Financial and Operational Highlights
Second quarter reported and adjusted sales increased 40%
to $2,117 million, a second quarter sales record
Second quarter reported net income was $2.52 per share;
adjusted net income for the same period was $2.70 per share
Gross profit margin, reported and adjusted, for the
second quarter was 26.0% and 26.1%, up 403 and 311 basis points
over the prior year, respectively. The increase was primarily due
to lower promotional costs and increased pricing, partially offset
by increased input costs including supply chain constraints,
logistic, labor and commodity prices
North American retail sales decreased 28% for the quarter
compared to uncharacteristically strong retail sales last year,
driven largely by low product availability due to supply chain
constraints limiting production. On a two-year basis, retail sales
were up 14% over second quarter 2019 pre-COVID levels
Market share improved during the quarter for ORV and
boats
Polaris repurchased approximately 0.8 million shares of
Polaris stock during the quarter for $111 million
Polaris increased its full year 2021 earnings guidance
and now expects earnings to be in the range of $9.35 to $9.60 per
diluted share. Full year 2021 adjusted sales guidance was narrowed
and is now expected to be up 19% to 21% over the prior year
Polaris Inc. (NYSE: PII):
Key Financial Data
(in millions, except per share data)
INCOME STATEMENT - Q2 June 30,
2021
Reported
YOY % Chg.
Adjusted*
YOY % Chg.
Sales
$
2,117.2
40%
$
2,117.2
40%
Net income attributable to Polaris
$
158.4
NM
$
169.4
109%
Diluted EPS
$
2.52
NM
$
2.70
108%
BALANCE SHEET - June 30, 2021
Reported
YOY % Chg.
Cash and cash equivalents
$
288.8
(47)%
Inventories, net
$
1,514.9
48%
Total debt, finance lease obligations and
notes payable
$
1,331.3
(31)%
Shareholders' equity
$
1,120.6
49%
CASH FLOW - YTD Q2 June 30,
2021
Reported
YOY % Chg.
Net cash provided by operating
activities
$
195.6
(37)%
Purchase of property & equipment
$
114.4
30%
Repurchase and retirement of common
shares
$
410.5
NM
Cash dividends to shareholders
$
77.0
1%
NM = Not meaningful
*Note: the results and guidance in this
release, including the highlights above, include references to
non-GAAP operating measures, which are identified by the word
“adjusted” preceding the measure. A reconciliation of GAAP /
non-GAAP measures can be found at the end of this release.
CEO Commentary
‘Think Outside’ is resonating with new and current customers
alike with continued strong demand and second quarter results that
beat last year’s COVID-impacted quarter as anticipated. Even more
notable, we delivered double digit sales and earnings increases
compared to our pre-COVID results from the second quarter and first
half of 2019. All of our segments performed extremely well, posting
strong increases in both sales and profitability in the face of a
challenging supply chain and increasing input cost environment.
While supply chain-related headwinds and higher input costs will
continue into the second half of the year, the Polaris team’s
operational dexterity and nimble approach has been nothing short of
spectacular. I remain confident in our ability to meet the product
demands of our dealers and consumers and deliver value for our
shareholders.
-- Mike Speetzen, Chief Executive Officer of Polaris Inc.
Second Quarter Performance Summary
(Reported)
(in millions, except per share data)
Three months ended June
30,
2021
2020
Change
Sales
$
2,117.2
$
1,511.8
40%
Gross profit
551.4
332.7
66%
% of Sales
26.0
%
22.0
%
+403 bpts
Total operating expenses
350.5
653.5
(46)%
% of Sales
16.6
%
43.2
%
NM
Income from financial services
13.7
25.4
(46)%
% of Sales
0.6
%
1.7
%
-103 bpts
Operating income (loss)
214.6
(295.4
)
NM
% of Sales
10.1
%
(19.5
)%
NM
Net income (loss) attributable to
Polaris
158.4
(235.4
)
NM
% of Sales
7.5
%
(15.6
)%
NM
Diluted net income (loss) per
share
$
2.52
$
(3.82
)
NM
NM = Not meaningful
Polaris Inc. (NYSE: PII) (the "Company") today released second
quarter 2021 results with reported sales of $2,117 million, up 40
percent from reported sales of $1,512 million for the second
quarter of 2020. The Company reported second quarter 2021 net
income of $158 million, or $2.52 per diluted share, compared with a
net loss of $235 million, or $(3.82) per diluted share, for the
2020 second quarter. The 2020 second quarter net loss includes a
$379 million pre-tax, non-cash goodwill and other intangible asset
impairment charge related to the Company's Aftermarket business,
principally Transamerican Auto Parts (TAP). Adjusted net income for
the quarter ended June 30, 2021 was $169 million, or $2.70 per
diluted share compared to $81 million, or $1.30 per diluted share
in the 2020 second quarter.
