Earnings call transcript Q4 2022

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

Operator

Good day, and welcome to the Polaris Fourth Quarter and Fiscal Year 2022 Earnings Call and Webcast. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to J.C. Weigelt, Vice President, Investor Relations. ahead. go Please

J.C. Weigelt

and and Weigelt, Betsy, Thank or everyone. fourth afternoon, for call. Thank President good of J.C. quarter XXXX our Vice us Polaris. year Investor I'm earnings joining you, for morning full Relations you at

presentation a our which is We website slide accessible ir.polaris.com. at will today, reference on

as Mack, initial today summarizing Officer. Financial Both for prepared remarks Joining call Speetzen, we'll questions. Chief Chief are me take on our Executive our our quarter well and XXXX. Then year the Mike expectations the Officer; as and Bob your have

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

XX-K reported refer XXXX presentation are GAAP and actual continuing and of for refer on details references our additional the non-GAAP All unless uncertainties. for are can regarding non-GAAP Reg results year basis, fourth at and to end quarter full our to schedules XXXX adjustments. our operations for reconciliation XXXX guidance to to noted. and the adjusted risks Please the an otherwise G You

Mike Now the turn call over Go I ahead, Mike. to will Speetzen.

Michael Speetzen

and and everyone, retail J.C. Good environment joining both We us versus today. another you Thanks, morning, our expectations. record and from lower thank difficult continuing chain a supply for earnings delivered original sales for year operations despite

in delivered team and your record in we proving over to share position also million a XXXX the I executed best is thank the again in once challenging relentless improved through cash our team this Polaris We want powersports. repurchases. results $XXX effort environment, entire of

continue focus team to made And with a on XXXX, R year, RZR in orders on mark the navigating to we launches the million open supply as and with didn't delayed R. in dealers With progress strategy intentionally focused more $XXX industry and X-year Turbo than challenges within in delivering on our innovation. we R&D we Pro on customers, product the and in we several powersports. the invested chain the wide XXXX while During make category stop investing side-by-side our renewed

And through that the a leadership, technology resources, positive and has extending time redirected a With our focus we on RIDE our connected introduction and with COMMAND+. of divested returns. had industry customer. first our powersports on margin EBITDA and industry's decision A TAP the impact on our core focus

always the is the our we foundation priority will safety innovation #X While of do, be our riders. everything of

vehicles while product acting in if are and needed. our behind investments We making standing safety

in warranty This past or saw year issues. designs by largely an driven increase expense recalls supplier and legacy

monitor years issues. aggressively in dealers to what and supported customers, safety and committed and to believe of which issues. the these to broadest is identified post-market recalls industry, we frustrating We quality enabling but be correcting investments us surveillance Our these recognize programs have one the in are over I identify are the for for

our combined high-quality focus investments our our monitoring with our testing, supplier bolsters and manufacturing in after products leave quality engineering to on with floors, safe, approach factory our This ongoing vehicles. processes, they even providing customers

is make recalls produced our against motorcycles and On-Road XXXX that I'll point Last XXXX powersports. from we per through X,XXX vehicles automotive, benchmarked

number Polaris terms of quartile was the X,XXX in of produced. in the fewest impacted top vehicles per

riders. and We improved safety to drive quality in invest have for will our and continue of

look to $X.X we fourth grew sales quarter XX% specifically, the billion. As at

market. slowing retail Off-Road year-over-year offset down recreational by growth marine, approximately Indian a North with Off-Road was American modest and utility Excluding in Motorcycle, X%

what trends in similar into These quarter XXXX. are continue and third are we expected the saw to to

overall the performing and X was share consecutive we our market, with of market. of the X.X high and in low approximately the retail concentrated the market best in share quarter market of of and On-Road quarter loss sequential quarters growth gained fourth declined share points end saw While the down year, it share share end in we was ORV. year-over-year, Pontoon

Both XX%, despite adjusted our that headwinds I'm overcome. and gross to interest increased and performance, the warranty relentlessly from record unanticipated worked environment drive EPS. costs, exchange. expense of considering profit growth EBITDA foreign nicely year-over-year team EPS and the proud adjusted margins of the especially headwinds expanded to

demand the down Now Polaris year-over-year let QX X% the by environment. was story sequentially, retail in about demand talk mainly down and REC me mixed. space. ORV X% The driven remains softness

business, customers, products year-over-year. factor the commercial our low up to RANGER represents not sequentially of into digits utility were Remember, retail including Off-Road mid-single and ATV which and to do Our sales XX% our space approximately metrics.

and We customers farm, work demand as care ranch, multi applications continue job or site on their stable expect for a here use these see homes. to vehicles

I'd also driven weaker QX stop in that recreation a many retail being add was of RZRs partially sale by recall-related December. in on

free declined in improved. backlog as the sales of anticipated, As the quarter shipments

RZR We our R premium they with Northstar and remain as due Pro to R, sales in and competitive Turbo customers to as their continue see RANGER models such favorites features growth capabilities.

rates few vehicles record or are higher-margin points A with on that PG&A levels, at accessories. include indicating demand customers are other attachment near their upgrading

rates see of to the historic customers trends, remain elevated new to continue historical with steady Polaris both and while is short consistent a range. or long-term mix We which repurchase within

and healthy seeing And rates seeing to repurchase we're Pro and consumer upgrade their point these a were RZR metrics a in with highs financing, vehicles position. vehicles continue on at Northstar RANGER to R, we're RIDE to the X-year customers even financial and all-time Interestingly, return COMMAND+.

FICO rates measured with metrics space, to changed. improved approval the consumer activity XX% approximately strong Also, and XXXX. and versus consistent in interest online searches, not up versus meaningfully online organic continues pre-pandemic by with are has Off-Road last be year. scores credit There availability

leads. web saw also strong Motorcycles Indian leading to number of record traffic a

remains models stable recreation. So content. while with thoughts demand. are utility a through move by indicators segment, let is there more me utility, delineation wrap with up moderation between pronounced as less on you and soft In Demand in Off-Road, recreation our

continue for trends expect future. We these to foreseeable the

in that On-Road QX market can has quarter gains growth. second strong it XXXX, strong India premium of marine share share time. optimistic the long we are product for with a retail to With in been up be the demand continue had motorcycle. seeing The line we is for healthy. Inventory continues gains in healthiest levels a at row a In On-Road, a

So customers and the we're seeing we longer. shop kicked far, season optimistic are off bit thus as busiest around season Show year. has a dealers enter their Boat

dealer North to American Turning inventory.

