Financial and Operational Highlights
Third quarter reported and adjusted sales increased
slightly to $1,960 million
Third quarter reported net income was $1.84 per share;
adjusted net income for the same period was $1.98 per share
Market share improved during the quarter for ORV and
Snowmobiles
Expanded and strengthened the ORV product portfolio with
fifteen new vehicles introduced during the quarter
Gross profit margin, reported and adjusted, for the third
quarter was 23.8% and 23.9%, down 359 and 362 basis points over the
prior year, respectively. The decrease was primarily due to
increased input costs including logistics, labor and commodity
prices, as well as supply chain constraints, partially offset by
increased pricing and lower promotional costs
North American retail sales decreased 24% for the quarter
driven by the lack of product availability due to supply chain
constraints
GEM and Taylor-Dunn expected to be divested by
year-end
Polaris lowered its full year 2021 adjusted earnings and
sales guidance given the supply chain constraints and now
expects to earn approximately $9.00 per diluted share with adjusted
sales now expected to be up approximately 16% over the prior
year
Polaris Inc. (NYSE: PII):
Key Financial Data
(in millions, except per share data)
INCOME STATEMENT - Q3 September 30,
2021
Reported
YOY % Chg.
Adjusted*
YOY % Chg.
Sales
$
1,959.5
0%
$
1,959.5
0%
Net income attributable to Polaris
$
114.6
(31)%
$
123.4
(31)%
Diluted EPS
$
1.84
(31)%
$
1.98
(31)%
BALANCE SHEET - September 30,
2021
Reported
YOY % Chg.
Cash and cash equivalents
$
316.5
(61)%
Inventories, net
$
1,773.6
46%
Total debt, finance lease obligations and
notes payable
$
1,523.3
(18)%
Shareholders' equity
$
1,211.8
28%
CASH FLOW - YTD Q3 September 30,
2021
Reported
YOY % Chg.
Net cash provided by operating
activities
$
153.4
(77)%
Purchase of property & equipment
$
199.3
51%
Repurchase and retirement of common
shares
$
411.3
NM
Cash dividends to shareholders
$
115.2
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
Throughout the third quarter, the Polaris team displayed a high
level of flexibility and demonstrated their commitment to
delivering industry-leading products to our dealers and customers
as quickly as possible. Retail sales were impacted by the
substantial deterioration of the supply chain permeating the global
economy, but continued interest and demand from existing riders and
new customers advanced our market position, further illustrating
Polaris’ role as the global leader in Powersports. Despite total
Company sales being flat for the quarter due to component
shortages, we gained ORV share for the 4th straight quarter against
the backdrop of a very difficult supply chain environment. We
expect the supply chain will remain volatile into 2022, but with
this team’s tenacity, our strong brands, future product plans, and
focused execution, I am excited by what the future holds for
Polaris.
-- Mike Speetzen, Chief Executive Officer of
Polaris Inc.
Third Quarter Performance Summary (Reported)
(in millions, except per share data)
Three months ended September
30,
2021
2020
Change
Sales
$
1,959.5
$
1,954.6
0%
Gross profit
465.6
534.6
(13)%
% of Sales
23.8%
27.3%
-359 bpts
Total operating expenses
321.6
313.3
3%
% of Sales
16.4%
16.0%
+38 bpts
Income from financial services
11.3
18.1
(38)%
% of Sales
0.6%
0.9%
-35 bpts
Operating income
155.3
239.4
(35)%
% of Sales
7.9%
12.2%
-432 bpts
Net income attributable to
Polaris
114.6
166.8
(31)%
% of Sales
5.9%
8.5%
-269 bpts
Diluted net income per share
$
1.84
$
2.66
(31)%
Polaris Inc. (NYSE: PII) (the "Company") today released third
quarter 2021 results with reported sales of $1,960 million, up $5
million from reported sales of $1,955 million for the third quarter
of 2020. The Company reported third quarter 2021 net income of $115
million, or $1.84 per diluted share, compared with net income of
$167 million, or $2.66 per diluted share, for the 2020 third
quarter. Adjusted net income for the quarter ended September 30,
2021 was $123 million, or $1.98 per diluted share compared to $179
million, or $2.85 per diluted share in the 2020 third quarter.