Ongoing robust retail demand requiring little or no promotional
assistance, along with favorable product mix and pricing continued
to drive improvements in the Company's performance.
Gross profit increased 66 percent to $551 million for the
second quarter of 2021 from $333 million in the second quarter of
2020. Reported gross profit margin was 26.0 percent of sales for
the second quarter of 2021, up 403 basis points compared to 22.0
percent of sales for the second quarter of 2020. The improvement in
gross profit was driven primarily by higher volumes, lower
promotional costs, favorable pricing and improved product mix
during the quarter, partially offset by higher input costs
including logistical costs, component costs and plant
inefficiencies related to the supply-chain constraints and higher
commodity prices. Adjusted gross profit for the second quarter 2021
was $553 million, or 26.1 percent of adjusted sales compared to the
second quarter of 2020 adjusted gross profit of $348 million, or
23.0 percent of sales. Adjusted gross profit for the second quarter
of 2021 and 2020 excludes the negative impact of $2 million and $15
million of restructuring and realignment costs, respectively.
Operating expenses decreased 46 percent for the second
quarter of 2021 to $351 million from $654 million in the same
period in 2020. Operating expenses decreased primarily due to the
prior year non-cash impairment of goodwill and other intangible
assets associated with the Company's Aftermarket segment, partially
offset by an increase in total operating expenses to levels
commensurate with the improvement in demand.
Income from financial services was $14 million for the
second quarter of 2021, down 46 percent compared with $25 million
for the second quarter of 2020. The decrease was due to lower
retail financing income resulting from lower retail sales and lower
penetration rates at our retail financing providers and a decrease
in wholesale financing income due to lower dealer inventory
levels.
Non-Operating Expenses
(Reported)
(in millions)
Three months ended June
30,
2021
2020
Change
Interest expense
$
10.7
$
17.9
(40)%
Other (income) expense, net
$
(3.2)
$
0.8
NM
Provision for income taxes
$
48.6
$
(78.7)
NM
NM = Not meaningful
Interest expense was $11 million for the second quarter
of 2021 compared to $18 million for the same period last year
primarily due to lower debt levels.
Other (income) expense, net, was $3 million of income in
the second quarter of 2021 compared to $1 million of expense in the
second quarter of 2020. Other (income) expense is the result of
currency exchange rate movements and the corresponding effects on
currency transactions related to the Company’s international
subsidiaries.
The provision for income taxes for the second quarter of
2021 was $49 million, or 23.4 percent of pretax income, compared
with a tax benefit of $79 million, or 25.0 percent of pretax loss,
for the second quarter of 2020. The decrease in the effective
income tax rate is primarily due to favorable excess tax benefits
related to share-based compensation on pretax income during 2021 as
compared to the impact of deferred tax benefits arising from the
significant pretax loss from the impairment of goodwill and other
intangible assets in 2020, as well as the release of certain income
tax reserves during 2020.
