PII - Earnings call transcript Q1 2024

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Operator

Good day, and welcome to the Polaris First Quarter 2024 Earnings Conference Call and Webcast. [Operator Instructions] Please note, today's event is being recorded. I'd now like to turn the conference over to J.C. Weigelt, Vice President, Investor Relations. Please go ahead.

J.C. Weigelt

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

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

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

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

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

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

Michael Speetzen

Thanks, today. morning, joining J.C. for us everyone, and thank Good you

expectations. performance out put quarter with consistent First our largely

first You'll difficult challenging the we recall dealer quarter with delivery the production QX coupled larger our focused manage operating increase also the inventory comparisons year, facilities. that our snowmobiles. normalized plan of down of to early and stages manufacturing execute more to and quarters expected improve headed continuing one in a costs saw year-over-year the drive to efficiencies us on delivery, be the into most given to actively

management. performance which given and our in EPS in above our cost the adjusted XX%, better was line in with first expectations Sales were quarter came expectations on down

much take in season While seen across and XX we're ORV, our lack products marine. it to in driven we've snowmobile experience performance, worst share of with by snow North was did great of America. see a pleased years, we the Overall, financial our motorcycles

new with drive customers, resonating innovation direction very which That, gains. coupled operational product our makes business. the is me will Our the about with improvements, of future share optimistic

driven continue North snow the snow. vehicles by lead North lineup. was by strong way a America RANGER the exclude up down while for for somewhat by offset Utility market with was driven when was X% but in to quarter, off-road you Recreation weakness. was On-Road our retail season, XX%, strength American markets, down, up international weak demand

SSI. quarter during the was our Within await Marine, first internal the believe March data we retail from using we flat data as registration

comes play We when it continue to innovation. to offense

portfolio. Expedition industry-leading Indian with leader attention in Our recently added and Command are Scout dealers this RZR launch with features, XP, Polaris model the Once to in RANGER RANGER the Ride cutting-edge innovation, attractive year their technology portfolio capabilities. industry-leading and And much our and full-size XD powersports. Plus reinforcing as again, position products motorcycle we for we further delivered new new the global garnering

new Following categories growth, managed product as Off-Road flexed models. we've our where to through dealer and we commitment seen consistent inventory, in utility inventory on such actively up

management is categories been doing been We that help demand for to us flow and also Marine. dealer as have inventory quarters. underperforming, this to adjust dealer reduced allowing industry, current multiple tools in several shipments you most we've of also materializing I'd delivery over ability in manage we've inventory This trends quarters, quickly by adapt the better system, one which remind seen sophisticated such environment. is by system aided recreation our and to our Off-Road approach our retail to production to the that driven

have manage region, to with as access actively as inventory profit data operations. deleverage dealers basis inventory year dealer. This points, conversations with enabled dealers to inventory gross in costs. by us began dealer real-time business. run Adjusted to volumes. by to operational margin our by than by our higher their improvement near that conjunction this to efficiently right us product, these the We the our the to gives XXX system down more enable promotions The the last elevated driven was Partially in quarter warranty offset progress improve was given offsetting continued well to headwinds lower use

savings $XXX We're our aligns targeting thus while operational far progress in it's still this and the million of this year, objective. year, with early

logistics achieve savings reducing against meaningful significant on in our execution tremendous the quarter, rework their facility costs first labor in During build and schedule. improvements and manufacturing Huntsville and material we strides saw costs indirect made and

the that are seeing where RANGER materialize operating Monterrey, now us issues in targeted It's and output XXXX. and rate, for significant to XD starting the within We delivering the second improvements at created significant seeing improvements half also we're line in the in more in of significant broadly. Expedition efficiencies production facility

to line expectations, In our year. number headwinds was were original had that to a results were there slightly summary, we entering it the encouraging recognizing largely of above in see

As quarter dealer manage I'm them few for remaining dedication team's innovation and we we given expecting continued and through to want committed in our and remain the efficiencies we've execution actively proud the inventory business. drive years their share significant the to incredibly and within proceed gains of further focus. first over thank quarters introduced we're of year, the the X the past

the retail. seen speaking, detail snowmobiles. Recreation were we've to vehicles the for retail quarter. down sixth with the year Broadly Off-Road over Turning trends consistent remain on exception what being straight past more with

to such As view purchase interest more elevated conditions more we've as rates. we vehicles previously, shared of the as sensitive these and discretionary economic

in and utility as of strength mid-single-digit to see continue our increase in side-by-sides consisting reflected RANGER retail. ATVs Our portfolio,

is part of as acres less segment makes this in up and an commercial approximately work farmers, for well discretionary and owners category Off-Road important XX% As applications ranchers, a settings of far plays sales. reminder, as our multiple land of

industry to interest rates. continue higher through As grapples environment the the during XXXX. industry promotional we expected, our of promotions elevated were each elevated and expect This with quarter impacts across segments as the a

For for in resulting impact Polaris this more elevated the seen categories Marine inventory. is and the quarters, recreational noticeable within several Off-Road industry, weak where we've and retail

to they is too adding dealers, to from promotional shipments fewer influence is to dealing doing all dealers. and OEMs. we dealer ranging do with looking in can't strategies We're their our OEMs, issues. Hearing for wallet adding and in industry high continue product. reducing are Every from segments reducing necessary with OEMs are we them challenged with moving dollars promotional part actively that as number And the to we own manage they product total, from their shipments unique of these to powersports taking most carry inventory dollars version opportunities while additional believe other well view assist of inventory assist as own from where

of that side-by-side Slingshots, higher anticipated. utility some snow finance purchasing near-term in rec have their the our down, who interest the do decisions upcoming and given meaningful We've We've and season, manufacturing the in reduced weak production has trends vehicles. is the stay adjusted season, Given than today. year. which been retail snow consumer also a for cuts elevated recreation these as outlook We've of production RZR we channel remainder the current also for likelihood the made in lines originally and mix we consumers improvement of and impacting elevated not the for decreased that a the inventory rates rates higher longer have given see

the the early retail Marine as it's in largely is anticipated. While environment out season, playing

operate side-by-sides cost. In a right Polaris the dealer not the inventory we disciplined we've flooring turns. Utility, quarters RANGER retail inventory increase field growth while competitive ensure in have to with of in healthy production to of continues maintain made decision our regarding given strong dealer manner dealers the to our our inventory multiple burdening position excess and to

being dealer remain to while goal choice a agile the to future. ensure relationship our the of today is and partner Our healthy into with

busy motorcycle my the We're our added rangers. launch Moving We've new Scout XXXX topics, by new platform, to snowmobile full-size was have the completely Indian of of to and a features the Polaris experience. one enhance ago best-selling tech new in of tradition rider excited the has sought the highly XXXX also with platform with carry couple but first years innovation. and does lineup engine, the platform new The quickly bike favorite launched Not of important historically the months bike to XX Scout lineup grown this to after a this the on Indian become launch. only of had lineup.