The Company continues to experience substantial retail demand
requiring little promotional assistance, which has been negatively
impacted by ongoing supply chain constraints and components
shortages leading to lower dealer inventory and shipments.
Gross profit decreased 13 percent to $466 million for the
third quarter of 2021 from $535 million in the third quarter of
2020. Reported gross profit margin was 23.8 percent of sales for
the third quarter of 2021, down 359 basis points compared to 27.3
percent of sales for the third quarter of 2020. The decrease in
gross profit was driven primarily by higher input costs including
logistics, components and commodity prices, as well as plant
inefficiencies related to supply-chain constraints, partially
offset by increased pricing and lower promotional costs. Adjusted
gross profit for the third quarter 2021 was $468 million, or 23.9
percent of adjusted sales, compared to the third quarter of 2020
adjusted gross profit of $537 million, or 27.5 percent of sales.
Adjusted gross profit for the third quarter of 2021 and 2020
excludes the negative impact of approximately $2 million of
restructuring and realignment costs in each period.
Operating expenses increased 3 percent for the third
quarter of 2021 to $322 million from $313 million in the same
period in 2020. Operating expenses increased slightly primarily due
to an increase in research and development.
Income from financial services was $11 million for the
third quarter of 2021, down 38 percent compared with $18 million
for the third 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 September
30,
2021
2020
Change
Interest expense
$
10.8
$
17.3
(38)
%
Other (income) expense, net
$
0.1
$
3.2
(97)
%
Provision for income taxes
$
29.6
$
52.0
(43)
%
NM = Not meaningful
Interest expense was $11 million for the third quarter of
2021 compared to $17 million for the same period last year
primarily due to lower debt levels.
Other (income) expense, net, decreased $3 million in the
third quarter of 2021. 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 third quarter of
2021 was $30 million, or 20.5 percent of pretax income, compared
with $52 million, or 23.7 percent of pretax income, for the third
quarter of 2020. The decrease in the effective income tax rate is
primarily due to favorable adjustments related to research and
development credits recorded in the third quarter of 2021.
Product Segment Highlights
(Reported)
(in millions)
Sales
Gross Profit
Q3 2021
Q3 2020
Change
Q3 2021
Q3 2020
Change
Off-Road Vehicles / Snowmobiles
$
1,208.3
$
1,288.8
(6)
%
$
260.3
$
377.8
(31)
%
Motorcycles
$
194.4
$
166.9
16
%
$
17.8
$
15.5
15
%
Global Adjacent Markets
$
146.5
$
106.6
37
%
$
40.9
$
31.5
30
%
Aftermarket
$
226.7
$
237.2
(4)
%
$
60.1
$
63.7
(6)
%
Boats
$
183.6
$
155.1
18
%
$
41.2
$
33.3
24
%
Off-Road Vehicles (“ORV”) and
Snowmobiles segment sales, including PG&A, totaled
$1,208 million for the third quarter of 2021, down 6 percent
compared to $1,289 million for the third quarter of 2020 driven by
lower volumes due to supply chain constraints and related component
shortages. PG&A sales for ORV and Snowmobiles combined
increased six percent in the third quarter of 2021 compared to the
third quarter last year. Gross profit decreased 31 percent to $260
million in the third quarter of 2021, compared to $378 million in
the third quarter of 2020. Gross profit percentage decreased 777
basis points during the 2021 third quarter compared to the prior
year due to higher input costs related to supply chain constraints
more than offsetting increased pricing and lower promotional
costs.
ORV wholegood sales for the third
quarter of 2021 decreased six percent. Polaris North American ORV
retail sales decreased mid-twenties percent for the quarter with
side-by-side vehicles down mid-twenties percent and ATV vehicles
down about twenty percent. The North American ORV industry was down
high-twenties percent compared to the third quarter last year.