Product Segment Highlights
(Reported)
(in millions)
Sales
Gross Profit
Q2 2021
Q2 2020
Change
Q2 2021
Q2 2020
Change
Off-Road Vehicles / Snowmobiles
$
1,314.3
$
952.9
38
%
$
364.6
$
251.7
45
%
Motorcycles
$
211.7
$
141.3
50
%
$
23.9
$
4.4
NM
Global Adjacent Markets
$
154.1
$
77.9
98
%
$
41.7
$
16.8
148
%
Aftermarket
$
239.5
$
207.5
15
%
$
62.8
$
47.6
32
%
Boats
$
197.6
$
132.2
49
%
$
47.4
$
18.6
155
%
NM = Not meaningful
Off-Road Vehicles (“ORV”) and
Snowmobiles segment sales, including PG&A, totaled
$1,314 million for the second quarter of 2021, up 38 percent
compared to $953 million for the second quarter of 2020 driven by
broad based strength across ATVs, Side-by-Sides and Snowmobile
sales. PG&A sales for ORV and Snowmobiles combined increased 31
percent in the second quarter of 2021 compared to the second
quarter last year. Gross profit increased 45 percent to $365
million in the second quarter of 2021, compared to $252 million in
the second quarter of 2020. Gross profit percentage increased 132
basis points during the 2021 second quarter compared to the prior
year due to robust demand and historically low dealer inventories,
which supported lower promotional and floor-plan finance spending,
partially offset by higher input costs related to supply chain
constraints.
ORV wholegood sales for the second
quarter of 2021 increased 38 percent. Polaris North American ORV
retail sales decreased low-thirties percent for the quarter with
side-by-side vehicles down low-thirties percent and ATV vehicles
down high-twenties percent. The North American ORV industry was
down mid-thirties percent compared to the second quarter last
year.
Snowmobile wholegood sales in the
second quarter of 2021 were $32 million compared to $12 million in
the second quarter last year. Snowmobile sales in the Company's
second quarter are routinely low as it is the off-season for
snowmobile shipments.
Motorcycles segment sales,
including PG&A, totaled $212 million, up 50 percent compared to
the second quarter of 2020, driven by increased sales of Slingshot,
Indian Motorcycles, and related PG&A. Gross profit for the
second quarter of 2021 was $24 million compared to $4 million in
the second quarter of 2020. The increase in gross profit margin was
driven by increased volume and lower promotional costs, partially
offset by increased input costs from supply chain constraints.
North American consumer retail sales for Indian Motorcycles
increased high-twenties percent during the second quarter of 2021
in a mid-to-heavy-weight two-wheel motorcycle industry that was up
mid-thirties percent. North American consumer retail sales for
Polaris' motorcycle segment, including both Indian Motorcycle and
Slingshot, increased low-twenties percent during the second quarter
of 2021. North American consumer retail sales for the motorcycle
industry including both two-wheel and three-wheel increased
mid-thirties percent during the second quarter of 2021. Indian and
Slingshot market share losses were driven by a lack of product
availability during the quarter driven by supply-chain
challenges.
Global Adjacent Markets
segment sales, including PG&A, increased 98 percent to $154
million in the 2021 second quarter compared to $78 million in the
2020 second quarter driven by increases in demand in North America
and EMEA. Gross profit increased 148 percent to $42 million or 27.1
percent of sales in the second quarter of 2021, compared to $17
million or 21.4 percent of sales in the second quarter of 2020.
Gross profit percentage increased during the quarter primarily due
to increased volume with lower promotional costs, favorable foreign
exchange rates and increased pricing, offset somewhat by higher
input costs related to supply chain constraints.
Aftermarket segment sales of
$240 million in the 2021 second quarter increased 15 percent
compared to $208 million in the 2020 second quarter. Transamerican
Auto Parts (TAP) sales of $206 million in the second quarter of
2021 increased nine percent compared to $189 million in the second
quarter of 2020. The Company's other aftermarket brands sales were
up 80 percent compared to the second quarter of 2020. Gross profit
increased 32 percent to $63 million or 26.2 percent of sales in the
second quarter of 2021, compared to $48 million or 22.9 percent of
sales in the second quarter of 2020. Gross profit percentage
improved during the quarter due to higher volume and increased
pricing.