pipeline Scout other for Indian is growth We've an new entry a the XX% with also seen more than gains. point share brand into our being role Scout of into the our riders as cruisers with XX% motorcycle to roughly the serves further plays lineup. of parts our reinforcing their or next and owners Scout purchase, of motorcycle heavyweight and lineup the the and bagger drive midsized to up further importance of touring to move

in and excited RANGERs to customers. shipping started utility we're vehicle innovation market rider to inspired to lineup utility as in the makes continues We even factory and XXXX installed also These is the full-size of more lineup additional the enhancements year by RANGER the best-selling side new the new the have model and and transmission better. #X side The announced market upgraded accessories. design our side-by-sides. grow, RANGER market bring core

right path we dealers working product their our we new XXXX, to on challenging to million Wrapping the what drive execute gained recent stronger and have portfolio, long-term partnership they savings even drive with share to We're mix executed to environment. in plan effectively EBITDA product quarter, be going and up the $XXX We we operating in continue ensure with of was with a strong comments margin a our in to in my expansion. business launches. manage well knew with consistent to inventory quantity our our made

summarize over our our commentary XXXX. who quarter I'll to for guidance and Bob, now updated and turn around expectations provide will Bob? performance it first

Robert Mack

good or on and Mike, everyone to call today. Thanks, morning the afternoon

quarter of and QX Off-Road last January. result lower as which versus channel billion, shipments last $X.X promotional the XXXX. shipments price the XX% due QX lapping planned versus were The we out These down sales of factors contend constraints, called quarter to we environment marine supply when to in in not XXXX first elevated did of expected inventory given ORV late-season snowmobile First was in lower high several year. decline The recreation with a in net XXXX, repeat factory and spoke and QX included year. of dealer fill Marine in

were in there surprises season line, whole strength snow were installed lines. Off-Road. the not impacted up than this, in was we and mostly retail X%, Therefore, our expected, in PG&A snow good quarter, accessories PG&A with weaker although sales the factory snow on the our many related top Despite which

a our to PG&A continue year. the throughout both driver view margin business as and for We sales

XXX was points promotions. down impacting sales due as many factors to margin same and EBITDA volume the Adjusted basis of such higher

and Off-Road for finance in to costs warranty with our flooring higher dealers. experience associated slightly interest higher seeing continue support are we addition, In interest

a exchange expected, As foreign was also headwind.

Somewhat offsetting spending. despite positive lower these controlled operations deleverage headwinds and from the expense contribution was a volume operating from

One item the tax lower between in quarter. is and to our more expect tax quarter rate we above the of net our XX.X% anything note year our was full and to of XX.X%. XX.X%, versus income was $X.XX still year-over-year function that Adjusted which initial a structural for unique be was rate EPS expectations

gained our shows shipped we our combined in In customer vehicles. lower the these down weight year. units the close our dollar dollar already shipments strive the on mainly such ORV. during more lapping RANGER unit and the the of of We revenue basis of On and market factors for a XX%, quarter on meet ORV discussed, during versus which business, Off-Road as Data fill in to share more premium and of puts Polaris channel X,XXX snow demand we side end basis, as and gained quarter a we XD share driven category-defining was XX% season nearly the Expedition youth, the to market. the new by last

impacted across We current strength use illustrates snowmobiles of OEM lack share America to for change within industry our the as of further market of season a moment. versus our believe and expected and both given North this most ORV a with snow inflating lower-tier market premium The retail. cover dealer in Primary will next this inventory is in levels. I impact retail us a products. selling

to by more to our we remain the only believe continue within utility interest are products year. volume, and Thinking as and get the pressured about the Operational we interest. in should expected contribute recreation. expect are second progresses. with and within were in we Promotions quarter our position launched quarter, trends our to plants last realized longer-term as and new levels finance improvements promotional recent dollars portfolio well the stronger the launch elevated expected were Ranger continued as higher competitive of year Margins

market. an expansion margin progress area and meaningful weakness soft the On driven modest launch gained share expect during operational especially international by is XX%, new of margins, we were strategy. savings category, in quarter on for as the the to quarter, by continued of motorcycle our us, to On-Road. the which in during with the Switching continue strength Motorcycles Indian make down Sales we driven Scout. Slingshot a midsized strength gross

was On-Road promotions gross up in to businesses, from somewhat offset by profit categories. margin basis our due XX points European the higher strength heavyweight [indiscernible]

second modest Slingshot from from promotions. and continued pressure coming benefit Scout the the we launch a quarter, with expect During new offsetting

to consumer's deal In with inventory down continues Marine, levels the elevated industry decision sales the and dealer were XX% interest to higher impacting purchase. rates as

with are second we seeing and the our in in inventory first which XXXX, given of of a second half quarter the shipments volumes reduction line quarter in expectations in the lower seeing half were the XXXX. -- in we dealer resulted in the Our first trends quarter were versus

SSI our quarter. are brands data in going retail, to our in the year-over-year February although decline the flat relatively March internal through year-over-year through first data suggest be reflected

head years, many than is into inventory position selling spring healthier our compare the feel competitors. our previous we that to season and As levels much of we

down pressures was profit XXX our top given Gross line at labor margin absorption and points basis less plants.

