Financial and Operational Highlights
First quarter reported sales decreased 6% to $1,405
million
First quarter reported net loss was $0.09 per share;
adjusted net income for the same period was $0.22 per share
First quarter North American retail sales decreased
high-single digits percent for the quarter compared to last year;
Indian motorcycles retail sales were up low-single digits
percent
The Company entered into an incremental $300 million
364-day unsecured term-loan facility on April 9, 2020, further
increasing its liquidity position
Cash on hand at April 23, 2020 was $475 million along
with $250 million currently available under the Company’s revolving
line of credit
Manufacturing plants have restarted production at select
locations based on orders in hand, anticipated future demand and
supply chain parts availability
The Company withdrew its full year 2020 guidance on March
23, 2020 given the unprecedented economic uncertainty as a result
of the COVID-19 pandemic
Polaris Inc. (NYSE: PII):
Key Financial Data
(in millions, except per share data)
INCOME STATEMENT - Q1 March 31,
2020
Reported
YOY % Chg.
Adjusted*
YOY % Chg.
Sales
$
1,405.2
(6)%
$
1,405.2
(6)%
Net income (loss) attributable to
Polaris
$
(5.4
)
NM
$
13.6
(80)%
Diluted EPS
$
(0.09
)
NM
$
0.22
(80)%
BALANCE SHEET - March 31, 2020
Reported
YOY % Chg.
Cash and cash equivalents
$
424.4
180%
Inventories, net
$
1,234.8
8%
Total debt, finance lease obligations and
notes payable
$
2,163.5
3%
Shareholders' equity
$
1,001.6
14%
CASH FLOW - Q1 March 31, 2020
Reported
YOY % Chg.
Net cash (used for) provided by operating
activities
$
(71.4
)
(87)%
Purchase of property & equipment
$
46.8
(33)%
Repurchase and retirement of common
shares
$
48.8
NM
Cash dividends to shareholders
$
38.0
2%
NM = Not meaningful
*Note: the results 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
Polaris opened 2020 on an upswing, with retail demand
significantly outpacing our expectations, but the abrupt impact of
COVID -19 in mid-March drastically altered our momentum. Since then
we have honed our focus to four goals which will guide us through
this crisis: the safety of our employees, the viability of Polaris,
the strength of our dealer network, and stewardship for our
shareholders and other stakeholders. Through fast action and bold
decisions, we enhanced workplace safety and re-aligned our
operations to match evolving demand trends. We also moved
aggressively to optimize our cost structure, preserve liquidity,
and augment our financial strength and flexibility, and we are
actively supporting our dealers as they find innovative ways to
serve customers and reignite demand. We expect the COVID-19
pandemic, and its corresponding shock to the economy, to be a
substantial challenge for the global economy and our business
through the remainder of the year and possibly longer.
Nevertheless, I am confident in our dedicated and hard-working
Polaris team’s ability to navigate through this unprecedented
environment and emerge a better, stronger, and more agile business.
Regardless of the headwinds we face, our commitment to being a
customer-centric, highly efficient growth company remains
unchanged, as we believe this vision will propel our business
forward and further solidify our position as the global leader in
Powersports.
-- Scott Wine, Chairman and Chief Executive
Officer of Polaris Inc.