Boats segment sales
increased 49 percent to $198 million in the 2021 second quarter
compared to $132 million in the 2020 second quarter, driven by
sales growth in all three brands, Bennington, Godfrey and
Hurricane. Gross profit increased 155 percent to $47 million or
24.0 percent of sales in the second quarter of 2021, compared to
$19 million or 14.1 percent of sales in the second quarter of 2020
due to increased volume and positive product mix partially offset
by increased input costs related to supply chain constraints.
Supplemental Segment
Data:
Parts, Garments, and Accessories
(“PG&A”) sales increased 35 percent for the 2021 second
quarter with all categories and business segments growing sales
during the quarter.
International sales to customers
outside of North America, including PG&A, totaled $311 million
for the second quarter of 2021, up 64 percent from the same period
in 2020. All regions realized significant sales increases year over
year.
Financial Position and Cash
Flow
(in millions)
Six months ended June
30,
2021
2020
Change
Cash and cash equivalents
$
288.8
$
544.4
(47)
%
Net cash provided by operating
activities
$
195.6
$
309.7
(37)
%
Repurchase and retirement of common
shares
$
410.5
$
49.3
NM
Cash dividends to shareholders
$
77.0
$
76.0
1
%
Total debt, finance lease obligations and
notes payable
$
1,331.3
$
1,928.0
(31)
%
Debt to Total Capital Ratio
54
%
72
%
NM = Not meaningful
2021 Business Outlook
Given the 2021 first half results, and the expected continued
solid retail demand and current dealer pre-order sales from
consumers, the Company is increasing its full year earnings
guidance and now expects adjusted net income to be in the range of
$9.35 to $9.60 per diluted share, compared with adjusted net income
of $7.74 per diluted share for 2020. Full year 2021 sales guidance
was narrowed and is now expected to be in the range of $8,375 to
$8,500 million, up 19 to 21 percent.
Non-GAAP Financial Measures
This press release and our related earnings call contain certain
non-GAAP financial measures, consisting of “adjusted" sales, gross
profit, income before taxes, net income and net income per diluted
share as measures of our operating performance. Management believes
these measures may be useful in performing meaningful comparisons
of past and present operating results, to understand the
performance of its ongoing operations and how management views the
business. Reconciliations of reported GAAP measures to adjusted
non-GAAP measures are included in the financial schedules contained
in this press release. These measures, however, should not be
construed as an alternative to any other measure of performance
determined in accordance with GAAP.
Earnings Conference Call and
Webcast
Today at 9:00 AM (CT) Polaris Inc. will host a conference call
and webcast to discuss the 2021 second quarter results released
this morning. The call will be hosted by Mike Speetzen, CEO; and
Bob Mack, CFO. The earnings presentation and link to the webcast
will be posted on the Polaris Investor Relations website at
ir.polaris.com. To listen to the conference call by phone,
dial 1-877-883-0383 in the U.S., or 1-412-902-6506 internationally.
The Conference ID is 0876176. A replay of the conference call will
be available by accessing the same link on our website.
About Polaris
As the global leader in Powersports, Polaris Inc. (NYSE: PII)
pioneers product breakthroughs and enriching experiences and
services that have invited people to discover the joy of being
outdoors since our founding in 1954. With annual 2020 sales of $7.0
billion, Polaris’ high-quality product line-up includes the Polaris
RANGER®, RZR® and Polaris GENERAL™ side-by-side off-road vehicles;
Sportsman® all-terrain off-road vehicles; Indian Motorcycle®
mid-size and heavyweight motorcycles; Slingshot® moto-roadsters;
snowmobiles; and deck, cruiser and pontoon boats, including
industry-leading Bennington pontoons. Polaris enhances the riding
experience with parts, garments, and accessories, along with a
growing aftermarket portfolio, including Transamerican Auto Parts.
Polaris’ presence in adjacent markets includes military and
commercial off-road vehicles, quadricycles, and electric vehicles.
Proudly headquartered in Minnesota, Polaris serves more than 100
countries across the globe. www.polaris.com
Forward-looking Statements
Except for historical information contained herein, the matters
set forth in this presentation, are forward-looking statements that
involve certain risks and uncertainties that could cause actual
results to differ materially from those forward-looking statements.