actively to to help profits. our variable continues cost team the Our protect structure of components manage

the consumer the are current work as hampered second elevated industry continue purchases dealers through by and We to levels rates. during inventory interest see challenge quarter

the going part year and with and our we repurchase to made early as have minimal financial first share activity be EBITDA We we that quarter employee communicated. holdback in a is to quarter of position. net payments as previously our dealer bonus knew was in Moving typically we the quarter generation in with during the cash the maintaining leverage the the being have range first limited QX. case prioritized Therefore, ratio

and year, to expect the dilution by For XXXX of from full remain ahead reducing enough offset basic shares well we XX%. plans, the outstanding compensation we to shares repurchase of our target stock-based

we to dividends position returned as year shareholders repurchases. to expected During ratio of generate investments million trend CapEx the used support cash the and is cash confident and our share our financial $XX in lower more We we to and progresses. debt-to-EBITDA in quarter, the remain form net EBITDA as

this to We value. deployment year strategy expect strong priorities our adjusted cash with and believe are capital flow continue free the aligned shareholder to build

to let's move guidance Now XXXX. and for expectations

full seeing calls year-over-year original internationally. response the for on down On-Road we mid-single sales our On-Road is XXXX this updated digits account flat a in year weaker given We are outlook segment motorcycles to the level sales trends This are our but versus pressure change of sales. some guidance have in adjustments making current additional made at On-Road not guidance we for for are be trends. at time Recall the to within adjustment changing Polaris Slingshot, minor to

While more have retail impacted rates, production seen higher we on Slingshot adjusted pronounced downward. and interest impact these schedule both a thus have markets our by being are of

levels second elevated are in remain Within are half Promotions to and to top maintain lower down margin. this interest XXXX year at finance now sales our to inventory which levels, the guidance the and expected coming add past we dealer digits. of for snow mid-single pressure our sales expecting Off-Road given continues Off-Road, season. We line at of out

by from recreation, Off-Road pulled given been the pullbacks we our continued added and trends. in Off-Road retail see Additionally, have strength vehicles, vehicle have back volume vehicles. volume Utility industry These we on offset

trends, off-road of particularly shipments areas minimize marine for help in and we reducing flooring are to coupled products with with inventory, by retail actively dealer recreation Regarding weaker elevated interest our those inventory addressing dealers.

trim We the levels of products expectations. actively align consumer mix are those in managing also with segments to

inventory, to turns Motorcycles levels. building versus is which One levels. of also similar target products X growth inventory We in pre-pandemic hold pre-pandemic RANGER where with at and comparable Indian utility categories. approximately growth dealers turns is is new such area

overshipping with X,XXX discipline We other success. partner dealers a a business channel the strong of management be around and sophisticated inventory their our or strive our frustration share in to dealers and globally OEMs understand a have have for to approximately the want We system. inventory dealer choice lacking

As with savings calls margin margins from previously targeting EBITDA funnel even total, at with larger million expanding and profit most over the guidance gross an $XXX communicated, operational the for our gross expansion level. resulting and profit of efficiencies both opportunity. are of savings we in In

Foreign to currencies headwind. a continue to and remain volatile be are expected

now the impact we $XX we expectation pressure negative Given versus the approximately our FX, is the original strength the of dollar, see million on for additional believe about million. of downside from recent EBITDA year $XX

to quarter, second the things few note. For a

As second of be X quarters I year-over-year, the mentioned relatively on sales quarter. we expect the remaining the in year call, flat to January the including

Our be assumption synergies and remains continue reflected the gaining larger Operational Polaris interest be Higher expansion intact the to to modest in promotions going through are margin with during is finance be year. be is that industry year-over-year for down quarter. year to the share retail modestly to expected headwinds.

Lastly, FX be continue year-over-year. and interest expense unfavorable to

meetings our improvements I emphasize clear. is and to Before operating it been. around have back review turn to energy I The how operational Mike, encouraging level lean want recent

the launching and margin time, While we at an It's time quarter. the passion second team. seeing innovation the we are our Polaris take believe have and these we the in begin for improvements journey exciting witness expect right and to be expansion we in team from to the and place results

shareholders. to lead opportunities to a to share have and call. which Go will capabilities, to generation our profile improve I position, cash back that, the Mike. up I ahead, over lot turn of increasing of Mike it wrap value margin can market With our We for believe all

Michael Speetzen

uncertain. environment The given that, the quarter we to carried And American We first remain of share North from remains year gains last macro expect dealer regarding both agile our into production and Thanks, Bob. inventory. market XXXX.

Our expectation experiences partnership share this take our playing outside. a with who to is and continue working we'll proposition customers bring strong memorable dealers and a industry-leading to healthy with that to year innovation, our value enjoy

up be customers of they as focus for continues a us new to portion powersports make strong the to business. Introducing a

first to saw customers with to new similar This great During of patterns quarter, being our a see. the approximately Polaris vehicles. we is XX% statistic

create to continue and we leader, by awareness the provided market vehicles. the capabilities experiences grow our the space As and for

encouraged drive that, the market share facilities we confident deliver the the progress margin Operationally, I'm I'll at journey. believe we're was improvement for back quarter with I our with a to year. continued for first made to in any call I questions. for with on our a us We results, coupled on well largest and the support. and guidance. expansion over XXXX And thank our you positions focus your turn plans

Operator

comes Craig Baird. question first with Kennison Instructions] [Operator Today's from

Craig Kennison

I expense. inventory. hear high that's get by floor I'm but you've that not feel health network, your guess your you've of there's margins and I caused and -- it a in plan sure dealer wanted exactly of like too And perspective, given on the what much market lot inventory I dealers. right feedback I skinny high all, just and the the you're too feeling to evidence have done is from it competitors done -- way Mike, stress dealers that from

Michael Speetzen

I Indian Bob in the tell out something the a in I tell can and to this our It's dealers look, simple certainly, headed largest different we our were our from just certainly it, And in out then Bob can I a spending sitting of is GBU the time Craig. marine we're with May not are on which time you I call. detail. January, of they and in on Look, field dealers. market. I Steve the many Michigan, dealers. motorcycle we're environment, under In and of spent conversation Off-Road is talk to phone X-minute in Coast. those from with in our out And lot were March, No, back disproportionate a leaders dealers dealerships at Yes. And that West it's stress. you with amount competitors, appreciate

