Wells Fargo Securities hosted Polaris chairman and CEO Scott Wine and executive vice president and chief financial officer Mike Speetzen as part of its Powersports Virtual Conference.
Wells Fargo Securities analyst Tim Conder reports in a research note provided to Powersports Business that “management's commentary around recent retail improvement and new customer trends further supports our Powersports COVID benefit thesis. Q220 likely to see inventory shortages on several products. Management is cautiously optimistic with some concern that the current economic backdrop could dampen consumer sentiment through 2020. We continue to see favorable risk/reward in PII as the premium market-leader, positioned to gain further share.”
Conder also provided commentary on Polaris retail and consumer trends, as well as a production update.
“Retail Trends. Troughed late-March/early-April. PII less impacted given concentration away from COVID hotspots. Core ORV +mid-teens April retail, strength across all sub-categories benefitting from dealers ability to open more quickly. Motorcycle recovery relatively delayed as dealers were slower to reopen, now seeing Indian and Slingshot demand rebound. Boat dealers slowest within the portfolio to reopen, but now seeing good demand. ~98% of Powersports/motorcycle dealers are currently open vs. 80% of boat dealers. Weather favorable yr/yr. No material oil patch impact. Canada/Europe/Australia lagging the U.S., but improving.
“Customer Trends. New customers currently accounting for ~67% retail vs. typical 33%. Demand from existing owners also strong. Seeing stimulus check benefit given accessible price points and lower spend on vacations, etc. Typical customer mid-to-upper class, often dual income family. 65% of buyers finance, of which 50% goes through PII retail partners. Financing readily available with very attractive rates. Softer approval rates given increase in lower FICO applications, but within typical FICO bands approval rates are stable. Lenders increasing diligence around income verification.”
“Production. Aggressive supply chain management since COVID onset. Overall production capacity <50% across the network. Q320 production should alleviate Q220 demand driven shortages. Monterrey facility (primarily RZR) reopened May 19th, shutdown lasted a few weeks longer than anticipated which may result in a 1-2 week product shortage. Not experiencing any logistical issues, actually getting favorable rates.”
— Dave McMahon, editor, dmcmahon at powersportsbusiness.com