Potential risks and uncertainties include such factors as the
severity and duration of the COVID-19 pandemic and the resulting
impact on the Company’s business, supply chain, and the global
economy; the Company’s ability to successfully implement its
manufacturing operations expansion and supply chain initiatives;
the Company’s ability to successfully source necessary parts and
materials and the ability of the Company to manufacture and deliver
products to dealers to meet increasing demand and to bring dealer
inventory levels back to optimal levels; the continuation of the
increasing consumer demand for the Company’s products; product
offerings, promotional activities and pricing strategies by
competitors; economic conditions that impact consumer spending;
disruptions in manufacturing facilities; acquisition integration
costs; product recalls and/or warranty expenses; product rework
costs; impact of changes in Polaris stock price on incentive
compensation plan costs; foreign currency exchange rate
fluctuations; environmental and product safety regulatory activity;
effects of weather; commodity costs; freight and tariff costs
(tariff relief or ability to mitigate tariffs); changes to
international trade policies and agreements; uninsured product
liability claims; uncertainty in the retail and wholesale credit
markets; performance of affiliate partners; changes in tax policy;
relationships with dealers and suppliers; and the general overall
economic, social and political environment. Investors are also
directed to consider other risks and uncertainties discussed in
documents filed by the Company with the Securities and Exchange
Commission. The Company does not undertake any duty to any person
to provide updates to its forward-looking statements.
The data source for retail sales figures included in this
release is registration information provided by Polaris dealers in
North America compiled by the Company or Company estimates and
other industry data sources. The Company must rely on information
that its dealers supply concerning retail sales, and other retail
sales data sources related to Polaris and the powersports industry,
and this information is subject to revision. Retail sales
references to total Company retail sales includes only ORV,
snowmobiles and motorcycles in North America unless otherwise
noted. (summarized financial data follows)
CONSOLIDATED STATEMENTS OF
INCOME (LOSS)
(In Millions, Except Per Share
Data) (Unaudited)
Three months ended June
30,
Six months ended June
30,
2021
2020
2021
2020
Sales
$
2,117.2
$
1,511.8
$
4,068.3
$
2,917.0
Cost of sales
1,565.8
1,179.1
3,036.4
2,291.4
Gross profit
551.4
332.7
1,031.9
625.6
Operating expenses:
Selling and marketing
154.2
119.6
300.1
269.8
Research and development
88.8
66.8
168.3
145.2
General and administrative
107.5
87.9
194.6
166.4
Goodwill and other intangible asset
impairments
—
379.2
—
379.2
Total operating expenses
350.5
653.5
663.0
960.6
Income from financial services
13.7
25.4
29.9
45.1
Operating income (loss)
214.6
(295.4)
398.8
(289.9)
Non-operating expense:
Interest expense
10.7
17.9
22.2
34.1
Other (income) expense, net
(3.2)
0.8
(5.7)
1.7
Income (loss) before income taxes
207.1
(314.1)
382.3
(325.7)
Provision for income taxes
48.6
(78.7)
89.6
(84.9)
Net income (loss)
158.5
(235.4)
292.7
(240.8)
Net (income) loss attributable to
noncontrolling interest
(0.1)
—
(0.2)
—
Net income (loss) attributable to Polaris
Inc.