I this essentially First have. that grip industry. through that's We've we the The enabled and process best RFM foremost, gives the probably think have real-time us the incredible systems data. we on across got visibility

the are we be We are part discussion because always of leader. going the largest to the market

lot our to of the even You have other to add get to close OEMs up numbers. a

that to to the typically in can than the do we more Polaris the of visibility CDK, into things are about are you to that at XX% are #X top outstanding, through we at look have And months know because see inventory bucket, they they like either systems the devils where we dealership So of of current the their noncurrent going sales when others. we the with we XX for relative the look through X, quartile inventory or have But at the #X. days inventory you inventory. inventory. efficiency details mix In or

from you frame through shipping quarter give reference. to inventory was dealers XX% year There's model that Just an that the over was a the 'XX. of OEM into of first

And that some In I are at hands. into dynamics fact of the taking puts on own going things prepared dealers. talked are the into that dealers my that perspective their about the remarks, so

attention get trying to a smaller became that. when in marine bit in and to move were met of trying hands the One brands things their the we've a of that on out they're a that And boats. still dealers financially, have desperate during around of they're is brands lot inventory that there's with focus the they they the and brought some those it's They just drag. move as evident pandemic of that to

keep to our We of the consistent Chairman us And JV. Hopefully, leader, Wells effective for can't rest been helping the eye. have behave follow control financial we We suit with JV that. close for OEMs visibility is segment, a That into health. which has XX as our our is over Fargo, the Bob of and dealers. the the a the to JV expanding we sure working manner. very that years their get Marine with in Board we'll and watch dealers. good cover each Through well of make industry we're that

do to we So our we're to part. do can going everything

I'd things up inventory, like were last we in But look at of where year. QX dealer versus we're

the are quickly, year, still If that in the last the that moving models -- we outlined, at light not was whether you channel so But I remember, inventory. models when we very look that's XX% boats, we've marine categories significant. sure I or pretty Slingshots, think dealers, taken with perfect, in those of down year-over-year. that our working we're not That's aggregate, we're reflective And making good the are we is, our and down. pockets soft those around production that inventory our remains know utility, obviously good where strong, The we're They for are, adjusted them. market vehicles. concentration our have the That's we We've along RANGER actively the levels bring given accessories Those and pulling are with a recognizing high-margin schedules. we of news lineup which is dealers. lot benefit. a but

way. going so go a obviously long And we we're that's up that pushing on and think to production

that, make our were when the dealers sure operate is that really we the long-term goes healthy going I an of the to because gave we to message make discipline. as reiterated relationship health here going term and business today in that guidance, clear going near and it we stay and network. value we're that So we're keep We retail that, our goes, we're incredible think we true to with of level sure to we

Robert Mack

Mike highest Craig. have Like going about, to the always the obviously, I industry, box count. we're to biggest think think a the in we're said, couple things of

more put out products other also innovative than folks. We

product categories, new we've and would dealer XX% taken build And to you so both some into we're fill. And This QX about level build manage if do RZR down XX%. inventory We how you at that in year, causes the of coming Mike talked high typically, much we've launches, QX, the we're channel down, marine. look to would RFM. you with to season, categories the which in range, double-digit really REC in mid- flat RZR, Marine, got like inventory

have dealer seasonality. in at we 'XX we we only and But not inventory typical see did the the in constrain into quarter would as first so And didn't build 'XX. going

we're challenged. categories those down that most So use keep the hopefully seasonality to in we going help levels inventory see to that

like the managing a terms really feel probably I we've inventory. So margin dealer large aggressive of been most in by

is good shows market. very we'll we response clean. challenging not We on remarks, dealer about as inventory but order. the the up, Marine we're some be QX. Hopefully, a sitting flat been We weather factories. think it talked Our for prepared inventory at build warmer to It's relatively see or will in our

And business see dealer managed that we so we've as orders. incoming with what

so a to OEMs. pretty other position lot in a compared of think And we we're good

Operator

Noah next question our And KeyBanc with from today Markets. comes Zatzkin Capital

Noah Zatzkin

realizing promo and mix, of QX? you operational through improvements guess the where I of you're to do offset implies looking the that for but in kind talk kind you of promo ability little talked the just could what kind of levels in of relative bit, to that And side, terms terms then on RV this think if through ahead? a are you you

the some you forward second, then think I give but not And pry EPS sometimes on much, to too color quarter.

there be just So helpful. any would thoughts

Michael Speetzen

Yes.

essentially year-over-year in versus the similar QX of But the talked back through 'XX we On the look and X. expect we most about course happened about we those we promo, QX, promo 'XX levels mix to into the and when up year, you implications, X to ramping year. if the of of would in increase really start talked this ORV in last remain And year. promo as go that and

little snow a like to we utility the well promo recognize those We rebalanced the little be out up. RZR in higher we've of that's be about. But production, we've Slingshot, Ranger be standpoint, do we there somewhat we will lot expected from a originally down, the our going because a think than increasing will things some and that there's how to market. all all bit It's promo probably but think we as headwind a counterbalance, of at but competitors look that but a of strength. we know we're So we feel noncurrent brought from talked range within inventory guidance

team the prepared The small total out to of smallest the that about operationally. was was forward. bucket, in The did February, us. had. talked around it in momentum front higher talked sit be you of and we've into continuing that performance. is about out progress a of EPS cadence. because is a gotten team focused work Bob don't going sure than line late talk here a operational the got the of 'XX terms I push of but 'XX, remarks. relatively bottom into and essentially was an coming lot that excellent improvement ourselves and that slug QX about that the in this rigor what driving in seen to We to let his we the cost in know got we're early job. that in about digging good I'd of it to factory the Bob I'll the category. tell pretty And able we our mean, of out improvements. the those making talked hole we I get January, coming we've we've quarter results I underlying call little relative I expected mean had bit

