Good others this will help for work communities Our our as and momentum. gains to during continue movement our Geared

retail but confidence I will our the who surprisingly consumers support for not an much the are positive days adventure are or the tool less on our with resonating extrapolate of the that April quarter, XX new into and first a of ORV looking to year, remainder offers use brand farm. are the

there as be they will for them outside. We think

over line to I'll it that, questions. the With Jason to for turn open

Operator

Thank you.

question-and-answer will begin is Farley ahead. from The We question Please now from UBS. go the Robin session. Instructions] first [Operator

Robin Farley

about wanted you. clarify ORV to retail. the that Thank your comment I just

I surprisingly April, improvement. You saying three clarify you use the year-over-year? for Are phrase that of to weeks retail actually That's the mid-teens increase so that. just mid-teens want strong.

tariffs sort something of now terms just I to you tariffs, paying? new And it. if you've comments but relief you remarks, about suggesting Thank later, past. discuss for know to you've you In of more much clarify that comments you. were. his those larger question. of I tariffs, follow-up in and right Scott's On there's of amounts you Just then opening just what my in going been amount smaller still gotten Are some were sort that that said clarify trying the know that could

Scott Wine

I well remarks, finding in dealers really and and serve get think finding vehicles. about executing ways customers. honest, And open be that when my to Yes, are their Menneto our is Robin. they off-road are his we Steve what well. surprised our Thanks extremely to team as Okay. I well said how are

what are to – what I exactly yesterday, said through in off-road we say. percent year-over-year vehicles. meant that's I up That's mid-teens So

year, talked List call, believe would for you just now now we earnings As has are we what a through. now about October we'll X that said again, we was we lot And color, the about relief X, we the talked tariffs what say as tariffs, come confirm recall, or last through come in substantial trying that additional has that finally List to substantial relief. seeing for but get we'll provide and all October in we XXX that's that that is we expected fact and XXX I

Michael Speetzen

the where in bills that faster. other is get exemption that past the the we've we success allowing emphasize paid. And And past are from up the piece I Robin. tariff government thing that has recovering transfer, which funds Hey, that us would funds mentioned much cash is is I've on tariff the process one been electronic has that to cumbersome, the as opened

that much current from just benefit it's a have added standpoint, the P&L environment but event. a obviously liquidity net So to a is appreciated given

Robin Farley

That's quantify X-K you that going assume we're in of terms terms be – that when in results. not you a something are tariff? or or QX Will even more. to to wait XX-Q And you'll you. – quantify in like great. it you Thank put of mentioned an to something ready I

Michael Speetzen

position It's I we to guidance Robin, the that, least back to we we'd back to get second to start we'll be a providing tariff contemplating would things to impact. If going get quarter we for how in going my if certainly and at to earnings. and start do see that wait out, around until color play we're provide to the stabilize, have half. things were hope, we're think if

Robin Farley

Okay. Thank you.

Operator

Please next comes question from Kennison go The ahead. Craig from Baird.

Craig Kennison

into taking context what could competitors failures out you the secondly, my network financial put good Thank And Scott, and crisis? last that in are for and what does then the to Hey, for dealer frame relative dealer how to that your doing stand you morning. crisis of question. you level support this doing? are

Scott Wine

Craig. question, Good Sure.

in Steve inventory position have us balances we've that X%. it each up how was you about the despite his now the It more they're talk program. that fact where mitigate of We exactly us in with things going as not than to asking And ship. to team to It RFM, inventory. made to dealer was. asking knew plans targeted. together product truckloads individually of quite better often know, frankly, in put investments with for was huge and One it a put And

always days the first and in motorcycles dealer May. we've were well. felt not of provide just his and locked the just to that managing interest down, ones support and flooring through end comfortable of do. we as did sure well these But the inventory those one were having expense early the team covered like So dealers things making when road things Steve

We really protocols have shared stay all rulings Pucel CISA and the to open. that And and whatnot. with can they COVID-XX of the is best our us shared navigate all related for to working on Ken advertising how And we retail really his are team thing have again, do advice support. our most practices the can they right have of And promotional and procedures make heavily various far. been can so provide what's that's really and so we that accelerated now not sure important

dealer at new business was far – that point. to mean, you the As I as I as dealer closures, recall,

We’re really surprised much. that how that It and not in X% few seen dealer closures we we've was had. range,

the taken self dealers indicated Mike they’ve either stronger. As dealers weaker over remarks, in are out years his the out. selected our that We've

a strength to pretty pressure really partner good. through network another move dealer is So is one has as good And we the product our of from points dealer us to to what alleviate with better. Wells been And we Fargo see usually this. overall, work is ability the

Craig Kennison

inventory Would at of QX? to end lower dealer you the expect be

Scott Wine

Well…

Michael Speetzen

Lower than Lower to what? QX.