$
158.4
$
(235.4)
$
292.5
$
(240.8)
Net income (loss) per share attributable
to Polaris Inc. common shareholders:
Basic
$
2.58
$
(3.82)
$
4.75
$
(3.90)
Diluted
$
2.52
$
(3.82)
$
4.63
$
(3.90)
Weighted average shares outstanding:
Basic
61.3
61.6
61.6
61.7
Diluted
62.8
61.6
63.1
61.7
CONSOLIDATED BALANCE
SHEETS
(In Millions), (Unaudited)
June 30, 2021
June 30, 2020
Assets
Current assets:
Cash and cash equivalents
$
288.8
$
544.4
Trade receivables, net
220.3
195.2
Inventories, net
1,514.9
1,026.4
Prepaid expenses and other
109.1
103.5
Income taxes receivable
0.3
14.2
Total current assets
2,133.4
1,883.7
Property and equipment, net
900.4
873.7
Investment in finance affiliate
29.3
72.0
Deferred tax assets
159.2
184.7
Goodwill and other intangible assets,
net
1,063.9
1,092.0
Operating lease assets
123.9
105.4
Other long-term assets
115.1
101.2
Total assets
$
4,525.2
$
4,312.7
Liabilities and Equity
Current liabilities:
Current portion of debt, finance lease
obligations and notes payable
$
53.1
$
536.5
Accounts payable
899.3
545.6
Accrued expenses:
Compensation
211.4
127.1
Warranties
142.2
134.2
Sales promotions and incentives
59.7
132.6
Dealer holdback
97.4
138.6
Other
288.4
249.8
Current operating lease liabilities
35.4
35.3
Income taxes payable
35.2
7.9
Total current liabilities
1,822.1
1,907.6
Long-term income taxes payable
16.1
20.0
Finance lease obligations
13.4
14.2
Long-term debt
1,264.8
1,377.3
Deferred tax liabilities
4.3
3.3
Long-term operating lease liabilities
90.9
72.4
Other long-term liabilities
179.4
150.5
Total liabilities
$
3,391.0
$
3,545.3
Deferred compensation
11.9
14.2
Equity:
Total shareholders’ equity
1,120.6
753.0
Noncontrolling interest
1.7
0.2
Total equity
1,122.3
753.2
Total liabilities and equity
$
4,525.2
$
4,312.7
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In Millions), (Unaudited)
Six months ended June
30,
2021
2020
Operating Activities:
Net income (loss)
$
292.7
$
(240.8)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
118.3
127.1
Noncash compensation
25.2
31.7
Noncash income from financial services
(4.3)
(11.9)
Deferred income taxes
18.7
(92.6)
Goodwill and other intangible asset
impairments
—
379.2
Changes in operating assets and
liabilities:
Trade receivables
33.7
(6.2)
Inventories
(341.3)
91.8
Accounts payable
119.5
95.3
Accrued expenses
(92.2)
(77.8)
Income taxes payable/receivable
18.8
12.0
Prepaid expenses and other, net
6.5
1.9
Net cash provided by operating
activities
195.6
309.7
Investing Activities:
Purchase of property and equipment
(114.4)
(88.1)
Investment in finance affiliate, net
34.3
50.6
Net cash used for investing activities
(80.1)
(37.5)
Financing Activities:
Borrowings under debt arrangements /
finance lease obligations
499.9
1,288.7
Repayments under debt arrangements /
finance lease obligations
(619.0)
(1,054.9)
Repurchase and retirement of common
shares
(410.5)
(49.3)
Cash dividends to shareholders
(77.0)
(76.0)
Proceeds from stock issuances under
employee plans
146.1
6.9
Net cash provided by (used for) financing
activities
(460.5)
115.4
Impact of currency exchange rates on cash
balances
(1.9)
(3.1)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(346.9)
384.5
Cash, cash equivalents and restricted cash
at beginning of period
657.5
196.3
Cash, cash equivalents and restricted
cash at end of period
$
310.6
$
580.8
The following presents the classification
of cash, cash equivalents and restricted cash within the
consolidated balance sheets:
Cash and cash equivalents
$
288.8
$
544.4
Other long-term assets
21.8
36.4
Total
$
310.6
$
580.8
NON-GAAP RECONCILIATION OF
RESULTS
(In Millions, Except Per Share
Data), (Unaudited)
Three months ended June
30,
Six months ended June
30,
2021
2020
2021
2020
Sales
$
2,117.2
$
1,511.8
$
4,068.3
$
2,917.0
Restructuring & realignment (2)
—
(1.7)
—
(1.7)
Adjusted sales
2,117.2
1,510.1
4,068.3
2,915.3
Gross profit
551.4
332.7
1,031.9
625.6
Restructuring & realignment (2)
1.7
14.8
3.9
20.1
Adjusted gross profit
553.1
347.5
1,035.8
645.7
Income (loss) before taxes
207.1
(314.1)
382.3
(325.7)
Impairment charges (1)
—
379.2
—
379.2
Restructuring & realignment (2)
1.7
22.9
3.9
34.7
Intangible amortization (3)
8.5
8.7
17.2
18.7
Class action litigation expenses (4)
4.2
4.4
8.4
7.6
Adjusted income before taxes
221.5
101.1
411.8
114.5
Net income (loss) attributable to
Polaris Inc.