Snowmobile wholegood sales in the
third quarter of 2021 were $28 million compared to $70 million in
the third quarter last year. Snowmobile sales were impacted by the
timing of shipments for the Company's pre-season snowmobile orders
year-over-year and supply-chain disruptions.
Motorcycles segment sales,
including PG&A, totaled $194 million, up 16 percent compared to
the third quarter of 2020, driven by increased sales of Slingshot,
Indian Motorcycles, and related PG&A. Gross profit for the
third quarter of 2021 was $18 million, or 9.2 percent of sales,
compared to $16 million, or 9.3 percent of sales, in the third
quarter of 2020. The slight decrease in gross profit margin was
driven by increased input costs from supply chain constraints
partially offset by favorable product mix, increased pricing and
lower promotions costs.
North American consumer retail sales for Indian Motorcycles
decreased twelve percent during the third quarter of 2021 in a
mid-to-heavy-weight two-wheel motorcycle industry that was down
mid-single digits percent. North American consumer retail sales for
Polaris' motorcycle segment, including both Indian Motorcycle and
Slingshot, decreased mid-teens percent during the third quarter of
2021. North American consumer retail sales for the motorcycle
industry including both two-wheel and three-wheel decreased
mid-single digits percent during the third 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 37 percent to $147
million in the 2021 third quarter compared to $107 million in the
2020 third quarter driven by increases in demand in North America
and EMEA. Gross profit increased 30 percent to $41 million or 27.9
percent of sales in the third quarter of 2021, compared to $32
million, or 29.7 percent of sales in the third quarter of 2020.
Gross profit percentage decreased during the quarter primarily due
to higher input costs related to supply chain constraints, offset
somewhat by lower promotional and warranty costs.
Aftermarket segment sales of
$227 million in the 2021 third quarter decreased 4 percent compared
to $237 million in the 2020 third quarter. Transamerican Auto Parts
(TAP) sales of $182 million in the third quarter of 2021 decreased
six percent compared to $194 million in the third quarter of 2020.
The Company's other aftermarket brands sales were up four percent
compared to the third quarter of 2020. Gross profit decreased 6
percent to $60 million, or 26.5 percent of sales in the third
quarter of 2021, compared to $64 million, or 26.9 percent of sales
in the third quarter of 2020. Gross profit percentage declined
during the quarter due to lower sales volumes and increased input
costs, partially offset by increased pricing.
Boats segment sales
increased 18 percent to $184 million in the 2021 third quarter
compared to $155 million in the 2020 third quarter, driven by sales
growth in the Bennington and Godfrey brands. Gross profit increased
24 percent to $41 million, or 22.4 percent of sales in the third
quarter of 2021, compared to $33 million, or 21.5 percent of sales
in the third quarter of 2020 due to increased pricing and positive
product mix partially offset by higher input costs related to
supply chain constraints.
Supplemental Segment
Data:
Parts, Garments, and Accessories
(“PG&A”) sales increased eight percent for the 2021 third
quarter with all categories and business segments growing sales
during the quarter.
International sales to customers
outside of North America, including PG&A, totaled $246 million
for the third quarter of 2021, up 21 percent from the same period
in 2020. All regions and categories realized strong sales increases
year over year.
Financial Position and Cash
Flow
(in millions)
Nine months ended September
30,
2021
2020
Change
Cash and cash equivalents
$
316.5
$
820.6
(61)%
Net cash provided by operating
activities
$
153.4
$
675.7
(77)%
Repurchase and retirement of common
shares
$
411.3
$
49.5
NM
Cash dividends to shareholders
$
115.2
$
114.2
1%
Total debt, finance lease obligations and
notes payable
$
1,523.3
$
1,864.4
(18)%
Debt to Total Capital Ratio
56
%
66
%
NM = Not meaningful
2021 Business Outlook
Given the impact of supply chain constraints on production and
shipments through the first nine months of the year and the
expectations that those disruptions will not subside by year end,
the Company is lowering its expected full year 2021 earnings
guidance and now expects adjusted net income to finish around $9.00
per diluted share, compared with adjusted net income of $7.74 per
diluted share for 2020. Full year 2021 sales guidance is now
expected to be approximately $8.15 billion, up about 16 percent
year-over-year.