Robert Mack

make be year that. see X to all not to do mean, flat the lag going said, because remaining in you'll back the improvements improvements is quarter-over-quarter would for We the of kind a relatively year-over-year EPS by like going don't I quarters. of you quarter. just guidance quarter. the half I or Yes. give we operating We're say But stronger revenue

of So that was a of happened result work in the really lot saw QX. in QX a what we

to for will the build those in all And but we're that's the terms through going the EPS give guidance earnings, of year on quarter. so

Operator

Joe today Raymond And our James. question Altobello next with comes from

Joseph Altobello

in timing the that realized you the is there earlier How quarter from operational to was better-than-expected some expected. potentially And that much that upside this of earlier related? costs. you year? mentioned you number Maybe than really So million costs earnings upside $XXX came

Robert Mack

time Joe. Thanks, it say was I Yes. No, wouldn't hugely related.

and a quarter. got takes of the a we puts were in little more and Just there bit lot

the year. where And -- improvements the I million. efforts they few they your like we a couple the do don't the So upside there. said significant results the with by quarter. of would solid lot there's operational efforts are of calls, on a build -- obviously over They a through It's to get times to lagged the thought I know work $XXX that track be. last

And a this and that into $XXX as everybody million a working exit getting million carry then the but sit 'XX, we're we I good on the $XXX focused having on rate today. hard. upside of to is here really can year lot plan so But wouldn't

Joseph Altobello

the April, behind Okay. year in RANGERs That's seems Maybe secondly, a helpful. model early. XX little shipping it strategy here

Robert Mack

time. long the on the Yes. We're segment. was into obviously got We've I The performance we a for product, products in mean, strong coming product -- season. Utility ready. work these

and been And what that so improvements consumers have to really We quality of lot we wanted a that responsive that in good consumers. looking made to in for drivability product of think hands get the we product. are

And decided year April. with it so ready, in we here go 'XX being to model with

Michael Speetzen

a they're number looking It's products. all customers excellent for we leaning the already them, of consumers I'll But time Joe. We've right can with things to addressed source were, And lot that excellent a I into what spend enhance tell around of vehicle. ways also, call was shifting. with the an most market about spots favorable you, now,

out. to did And that The able executing we job we excited around we a team were position to with ship. vehicles there's it the vehicle And were of excitement an so get is as last year. lot of program, in the launched a so be excellent to

Operator

Fred our Research. today comes next with And question Wightman Wolfe from

Frederick Wightman

and and later of a puts beat for you sort I you guys handful makeup of of year, cautious as full guess, but did would to the more just rest expectations you didn't where you is of or on address simplistically, year you're far production there as the you've that in the changes the year offset? in the why given XQ. something thought Is sort the takes What outlook?

Michael Speetzen

or to little expect to what levels was of expected Well, close them X. look think, in move, slightly expected balance the the and out the comments And light the hit mean, we on X bit we it not be year. terms rates from given likely promo to thinking. I year. pretty around be where of as the likely up just reductions year, the were them QX of we mean for see I earlier the Fred, holding I we rate made are to But of kind the were for in I rest to that has are through of balance of the a the had elevated inflation interest Fed

think worried we'll if we're I see any.

And through year. play promo likely so in there's higher a rates little the as of the we rest that adjust bit to will that of continue out

Robert Mack

cost we interest Yes. the -- isn't planned late I them had year. the mean in

forecast a And there's not consumers To think feel obviously, So significant. cuts I retail better is start and the benefit same a would think to impact that the positive environment that rate Mike's standpoint we're going we're to some in from doesn't today. if and happen, few that that to be have promo. point, in might a we little particularly

thought to in sort quarter. prepared were than would, little bit progress for us year. a nothing cause things that We of and the our point, at we're little we So better the change first made bit we a that this view more of would, but

Frederick Wightman

And guess, still that in a do move they we from closely. expecting mentioned was Didn't that Bob, that today, support dealer margin just build because into where for managing enough. are that guys XQ. the this think guess gross normally earlier at that expansion benefit are right, of see you Fair of should see you year, products, you some embedded gross as the that mix. margins throughout you when the from sequential that year the new portion you're inventories you from I XQ look inventories I

Robert Mack

Yes.

the and a products, on and launched mean, about guess, and shipping inventory seeing XD ago I immediately. are the week We RANGER. we good started we new Expedition product, build I

I think the dealers days. couple just to in of started last they've hit

that was plants. the that either in things -- of efficiency the we mean, cost plants, So the all are of cost just the operating I the factored improvement a in. is lot

So materials. same vehicles and thing on get that as into fairly inventory immediately shows those up

all still aligned. that have very we So

Operator

Stanley. question next our And today Morgan comes from Megan Alexander with

Megan Christine Alexander

down follow clarify Bob, Just you expect to wanted be you I on did XQ. to up year-over-year. sales think

You be up actual net about I range, a the year-over-year, earnings interest significant right? that an not is expenses, headwind of you're suggest that margin to should guess, talked understand give but expansion, going does understand

Robert Mack

Yes.

is what QX, about is flat think year-over-year. thinking revenue going to So we've said be relatively we

of the will which out doing side will big -- it We'll the earnings. revenue be negative. into the play see positive on the So side work operations or a the cost then we're improvements from and

think giving about I but a specific we're So to way is not flat year-over-year think it. relatively guidance

Megan Christine Alexander

maybe April? then the just And what retail you follow-up the helpful. in on X%. in XQ, that the maybe That's ORV so Understood. a Okay. quarter talk far over and about Can seeing cadence you're

Michael Speetzen

specifically tell market Yes. utility what it razor that I sums I would business, you I commentary the pretty mean remained Rec of In X quarters weak. now We've pretty got up. has solid, the much around provided Ranger The is that strong. remain pretty performance.

at making And so we to we're we to my through the adjust within in try in Monterrey in talked production we those But about the trends -- changes rates have quarter. see. those see we for remarks, as that and did we're continuing as adapt Huntsville trends those year, prepared and

that are an people of to the I coming, were fact is hopeful X.X% mortgage would bit having rates think still trade-offs. inflation a rate we at the probably Gas to And relief more all-time hope dimming, start with rec And is expensive. I interest the think hit lot high. that So stabilize. a make little of

continuing cautious spending that they're just for Rec And see replenishment going I cycle to their business. that think is prolong with to and consumers our just careful be money. to how you

know know to point cycle. and driven want So innovation. we repurchase comes, Once some little to who going upgrade are. vehicle that of by our through in We know time, a bit they're we these that relief they're at customers their

of into next whether more probably point. this at is year year or a later guess that's it's anybody's So delay, this

Operator

question And our today Perry from of comes of Bank Alex next America.