We present environment continue business move history. versus seasonality closer even more a operating within more to normal with our recent to

sense to inventory seasonality couple over For we specifically, before data disruption a ORV of get with that retail occurred past average from years. XXXX the through American XXXX dealer of the the look and at North

environment we customers retail The data for inventory typically come know inventory We seasonal of we to which shows in more the operating QX, sense retail the dealer understand think as this levels the see before context a units important enter and to spring build in looking ahead summer summer. in as makes typically and writing an normal our and better lowest highest is season. the heavier season levels

current make As dealer we level. towards new our optimal progress the for continue to inventory,

we which fourth value dealer currently remains progress on with continue especially in made for inventory XXX% these products from are is Northstar of where dealer our company XXXX of to call inventory up shipments to refilling most $XXX we see high-end million, side-by-side million levels, except but optimal the the the well demand. to strong approximately our was fact, its due the the $XXX we below below XXXX, discussed RANGER XXXX portfolio additions, levels. at We Total see close to October In quarter.

We expect to inventory reach in half this optimal first the XXXX. level in sometime of

more normal sell availability. to on products needed dealers our a environment given and operations worry So into operating traditional retail ensure season strong seasonality, channel where not return to today, building are inventory a focused allowing about and the to

EPS In summary, in exceeding increased and and and as will ratio our it of turn exchange. year at and fourth guidance from summarize as our $X.XX our now interest full high to high, XXXX and headwinds pressure expectations. coming quarter despite guidance XXXX in was who Bob? guidance rates the with well chain foreign performance by the end Bob, say-do supply revenue in and over I'll

Robert Mack

call volume, good with Thanks, us higher grew record mix for to sales up Mike, everyone today. to was and from a International or on the and QX vehicles. quarter morning price priced contributions point another and G&A X% marketing from increased currency. a expense expenses. profit, EBITDA drag year-over-year, Adjusted rates. X percentage continued higher margin warranty, Below up interest points, overcoming given overcoming operating tick basis expanded XXX afternoon to

rate In in fixed executed we of approximately fixed at floating million us debt will XXXX. in XX-XX maintain our target all-in allow for an starting This our X%, near XXXX. ratio to February to QX, floating to swaps X-year $XXX

a marking quarter. continuing up repurchasing new we X.X Polaris. Additionally, for operations from was record opportunistic Adjusted EPS million the $X.XX, XX%, were buybacks, in quarterly share shares

a For want to the few call full I year, out things.

Price we what favorable mix grew share we by results. said both $XXX We do by sales did with these over higher would in and repurchases XX%. opportunistic and and we drive content helped also shares. First, million repurchasing vehicles were to EPS

delivered challenges, and supply additional proud its chain despite was challenges, results not warranty I without incredibly team our year am these The of costs. who and rising ongoing inflation

QX. our Turning results segment to for

which Sales impressive to driven was growth Similar PG&A gross QX, Off-Road. profit were margin expenses sales more X%. offset XXX rose with warranty Whole were points. expansion up up $X.X goods relative price basis to year than last mix, commodity an and XX% and increased start margins XX% Let's by Adjusted to billion. higher costs. and

better We performance, North low Looking share there utility. the with is the by ATVs. recreation, in modest America growth to declines believe performance thus loss Within X% industry at pointing in in was quarter. about RANGER was digits, in versus in down retail offset single ORV down Utility, somewhat

expect the XXXX. products, our Some we recall that hold to work on holds was loss which highest back first dealer QX sales to due we through higher and of gain ORV share the in able with and should and also our to would gain as lifts marked healthier we share were inventory. occur share recall share quarter. in quarterly performance the shipments Sequentially,

government continue as Snow well associated XXXX. trends as impacted communicated Off-Road now new by our was segment as innovations, been look utility dealers. rework see portfolio to double-digit negatively market in defense our as We fixes X across business. our positive have robust in recalls with growth in healthier well gain to where inventory commercial, share With we and to

year, includes of while which were pressure strong businesses $XXX Sales of Goupil a versus business, along the meaningful mix Remember million motorcycles, that thus, XX%, from see goods international revenue, with you our On-Road On-Road Switching Aixam PG&A global was last up whole flat. FX. now. in XX% most France, with saw to and our up Indian segment

up in quarter second chain a more motorcycle were helped the into settling we the a share was and XXX heavyweight shipments as of Gross for its supply the motorcycles to margin On-Road profit was row. towards price. Indian in and normal to Driving to team year XX.X% expansion execute This are in well on the second this continues path highest the as quarter volume basis all environment. gain points profitability. quarter mix

a we With retail to low return and of we high-end in models hard price which healthier to mid normal it in the up inventory, boats make Moving mix for North high-end all Marine work as XX%, up year our expect path mix. to of quickly brands. boat we more given were chain American been successful in by Sales have Inventory high-end lead $XXX all pontoon to and work prioritize recent set should us dealer gains. across a XXs is as segment. season. boats. a XXXX, some and progress to improvements supply X We entry, has but driven show a to dealers to million still do continue down has entry was share healthiest to

up innovative an outperformance products in on launched. new were price, sets new margin results margin last for by and data, abundance from expectations stability. being profit Gross segment with little expected strong performance in gains points The improving technologies based and XXX was supply Reviewing mix the our basis line along with with the full a highlighted Group. year a On-Road up of year share us chain and actual XXXX,

financial position. to our Moving

was from second to of to continue with XXX% sheet flow benefit year. XXXX. coming The further the growth expected cash healthy a is in over in continue cash strong of X.X% up position. -- X.Xx growth We the and all with momentum our the leverage ratio balance anticipated half year-over-year a at cash Free

year of over we straight for our in with are dividend executed scenarios a XXXX. spent We our aristocrat, dividend. cash our a believe investing generation our commitment sales As we XXth in variety sheet set to R&D We capabilities of up concluded on on XXXX. balance in well $XXX simplified the in broader market and spent CapEx of our portfolio increasing million X% and on with