Divestiture of Business
The Company expects to divest its Global Electric Motorcar (GEM)
and Taylor-Dunn businesses by year-end. Full year 2020 total
revenue was less than $100 million for both businesses,
combined.
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 third 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 8010195. 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 press release, 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 September
30,
Nine months ended September
30,
2021
2020
2021
2020
Sales
$
1,959.5
$
1,954.6
$
6,027.8
$
4,871.6
Cost of sales
1,493.9
1,420.0
4,530.3
3,711.4
Gross profit
465.6
534.6
1,497.5
1,160.2
Operating expenses:
Selling and marketing
143.2
135.5
443.3
405.3
Research and development
86.8
77.2
255.1
222.4
General and administrative
91.6
100.6
286.2
267.0
Goodwill and other intangible asset
impairments
—
—
—
379.2
Total operating expenses
321.6
313.3
984.6
1,273.9
Income from financial services
11.3
18.1
41.2
63.2
Operating income (loss)
155.3
239.4
554.1
(50.5
)
Non-operating expense:
Interest expense
10.8
17.3
33.0
51.4
Other (income) expense, net
0.1
3.2
(5.6
)
4.9
Income (loss) before income taxes
144.4
218.9
526.7
(106.8
)
Provision for income taxes
29.6
52.0
119.2
(32.9
)
Net income (loss)
114.8
166.9
407.5
(73.9
)
Net (income) loss attributable to
noncontrolling interest
(0.2
)
(0.1
)
(0.4
)
(0.1
)
Net income (loss) attributable to Polaris
Inc.
$
114.6
$
166.8
$
407.1
$
(74.0
)
Net income (loss) per share attributable
to Polaris Inc. common shareholders:
Basic
$
1.88
$
2.70
$
6.63
$
(1.20
)
Diluted
$
1.84
$
2.66
$
6.48
$
(1.20
)
Weighted average shares outstanding:
Basic
61.0
61.9
61.4
61.8
Diluted
62.3
62.8
62.9
61.8
CONSOLIDATED BALANCE
SHEETS
(In Millions), (Unaudited)
September 30, 2021
September 30, 2020
Assets
Current assets:
Cash and cash equivalents
$
316.5
$
820.6
Trade receivables, net
242.7
241.3
Inventories, net
1,773.6
1,213.5
Prepaid expenses and other
114.3
98.6
Income taxes receivable
0.6
5.7
Total current assets
2,447.7
2,379.7
Property and equipment, net
931.4
865.3
Investment in finance affiliate
31.4
44.9
Deferred tax assets
160.3
186.4
Goodwill and other intangible assets,
net
1,053.2
1,087.3
Operating lease assets
165.1
105.8
Other long-term assets
81.2
114.2
Total assets
$
4,870.3
$
4,783.6
Liabilities and Equity
Current liabilities:
Current portion of debt, finance lease
obligations and notes payable
$
53.3
$
542.1
Accounts payable
928.2
790.7
Accrued expenses:
Compensation
241.3
194.6
Warranties
137.1
140.6
Sales promotions and incentives
76.9
133.1
Dealer holdback
79.7
109.7
Other
255.3
256.6
Current operating lease liabilities
39.4
33.6
Income taxes payable
33.6
38.0
Total current liabilities
1,844.8
2,239.0
Long-term income taxes payable
16.3
21.3
Finance lease obligations
12.7
14.4
Long-term debt
1,457.3
1,307.9
Deferred tax liabilities
4.2
3.5
Long-term operating lease liabilities
128.1
74.2
Other long-term liabilities
181.7
159.3
Total liabilities
$
3,645.1
$
3,819.6
Deferred compensation
11.5
16.2
Equity:
Total shareholders’ equity
1,211.8
947.5