First Quarter Performance Summary
(Reported)
(in millions, except per share data)
Three months ended March
31,
2020
2019
Change
Sales
$
1,405.2
$
1,495.7
(6
)%
Gross profit
292.9
352.5
(17
)%
% of Sales
20.8
%
23.6
%
-272 bpts
Total operating expenses
307.1
289.3
6
%
% of Sales
21.9
%
19.3
%
+251 bpts
Income from financial services
19.7
18.7
5
%
% of Sales
1.4
%
1.3
%
+15 bpts
Operating income
5.5
81.9
(93
)%
% of Sales
0.4
%
5.5
%
-508 bpts
Net income (loss) attributable to
Polaris
(5.4
)
48.4
NM
% of Sales
(0.4
)%
3.2
%
-362 bpts
Diluted net income (loss) per
share
$
(0.09
)
$
0.78
NM
NM = Not meaningful
Polaris Inc. (NYSE: PII) (the "Company") today released first
quarter 2020 results with reported sales of $1,405 million, down
six percent from reported sales of $1,496 million for the first
quarter of 2019. The Company reported a first quarter 2020 net loss
of $5 million, or $(0.09) per diluted share, compared with net
income of $48 million, or $0.78 per diluted share, for the 2019
first quarter. Adjusted net income for the quarter ended March 31,
2020 was $14 million, or $0.22 per diluted share compared to $67
million, or $1.08 per diluted share in the 2019 first quarter.
The rapid decline in retail demand over the last two weeks of
March 2020 driven by the COVID-19 related economic slowdown
significantly impacted sales and gross profit for the first quarter
of 2020. Sales were adversely impacted by approximately $125
million in the quarter, while gross profit was impacted by
approximately $50 million compared to previous Company
expectations.
Gross profit decreased 17 percent to $293 million for the
first quarter of 2020 from $353 million in the first quarter of
2019. Reported gross profit margin was 20.8 percent of sales for
the first quarter of 2020, down 272 basis points compared to 23.6
percent of sales for the first quarter of 2019. Adjusted gross
profit for the first quarter 2020 was $298 million, or 21.2 percent
of sales compared to the first quarter of 2019 adjusted gross
profit of $359 million, or 24.0 percent of sales. Adjusted gross
profit for the first quarter of 2020 excludes the negative impact
of $5 million of restructuring and realignment costs, and adjusted
gross profit for the first quarter of 2019 excludes the negative
impact of $7 million of restructuring and realignment costs.
Operating expenses increased six percent for the first
quarter of 2020 to $307 million, or 21.9 percent of sales, from
$289 million, or 19.3 percent of sales, in the same period in 2019.
Operating expenses in dollars and as a percent of sales increased
primarily due to incurred expenses for ongoing investment in
research and development and strategic projects before the COVID-19
pandemic began to impact demand.
Income from financial services was $20 million for the
first quarter of 2020, up five percent compared with $19 million
for the first quarter of 2019. The increase was primarily due to a
change in retail financing programs with one of our retail
providers which allowed for the release into income certain
reserves maintained under the previous program. Excluding this
adjustment, financial services income would have been lower year
over year.
Non-Operating Expenses (Reported)
(in millions)
Three months ended March
31,
2020
2019
Change
Interest expense
$
16.2
$
20.4
(21
)%
Equity in loss of other affiliates
$
—
$
0.6
NM
Other (income) expense, net
$
0.9
$
(3.5
)
NM
Provision for income taxes
$
(6.2
)
$
16.0
NM
NM = Not meaningful
Interest expense was $16 million for the first quarter of
2020 compared to $20 million for the same period last year due to
lower average daily debt levels and lower interest rates.
Other (income) expense, net, was $1 million in the first
quarter of 2020 compared to $(4) million in the first quarter of
2019. Other (income) expense is the result of foreign currency
exchange rate movements and the corresponding effects on foreign
currency transactions related to the Company’s foreign
subsidiaries.
The provision for income taxes for the first quarter of
2020 was a tax benefit $6 million, or 53.8 percent of pretax loss,
compared with tax expense of $16 million, or 24.9 percent of pretax
income for the first quarter of 2019. The favorable tax benefit for
the quarter arises from the benefit from a pretax loss and the
release of tax reserves due to the expiration of certain statutes
of limitations in the quarter.