Now guidance initial let us talk for about our XXXX.

that Drivers order to expect mix to impact, performance new X% content flat to for products expected majority It We the and and of our launch like the the of second currently half be sales in XXXX. favorable expected products of products, the our portfolio. to include PG&A. note important is above to up vehicles are priced relative from in higher following in new be more year

is Second volume.

expect retail to modestly Off-Road. outperform We industry in the

of those year to a business to a have performance. our commercial units expected have but Our lineup do not towards is expected retail bikes. strong count competitive also share strong On-Road a year, very is with

entire its all brands. as will believe lineup with stronger be some position well across boats as across inventory Marine in a X We new competitive healthy

with or increased due carryover as the to a and view impact stronger of price over Price basis is deviation finance to We could the half expected year to from the the being flattish the FX industry the growth interest in contributor headwinds offset in positively results. industry of promotions negatively and XXXX. first in sales XXX Therefore, points. expectations any magnitude year. retail for These contemplate

Another year, by which Marine with Off-Road healthier launch share be from digits, sales up and the swing mid-single second is industry. new be new dealer low new year. segment, expect the grow somewhat single offset low sales last flat healthier to be the products, could we weaker to factor expected of timing and of inventory, dealer to With gains relatively by to a half are retail and products driven digits By in share On-Road to expected gains. inventory, products and to

margin a associated modest and expect and premiums cost chain. with include healthier we inflation at mix, profit along the volume margins, Drivers adjusted EBITDA For and expansion gross reduced with supply line.

increased acknowledge interest to and headwinds include financing FX. Some

to movements forecasting currently are mainly Canadian EBITDA, of to approximately headwind due We FX an recent basis the XX dollar. points in

are carefully watching the We also euro.

most continuing from for EPS X% consumed of higher the Adjusted to operations interest expected down expense. with X% rate be to is drop-through expansion being up by margin

impact approximately combining interest headwind work the In adjusted count share XXXX, in we did FX headwind expense given estimate a to from in of shares our in offset rate of a to as this fact, and the to EPS, we higher $X.XX some benefit be the helping drag a repurchase XXXX.

increase to and Operating to is note model and encourage it tick A of back We over are up to few you This sales I normal QX, flat levels sales so return expenses percentage $XX.X other Mike. expected to as driven that to items being to turn by advertising bulk to of events. before a attributed more with shares million. roughly dealer marketing. a in-person the

working flow income XXXX is to capital be be drag. interest to dealer with higher free expected a in and is to income services Operating increased up expected investment Financial significantly cash driving rates inventory, more XX% and versus up as are receivables. from be expected not

outsourced expansion several in historical meaningful activity, Mexico and levels. in Lastly, back higher to capacity year-over-year. other going That back at CapEx we bring to activities shop investment molding drive injection to fabrication investment planning facilities with along are capacity is a

of Mike in on briefly, control growth this excited we while opportunity more will taking the touch chain. also supply but invest our to about are

to intend and both program. At to bit we continue deployment share offset our follows: we of stock-based look year to have priorities pay the to that, our as this from likely in year. balancing business, at increasing XXXX a we straight dividend. down with debt look compensation repurchases dilution minimum, our a Our of intention and After is in capital XXth are invest our

the we best be a also think and deem part share and debt base our financial recall, reduce off we XX%. of our are is making share say by what as we you activity X-year we plans. And is position. with decisions company our count Therefore, while the what strategy pay with of healthy repurchase least can to repurchases I to given concluded at opportunistic return balancing the based year, down If initial expect ahead for metrics these last

expense. think year-over-year. a do to worth of we ex as we there some to foreign expect retail be revenue, moving to parts those modestly quarter, there and interest increasing, promotions pressure are Remember, revenue with Marine headwind the and Lastly, We about both will out exchange netted profit up mentioning. first then year-over-year flat expect gross are from And and be margin.

in are working expected premiums. and an Some reduction items price in favor our cost

On we of XX% have full realized expect with year have to to earnings being of of we back a regarding the EPS, earnings, pre-pandemic looked XX% EPS XXXX at normal years more and quarter segments, retail first our typically cadence for we we quarter. Overall, our up the including gains strong soft and share when generation. are across seasonally strong see expansion year, believe margin cash set in a a we cadence

Although towards as headwinds results to exist, these delivering our team our targets. is focused X-year we on continue march

With I turn some on back additional XXXX. will to that, for thoughts Mike it now

Michael Speetzen

believe and This drive growth, strategy. to review the with lot changed. are We pillars is our done long-term of needs for Starting a out focused consistently our objectives as returns X last strategic at Day to Bob. and on as get financial aligned strong team laid team our made year of has our goals. to February, progress on Investor improve We this in well meet strategy progress drive the what as X-year our with Board. executing a margins strategy we We nothing the XXXX Thanks, strategy on will investors. well

all our Pro across R with segments. on we only and display XXXX to the for not in will Off-Road XXXX what's will will have XXXX. product impressed Turbo for saw dealers RZR as exciting in success very and we experience Polaris the be the should Consistent customer and product experience Rider a customers best in Road introductions redefine I driven and think Off raise innovation new but with to full Both year come. you excited R, and our industry, launches will be see be bar categories. with

company. XXXX of -- is even has be innovation and new new motorcycle have to proud riders much from accessories America's XXXX bikes with motorcycle an Sport in expect with consistent Challenger up Indian year to set And and Indian the be of had much Elite. to with the first better launch the come FTR

ship to Sundeck in products. Marine our to Hurricane saw and Mighty is Boat to is the level from And the more these released us, firsthand X already XXXX plus be G I around up gearing Godfrey business and brands all products season new show XXXX. across announced of and energy excitement upon

isn't strategy about just Our innovation.