Scott Wine

I shipping on we XX%. mean, call, saw got retail That's forecast. up our ramped not so Monterrey in hard QX, XX% again. we've The mentioned than down through can say. we've we yes. April start It's crises We we’ve anticipated. I we get Lower as what was the mean, before. – these been to got to or

throughout would lower a inventory. it So but position to in again, have if we're us it dealer not continue to extrapolating. That's does, put going the quarter,

Craig Kennison

you. Thank

Scott Wine

There are like four questions, Craig.

Michael Speetzen

question. Next

Operator

go James. from Please Next question from comes Raymond Joe Altobello ahead.

Joseph Altobello

guys. Good Hey morning.

obviously, last Just the RVs us up week too. for on as that follow-up well, boat surprising RE/MAX on were previous although, mega questions did in sales say wanted April, to U.S. retail

purchases mean, stemming that So much you in said, to? ticket not that I of I created was number? is pent-up guys all of guess that in But there terms big from March? are with how demand attribute that maybe geography what any I And do that equal. is difference mean,

Scott Wine

are things with as throughout to. couple – There's of is stay-at-home don't attributing want buy, a have get do our One outside. that prevalent way. even powersports orders quick I've the products. so launch people customers access it I were And that said they hibernate. that that deliver we could before, dealers think We program get to country, found the to click, And to the a these

vehicle the areas. are I great would of remember And in most hotspots not riding with COVID-XX what off-road call

and So that areas most in as been our hit. I believe of that hard haven't customers potential are customers

helpful. So Kermisch, credit that Krois, of And that's again, the that really credit Steve Menneto, Rod really And doing – give work that think a executing. I job seeing due team results is where just of is we're nice certainly to Pam want that. to the

Joseph Altobello

helpful. could Is we about of about I rest I think continue maybe this for year very if terms for Could And mentioned a It's the Mike. CapEx going the sense expense and operating how for flow get that year? cutting thinking you QX, year? cash we're with to XX%. in the of you're number the follow-up number just

Michael Speetzen

Yes.

I is, a think OpEx think, took to the QX. So reduction we about way pretty in heavy

the If bit back timing a more the at of to the little so releases around you going press look is weighted. QX furloughs, be heavily

level of the to in XX% capital be in spending. It'll last it's about that XX% would year, you range the our about down of operating similar reduction to full-year versus expenses I probably the XX%. And relative that be would think a probably tell range. you If

Joseph Altobello

you, Thank great. guys. Okay,

Operator

ahead. from Brett from question next The KeyBanc. Andress go Please comes

Brett Andress

Hi. Good morning.

something a trends? in kind Is give you I extrapolate follow-up stimulus-driven? just catch-up I guess, about the of seeing demand? Is you're behavior? it that around comment do again thinking on of Just is it hesitation kind April. consider So there? what you factors it the retail factors what consumer those in you mean, to to are

Scott Wine

to there's demand. point shock mean I impact at consumer big that's it and it on been system. most the believe that of stopped have a we refer a – as – like I just to commerce I in to an got the to country some

not We seen that. have

part So caution. of what's that's causing

we're is, supplier got risks. through. Italy, in working still Secondly right battling now. increasing we're We've working in is Mexico we're India, an concern problems problems through

So to we've make got that. we need sure that

that we Now we granted, significantly to cause better and it's of finished that. now we've thought, than got can can [indiscernible] manage we're but goods things the and again, pause, – those are that some trying we us through

Brett Andress

we trends are trends? April you of in us Got sense it. inventories I of April? presumably sales and lot impact around Just we retail to that top of that are that And at retail starting are the just a kind now, inventories where the comment can those of give saw up on sit with where kind suppliers. starting – mean, you especially of following last a on lower

Michael Speetzen

have about too problem at do in dealer the any plenty end now, we've zero Maybe low we got of like quarter, a be being inventory that'll No, the of the inventory concerns. inventory not still concerns network. right but or factory

Brett Andress

you. Thank Understood.