Product Segment Highlights
(Reported)
(in millions)
Sales
Gross Profit (Loss)
Q1 2020
Q1 2019
Change
Q1 2020
Q1 2019
Change
Off-Road Vehicles / Snowmobiles
$
823.7
$
867.5
(5
)%
$
201.7
$
240.1
(16
)%
Motorcycles
$
126.6
$
117.9
7
%
$
(1.0
)
$
3.7
NM
Global Adjacent Markets
$
98.3
$
105.0
(6
)%
$
26.9
$
29.6
(9
)%
Aftermarket
$
202.1
$
220.5
(8
)%
$
46.3
$
56.5
(18
)%
Boats
$
154.5
$
184.8
(16
)%
$
29.7
$
36.2
(18
)%
NM = Not meaningful
Off-Road Vehicles (“ORV”) and
Snowmobiles segment sales, including PG&A, totaled
$824 million for the first quarter of 2020, down five percent over
$868 million for the first quarter of 2019 due to a decline in
side-by-side sales. PG&A sales for ORV and Snowmobiles combined
increased seven percent in the first quarter of 2020 compared to
the first quarter last year. Gross profit decreased 16 percent to
$202 million in the first quarter of 2020, compared to $240 million
in the first quarter of 2019. Gross profit percentage decreased 320
basis points during the 2020 first quarter.
ORV wholegood sales for the first
quarter of 2020 decreased seven percent. Polaris North American ORV
retail sales were down high-single digits percent for the quarter
with both side-by-side vehicles and ATV vehicles down high-single
digits percent. The North American ORV industry was approximately
flat compared to the first quarter last year.
Snowmobile wholegood sales in the
first quarter of 2020 were $6 million compared to $13 million in
the first quarter last year. Polaris snowmobile retail sales were
down mid-teens percent during the first quarter of 2020 and down
low single-digits percent for the twelve month season ending March
2020. North American industry retail was down nearly 30 percent for
the first quarter and down high-single digits percent for the
season ending March 2020.
Motorcycles segment sales,
including PG&A, totaled $127 million, up seven percent compared
to the first quarter of 2019, driven by increased sales of both
Indian Motorcycle and Slingshot. Gross profit for the first quarter
of 2020 was a loss of $1 million compared to a profit of $4 million
in the first quarter of 2019.
North American consumer retail sales for Indian Motorcycle
increased low-single digits percent during the first quarter of
2020 in a weak mid to heavy-weight two-wheel motorcycle industry
that was down high-teens percent. North American consumer retail
sales for Polaris' motorcycle segment, including both Indian
Motorcycle and Slingshot, increased low-single digit percent during
the first quarter of 2020, while the North American motorcycle
industry retail sales for mid to heavy-weight motorcycles including
three-wheel vehicles, was down mid-teens percent in the first
quarter of 2020.
Global Adjacent Markets
segment sales, including PG&A, decreased six percent to $98
million in the 2020 first quarter compared to $105 million in the
2019 first quarter. Gross profit decreased nine percent to $27
million or 27.4 percent of sales in the first quarter of 2020,
compared to $30 million or 28.2 percent of sales in the first
quarter of 2019.
Aftermarket segment sales of
$202 million in the 2020 first quarter decreased eight percent
compared to $221 million in the 2019 first quarter. Transamerican
Auto Parts (TAP) sales of $177 million in the first quarter of 2020
decreased 10 percent compared to $197 million in the first quarter
of 2019. The Company's other aftermarket brands increased sales by
six percent. Gross profit decreased to $46 million in the first
quarter of 2020, compared to $57 million in the first quarter of
2019.
Boats segment sales
decreased 16 percent to $155 million in the 2020 first quarter
compared to $185 million in the 2019 first quarter. Gross profit
decreased 18 percent to $30 million or 19.2 percent of sales in the
first quarter of 2020, compared to $36 million or 19.6 percent of
sales in the first quarter of 2019.
Supplemental Data:
Parts, Garments, and Accessories
(“PG&A”) sales increased seven percent for the 2020 first
quarter.
International sales to customers
outside of North America, including PG&A, totaled $182 million
for the first quarter of 2020, down 11 percent from the same period
in 2019.