Alexander Perry

XXXX lineup just about RANGER early Expedition? can new has on innovation as how much What reads you first the guess the question, Scout any new lineup And give in well? I supported feedback my on XC been then you new the can the the Indian talk retail? RANGER and

Michael Speetzen

percentage utility the look high it's moved Well, we and we introduce while RANGER Yes. new, innovation, revenue. popular. become I did it, say to of that making They've new utility Star at And I call the ultimate incredibly and the the premium into Those that work lines. segment. a mean, around the the would not specifically have North that up

Plus Ride value audio great for it all connected the through makes the marketplace, of incredible in one out really And mean, so That, the Command coupled with being capabilities we that enable an only I that. proposition. vehicles systems,

lower-end trying in in of lower end you go or to the at which into is is RANGER we've incredible the why is so innovation driven our leaned vehicles. marketplace. were the we've an And out pickup if with hands XX in we're an out detractors doing strong. making smooth of Receptivity visibility why vehicle those. There's the the to can really incredible you get general higher-end very getting have really belt vehicle specifically in business, influencers, heavy, playing that things a a of now It's has those a we'll that with steel the to figure addressed if that go little out those bit lot XD to vehicles business. affords been to its North have. terms are general some best I'd Star being demand in in purpose Dealers The of when had. there's terms with with the around Expedition, they incredible workloads important on technology that tell new Rangers. trucks and trims, demoing marketplace. the handle on the The model way of of It customers the out they that in market out some the that them. to what Expedition. look customers equivalent that it's that So keep They're year that's serving of want want we the we specifically up their launched that's around a and commentary capability. cabs. and tough the riding with anxious retail in ultimates are aspect

team sequestered we an Mike and of vehicles, They're their teasing launch. do hands adapt incredible videos ahead team them. so back job. in Arizona. in ridden dealers Scout did January watch gotten gave the them lineup, Bob on with who've essentially I to late monitor when we'll team Dougherty dealer management last as can down are terms Bob on. watch view The were started you the a and excited. and them to meeting year. continue I We And We and a do know that and that, wrote of We and very a those number go the at time influencers what goes There's the of it excellent well in motorcycles.

in view So they and of they marketplace. able advanced were an get the bikes, to were things anxious those out get campaign the incredibly the launch to

Indian larger So as to ownership. new bikes I it bike is about segment. in in a customers brings and remarks, talked selling the that and It's we the it into know prepared a largest funnel we lifetime my Indian of have,

incredible the every and of proud part The we've business, think good So it. sets I well across for up of X we're that really I'm our just the continues about about long our innovation us term. solid excited and expectations a years team. launches exceed now got of to

Unknown Analyst

of the helpful. ask terms rate guidance in Perfect. then That's what cuts. just quick my I of follow-up in And embedded is wanted terms to is

Is how year sort to of still cuts. play things the waiting are that you think where prior see rate contemplating out? I X expectation

Robert Mack

Yes.

originally rate but X, got point, we're late embedded had this we So them QX. X cuts, we've at down in to

or no cuts of floor dealer terms plan. share for for dealer So there's actual meaningful those in company interest to expense the or of risk our rate

is maybe consumers. that now. contemplated happen, earlier, said to at some will we what right mentally least got not the the provide we've impact we in in, As stimulus, doesn't actually we'll rate the And but a just which environment view if have financially is that cuts real we're be

it So us. either be for won't meaningful way

Operator

Longwall And from with our . next MacGregor question comes David today Research.

David S. MacGregor

to wanted I just production about the curtailments. ask

talked Snow Green. down Slingshot, you So RZRs, about taking

quarter? or of we up about the maybe first would production think relate it XQ RANGER. should the How as on to picked the compared impact You curtailments to

Robert Mack

we Well, in revenue and year, for was full of most down so QX, were million in the QX. in nearly $XXX that

fair in the flat a last volume. but will of out before, amount relatively even normal QX relative -- year of looking to be comparison to We QX to relative relative to year took year. a a lot marine of particularly So

So bit marine build as RZR RANGER add up be really, pick will RANGER -- to -- get the little into seasonality. added we -- offset weaker a start then the will build. And helps a

until play inventory of fair will there. sitting the an snow. model build that still trade-off for So really on QX. be the -- the year into our amount Snow season prepared QX, even pretty snow of sell snow much a model in lack come And we remarks, down doesn't like because said year 'XX dealers are given year didn't this

way play it flat revenue was will guided, XX% we out XX% the quarters. versus being relatively year-over-year, through think which revenue I had originally quarter-over-quarter the remaining still So X

Michael Speetzen

is the I facilities. The of, take we'll all products who work. and make pretty substantial it sounds teams add, offset those thing we David, same operational RZR in well, And the up are doing Snow. mean, only RANGER simple relatively don't in to terms I'd obviously, already

it it us that. lean the there's to not scenes, we right Slingshot, confidence of in important strong a to gain and consistent within in what we Snow, to we with where that of done a the and are the and also work confines have that's year recognizes is executed. team network, it RZR the lot the starting have of and of it's made RANGER able and And on keep it a light lot Huntsville our does thing how reiterating, execute softer the with in to quarter. being because where behind but to I inventory change, so dealer position rebalancing incredibly And work through that first retail manage last of helps impacts into improvements us. retail, on those do to momentum Rosa, work Monterrey be only But but to