Operator

ahead. question The from Gerrick from Markets. go BMO comes next Please Capital Johnson

Gerrick Johnson

kind of number XXX Maybe want margin? the March March, would Yes. allowances? of if be? everybody. gross on there support of other that April, how down points. question what my one-time morning, about be Good of Thank your And and about Joe's any weeks sort plan last you a does you. to floor reserves margin question two combine April. gross affect Was then And basis I first would or could acceleration three weeks just follow-up adjusted in

Scott Wine

accelerate usually it's any April would in – and it's impact. and is not the last big a think we beginning XXs, was there open but last I two minimis, because of but because weren't of April, because not March then all number was it de out large not, the April two Gerri, that it good, And our for of of first two did retail, since was improved plan door have what start week April trend weeks it doesn't said really really but then floor weeks. weeks first almost an wasn't the but very minimis, down much didn't bad a be those was support gangbusters is then. of two And dealers down the March really March of a rather year so weeks. last and is, – essentially Well, de quickly, The it's really it

Michael Speetzen

the does of our promo gross what margin. at if cost. – hit far margin as we look of deem From is support couple Gerrick. Hey, dealers the a It's the we a as versus that QX things. margin part plan the it cover interest company detrimental relative financial floor for you then substantial. And Scott last not right, It standpoint, to size the year, is was material. pretty

In starting that that et COVID as for. drop rate, sure that the other to is, about half half of we started were we where looking had the that is I factories provision pay, have we had shutdown, promo, talked my remarks, prepared all typical to cetera, making at

balance something the that a through that year, look gross margins of standpoint. profile and all taken, sales we've full-year XX% would we more the rate from actions drop our assuming it expect As like, the to we call look

Operator

from comes The question from Wells ahead. next Fargo. Please go Tim Conder

Timothy Conder

getting preserving policies, this rolling. to you where stand things on your MAP And can any first patch Gentlemen, lastly, difficult just to just wants all, you keeping probably other any question. then a ORVs then can Scott product way ORVs, And oil what specifically lines, and confirm part. of with congrats one? out it it's maybe On or take very know you. to the on and is what you Thank parse and the Mike, whoever I doing ex-COVID?

When risk, those On you us mentioned any color Mexico, there? expect could Thanks. China? additional and you you on resolved any the can supplier be Italy, color give

Scott Wine

policy, – of got channel Steve our extremely rich history one the with understands and MAP well. has Menneto deep, deep

it what with to MAP to he's sense in still job what protect looking And done dealer giving I at Steve's we MAP make to makes we them Rod look they've opportunities a And what MAP. – the restrictive. policy. is brought can Krois, do What have is and sense it of done think We believe it their a taken businesses. doing just at make can't not does good grow so and is to where profitability everything

slight architecture there's policy, to the all. adjustments grand at So no been but change

Italy. and The California, that in problems this when suppliers then other Even with coming chain, and we is it we New suppliers then it which better managed a and the well. of get that more it India, in and couple moved, with suppliers starting had and was management. was a get was back hyperventilating, very in to in lockdown give question China, supply address come thing were through that's ultimately but York, for is to global started then comfortable bit, they scary, how reasonably weeks it it, complete would Italy a we

their to right but and will to expect there we'll seen Mexico, we're in get come countries, now these processes we they And the around concern not all back other be thought but is yet. like able of in that we've operating,

Operator

from Badishkanian Research. The next Wolfe from Greg Please comes ahead. go question

Gregory Badishkanian

you. Thank here. quick Two Great. ones

mid-teens, up worst share you the best the position perspective? you the which retail being look one Who the a ORV as the we April you driven then And is, categories. for strengthening is best, versus in powersports year move position by market think about just throughout rest of operate from versus do as out is that industry of how one all out is First much gains? year, just

Scott Wine

industry, share research but we believe. some market and done off-road we That's and We've what believe it gains mostly vehicles. Yes. is some also

be consumer the best month, sequential but were still continue demand good to certainly they've negative Motorcycle good, opportunity to had getting But a there if improvement that you to that down bring reasonably could as again, month, throughout has relates so it help for bring lot we getting trying is they're still I take side-by-side to a been better outside inventory weather going it's back. that. sentiment to dealer for and but the boats growth. the less think will. the worse, for Boats, so

Gregory Badishkanian

you. Thank

Operator

next Hardiman Wedbush. comes Dan question from go Please from The ahead.