we Off-Road new at and in capacity as in and XXXX, into the Mexico Elkhart, capacity added well support innovation. segment. ensure expanded support cat operations -- agile business significant to capacity year, money facility Last Indiana our company for boat Monterrey, In coming center we back out in products PG&A to the large Ohio efficient growth our marine XXXX, our to invested support added the have we our as in distribution to

expansion location forward, look X-year investments and step to in to operations early important a in our with scheduled in pillar. see an our agile investing construction capacity XXXX, growth. we align being XXXX, certainly as and Starting are our we start planned to in well As as capacity strategy year Monterrey, this with Off-Road the vertical in need a support Mexico. benefits support realized integration The new efficient for in business additional in we're

drive our on expand well saw growth, deployment way execute financial to and returns we're on and achieve X-year objectives. improve XXXX plans. our margins, us capital Lastly, trajectory on our

of to progress is have another While our some I bound challenges, year expect against objectives. XXXX solid

said We we in we up. XXXX. wrap would me did what Let do

so have of mixed number agile respond to signals swiftly quarters. in XXXX been our managing closely for demand negative our can plan watching We're they indicators to demand the expect and of that We we remain as and manufacturing trends. past couple to positive or shipment be is plans in a

into to powersports retail as X plus be flat normal overall a or relatively expect we minus operating year, settle environment. a point more or this We

an given rates. foreign be There and exciting for to best services moves new For year we financial Polaris, results and are it's expected innovation higher our product as recent exchange interest accelerate and rider-driven customer experience. meaningful launches the to headwinds

been them We have to both late. help but the know realize of these our model as volatile information you done today, given best of have we

to This us do agile to to conditions, well we remain and environment requires just are poised that. changing

competitive As I environment have organization remains today, entire our we on know delivering. focused true said that before a it be to and winning in requires

best strong the our but dealers, We shareholders. will for our power and team today we up confident the the in on believe XXXX powersports. year, what offers We're in excited it long global only our making and returns of customers strong generate leader deliver the investments are commitment over deliver sports, With set and being our us, we I'm not growth decisions term. also Polaris will to and a

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

Operator

Instructions]. [Operator

The Kennison from today comes Craig question with first Baird.

Craig Kennison

what To your look I gain pressure retail in downturn might your and ask curious forecast wanted on deeper little considered scenarios does like? maybe enter economic a the downside share economy is just share a guidance. those market to in embedded hold about or I'm recession. you scenarios that flattish suggests or if you a with that not me, an that

Michael Speetzen

Okay. modeled result and on operations. different Thanks, number we've Yes, a question. appreciate Craig, and scenarios of I the the

think element substantially keep is it's mind a predicated not in I the on to economy. better

is areas RANGER we If predominantly XXXX the lost you utility around concentrated where the think line, share in space. product about the

are business, inventory still at that levels when levels, we optimal we those are XXXX. where below the And were and well the optimal even in below they well look levels for

out opportunity X for that seen pull essentially as in playing we back. And quarters. the improves an get we share market up, And us that over last given and that to holding that back see delivery it's have

put great the had which pull performance REC we've challenges availability given Pro going to share that in some of us position, R know we we with when So over we've Turbo the had the we're back. the we're past. is share year, got happy gain last a the R, the in And

our line. And seen that down really, improving, And within product continue XXXX. we've it and through will we came availability anticipate steadily to RANGER that

being in get demand as continued is that solid the we up both category able as dealer So well important. that on the to caught inventory just have

from products And new The that's out serve I of us bit really really be segments. a that comes these think appeal new there other but the going subset element think important is think do think coming spot. a we they're different we that and little products, we industry, do through to to to cannibalization because put that's a of going that into have to good will

several I being thing And of environments is, last The from the And coming we and able to data are plus We're team would just for be strong in some that managed relative to volatile through past business record really that's point has move a got really demand pretty a direction. the track what react in and we've let the dealers uncertain guidepost this going the our business to know in guideposts us. the right the inventory. to dealer years.

quarter. The the very the inventory the in dynamic other third versus saw that last and up obviously went a we late lot similar to year, is inventory versus was 'XX I'd point to strong channel quarter, the the dealer 'XX. thing consider into in make of But

dealer over the and that clearing of get dealers dealing in the the suppliers customer were still and they're delivering able some and inventory January lot into holds that of also, hands to number we getting But the even disruption from recall setup course demand. we're clearing is manufacturing as of as January one, well out a and February. when some through think were of as about the We with you recalls

we've that has know those And least them because deposits put at the had in that consumers on in initial numbers. demand presold up we are vehicles shown

would January watching the outpacing now, channel. right anything into we're we retail is be shipping closely So

So the we good dealer feel about levels. inventory

Operator

from question with Wightman Fred Wolfe next comes Research. The

Frederick Wightman

the sort guidance, I just look sticky wanted we reported Or of the then the is? what that? that how gave you What if and retail? or to end it driving commentary just just sort actual low is benefit versus of retail high sales? mix sort it at about think end sales is price the Is of you the gets of to long and --

Michael Speetzen

just of retail. I element lot of given the that's is going be of promo rate conditions. we mid-end that low geared finance. there's downs think the And an to that the -- They is factored of around promo rates. pretty We've that of knowing industry the mean it the to markets to kind typically level in buy really appropriate interest interest the are the sensitive a

us. we've built so that to allow in And

price anticipating don't any So know I that we're necessarily substantial moves.

is to I think it's let a ship to there's the uncertainty. see where amount to what of relative the demand about guide pockets that going recognize business. as the a to lot inventory we of really guidance widened we do just we of we're normally look going we And to through we if earlier, scenarios. why be, talked dealer And as and it's kind range frankly, fair we

got that fact we channel dealers. we for do in kind have where demand as couple in need of -- where products up we serve and I we've we've new mentioned my to and flattish when that the we're about couple points that a talk in plenty using new sure we the guide go that help also strong down a we're segments. of retail, factoring those, And running for inventory remarks, anticipate or but coming scenarios points of then of got to making in prepared And a the

Frederick Wightman

of Should historical to think because us us should looking be it new in be How you back It year, on the introduction, cadence just that? do product XX% half to XX% just sort the we weighted the to these of half cadence gave of want also back for quarters? products. sounds products? these earnings then of And like about the more you sense. Makes in that but the timing first the quarter,

Michael Speetzen

Yes.