158.4
(235.4)
292.5
(240.8)
Impairment charges (1)
—
289.0
—
289.0
Restructuring & realignment (2)
1.3
17.5
3.0
26.5
Intangible amortization (3)
6.5
6.6
13.1
14.1
Class action litigation expenses (4)
3.2
3.2
6.4
5.7
Adjusted net income attributable to
Polaris Inc. (5)
169.4
80.9
315.0
94.5
Diluted EPS attributable to Polaris
Inc.
$
2.52
$
(3.82)
$
4.63
$
(3.90)
Weighted average shares outstanding
adjustment (6)
—
0.02
—
0.03
Impairment charges (1)
—
4.66
—
4.64
Restructuring & realignment (2)
0.02
0.28
0.05
0.43
Intangible amortization (3)
0.11
0.11
0.21
0.23
Class action litigation expenses (4)
0.05
0.05
0.10
0.09
Adjusted EPS attributable to Polaris
Inc. (5)
$
2.70
$
1.30
$
4.99
$
1.52
(1) Represents impairment charges related
to goodwill and other intangible assets associated with the
Company's Aftermarket segment
(2) Represents adjustments for corporate
restructuring, network realignment costs, and supply chain
transformation
(3) Represents amortization expense for
acquisition-related intangible assets
(4) Represents adjustments for class
action litigation-related expenses
(5) The Company used its estimated
statutory tax rate of 23.8% for the non-GAAP adjustments in 2021
and 2020, except for non-deductible items
(6) For the three months ended June 30,
2020, the Company used 61.6 million and 62.1 million weighted
average shares outstanding to determine Diluted EPS attributable to
Polaris Inc. and Adjusted EPS attributable to Polaris Inc.,
respectively, and for the six months ended June 30, 2020, the
Company used 61.7 million and 62.3 million weighted average shares
outstanding to determine Diluted EPS attributable to Polaris Inc.
and Adjusted EPS attributable to Polaris Inc., respectively. The
differences are the result of the exclusion of additional
outstanding stock options and certain shares issued under the
Omnibus Plan from the Diluted EPS attributable to Polaris Inc.
calculation because their effect would have been anti-dilutive as a
result of the Company's net loss during the periods.