James Hardiman

James. think I that's me,

to from in apologize. So the March XX I half maybe this, answered getting you've going back mid-teens, so, of back if up to down

your have think bottom out? As I are when that do we that you get back can on did to any of dealers Where that visibility when today, us And XX% now sit XX% open. you and number gave XXX%? here

Scott Wine

don't was It April out. recall. bottomed I when sometime in it

I almost The or It it to that other it's going like CISA remember don't date never each in the just was. again, was can know exactly we understand even number just the but XX% question? through – April, was that. we, and what got making like anything first dealers don't combat days XX state was and sure I ruling then and the navigate the down understand What hand-to-hand through our and of that, what it, it,

James Hardiman

sales rather already Well, open seeing the being that But other goes where think question from about just point, here. is dealers to last improvement the dealers was in accelerating than open? it were just on that more more you April clarify

Scott Wine

itself if were a way that to a really appointments. job. about job there. really I doing mean good ones it the is probably of the a nice the protocols, mean, aggressive feeds network environment, you a the that creating I safe kind opportunities mean, are it, dealers using to of And the found doing I the be open are managing Sure. ones I right sooner. mean most schedule that they're think just

James Hardiman

Mike's is said then the the think And to mid-teens be Got range. for with help XX% demand and bridge up comments you weakest, to overall expectation down the I it. or XX% up me April about in XQ

the have bridge two. trying saw just was? answered I'm to was April latter you those may this, made before how assumption You strong

Michael Speetzen

Yes.

Obviously, couple the that is not ship. to Monterrey a it we've having what XX% The performance April capability One, is XX% back up profile. And our Scott our the things. got James, and pretty actually is demand and than back to two that the things. shutdown, One, our we demand. the And factories online. of did been with represents meet mention second factories expected better by ability part of Scott is was So substantial really driven as mentioned, were expecting. to coming running, then

and patterned quarter as see dealer really where we well into we of obviously, after to inventory wanted that the it as as the the changeover. we second so be year end to got And leading model

still is implications is indicated, plays, environment. Steve continues and pulled what this up trigger. that's June up April pulling got with play to it's We've a evolving running. supply why a see But his want working So trying completely not as guidance, got and that still plant We've that's to the out an and as and assess We how chain that. we just to we get still daily that's and a to to May for easy are trying and Menneto team we're get running. network as

James Hardiman

two those and not other connected don't thinking to XX% down, know, correct. That's XX% now, May In would it get down right to or June I to words, clear, one how that XX% be numbers to be you're to just about not need But XX%. another. are to

Michael Speetzen

We're mind got promo retail the to dealer through make involved, sure it. because inventory, why a of to it's in managing guidance trying you've Yes. we're environment, we're got bit pulled again, actions trying involved. the I a versus in mean, wholesale. just keep we you just also I mix volatile manage mean,

James Hardiman

was the a to Okay. demand apologize. comment. thought I XX% XX% I

sort You're saying wholesale assumption you're that's a that reported making. of

Michael Speetzen

Correct.

James Hardiman

Got it.

it. Appreciate guys. Thanks Okay.

Operator

question go Please Next MacGregor from David from Research. Longbow ahead. comes

David MacGregor

a volume reduction? with operating I XX%, Hey. that much a impressive of Good structural back guess versus that how down Pretty morning, much everyone. of the comes expectations second is expense progress permanent around how quarter recovery cost

Scott Wine

we highly our and I customer-centric, but people at it was really cost. mean operating the structural cost And efficient actions. we've other some permanent structured think was this environment across business. unless short-term of stay in things cost I most demand that. But like how And structural look and out are won't some necessary. it's of that lower will do do them looking mostly it's there the was cutting expenses, of it and company that to it does business repeat what of be of furlough Most type advertising this as business, managing the

David MacGregor

very it That's Good. much. Thank for me. you

Operator

ahead. Next comes Morningstar. from go Jaime Please from question Katz

Jaime Katz

quick Hey, good morning. have I two questions.

demand April, to fair patch or XXXX, a on commentary falling changes going that you there? off did not seen the of reiteration like is have we would imminently given it that oil are seem in we have First, any

Scott Wine

– weakness, we've hasn't work sales gotten got it just repeated oil or over I couple those much players hiring up a efficient. remember, they patch that was level itself in think us. to down rigs in And of customers. more regions the last to does years of was of remember of much it were mean to so the it so many that the on That because ideal people XXXX, to that

less labor price the down, they people. Before were went and needed and very efficient less

a going down So to it's such I – not it's but yes, it's to down, go matter base. much. going won't really It mean, going from get to go low

Jaime Katz

or then taken that Excellent. I'm are segment And for margin squeezed pretty any there have guys curious got going margin you forward? steps the gross mitigate to aftermarket parts, for well. [indiscernible] out if Thanks. degradation

Michael Speetzen

that will later improve talking mean, I'd spend But working that year we likely margins. it. were year we at to I underway point, we're the time Yes, things in had through there into about some get that we the you the this tell as heading

are at broader Craig the some the Transamerican, think than automotive we compete they I team's against. peer and segment, the tend be performance at actually look they that groups of better to doing as which

to of well through a continues they're So and be wholesale a bit managing the retail challenge. channel quite

Operator

from Spak RBC. Joe Please from comes question go Next ahead.