the So I back be at more products because half the to think direction historic a the historical those. the of and than it -- right just timing bit Probably go. of will little to back looking cadence is new

in The year thing business. folks around for is need growth keep I next to the commercial think other mind

very run large It business as the that commercial one selling folks rangers ROVA doesn't accounts We up through Herc things retail. Rentals, have doesn't a Rentals, in dealers. show business, like to direct. that. United count doesn't retail. It sold And like It's

strong a the fab it's right is the chip really now infrastructure and that bill. business given bill But

do it because sort general of We risk those markets relatively terms in significantly up projects So happening, really what XXXX are of are funded. those that with business them. the regardless And low strong. in economy is well for really happens in of

that 'XX. a confidence bit RANGER we little the gives us growth on stability and So more into go as in

Robert Mack

Fred, last are standpoint make point vehicles. show from market And typically slow, as a buying starts vehicles, if new our sales again, I'd because, people retail up it the the PG&A doesn't to repairing certainly aren't their the they is business in and is upgrading

that know resilient business So to going we is that, in PG&A offsetting.

talked I the think to retail-driven portion the So we've revenue past, about our XX%. probably in the of in XX% is

the North out to terms of and influence that other government commercial, there's numbers performance revenue well as retail. those number PG&A, So just American play outside of as the of a growth in that international going factors are

Operator

James. from Altobello The next question Raymond comes with Joe

Joseph Altobello

'XX. drag What's guess question Does margin dollar? margin are I for that the it that Or guys from neutral? you in first offset activity increased assuming promo on is pricing margins. dollar

Robert Mack

carries 'XX, into will through promo pricing increased from -- in the the first if year. pricing carryover really look the largely half, 'XX 'XX at that you the for offset and the So versus 'XX --

plan being us is but being dealer with The piece other drag. a floor up, the floor cost up, other floor that finance dealer plans -- with drag plan finance for inventory is rates of the

the mostly is promo -- of itself by the carryover So offset price. but

Michael Speetzen

Joe, about this got finance has we when that just the the income with promo, in the that financial pulling Bob end keep way partners, we up mind some And talk below structure of our line. back

of some lower that margin GP financial gets statements. the much So offset headwind in

Joseph Altobello

guys the headwind? points? Okay. But it XXX quantify -- basis expected you Is could

Michael Speetzen

that. less than No, it's

Joseph Altobello

why in picture, us maybe then, could I second, would the down tougher a 'XX? was in in And tell And big industry guess, Okay. economy 'XX? you sort that get better of what

Michael Speetzen

towards portion the REC especially the us a large when of to as our we industry. pretty the have -- you on remember, sale And end a stop get you a Well, have such substantial business. year, combination we're of for of

look out a the then pressure as the utility industry. struggling fair of as shown past knowing earlier, us quarters, product of couple resilient we we for least puts products pace with we for to going getting on the business, get that that the XXXX. And has segment, stability at enough, to that be mentioned we into a the create earlier up, be Ranger, on back factors obviously And that you I those of going get Polaris And industry. more amount could utility to a retail the continue in new least demand and flat should that come the as for are at to are drive the said, outlined and that, anticipate into and the market, that perspective from to combination to

XXXX, in the below around What both we I'll where that as industry. Polaris you tell still down as is, with were we're even well retail, expectation

really So it stabilization it's were as off in we saw when then coming challenges industry, 'XX struggling. would 'XX characterize I outsized continued XXXX of demand and and we as more -- an a

some And think for levels Polaris segment, the new stabilizing to specific that see challenges, inventory impacted us that supply we a XXXX. to relative opportunity as RANGER into coming on disproportionately growth. and even the gives utility the by to chain as with as choppy seen products macro, And the obviously, we the well get we opportunity were is we

Operator

comes with The UBS. from Robin Farley next question

Robin Farley

A couple of little clarifications.

kind You shipping. like into pacing you how that sort mentioned is January retail you roughly in put so year-over-year, Can far? a you're of outpacing January, said of retail what

Michael Speetzen

that the provide point inventory was coming is quarter. know specifically But the But the a what sitting that channel third watching, we remember ATV the time, had don't whole to at ship were you sales, we think that as in able I experienced, overstripping bit if and well Xx we call quite what as off in. talked they were I would that, October, to were a fact about similar lot. what it retail the RANGER dealer in was moved No, and back we

and here late That business, we saw a dealer our fact But end had we quality the of us come RZR . And that that on inventory resolved have with supplier-driven holds at the going to of February. dynamic, different given have and to going system fuel working maybe specific the little had some the utility in a puts RANGER some down to challenges on bit coupling to what is in retail we similar is issues just calibrating we're given shipments in a that January XXXX. position that that that did means so the of bit outstrip, which we to that side the recall

Robin Farley

Okay. quantify you've I in prior quarters. was of roughly retail that QX percent in you number been can And what giving presold? out think

that So where for wondering ended QX. just

Robert Mack

going number, been see but to Yes. it's of Robin, presold, I'm kind specific strong down though. a We quarter-over-quarter. did give not

that too. And happens because some model of of year change a

in, to model get wait the because year stop people want and model. As new preordering change the comes they

take model a for years. new preorders And of period don't time, we on

So -- that was we have would are which dynamic expected refills. ends seeing as up strong in we QX. down, But dealer it while inventory

the like -- it's to we it's But on at seen on that and are in hold products. aren't in the just that with not get that consumers people some products can were demand buy presold had high recalls, those the they're products So strong line dealer. they the get as of buying,

pandemic. levels still well the just So it's historically. have was not been during above the it would It's it where in

Michael Speetzen

of watched one Yes. in out we play And Robin, India. the it dynamics

Bob seen rather off playing essentially up in stock or than to the show cancellations more on We buying As bike that moving but folks got floor. the And X. presold, floor all out. the in of we around specifically don't it's have products hold better as as level have we the that now. right a demand little seen as now around where bit adequate well that's the levels we've and playing product indicated, RZR indicator becoming the RANGER at out high-end for dynamic a waiting on those see And or we bikes a inventory would month we've to dealer were

Robin Farley

that sense. Okay. makes Great. No,

initially, quick share think I X have in not share. your I dealers talking market I been clarification, numbers, could. those China some still competitor the included legacy or kind those Are share imports brands? other Just if in about gave. now from of were final In And share It's growing brands numbers that OEMs guess data market sort you market in of a the just not your yet.

