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Brian Sozzi and Alexis Christoforous of Yahoo Finance communicate with Polaris CFO Mike Speetzen on the company’s stage with COVID-19, while others turn to the industry for relief.
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ALEXIS CHRISTOFOROUS: In a few minutes, President Trump will point out the Great American Outdoors Act. It’s an investment that will inject about $3 billion into our national parks and public lands. This is the largest investment in recreation this country has noticed in approximately 65 years.
And the week, we saw other people turn to the wonderful outdoors after being locked indoors for months during this pandemic. And today we have Mike Speetzen with us. He’s Polaris’ CFO. And, of course, the company’s sales of cars and off-road motorcycles skyrocketed during this pandemic, up 57% in the last quarter.
Mike, good to see you here. Give us an idea of how business is looking right now. And I’m curious how many of your customers are first-time customers just discovering these off-road vehicles.
MIKE SPEETZEN: Well, hello, Alexis, and thank you for inviting me. Things are going pretty well. As we talked in our effects call in July, we expected things to slow down. And at the time of the effects call, things were moving to a very smart clip. We talked about the fact that almost 75% of the consumers we saw in the last quarter were really new to Polaris.
And what we’re seeing is that it brings a new and varied organization of drivers, younger, more families, we are seeing the sale of what we call equipment vehicles. So for several passengers we can sit 4 to six more people in a Ranger or an RZR. These sales have been incredibly strong, as have our pricing models, which means new people in the space. In fact, many new participants are coming.
BRIAN SOZZI: Now Mike, you’re the numbers guy there at Polaris, and you put out guidance. We’re not seeing that from a lot of companies. What are you– what are you seeing in the second half of the year that would give you confidence to put an outlook out.
MIKE SPEETZEN: Yes, we … Brian, it’s good to see you. We withdrew our recommendation because of the uncertainty we saw in what happened at the end of March. I mean, our retail business had declined considerably. What we saw was the force that started in April, then continued seriously in May and June and evidently continued in July.
And when we take a look at the stock channel we have with our distributors, we know that we can produce approximately the full capacity for the rest of the year, only to bring distributors to where they want to be in terms of having products available. And, you know, that, along with the paintings made around our recession planning, the implementation of our e-book on recession, has given us a lot of confidence in terms of the company’s liquidity, the design of company positions in our perspective. for the rest of the year.
And we feel that giving investors an idea of how we feel about the company will be the key. Because we knew there would be many others who might not do that. And of course, it fit well with the reaction of the name we had at one time after the call.
BRIAN SOZZI: Were you surprised, Mike, of some of the effects you achieved in June and July? Sales of pontoon boats are hot. Sales of Indian, hot motorcycles. We’re in recession here, and those items are pretty expensive.
MIKE SPEETZEN: Yes, we were surprised. I mean, Scott talked about the fact that we lost our expectations of a mile in the country. And basically, you know, we expected the retail industry to fall by 20 or 30%. We’ve used, you know, beyond recessions as an indicator. And I think the other thing about this is that the underlying consumers are still very strong.
I mean, you can see that in the reports that were published in terms of income source grades that higher in the current quarter, non-public savings rates rose in the current quarter, there were many incentives in the system. And other people didn’t have much to do. They canceled the holiday, cancelled trips and looked for anything to do with their families safely.
And in many ways, our products allow you, as I mentioned earlier, either a pontoon or side by side of several passengers or even just motorcycles where you can faint with an organization of friends and be to drive and make the right point of social distance. All our products work very well.
ALEXIS CHRISTOFOROUS: You know that your distributors, many of them, had to close because of the pandemic. Do other people buy more online? Some kind of invisible screen, so to speak. And I know you also have a program where you use generation for other people to make the purchase, it’s called RideReady. Tell us a little bit about it.
MIKE SPEETZEN: Yeah, so we did a couple of things. I mean, our powersports dealerships where we sell Rangers and RZRs, they did shut down, but they were able to open quickly under the CISA requirements. And a lot of that has to do with we supply municipalities with products and so they were deemed essential.
Boats and motorbikes, the concessions took a little longer. The motorcycles were eventually added to the CISA list for transportation. And then the ships really began to open up when the economy began to open under state command. We established a Click Deliver Ride program, which essentially allowed other people to buy cars through a portal we created, contacting our dealers and doing so without contact where the vehicle would be delivered to them.
You’re right, we brought a procedure called RideReady, which is necessarily a cellular service. One of the things we do know is that many of our consumers don’t return to dealerships to take care of their vehicles. Either they do it themselves or they don’t. And one of the big obstacles is how to send a vehicle to a dealership.
This, combined with the existing environment in which we are located, with social estrangement and the scarcity of contacts, seemed to us a fair opportunity to launch this cellular service. And enabled through an app, consumers can log in, can use the visitor portal to load their vehicle, put the express or accessories they need and do whatever they take care of in their home or have the vehicle picked up and removed from the dealership. .
BRIAN SOZZI: How did you see it? His main rival in the motorcycle industry, Harley Davidson, fought. As a new CEO, my resources told me that other people had been fired from the company. How have indigenous people’s struggles helped in recent months?
MIKE SPEETZEN: Well, you know, there are several things. First, the demographics. You know, Harley’s strength is his logo. One of the weaknesses is also the strength of this logo with a segment of fast visitors. The Indian logo plays with many other demographics, and we’ve noticed that happens.
Our clientele is much younger, more diverse. Selling our medium-sized motorcycles to Scout diversity has been incredibly long, also strong. And it shows that other people would possibly be looking for anything else from the brand’s point of view. The only thing we’ve noticed about them here recently is that, you know, they’ve limited the amount of stock that goes into dealerships.
And they’ve cut their promotional expenses a lot, which has been helpful because it puts us in a position where we don’t have to cut the bikes down. And we can play with the strength of the logo we have.
ALEXIS CHRISTOFOROUS: You also have one of your brands, Sturgis, which will host your 80th anniversary motorcycle rally in South Dakota. I think more than 200,000 people deserve to participate. What do you think of this movement in this period, this pandemic?
MIKE SPEETZEN: Well, you know, I know from our standpoint, we’re planning to approach it in a very careful manner. We’re limiting the number of employees that will be exposed. We’re really leveraging our dealerships. You know, our dealerships have proved they’ve got a true capability to ensure customer safety so that as we do demo rides and allow people to experience our products, we’ll do it in a way that keeps them safe and make sure that we’re keeping the employees and the dealership employees safe they’re interacting.
But it’s a vital component of the business in terms of attracting customers, being, you know, having access to vehicles, touching and feeling and seeing how wonderful products can be in this component of the world.
BRIAN SOZZI: Do you think snowmobiles? You also have one, obviously, they’re giants on snowmobiles. How do you see this business in the fall?
MIKE SPEETZEN: Yes, you know, we’ve created, in many ways, the snowmobile segment. The company started in Roseau, Minnesota, to the north. And, you know, that’s a great component of our heritage in our hearts. We’ve launched some very smart platforms. There’s a lot of emotion. We were fortunate to be able to organize our snow racer assembly in Dallas, Texas, just before it all stopped by COVID.
And the excitement of the distributors, I was there with our investors and with our team. And the excitement of the distributors was out of the serie. We do a snow program where there are complexes, we do a lot of customization. We are very confident and obviously no one can expect what will happen to the snow conditions.
But assuming we have, you know, a decent winter game, I think we’ll continue to take components like we did last year.
ALEXIS CHRISTOFOROUS: All right, Mike Speetzen, CFO of Polaris, very happy to see you this morning. Thank you for being with us.
MIKE SPEETZEN: Thank you for inviting me.