Joseph Spak

did impressive liquidity the got on everyone. least us, short morning, surprises, think how you at one in was order. Thanks. I maybe of work lot and Good to quickly. But hard Polaris of so pretty a here Mike,

question. cash the you a going hand forward? in once about event, structure, cause a but maybe Does capital minimum real think you on this to this lifetime simple So change way liquidity and

Michael Speetzen

question, a good Joe. It's

spent that flow. the the probably business one the we in daily time think had not enough managing I things just cash was of

the focus much a paid the have finance we as with have payables, managing most we benefit, different receivable the output ship. which We of that lot is get wholesale our the companies well than companies after side. as to And side relatively structure quickly on

tighter in cash place rigor go in forward strong we didn't liquidity We've been room will probably will this war definitely quickly put have the to continue process. we that forward. we approach very and change as we go very fortunate such as That as have that

at I think standpoint, were. we it optimal that wasn't level debt to from mean the I a be

and and continue to the which have, strategy pivot company we the delever towards is think I had that. to rapidly

once look will We a certainly take at through. this we get

we number and sustain of to we'll short-term we we're levels I look then assess as that one we can be I at schedules sure is profile, longer-term company Just the things probably think lot backs aggressive going forward. that, with leverage to as priority be. paydown make make how right the But sure run the that look like we'll as think And ensure we that as through comfortable to do now just liquidity that. understand really a and

Joseph Spak

the year? working guess, know working Mike. again. the thinking capital typically given the capital Maybe are like about a I over But use quarter extraordinary I the or balance you happened sort is follow-up. a rewind, of draw that how first events, down Thanks of

Michael Speetzen

dropping material. number around priority really focus been It's been has Yes. one us inbound the for

of but slowdown I a have they receivables. have the mentioned, they also of wave happens, bow As bow most companies payables, when a wave

so And positive. offsetting from to tend slightly or cash they a be position

Our company is structured differently.

was QX. collected cash QX in in Our the materials we're on that paying for

difference us. And the timing is to paramount so

I those is push of SIOPs, track what cash that give of probably be coming inventory now, clearly to are back on cash the anticipate standpoint the and were rapidly faster a organization able down, We've would credit that. to back and a link year the go lot our I daily around being we supply I was watch the that inputs we And our down. through planning basis a rerun will we to shutdown then the expecting chain for has we will and demand executed how the can inputs. it, relative where and seen from team continuing that to we're QX than expecting. something balance in help our and really the be which

Joseph Spak

much. Thank you very

Michael Speetzen

bet. You

Operator

Stember ahead. from King. question Scott comes Please Next CL go from

Scott Stember

far so what like the of was you March? in for what saw it promotional sure the April ORV back XX% mentioned environment in in half if you I'm decline the versus not

Scott Wine

one I promotion. with not retail things April. we're It's more committed to in of is that promotional mean the chasing down

nice done his and Steve promotions. of a managing job really So have team again,

not that So we're competitive, leading but way.

we've campaigns Our the in that with dealers is advertising brand our see think partnering resonating and messaging really that The that we're you way gotten. is I better.

So it's bit the taking has little promo, more promotional less a been industry April. in but

Scott Stember

TAP on down. Okay. And last just question

in XX% made April? month so a in there? about is cost there think from are in And I How that be that or far need performing perspective the TAP vicinity. moves to any

Scott Wine

team tight cost is big I Craig and how Well, cost the most down infrastructure taking looked The don't step at at as a as of anything And mean, third in United I stores issue States. there moves. the lot to holistically California. really you have there. – TAP a is know, that's as locked in the know, as down are their almost of retail about TAP

problem. bigger a that's So been

seeing we're know, that up. a presence you big got they've As online and pick

steadily that was again, they in California them. So slowdown but are improving, to impactful

Scott Stember

have. Got it. I That's Thanks. all

Scott Wine

Thanks.