Robert Mack

we the No. data, organization. in the manufacturers really don't the in of for I mean and folks we ROVA trade give Robin, share when some can participate it Chinese give that only participate market

But participate data. that to bulk selling, is that some products any been the certainly -- as other competitor in -- dismiss we thing at the lower especially range don't ever. keep get have products reported we the entrants, pandemic of So don't end we in a way. their the mind meaningful these of look in you Chinese has been they But during we the a in, don't

the So it's to share probably market some it's dynamics. degree, changed more grown than the

Michael Speetzen

ours consistent out reiterate are Yes. higher-end we necessarily -- And majority Edo Steven, spend be competitor. mean of customers a competitors. dialogue mean, dealers folks we those I meeting -- of businesses not or Bob from not with do buying is Robin, like for time the I what I will a know said, and the of Bob, dealers, we I'll dismissive and But the lot the

that and was in, seen none when to of were changed dynamic had they they the availability move were able us bit. it. to also we've issue has able The And a product quite get

point pushed inventory are back where the they're pushing much the at is Now they're being and hard channel. a in on really dealers a at surplus how

understand rest come in -- at we think dynamic I'll we're at So And of we're that least what see if it's parity. it to potentially the down how value legacy to particular end we of how it's Polaris our hard accordingly. -- to and products think continue parity. call That of obviously, the a but that monitor to as the said, higher-end that of look into as a a how in improves, play, don't industry as -- back I to compete cheap and the and back kind we it want react taking availability market, and against well take at you'll going I coming look necessarily super

Operator

Longbow with MacGregor David from comes question Research. next The

David MacGregor

Just a on PG&A. question

XXXX, rates stocks? attachment into are do higher does or reduced that noted You attachment sales the in dealer whole with extend PG&A with dealer inventory healthy. targets goods lean aggressively more you in

Michael Speetzen

there similar do they RFM whole on to an we goods. PG&A Certainly, model, -- operate

going move, because we in-store another writing as of are some maintaining So they're for are vehicles call buying likely X, year seeing on to have know obviously, said, But vehicle accessories. still people that if rates that to will the historically oil it, they're as goods the, if -- tamp down people whole same hold buy or they typically, well you're traffic. any that the to fewer kits, a

And that. so there'll be of some

the seen install, we terms on shipping steadily The attachment, that it, the we've in of with whole it, factory call a good accessories increasing.

bounds still whole inching will And that not attachment same even years. leaps so to I good up. X last rate, muted you're the that, growth PG&A the more going continue. and that a anticipate see at with rates it And probably over had

coming than product We've historically on still are year, and on that a we've accessories. those lot new this accessories got a had launch. But available out there's products of products there's more new ever

it's way customer both opportunity a great gotten dealer. for team's and recognizing but customize the to the that a to to good be vehicle, margin also able really So the a Polaris the cadence it's for great

David MacGregor

Got had guess, progress it. motorcycle is motorcycles. but Got I on question a in challenges XXXX on gross made category then it. And second a years, you margins. This where, margin over lot the some you've of

well drivers seem be the you your here. in about games of margin the than mix, which improvement to talk just referenced the but holding prepared remarks, other So the

material the should how XXXX we assumed upside guidance potential with raw cost And in think relief? what have your low about So on from digits sales we here? single up

Michael Speetzen

your different factors. and compromising it, one a mean, innovation. business, grow lot I team it there's we've you driving to I the path a mean of seen, we've mean Yes. what really happy quality that talked And is you're the the plan. with I overhead. is the about the as the without a lot scale obviously of to adherence profitability the fact leveraging we're

there. said be to lot a there's So

and price environment the stabilizing. like promo things about talk would I

was on our and also One bit few a that were pretty our dealing stabilized I was we years scarcity where has plus vehicles we're of leadership we premium. of environment able an with think to things where created some environment new a challenging And driving full a competitors an that largest back. doing pricing get with ensure certainly

we On top this chief We spend. our year, as with that And up leveraging a essentially needed categories. the of really past all that, filled platforms the out engineering bikes that we're scratch, into introduction build of the from had to company.

creating And good just at money did we engineering, we effectively so move business. new when the spending on were we forward, levels not a as that still be we'll

opportunity. been huge us an focus a has is for PG&A

team our If we're at should catalyst be. you made that has to competitors, some But of then drive international with to become still us relative progress couple the really the the for And performance. of we has look growth years I'm a over below where huge past us. happy

U.S. is Indian of of out XX% our markets growth About coming for the of revenue outside

gives markets. into good that really so opportunity And you those a

to You're price and the bikes the able hold paid really deserve. premium get that

expect So opportunity continue. that happy what trajectory have are every seen. working much they teams to and we've pretty The we with

Robert Mack

thing so the is It is continued We to assembly earlier they're to level would as you in increase in localization in started know, most earlier assemble of but in given add I The that Yes. . business. pursue FX year, impacted this Vietnam And we've continued by to -- how Unfortunately, bikes. global we only is, also it 'XX. we've or

as starts we're they're the those efforts So we Indian make and sure move to sold. producing forward, continue that we'll motorcycles being benefit where to

Operator

Katz Jaime from Morningstar. comes question next The with

Jaime Katz

the stems of a the I'm achieve. mostly remedy correcting mostly hoping you to from of chain. Marine, on more elaborate I'm that if hoping improvement correction the the a can wondering you're supply bit little guys trajectory

what to impact the smooth have of going way on on point or it's And the versus forward. about improvement price switch So the of sort the demand, end might any a at had market declines lower to then there market retail? of sorry? think recent coming the is the

Michael Speetzen

Yes.

