Temporary Suspension of Operations in Select
Powersports Manufacturing Facilities
Expanded Dealer Support Programs
Increased Cash Position to Maintain Financial
Strength and Flexibility
Withdraws First Quarter and Full Year 2020
Financial Guidance
Polaris Inc. (NYSE: PII) is today providing an update on its
business and the actions the Company is taking in response to the
COVID-19 pandemic.
Scott Wine, Polaris’ Chairman and Chief Executive Officer
commented: “As we confront the COVID-19 pandemic, we are focusing
on the health and safety of our employees, dealers, customers and
the communities where we operate, while also taking bold action to
protect our business. We have been aggressive with employee safety
and supply chain mitigations actions, so our plants have operated
effectively to meet the strong retail momentum we saw at the start
the year, through the second week of March. As anticipated,
pandemic concerns ultimately began to impact demand, which dropped
suddenly in the middle of last week, and we are adjusting our
operations accordingly. Between our Retail Flow Management (RFM)
system and our agile workforce Polaris is built to react quickly
during rapidly changing times. However, with no near-term
resolution to the COVID-19 related economic slowdown in sight, we
expect these events to have a significant impact on our 2020
financial results.”
“With most of our vehicles – and our Think Outside tagline –
highly amenable to social distancing, we believe, with validation
from our dealers, that powersports customers will not hibernate.
Consistent with 2008, we are prepared for a period of vehicle
retail demand being down significantly. Today, however, we have a
much larger installed base and broader aftermarket portfolio, which
will help to mitigate the impact of this unwelcome downturn. We
remain focused on being a ‘customer centric, highly efficient
growth company,’ although our immediate concern is navigating the
current uncertainty.”
Wine continued: “While broad-based economic uncertainty is
creating headwinds, I am confident that we have the foundation and
team we need to withstand these challenges. We are taking action to
further enhance our financial flexibility and adjust operations in
light of the reduced demand, and we will think critically and act
judiciously to keep Polaris strong in both the near- and long-term.
This Polaris team is exceptionally strong, and as we work together
to manage through these serious external challenges, I am extremely
confident that we will get through this successfully and emerge as
a better and stronger company.”
Suspending Select Plant Operations The Company is
suspending production schedules and plant operations for one week
at select powersports plants, effective Tuesday, March 24th.
Polaris is continuing to diligently manage its business, adjusting
production schedules based on current demand signals and continued
market uncertainty. During the first quarter of 2020, Polaris
reduced shipments in anticipation of weaker retail demand due to
the COVID-19 outbreak. Polaris will continue to evaluate the safety
of its employees, external market demand, its supply chain and
distribution network, government mandates and local orders, among
other factors, when considering any further actions regarding the
Company’s business operations. Affected plants include:
- United States: Huntsville, Alabama; Spirit Lake, Iowa;
Monticello, Minnesota; Roseau, Minnesota; Battle Ground,
Washington; Osceola, Wisconsin
- Mexico: Monterrey
- Poland: Opole
During this time, Polaris will continue to ship finished
vehicles to dealers, as well as produce products that are
considered essential by the Cybersecurity & Infrastructure
Security Agency (“CISA”), including vehicles built or upfitted for
the U.S. military; federal, state or local governments; or
customers who are critical to shipping and delivery services. The
Company will continue to manufacture and deliver boats to meet
retail customer orders; and its distribution centers will continue
to operate, shipping parts, garments and accessories to dealers and
customers.
Supporting Employees To help support employees, Polaris
has established a new COVID program under which U.S. employees may
choose to receive up to 10 days of pay. Employees are able to use
this benefit for income replacement in the event of COVID-related
quarantine, illness, or suspension of plant operations.
Polaris has already implemented, and will continue, enhanced
health and safety protocols at its facilities, including bolstering
cleaning and disinfecting procedures, suspending all non-essential
visitation, and directing employees to work from home where
feasible. At our distribution centers and manufacturing facilities,
we have implemented several new processes around social distancing,
including staggered breaks and start times, and adjustments to work
spaces.
The Company continues monitoring its operations closely and will
make additional adjustments as necessary in accordance with World
Health Organization (WHO) and Center for Disease Control and
Prevention (CDC) guidelines.
Implementing Dealer Support Programs Polaris has launched
numerous new programs to help support its dealers during this
challenging time, on top of the robust programs in place for both
consumers and dealers. Polaris has added dealer support in the
areas of retail rewards and flooring on future orders. Polaris has
temporarily lifted restrictions to enable participating dealers to
provide home deliveries where requested by customers. To further
assist in cash flow, our dealer financing arm, Polaris Acceptance,
a joint venture with Wells Fargo, is covering all Off-Road Vehicle
and Motorcycle flooring interest payments through May 31st.
Wine noted: “As small business owners, our dealers are facing
considerable pressure on their business. In addition to program
enhancements we have been in frequent, open communication with our
dealers, which is allowing us to adjust shipment plans on an
individual dealer basis and better monitor and protect dealer
inventory health. Additionally, RFM is benefitting us and our
dealers, facilitating shipment adjustments through real-time
information on fluctuating demand. In the near-term, we are taking
further steps to support our dealers by updating rebates and payout
levels and extending Polaris paid flooring support.”
Increasing Financial Flexibility
Polaris entered this pandemic crisis in a solid capital position
and has decided to take additional steps as a precautionary measure
to further increase financial flexibility and liquidity during this
period, including:
- Drawing down additional cash under its revolving credit
facility
- Reviewing all operating expenses and postponing capital
expenditures that do not impact near-term programs
- Suspending its share repurchase program
- Optimizing working capital needs
- Exploring access to additional capital with our lending
partners
Mike Speetzen, Polaris’ Chief Financial Officer commented, “We
are managing through unprecedented times, and as a result, we are
taking proactive, prudent steps to enable the flexibility and
liquidity of the Company for the long-term. As of March 20, 2020,
we have approximately $150 million in cash on hand, and another
approximately $280 million available under our current revolver. We
believe the actions we are taking today will enhance our ability to
withstand this heightened global economic turmoil.”
Withdrawing Guidance The Company is withdrawing its first
quarter 2020 and full year 2020 financial guidance issued on its
fourth-quarter earnings call on January 28, 2020.
Speetzen concluded: “Given the dynamic nature of the situation,
we cannot meaningfully quantify the impact of the COVID-19
pandemic, limiting our visibility to accurately estimate its
magnitude on Polaris’ results. We will provide updates on our first
quarter earnings call.”
Polaris expects to release its first quarter 2020 financial
results on Tuesday, April 28, 2020, and hold a webcast and
conference call at 9:00 a.m. central time on the same day to
discuss the results.
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 2019 sales of $6.8 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 news
release, including management’s expectations regarding 2020 future
sales and demand for our products, the enhanced ability of the
Company to mitigate an economic downturn given its broadened
portfolio, future shipments, net income, and net income per share,
future cash flows and capital requirements and the ability to
access credit facilities, operational initiatives, and the
potential impact of the evolving COVID-19 pandemic, 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 evolving COVID-19 pandemic and the resulting impact on the
Company’s business and the global economy; the Company’s ability to
successfully implement its manufacturing operations expansion and
supply chain initiatives, product offerings, promotional activities
and pricing strategies by competitors; economic conditions that
impact consumer spending; disruptions in manufacturing facilities;
acquisition integration costs; product recalls, warranty expenses;
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 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200323005480/en/
Investor Contact: Richard Edwards 763-513-3477
richard.edwards@polaris.com
Media Contact: Jess Rogers 763-513-3445
jess.rogers@polaris.com
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