Operator

Next question Capital Markets. ahead. Please Lake from go Mark comes Smith Street from

Mark Smith

dealer trends close that you kind versus April the many see And maybe are today? and trends you Can in you XX% insight talked some us guys. then open any that of give Hi additional boats? How about? boat in into

Scott Wine

data true open, of CISA know dealers as on while vehicle to that not eligibility remain did the boats, that fit clear off-road what have don't do is granular is for into most but we We Yes. both.

said, So recognize people, weather and and that more pot. we states it difficult That gets even cause Michigan bit up. little for that have warmer a as important many it boating open seeing is an was the especially a other of Minnesota are recognized,

closed but pretty are they on, up many rapid pace more at a – more now. opening was it So early

Mark Smith

have if we insight hands look any give on at us coming have it even then you can that government the you and impact sure into I'm within the consumers had, not if segment? And just PG&A maybe checks

Scott Wine

deposits is lot Eastman of there We were great anecdotally business. vehicles. a PG&A that put well, and did down Steve extremely hear $X,XXX a does on that performing with job

not big but that's hurt. that sure wave, I'm didn't certainly bow a So it

Mark Smith

Thanks.

Operator

Please Swartz from Mike Next from SunTrust. question go comes ahead.

Michael Swartz

for why ORV Hey. in think this quarter second was in but Good Scott, and out about morning, that maybe you did comments, your guys. I any apologize reasons the to missed quarter share the I how if down and call beyond?

Scott Wine

sequentially you less quarter. why. got didn't that I can the throughout bad quantify I it tell

of lot it a was the pay the dividends. work So team has across to all categories. not that And started done

pulse So it on doing his I have I feel and their really they're comfortable and are team April. turning one that that Steve as in around, mentioned,

Michael Swartz

just quickly question boats well. And a Okay. as on

in recent brands in weeks, – you segments? boat you quarter material of the brands. during you're to were your those think couple revenue I announced down How shutting a

Scott Wine

The none. revenue was very profit small was and the

material they So it – doesn't really to I boat actually. weren't the mean business,

Richard Edwards

Okay.

Next question.

Operator

go Next Conder from from Tim ahead. question Wells Please comes Fargo.

Timothy Conder

revenues that now, My oil of quite been patch end your the for question or that frame on the the maybe year it The just said reduced want XXXX? you bit, percentage Well, guess, you as Or on oil I patches. patch. however of as update oil a just Scott, America in the North from to any of let percent a me the revenues ORVs? stands rephrase it, they've where

Michael Speetzen

timeframe. it more was XXXX, now Yes. That it demand comment at the had had Scott around down in call probably less oil. the something that outstrip that correlated was think revenue just It less is Tim, about line and back XX%. made peak, XX%. I the movements with are driven in, XXXX

the move to regions, just be I think, is. tend tend tied economics what don't And levels economic track done Now certainly to oil state-specific. it than cycle. I back which current the supply drop all reacted the that's far They COVID-XX has what to to to specifically. and that in with has broader demand greater the broader the and think those They are more demand we

to now. So right it's the two tough parse

Timothy Conder

Okay, great. Thank you, gentlemen.

Michael Speetzen

You bet.

Richard Edwards

question. Okay. Last

Operator

from Andress Brett KeyBanc. from comes question Next ahead. go Please

Brett Andress

you second expense But give this. And for then sorry on cadence you XQ, back planning color any to launch did new in. And did operating me for but anything know you you your gave year? product an year? some I Thanks the us for if changes the the number Mike, mentioned year? give you squeezing this I'm question, are already kind of

Scott Wine

XX% said think year. for the I down Mike

Michael Speetzen

Yes.

Scott Wine

pushing couple are the planning years launch a calendar not out we out And of push – to our more cadence. kind are launch. around to not Remember, a went we of product we ago,

to summer So a that risks. we launch. Right supplier it wasn't tied few now, managing are all

can So we're to time but completely going we'll of on or based is weeks that manage launch a here of our chain now. on couple supply managing out get there's execution. that appear through doesn't there be we bounds, that. through right And anything supplier There and to

Brett Andress

Thank you.

Richard Edwards

morning, have for look Thanks everyone we call again to thank participating to you day. to good want quarter. forward the next again, in I Okay. and talking this a and

Operator

The you today's concluded. now presentation. conference attending for Thank has

disconnect. now may You

Polaris (PII) 28 Apr 202020 Q1 Earnings call transcript