it We first. certainly impact. the held switch mean up when true brands does. qualify just the the know necessarily quite well. last given new product, When at that on stimulations doesn't an Pontoon theory, come the I the the a legacy which take had market, some in I'll you of market, it's So with Pontoon we look

to away. And Minneapolis to the some customers the and talking the and we pulling on spent their I eye PWC for it's It's so larger time But customers at going Boat into product. part, we're of version pontoon like potential that. pulling customers continue we obviously probably tracking most feel performance, Show necessarily we're think to not up keep a an

that expecting turn are businesses years is I been I'd gorgeous. And guess X those businesses. at improvement boats of look One when sets several past -- we're the a we Godfrey there's at to characterize around. Marine, When in the of look it, tale absolutely the it's a work lot and Hurricane, we of over

stunning an in consumers smaller, businesses and Those my spectacular it of we're significant improving XXXX, the fiberglass absolutely is a up are the way maneuverable to market share obviously going performance. for both a new electric that in market continue. drive all Hurricane Pontoon we more in XXXX, which expect whole segment, to boat. the those tapping version well mentioned both tremendous that's to I looking who saw gains Mighty pickup share done which We seeing that on remarks, profitability electric everything job G, from prepared They've into boat, a are of as the as

market and was entire pull brought a moving struggled was to lot the Hurricane same Marine Bennington to the of leadership philosophy going Bennington with of that role approach we he's seen Ben positive segment. into Where to that really really bring share go-to-market perspective. what And a plans, that given we're Godfrey spot will in and of really put up in share market strategies we've from product confident a Bennington back gains. pretty to terms back

ability that put the are Part in being We of there's capacity some added and the -- our moves was put and being into back position gain just brand. a place, share deliver challenge channel. year in we us improve past that to automation able get had to should boats this for that

Robert Mack

Yes.

be. XXXX, miss business, thing maybe Bennington, on I we obviously, the jewel people bought continues to and crown when boat in it the think the

to bulk But really I the and of dated boats, earnings financials. in call Bennington the kind addition what is had also would having of Hurricane Godfrey dated

And a months have so bought they and And weren't we now in profitability. money in made Godfrey made 'XX them more contributors they to than Hurricane where really month marine in big XXXX.

now well. Mike focus, businesses. over to quite bringing So more that team business, But great we side have those with said, -- Ben of driving Ben improvements, to to Bennington some and we've since see is bit acquired as in that we'll on the a has and the improvements good that. activities continue a and same results And profitability the got profitability job drive quality and design done design underway particularly marine improved along as there

story. been it's good really So a

Jaime Katz

Okay. that clarify, another we And think I prepared just pay in beyond for you then normalizing before the remarks goes year the guys But for in XXXX that on the were you sort I had capitalizing to going can start expansion? Monterrey said to elevated CapEx of maybe expansion in XXXX. should assume that

Michael Speetzen

made new we mean location. that I obviously that a it's we've the Yes. reason made the is statements

trying just in-sourcing. bring get the be to backdrop this, outsourced out. a the current able of the from height We're wave we of economic frenzy given really activities to first broader standpoint around focused The of that is to product some during the

And serve to America sooner. the able also up that's the start as to bring in investments to it play. substantial into produce to trying whole pretty realize well as why we'll parity. capability We're there'll back broader some as to both North goods benefits start back It's that of that to be bring we a new then more cost And additional building be market market.

Robert Mack

Yes.

timing at in investments over elevated was does you the I But 'XX. on So what or be look over will the just start CapEx so. levels. to as should next CapEx when of decide It depend year -- think will we exact market the the we the historic

will It be in 'XX.

to really Mike portfolio, us is into the and either investments operational quality, our improve went we're reason high-return the we been that I was and improve and under that. putting money I think back a the see everybody focused historically, product have we costs. of continue that with more business like you'll part drive invested clear in And better feel

Operator

comes question James with from next Citi. Hardiman The

James Hardiman

and last we've of had I million was it dig the easier that that dynamics, quarters. I inventory a left What around even into you time the over. wanted benefit the if conversation to of with gave $XXX the so, the take just the XXXX? for $XXX a quarters us million $XXX headwind replacement continual as million Is full couple couple this and year replenishment gave guess to subtract us doesn't this you suggest lap sizable we that year that pretty

Michael Speetzen

Yes. the I as has part the think mean of math that I equation. basic

more But dealer left you yes, after end think $XXX aspect year. I clearing I we're at as challenging pointed the mathematically through million of of is, is already look the earlier, what's the inventory. out that some

until of out of the end hold the of to into know, February. And fact then time retailing setup or fair a had and our that January and a in of we year as aren't week RANGER X. you coming time, have delivered got transportation that and you So the lot consider part RZR on of the last things And number into February. January even even those between

And so of moves it kind it's around. because difficult

the still that that as Ranger to suggest in ballpark. you that understated forward, holding well one, is backlog of as and some it's of million February, holds higher-end look as recall have because and But through $XXX demand But opportunity ranges. January the deposits consumer for probably we would I in is up. we cleared the refill with

business. redefining revenue North catch-up. about out of that we're how said it's outside pricing we'll we then going we're confident expect profile That's talked $XXX planning, of feel the we and in we in the first I the American lapping pretty demand coupled have. other that on why to second that the So that just plays But of and new million that and coming depend areas be factors given growth segments, as dynamics we still retail some the going well on scene to products new before as all have we half, really opportunity pretty half, this because confident of drive the see a have I growth of with some growth, that

Robert Mack

has the in growth business dealer business, in mind to is well. piece very in from other been will That strong -- 'XX goes the was factory which The the that, commercial too, doesn't because with straight commercial the that of impact as the it in business, customer. keep and be inventory 'XX

in And so that but revenue. up does show it inventory, you dealer see won't obviously in show

Michael Speetzen

business was that in of majority the already backlog. sitting And

So degree of there's confidence that. a behind high

James Hardiman

shouldn't Just it really should up headwind be an of way. a to back add-on $XXX feels to taking half be -- of clarify, your it the sort still because favorably sets I think shouldn't of like million first like sort got of the but about telling year sort the half then I that you're sales seems $XXX of kind that that million me you've

Robert Mack

at depend $XXX wouldn't. of I and RANGER. RANGER all or to timing going think point, I -- point, this it's the is million on that retail, Mike's the really No, To refilling so mostly

make better strong it will to share, refill continue we that as which think we inventory. to harder Ranger, we'll shipments in have So drive

or the half. new the chunk in feel then got really we all about second diluted So much push the to second is some we've commercial of product good second that the again, And the of some half of half of could that. that business

in I So half. wouldn't I is the don't view as it all -- headwind second that

Michael Speetzen

that I focus do obviously also you think, year. in calculus. QX, needs to last And we to flattish. of you're trying if retail And when math, retail That your declining consider QX James, to you into assume have Yes. had is