Robert Mack

focused talked of of kind right the out lot consumers focus there's coming reality market piece of of on also. a we trim haven't sort trim for The the really on pandemic, a of we dealer And now management, of inventory levels are other is about, but higher-end lot levels. is been managing

And was everybody I so trim across really manufacturers, all really highest products. into all products level their think and leaning across

as market after to purchase I change, was entry-level the can their keep in lower. consumers a that bit later well. that accessorize little think of the price And as they true to started some initial do purchase for more the auto looking are trims

levels, year, we last those continue trim and that. so to adjusting do And starting we started

it's having biggest it we industry. of right business just the the the on level because to right it's accessory plays in lot of units made the trim and units, that. field, progress number So not think having And of in the we've got but we've strength our a

them And buys later We've vehicle so on got a accessories most the as at that sell consumer if likely it. to doesn't those a have many accessories opportunity margins. good

So us. it's a for good switch

David S. MacGregor

LYes. That make sense.

bottom I just $XXX of had talked was much program, to about guidance channeled maybe regarding savings million The we second into should think the line your how that cost versus it being in question investments? other the How that you've about. your makes

Robert Mack

and -- it you'll it improve have said, in true improvement. as volumes million mean, like through see like sequentially so cost it's around. But the as I obviously, the And and in falling volumes builds the $XXX warranty cost the puts is with is quarters. line million the move guidance year, year, things other a bottom we be impact there'll on but whole the margins will embedded takes So $XXX absorption to through bigger later as operational the savings.

Michael Speetzen

when a Yes. the we margins standpoint, There's down not us, up, from I good we we're those the about an operating think prudent and XXXX, and we when point. revenue pushing back hallmark is everything the businesses. for standpoint. it's a at fact have look expense being but I'm you but necessarily baseline get a to comparison But year being I talking manufacturing mean out to that that look facilities we're from at our We're XXXX suggesting of lot can. doing

like things elevated because Some they were a that rates are but are tougher other from lot or there's elevated, while still down inefficiencies labor coming -- that, sequentially we've saying commodities all bottom crept of that we're is the of line. we where that's And the into but got benchmark. that have back than that the XXXX focus, not to. is we get which can means better think to to get We that the be to facilities

Operator

the with And from Citi. questions Hardiman comes last James

James Hardiman

to on just one more wanted question I inventory ask front. the

an you lot crumbs, So sequentially, and bread you've a inventory I give believe is X us we think India. still I any way some for Any where way or said aggregate think of where inventory to reference versus given about was flat to Is at just things for us but we're least in to it's RANGER there aggregate? some can't XXXX, comparing are year-over-year point. XXXX? turns

Robert Mack

like so -- mean said, I we're Yes. we flat.

products, If down X. you and we're exclude the youth new

QX If same you quarter-over-quarter think about total RZR, digits way. high we're down single rack from

into lot of boats going a have commented built Marine seasonality. earlier, I normally, think flat. And I we is would

good that out raise RZR, going we significantly. even So about where XX% not feel to is of And kind built up have QX QX into RANGER into is. coming rec seasonality. would of normally we QX headed XX% into

in and like either we of we lot So inventory -- there it didn't products. tons built it's new not a is of the

So overall, to we are. hopefully, we that's you good feel And where to. get enough about pretty

James Hardiman

numbers, lot those right, But think that of us normally I -- think of way. we which don't sort are clarify, it sequential all about just a to

last that to the any in put So of way is context there year.

Michael Speetzen

at days of average, well the last QX still on mean industry where less were James, I of inventory, in when is QX the or restocking Well, year, been. we're position. is has We But last problem, look a below XX which ever had the you year, network up of XX%.

trend said, last just about We A just about our to the don't and a big the look on know talked given outperforming it. aren't actually of inventory relative what talk that year, to we're make think they adjust. I tell ourselves I measures we seeing the else, is is so And on other through we the for challenge the quickly the they we seriously. of the And noncurrent at and CDK by we see that work until how when are the this business. dealer. comes spending absolute on it, that it. but looking everybody we're retail corrections folks OEMs what's of couple talking years. through it year-over-year can current, But the acting the dealers lot time We're We I'll performance for I it. of what's frankly, by And we're about comparisons across at interesting, the data, when of region, And terms at that are we mix it, us turning, network that's the part reemphasize levels the continue because in can really that so complexity what's that the we driving take acting necessarily by product the size inventory you get is like And lot. us we matter don't to they're group. of Xx the that we business. look do. And really data mean we're a on we our that while have

so pressure to And up it continue put really or us work other on hopefully, them their of dealerships. And the lead. to the is out they'll to take guys the

James Hardiman

of dealer failures? low-end I maybe seemed talked Could wrote of sort that pickup reduced the health a remarks, then that assuming we OEM rationalize talking the but significant could circle are response like That to dealers term that wanted then OEMs, sense. dollars. what contributing make promotional comment reduced guys there any about and think, I to shipments you positive a that Mike, if it. talked you able of first, concern And back prepared like base? their the longer fewer in pressure the space. about some some a also to players, OEM I the guess, on. down, be Got is in we're I'm doing of we're about, about to in then see feels own your dealer But you

Michael Speetzen

did standpoint, obviously, on and have were of keep if dealer is JV. very what management the concern you Yes. the of They're vehicle I pontoon a a through much Discretionary sensitive. boat, is lot dealers OEMs and these that behavior at rec they something. highly dealer in highly and network in the the the those of said that things exhibit, dealer of of OEM our a me as it Yes, that been that a during that lower-end Quite purchases. obviously, has with OEMs frankly, of that It delivering because market that, time fraction any other businesses, were period, whether XX% a lot in bringing Within because, wanted constraints, in value of history marketplace. to things Hopefully, with short mean, coming out same availability. people or us. had are pressure. this remarks, of if the rate of helps good it's out, lower like we When of couple shaking in we were were we the they -- we've is close XXX% this. they of dealers, health lines play the anything a a given our we discretionary our concerned eye of the a so we the that now because network manage put does the small. shared, interest nature I are really they delivery in shared. are a each of some 'XX, the buyer, more And pretty my We how group. brought get we during just of in 'XX even year, Fargo who data retreated is behavior of a JV, pandemic One those to Wells But Even income in proactive look bringing inventory the because would instances, prepared the failures boat some isn't up from

that increases getting priority living, cost continuing to of relative they're with. low they're So

lines. straightforward they've talked we've boats they to to at looking of they're they or got don't options they've the vehicles to So they one they've plan have, those got the move with carry is been move that that have continue some as pretty dealers, of but the to

reflective into region. think frankly, we're varies it is and I the moving And not all forward, names because, by forward. going business, get so business, whether market But to that by you quite to stuff our understanding that are kind the dealer dealer disproportionate and they it of look at pontoon as they really we're our the a go on Off-Road bet of business, player our motorcycle of share