Noncontrolling interest
1.9
0.3
Total equity
1,213.7
947.8
Total liabilities and equity
$
4,870.3
$
4,783.6
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In Millions), (Unaudited)
Nine months ended September
30,
2021
2020
Operating Activities:
Net income (loss)
$
407.5
$
(73.9
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
178.2
190.5
Noncash compensation
45.2
59.4
Noncash income from financial services
(5.7
)
(15.0
)
Deferred income taxes
17.1
(94.1
)
Goodwill and other intangible asset
impairments
—
379.2
Changes in operating assets and
liabilities:
Trade receivables
8.2
(48.6
)
Inventories
(604.0
)
(90.4
)
Accounts payable
150.1
338.5
Accrued expenses
(95.8
)
(19.4
)
Income taxes payable/receivable
17.6
51.6
Prepaid expenses and other, net
35.0
(2.1
)
Net cash provided by operating
activities
153.4
675.7
Investing Activities:
Purchase of property and equipment
(199.3
)
(131.8
)
Investment in finance affiliate, net
33.7
80.6
Investment in other affiliates, net
—
(2.5
)
Net cash used for investing activities
(165.6
)
(53.7
)
Financing Activities:
Borrowings under debt arrangements /
finance lease obligations
1,250.1
1,299.9
Repayments under debt arrangements /
finance lease obligations
(1,176.4
)
(1,131.6
)
Repurchase and retirement of common
shares
(411.3
)
(49.5
)
Cash dividends to shareholders
(115.2
)
(114.2
)
Proceeds from stock issuances under
employee plans
151.7
32.6
Net cash provided by (used for) financing
activities
(301.1
)
37.2
Impact of currency exchange rates on cash
balances
(6.9
)
1.4
Net increase (decrease) in cash, cash
equivalents and restricted cash
(320.2
)
660.6
Cash, cash equivalents and restricted cash
at beginning of period
657.5
196.3
Cash, cash equivalents and restricted
cash at end of period
$
337.3
$
856.9
The following presents the classification
of cash, cash equivalents and restricted cash within the
consolidated balance sheets:
Cash and cash equivalents
$
316.5
$
820.6
Other long-term assets
20.8
36.3
Total
$
337.3
$
856.9
NON-GAAP RECONCILIATION OF
RESULTS
(In Millions, Except Per Share
Data), (Unaudited)
Three months ended September
30,
Nine months ended September
30,
2021
2020
2021
2020
Sales
$
1,959.5
$
1,954.6
$
6,027.8
$
4,871.6
Restructuring & realignment (2)
—
(1.2)
—
(2.9)
Adjusted sales
1,959.5
1,953.4
6,027.8
4,868.7
Gross profit
465.6
534.6
1,497.5
1,160.2
Restructuring & realignment (2)
2.1
2.4
6.0
22.5
Adjusted gross profit
467.7
537.0
1,503.5
1,182.7
Income (loss) before taxes
144.4
218.9
526.7
(106.8)
Impairment charges (1)
—
—
—
379.2
Restructuring & realignment (2)
2.7
2.8
6.6
37.5
Intangible amortization (3)
8.5
8.7
25.7
27.4
Class action litigation expenses (4)
0.3
4.7
8.7
12.3
Adjusted income before taxes
155.9
235.1
567.7
349.6
Net income (loss) attributable to
Polaris Inc.
114.6
166.8
407.1
(74.0)
Impairment charges (1)
—
—
—
289.0
Restructuring & realignment (2)
2.1
2.0
5.1
28.5
Intangible amortization (3)
6.5
6.8
19.6
20.9
Class action litigation expenses (4)
0.2
3.6
6.6
9.3
Adjusted net income attributable to
Polaris Inc. (5)
123.4
179.2
438.4
273.7
Diluted EPS attributable to Polaris
Inc.