James Hardiman

I meaningful One guess sort sounds sort for anecdotal still Are how bridge of and there's commentary benefit Pricing those dollars your your me. like about it tailwind you numbers? think quickie more you versus wholesale within Got do mix, that getting you guide? the of think of ASP context we there. units a it. as wholesale a from

Robert Mack

a we There's pricing So amount I be the mean, the few fair -- over flat. of expect there's relatively been last industry to in not taken price years.

price the So year increases. we're expectations going into not ongoing of with

industry will lot we comes we're benefit changed. across this that be is the and seeing, relatively So the industry, really really from mix really of I flat. what think has A and the think

more premium moved mix multi-passenger The has that in much units. continued 'XX. and towards And

continue customer We is the going. expect to in where it That's 'XX.

truck -- buys a right, got -- anymore, X-door I you really think of kind consumers and at like nobody have market to a where look truck SUV fully be a this the buys the everybody bit product ASP buying that's optioned a that benefit. drives And is lot premium and we same crew multipath,and out. move the a that lines of thing and across see to the

Operator

Capital The with next comes Johnson Gerrick question Markets. BMO from

Gerrick Johnson

here. questions Two

First, quarter. just what fourth to on clarify happened in

positive. You be quarter retail expected fourth to

from? that So come What down the left like retail all recall? else your I in or I guess short Is does where X%, guess. expectation? that of

Michael Speetzen

later a was shipments would news then have the the in is a quarter issues into are combination specific were much of holds supplier pushed substantial it vehicles recall that couple -- a good really had of the fourth RZR. around utility in We obviously number we was timing products It shipments January. moving The the which than channel. the of And our was on really, of liked. it the those

being So their at not but happy least customers they're late, vehicles are about getting it now.

Robert Mack

of It is they fix can fix, the don't simple done. recognize prove just had them of but at that We can't couple the them. how of from shipment retail was revenue. lot standpoint, units, the fix can't revenue, impact But those a a retail we're terms a we of same with And in conservative we had until so a very from but pretty in less unit look And margins, We -- some side quarter. dealers snow. little calls dealers the issue the out.

would some units 'XX. into pushed snow that early that have 'XX So retailed

Gerrick Johnson

a Bob. it. a to up give the how retail here do Okay. XX%? service us second And Got Maybe to cash question you, we bridge flat buyers, and more percent financial get

Robert Mack

Yes.

on even flat retail, So seeing X we're things.

interest a continuing comes in As market, we're lot is because the on back promo rate promos, seeing downs. rates focused our of promo higher as pen buy

a makes to helps drive our financed by plans, other And that that floor that the partners, we units financing sell higher our which higher rates. percentage plan percentage of piece the So floor get the income. then higher is

partner up JV goes as share that our Our well. with of

Gerrick Johnson

down gross services buy Or you and financial When is offer Okay. promos, margin? against does go against that that income? your

Robert Mack

margin. Gross

Gerrick Johnson

Okay.

services? impact it financial So doesn't

Robert Mack

the that more we impacts No. we higher partners But the -- the that finance those rebate from get financial.

Michael Speetzen

Yes, we their share in the portfolio. return on

get we'll money gets financial. it as back, So but booked

Operator

question next with Siew comes The BNP from Paribas. Xian

Xian Siew

about just for maybe I XH different? think Anything within a helpful. on there sales. more little to about XH of wondering, be to cadence color was plus retail Any I bit wanted should is think about flat anything quarterly terms the basis? we the a year? would Is in ask

Robert Mack

mean, to seasonality. we return to I more No. normal expect

inventory behavior general, time think I of in times, a return as the for said in couple back buying we think towards we've consumers' So riding will improves, season. that

spring better, -- So then for and be you'll will they'll into summer especially motorcycles.

I think that will trending towards is back Boats normal be close seasonality. its normal. to

pick the to up. normal, deposit are spring people of moving of even I on season. the make cold QX had happens return season sure spring the the in it years to where they in buying that a boat their as the think And really things retail late for when boats couple and in a had kind they back were We put people towards

think So I see you'll that dynamic.

progress, share and -- RANGER. ship And on the to make continuing then it's think we're side, I

we we share, that in where under-shipping share as primarily what back the And to due that build so our you'll take to lost look see through historic have been. market year levels share

Xian Siew

to same on you there's any -- like but are you then It It benefit year, anything the than so Okay. some pricing? equation? maybe Got sounds I are but a I affordability at no, on fair? Or seeing there, increase? in And sounds much like pricing. not any higher ASPs holding. X sounds of consumer are it just time, sounds X guess accept coming But know pushback the it. of mix like maybe XXXX. seeing obviously like still it continues on the Is your quick pricing that kind this

Robert Mack

year. maybe 'XX the of on relative little and in I to built guidance Yes. is we versus ahead 'XX all particular price feel where ratio the of higher plan we units to the like into the factored some designed counterbalance how we competition, a curve and that for promo got certainly mean but our the that's there's

then to where the crew, and are end like larger, multi-passenger vehicles increase get then It really a a mix benefit, crew capture. to and and to because I which driven, the is ASP more higher factory in double the a kind mix the we PG&A this expensive our underestimate much both mix, right? in of on of a things and It's it's -- premium install change and think folks and mix vehicles.

the of So that's in really the bulk ASPs. the driver

Operator

comes MKM with question from Next Scott Stember Partners.

Scott Stember

me. Just X for PG&A.

environment? how are talking not most business You you be much in 'XX. tougher a resilient of how attachment of and much most more this would guess, I out part that sustainable fix is, But guys how break about business economic brake the your can based is in likely and

Robert Mack

the it levels Yes. and the staying units, but business. have the fixing we out haven't couldn't their we historically We saw given seen, on breakdowns of are people riding high. pandemic, course were don't -- But units, old those they historically what we through get

of more kind sales seen maintenance we've good So the of continued of parts.

that buy them the a availability to downturn, can't back we to pay and older when accessorize units. a their willingness the see come in the people new it's new get units, happens of whether And their other and for interest event or unit, dynamic

So change, we G&A any don't break that expect or of would and know [indiscernible] we between to out upgrade. falls business don't how why the reason really trend but

Operator

for presentation. This concludes and our concludes the question-and-answer conference attending you today's Thank call. session

You may now disconnect.

Polaris (PII) 31 Jan 232022 Q4 Earnings call transcript