Financial Position and Cash
Flow
(in millions)
Three months ended March
31,
2020
2019
Change
Cash and cash equivalents
$
424.4
$
151.4
180
%
Net cash (used for) operating
activities
$
(71.4
)
$
(38.2
)
(87
)%
Repurchase and retirement of common
shares
$
48.8
$
6.2
NM
Cash dividends to shareholders
$
38.0
$
37.1
2
%
Total debt, finance lease obligations and
notes payable
$
2,163.5
$
2,101.2
3
%
Debt to Total Capital Ratio
68
%
71
%
NM = Not meaningful
Net cash used for operating activities was $71 million
for the three months ended March 31, 2020, compared to $38 million
for the same period in 2019. Total debt at March 31, 2020,
including finance lease obligations and notes payable, was $2,164
million. The Company’s debt-to-total capital ratio was 68 percent
at March 31, 2020 compared to 71 percent at March 31, 2019. Cash
and cash equivalents were $424 million at March 31, 2020, up from
$151 million at March 31, 2019.
2020 Business Outlook
Given the dynamic nature of the COVID-19 pandemic and the
resulting unprecedented economic uncertainty, the Company withdrew
its full year 2020 guidance on March 23, 2020. The Company will
revisit its decision to provide detailed sales and earnings
guidance when visibility to accurately estimate its future results
improves.
2019 Reclassified Segment Gross Profit Results
Beginning in the first quarter of 2020 certain costs, primarily
incentive-based compensation costs, previously classified as
"Corporate" in the Company's segment gross profit results were
allocated to their respective operating segments results. The
comparative 2019 reported and adjusted gross profit results for
ORV/Snowmobiles, Motorcycles, Global Adjacent Markets, Aftermarket,
Boats, and Corporate were reclassified for comparability.
Reclassified historical reported and adjusted gross profit results
can be found at ir.polaris.com/investors/financial-information.
Non-GAAP Financial Measures
This press release and our related earnings call contain certain
non-GAAP financial measures, consisting of “adjusted" 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 2020 first quarter results released this
morning. The call will be hosted by Scott Wine, Chairman and CEO;
and Mike Speetzen, Executive Vice President and 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 8668695. 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 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 the impact of the COVID-19 pandemic and the Company’s
ability to manage the economic environment resulting from the
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 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. 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 March
31,
2020
2019
Sales
$
1,405.2
$
1,495.7
Cost of sales
1,112.3
1,143.2
Gross profit
292.9
352.5
Operating expenses:
Selling and marketing
150.2
129.3
Research and development
78.4
67.1
General and administrative
78.5
92.9
Total operating expenses
307.1
289.3
Income from financial services
19.7
18.7
Operating income
5.5
81.9
Non-operating expense:
Interest expense
16.2
20.4
Equity in loss of other affiliates
—
0.6
Other (income) expense, net
0.9
(3.5
)
Income (loss) before income taxes
(11.6
)
64.4
Provision for income taxes
(6.2
)
16.0
Net income (loss)
(5.4
)
48.4
Net (income) loss attributable to
noncontrolling interest
—
—
Net income (loss) attributable to Polaris
Inc.