NON-GAAP RECONCILIATION OF
SEGMENT RESULTS
(In Millions), (Unaudited)
Three months ended June
30,
Six months ended June
30,
SEGMENT SALES
2021
2020
2021
2020
ORV/Snow segment sales
$
1,314.3
$
952.9
$
2,546.5
$
1,776.6
No adjustment
—
—
—
—
Adjusted ORV/Snow segment sales
1,314.3
952.9
2,546.5
1,776.6
Motorcycles segment sales
211.7
141.3
377.3
267.9
No adjustment
—
—
—
—
Adjusted Motorcycles segment sales
211.7
141.3
377.3
267.9
Global Adjacent Markets (GAM) segment
sales
154.1
77.9
278.9
176.2
No adjustment
—
—
—
—
Adjusted GAM segment sales
154.1
77.9
278.9
176.2
Aftermarket segment sales
239.5
207.5
469.3
409.6
No adjustment
—
—
—
—
Adjusted Aftermarket segment sales
239.5
207.5
469.3
409.6
Boats segment sales
197.6
132.2
396.3
286.7
Restructuring & realignment (1)
—
(1.7)
—
(1.7)
Boats segment sales
197.6
130.5
396.3
285.0
Total sales
2,117.2
1,511.8
4,068.3
2,917.0
Total adjustments
—
(1.7)
—
(1.7)
Adjusted total sales
$
2,117.2
$
1,510.1
$
4,068.3
$
2,915.3
Three months ended June
30,
Six months ended June
30,
SEGMENT GROSS PROFIT
2021
2020
2021
2020
ORV/Snow segment gross profit
$
364.6
$
251.7
$
692.0
$
453.4
No adjustment
—
—
—
—
Adjusted ORV/Snow segment gross profit
364.6
251.7
692.0
453.4
Motorcycles segment gross
profit
23.9
4.4
31.9
3.4
Restructuring & realignment (1)
—
—
—
0.7
Adjusted Motorcycles segment gross
profit
23.9
4.4
31.9
4.1
Global Adjacent Markets (GAM) segment
gross profit
41.7
16.8
74.6
43.7
No adjustment
—
—
—
—
Adjusted GAM segment gross profit
41.7
16.8
74.6
43.7
Aftermarket segment gross
profit
62.8
47.6
124.1
93.9
No adjustment
—
—
—
—
Adjusted Aftermarket segment gross
profit
62.8
47.6
124.1
93.9
Boats segment gross profit
47.4
18.6
93.8
48.3
Restructuring & realignment (1)
—
11.1
—
11.1
Boats segment gross profit
47.4
29.7
93.8
59.4
Corporate segment gross profit
11.0
(6.4)
15.5
(17.1)
Restructuring & realignment (1)
1.7
3.7
3.9
8.3
Adjusted Corporate segment gross
profit
12.7
(2.7)
19.4
(8.8)
Total gross profit
551.4
332.7
1,031.9
625.6
Total adjustments
1.7
14.8
3.9
20.1
Adjusted total gross profit
$
553.1
$
347.5
$
1,035.8
$
645.7
(1) Represents adjustments for corporate
restructuring, network realignment costs, and supply chain
transformation
NON-GAAP ADJUSTMENTS
Second Quarter 2021 Results
& Full Year Guidance
Restructuring and Realignment Costs
Polaris announced in 2017 that it was making changes to its
network to consolidate production and distribution of like products
and better leverage plant capacity and embarked on a multi-phase
supply chain transformation initiative to continue to leverage its
supply chain as a strategic asset. The Company is also executing
certain corporate restructuring across the organization to increase
efficiency and focus its business including the wind-down of the
Rinker, Striper and Larson FX boat brands. For the second quarter
of 2021, the Company has recorded combined costs totaling $2
million which was included as a NON-GAAP adjustment.
Intangible amortization related to acquisitions
The Company uses an adjusted net income metric which excludes
intangible amortization from all historical business acquisitions.
The Company believes this NON-GAAP information is useful to
understanding its operating results and the ongoing performance of
its underlying businesses because the amount and timing of such
charges are significantly impacted by the timing, size, number and
nature of the acquisitions the Company completes. For the second
quarter of 2021, Polaris recorded $9 million of intangible
amortization related to acquisitions as a NON-GAAP adjustment.
2021 Adjusted Guidance
2021 guidance excludes the pre-tax effect of supply chain
transformation, restructuring and network realignment costs of
approximately $5 million to $10 million, and approximately $10
million for class action litigation-related expenses. Intangible
amortization of approximately $35 million related to all
acquisitions has also been excluded. The Company has not provided
reconciliations of guidance for adjusted diluted net income per
share, in reliance on the unreasonable efforts exception provided
under Item 10(e)(1)(i)(B) of Regulation S-K. The Company is unable,
without unreasonable efforts, to forecast certain items required to
develop meaningful comparable GAAP financial measures. These items
include restructuring and realignment costs and acquisition
integration costs that are difficult to predict in advance in order
to include in a GAAP estimate.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210727005333/en/
Investor Contact: Richard Edwards 763-513-3477 Media Contact:
Jess Rogers 763-513-3445
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