Operator

with next And from BMO Markets. our Thomas-Martin question . comes Capital Tristan

Tristan Thomas-Martin

I pricing. have one on question

been there's on price productions I your at -- but premium, are higher Looking it they're adoption. like think with models XX seems the that base lineup, RANGER year-over-year,

So part about a XX% on question, pricing your into how we the one you that difference installed factory second to across the then ship all between the think what's products? average your And accessory margin of relative overall should channel? dealer

Robert Mack

non-Polaris you advantage Answer they're is you more. to The buy is installed the already vehicle. more fully people or don't because factory accessory have Typically, question that margin shown then not on accessorized the get when first. about also vehicle. worry you selecting to a it's dealer significant. second customer And bigger -- a a the don't difference The

So the advantage. bigger that's

people model consumer. MSRP, between space, of think increased pricing. the new the promo given OEM come going That think of sort in got and so year now amount a the of model state been the that all 'XX, industry net the have across surcharges out, into significant. noise you're be of going market promo increases, the I and lot impact through think know I it It's about to power price as surcharge I particularly happened has just current years price There's that seeing -- increases the a to I tremendous of that shows MSRP said, up. pandemic don't think mix in where don't pricing on just coming is way and the the adjust

the saw it to levels that see I what is the them. you think spec-ed they in focus ways that buy customer you'll right comparing try are get us trim so on, the is want in well to we vehicles RANGER

lower higher sometimes that tweak consumer but off on level adding trim for trims, the something into on and asking stuff the dealership that's we trends get to coming try for taken year that's what things them. And to and right every is

Operator

question with our comes today UBS. Farley from And Robin final

Robin Farley

year. your ORV, in about more if terms of do So through the others to don't share talked work don't you clearing do may other to maybe also you work to know that more know gaining expectation mentioned OEMs about if some how But mentioned have have other but I that -- specific inventory. that you're that was you I

that grow that's has? others be wouldn't guess, to share, I difficult than to clearing share saying suggest of So OEM that that of grow clearing you're sort make to mean, But it it long inventory is sort wouldn't I another not do have meaningful will or that tough Polaris share, more if loss term. inventory to

Michael Speetzen

by mean, is certainly it's trim discussion by that. when internal I line, Yes. there far I things we pockets. talk share, are mean not model, And about helpful. the more in-depth like

more forward. -- we're are there And question that a presented making challenge. is when last areas as us it that's that stack relative inventory old. or I'd be and on us. the to price And nature, competitive year someone after has have products to we're promo reflecting move make trying bigger we news that where that, as to that anybody our adjustments is. clearing up to far go a we'll real-time crazy between comes innovation the The indicated, good the who's around end, given coming going and sure eventually we #X So battling market better foot We're an to a we're and protect not the

markets going come the new going Scout to So that around XD. around And The desired. I and products some as that momentum RANGER back highly new the with great. is new products, of we I the Expedition certainly, over past rec now getting is just at We're introduced the then feel look razor be be to desired. highly new that refreshed models. Bennington Within a went are that. and Godfrey refreshed Pro, with Hurricane of several we've good of We've the feel of the got marine a business, forward end continue really position there. going We XP and after refreshing our we're years the low to ton and obviously, we the the the about lot we've line. on the

our lot models a of have we'll segment. So Marine new from

good So where make dynamics at, inventory. and that sure I really competitive those disciplined dealer we'll we're we're staying around about manage and feel

Robin Farley

will And sounds clearing. Great. year. penetration. clearing, about after follow-up think like which inventory for the you of look like be talk the some everybody floor it in of kind dealers about some what They be on And you're just and gone of that terms through kind restocking you last will still modestly QX It for share charge the penetrated, has the expecting if big down one as to about industry this restocking, sounds dealer right, like to not MSRP. can when are close think others maybe OEMs retail

OEM can dealers compete anything that combat do think And competing you share but make you sort I though guess about do Is different carrying make how so other can point to product restocking a more are dealers same Polaris there on to floor that brand. And they're a can kind a that than not when price if it's even of they product. of they with lower-priced dynamic? on have money for saying

Michael Speetzen

scale. sure that's but a there's I'm that, I mean I some pockets wouldn't large of say

making sit such big you quickly much our standpoint. talking costs. you time brands like you majority think it's a I Any our were down have of mean, carry the they sophisticated they get know too smaller do, what's seen because paying dealers. that's from inventory part they all into of And evident times don't we inventory And they spend are important happened they've and and difficult as some those of dealers, get a margins they management. eroded and with and and the they're I we that carry when these on profitability interest

them. Off-Road those dealers relationships. or lot bar we'll think sure And that in the the setting good a Marine business strong drive it's confidence dealer relationship really got make the cultivation I our to understand whether we've do, a of build is have and and continue So to with or we I Indian really that think high, a long-term that I take view, that

Robert Mack

evolve. continued Yes. And we've to

use we far around and in that, tied a of our it. we For And to Star dealerships, most contributor it money away our profit and manage our dealers to need manage real to to there's dealers, the lot are that we they Rewards brands. floor largest there's criteria North dollar dealers understand present and space that how their the program and

So I in that like situation, deal feel a we're with type to of position Robin. good

Operator

all presentation. today's attending this session We question-and-answer call. you concludes for today's And today's conference and thank

You may day. wonderful now lines, disconnect and a your have

Polaris (PII) 23 Apr 242024 Q1 Earnings call transcript