$
1.84
$
2.66
$
6.48
$
(1.20)
Weighted average shares outstanding
adjustment (6)
—
—
—
0.02
Impairment charges (1)
—
—
—
4.62
Restructuring & realignment (2)
0.03
0.03
0.08
0.46
Intangible amortization (3)
0.11
0.10
0.31
0.33
Class action litigation expenses (4)
—
0.06
0.10
0.15
Adjusted EPS attributable to Polaris
Inc. (5)
$
1.98
$
2.85
$
6.97
$
4.38
(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 September
30, 2020, the Company used 62.8 million weighted average shares
outstanding to determine Diluted EPS attributable to Polaris Inc.
and Adjusted EPS attributable to Polaris Inc. For the nine months
ended September 30, 2020, the Company used 61.8 million and 62.5
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 year to date period.
NON-GAAP RECONCILIATION OF
SEGMENT RESULTS
(In Millions), (Unaudited)
Three months ended September
30,
Nine months ended September
30,
SEGMENT
SALES
2021
2020
2021
2020
ORV/Snow segment sales
$
1,208.3
$
1,288.8
$
3,754.8
$
3,065.4
No adjustment
—
—
—
—
Adjusted ORV/Snow segment sales
1,208.3
1,288.8
3,754.8
3,065.4
Motorcycles segment sales
194.4
166.9
571.7
434.8
No adjustment
—
—
—
—
Adjusted Motorcycles segment sales
194.4
166.9
571.7
434.8
Global Adjacent Markets (GAM) segment
sales
146.5
106.6
425.4
282.8
No adjustment
—
—
—
—
Adjusted GAM segment sales
146.5
106.6
425.4
282.8
Aftermarket segment sales
226.7
237.2
696.0
646.8
No adjustment
—
—
—
—
Adjusted Aftermarket segment sales
226.7
237.2
696.0
646.8
Boats segment sales
183.6
155.1
579.9
441.8
Restructuring & realignment (1)
—
(1.2
)
—
(2.9
)
Boats segment sales
183.6
153.9
579.9
438.9
Total sales
1,959.5
1,954.6
6,027.8
4,871.6
Total adjustments
—
(1.2
)
—
(2.9
)
Adjusted total sales
$
1,959.5
$
1,953.4
$
6,027.8
$
4,868.7
Three months ended September
30,
Nine months ended September
30,
SEGMENT GROSS
PROFIT
2021
2020
2021
2020
ORV/Snow segment gross profit
$
260.3
$
377.8
$
952.3
$
831.2
No adjustment
—
—
—
—
Adjusted ORV/Snow segment gross profit
260.3
377.8
952.3
831.2
Motorcycles segment gross
profit
17.8
15.5
49.7
18.9
Restructuring & realignment (1)
—
—
—
0.7
Adjusted Motorcycles segment gross
profit
17.8
15.5
49.7
19.6
Global Adjacent Markets (GAM) segment
gross profit
40.9
31.5
115.5
75.2
No adjustment
—
—
—
—
Adjusted GAM segment gross profit
40.9
31.5
115.5
75.2
Aftermarket segment gross
profit
60.1
63.7
184.2
157.6
No adjustment
—
—
—
—
Adjusted Aftermarket segment gross
profit
60.1
63.7
184.2
157.6
Boats segment gross profit
41.2
33.3
135.0
81.6
Restructuring & realignment (1)
—
0.4
—
11.5
Boats segment gross profit
41.2
33.7
135.0
93.1
Corporate segment gross profit
45.3
12.8
60.8
(4.3
)
Restructuring & realignment (1)
2.1
2.0
6.0
10.3
Adjusted Corporate segment gross
profit
47.4
14.8
66.8
6.0
Total gross profit
465.6
534.6
1,497.5
1,160.2
Total adjustments
2.1
2.4
6.0
22.5
Adjusted total gross profit
$
467.7
$
537.0
$
1,503.5
$
1,182.7
(1) Represents adjustments for corporate
restructuring, network realignment costs, and supply chain
transformation
NON-GAAP ADJUSTMENTS
Third 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 third quarter of
2021, the Company has recorded combined costs totaling $3 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 third
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 $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/20211026005324/en/
Investor Contact: Richard Edwards 763-513-3477 Media Contact:
Jess Rogers 763-513-3445
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