$
(5.4
)
$
48.4
Net income (loss) per share attributable
to Polaris Inc. common shareholders:
Basic
$
(0.09
)
$
0.79
Diluted
$
(0.09
)
$
0.78
Weighted average shares outstanding:
Basic
61.9
61.3
Diluted
61.9
62.0
CONSOLIDATED BALANCE
SHEETS
(In Millions), (Unaudited)
March 31, 2020
March 31, 2019
Assets
Current Assets:
Cash and cash equivalents
$
424.4
$
151.4
Trade receivables, net
167.9
206.8
Inventories, net
1,234.8
1,148.6
Prepaid expenses and other
112.2
106.6
Income taxes receivable
45.9
25.6
Total current assets
1,985.2
1,639.0
Property and equipment, net
886.1
868.1
Investment in finance affiliate
112.4
99.5
Deferred tax assets
90.9
88.5
Goodwill and other intangible assets,
net
1,478.4
1,506.4
Operating lease assets
110.0
112.3
Other long-term assets
100.9
94.9
Total assets
$
4,763.9
$
4,408.7
Liabilities and Equity
Current Liabilities:
Current portion of debt, finance lease
obligations and notes payable
$
166.7
$
66.5
Accounts payable
556.1
436.9
Accrued expenses:
Compensation
79.2
92.1
Warranties
132.8
116.2
Sales promotions and incentives
186.5
181.9
Dealer holdback
121.1
112.7
Other
230.0
201.9
Current operating lease liabilities
36.9
34.8
Income taxes payable
3.7
5.1
Total current liabilities
1,513.0
1,248.1
Long term income taxes payable
25.2
29.4
Finance lease obligations
14.3
15.9
Long-term debt
1,982.5
2,018.8
Deferred tax liabilities
3.4
5.9
Long-term operating lease liabilities
75.6
79.7
Other long-term liabilities
141.4
122.7
Total liabilities
$
3,755.4
$
3,520.5
Deferred compensation
6.7
8.7
Equity:
Total shareholders’ equity
1,001.6
879.2
Noncontrolling interest
0.2
0.3
Total equity
1,001.8
879.5
Total liabilities and equity
$
4,763.9
$
4,408.7
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In Millions), (Unaudited)
Three months ended March
31,
2020
2019
Operating Activities:
Net income (loss)
$
(5.4
)
$
48.4
Adjustments to reconcile net income (loss)
to net cash used for operating activities:
Depreciation and amortization
62.4
54.4
Noncash compensation
11.9
12.1
Noncash income from financial services
(7.8
)
(7.7
)
Deferred income taxes
0.8
(1.3
)
Other, net
—
0.6
Changes in operating assets and
liabilities:
Trade receivables
18.0
(11.2
)
Inventories
(121.5
)
(180.0
)
Accounts payable
106.3
91.2
Accrued expenses
(116.2
)
(75.7
)
Income taxes payable/receivable
(18.8
)
12.3
Prepaid expenses and other, net
(1.1
)
18.7
Net cash used for operating activities
(71.4
)
(38.2
)
Investing Activities:
Purchase of property and equipment
(46.8
)
(70.2
)
Investment in finance affiliate, net
6.0
0.2
Net cash used for investing activities
(40.8
)
(70.0
)
Financing Activities:
Borrowings under debt arrangements /
finance lease obligations
939.4
1,010.2
Repayments under debt arrangements /
finance lease obligations
(469.2
)
(870.5
)
Repurchase and retirement of common
shares
(48.8
)
(6.2
)
Cash dividends to shareholders
(38.0
)
(37.1
)
Proceeds from stock issuances under
employee plans
2.3
3.2
Net cash provided by financing
activities
385.7
99.6
Impact of currency exchange rates on cash
balances
(4.9
)
(1.0
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
268.6
(9.6
)
Cash, cash equivalents and restricted cash
at beginning of period
196.3
193.1
Cash, cash equivalents and restricted
cash at end of period
$
464.9
$
183.5
The following presents the classification
of cash, cash equivalents and restricted cash within the
consolidated balance sheets:
Cash and cash equivalents
$
424.4
$
151.4
Other long-term assets
40.5
32.1
Total
$
464.9
$
183.5
NON-GAAP RECONCILIATION OF
RESULTS
(In Millions, Except Per Share
Data), (Unaudited)
Three months ended March
31,
2020
2019
Sales
$
1,405.2
$
1,495.7
No adjustments
—
—
Adjusted sales
1,405.2
1,495.7
Gross profit
292.9
352.5
Restructuring & realignment (2)
5.3
6.7
Adjusted gross profit
298.2
359.2
Income before taxes
(11.6
)
64.4
Acquisition-related costs (1)
—
1.1
Restructuring & realignment (2)
11.8
6.7
Intangible amortization (3)
10.0
10.2
Class action litigation expenses (4)
3.2
6.4
Adjusted income before taxes
13.4
88.8
Net income attributable to Polaris
Inc.
(5.4
)
48.4
Acquisition-related costs (1)
—
0.9
Restructuring & realignment (2)
9.0
5.1
Intangible amortization (3)
7.5
7.7
Class action litigation expenses (4)
2.5
4.8
Adjusted net income attributable to
Polaris Inc. (5)
13.6
66.9
Diluted EPS attributable to Polaris
Inc.
$
(0.09
)
$
0.78
Acquisition-related costs (1)
—
0.02
Restructuring & realignment (2)
0.15
0.08
Intangible amortization (3)
0.12
0.12
Class action litigation expenses (4)
0.04
0.08
Adjusted EPS attributable to Polaris
Inc. (5)(6)
$
0.22
$
1.08
(1) Represents adjustments for integration
and acquisition-related expenses and purchase accounting
adjustments
(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 2020
and 2019, except for the non-deductible items
(6) For the first quarter of 2020, the
Company used 61.9 million and 62.6 million weighted average shares
outstanding to determine Diluted EPS attributable to Polaris Inc.
and Adjusted EPS attributable to Polaris Inc., respectively. The
difference is 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 first quarter of 2020.
NON-GAAP RECONCILIATION OF
SEGMENT RESULTS
(In Millions), (Unaudited)
Three months ended March
31,
SEGMENT GROSS
PROFIT (LOSS)
2020
2019
ORV/Snow segment gross profit
$
201.7
$
240.1
No adjustment
—
—
Adjusted ORV/Snow segment gross profit
201.7
240.1
Motorcycles segment gross
profit
(1.0
)
3.7
Restructuring & realignment (1)
0.7
—
Adjusted Motorcycles segment gross
profit
(0.3
)
3.7
Global Adjacent Markets (GAM) segment
gross profit
26.9
29.6
No adjustment
—
—
Adjusted GAM segment gross profit
26.9
29.6
Aftermarket segment gross
profit
46.3
56.5
No adjustment
—
—
Adjusted Aftermarket segment gross
profit
46.3
56.5
Boats segment gross profit
29.7
36.2
No adjustment
—
—
Boats segment gross profit
29.7
36.2
Corporate segment gross profit
(10.7
)
(13.6
)
Restructuring & realignment (1)
4.6
6.7
Adjusted Corporate segment gross
profit
(6.1
)
(6.9
)
Total gross profit
292.9
352.5
Total adjustments
5.3
6.7
Adjusted total gross profit
$
298.2
$
359.2
(1) Represents adjustments for corporate
restructuring, network realignment costs, and supply chain
transformation
NON-GAAP ADJUSTMENTS 2020 First Quarter
Results
Restructuring, Realignment and Acquisition Related
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. Additionally, the Company has
recorded acquisitions and integration related costs associated with
the TAP and Boat Holdings acquisitions. Currently, the Company is
also executing certain corporate restructuring across the
organization to increase efficiency and focus its business. For the
first quarter of 2020, the Company has recorded combined costs
totaling $12 million which was included as a NON-GAAP
adjustment.
Intangible amortization related to acquisitions
As a result of the Boat Holdings acquisition, Polaris'
amortization of intangible assets increased significantly on an
annual basis. Given the significant increase in non-cash
amortization associated with this acquisition along with intangible
amortization from prior acquisitions, the Company has moved to an
adjusted net income metric, excluding intangible amortization from
all acquisitions. The Company believes this treatment will provide
additional transparency into the true, ongoing earnings performance
of its business. For the first quarter of 2020, Polaris included
$10 million of intangible amortization related to acquisitions as a
NON-GAAP adjustment.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200428005216/en/
Investor Contact: Richard Edwards 763-513-3477 Media Contact:
Jess Rogers 763-513-3445
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