Polaris Inc.

Good day and welcome to the Polaris first quarter 2020 earnings call and webcast. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Richard Edwards. Please go ahead.

Thank you, Jason, and good morning, everyone. Thank you for joining us for our 2020 first quarter earnings call. A slide presentation is accessible at our website at ir.polaris.com, which has additional information for this morning's call. Scott Wine, our Chairman and Chief Executive Officer, and Mike Speetzen, our Chief Financial Officer, have remarks summarizing the quarter, and then we'll take some questions. During the call, we will be discussing various topics which should be considered forward looking for the purposes of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projections in the forward-looking statements. You can refer to our 2019 10-K for additional details regarding these risks and uncertainties. All references to the first quarter 2020 actual results are reported on an adjusted non-GAAP basis unless otherwise noted. Please refer to our Reg G reconciliation schedules at the end of this presentation for the GAAP to non-GAAP adjustments. Now we'll turn it over to our CEO, Scott Wine. Scott?

Thanks, Richard. Good morning and thank you for joining us. I want to begin with sincere thank you to the Polaris team for stepping up and leaning in, as they always do, to support our customers and dealers through the first few months of this COVID-19 pandemic. Our people and our culture remain our most important strength, and their performance in the early days of this crisis is proving that out. The abrupt shutdown of global commerce was certainly a shock to our business, but our aggressive, planful response has positioned us to navigate and win through this lockdown and the recession to come. Our long-term commitment to being a customer-centric, highly efficient growth company is unwavering. But this crisis requires focus, so we defined four priorities to guide us. First and foremost, we are committed to employee safety. Next, we will ensure that Polaris is viable, and then support our dealers with the goal of being their preferred partner. Finally, we will continue to be a good steward for our shareholders and stakeholders. When China locked down in early February, Ken Poussel assumed the mantle of coronavirus czar and his leadership focus and structured approach has been essential to our ability to stay abreast with and often ahead of this dynamic situation. What began as a major risk with suppliers quickly evolved into employee health and safety concerns and then issues with mandated dealer closures and various state regulations. Ken and his team meet daily to assess the environment and their prompt actions and thorough execution has been immensely helpful. Mike Speetzen took a similar ownership of our liquidity and cash management and expertly turned a potentially significant concern into a very manageable scenario. He also quickly initiated our recession playbook, enabling us to execute cost down and restructuring activities with speed and precision. Both our retail flow management system and our overall agility were tested by the rapid demand shifts at the end of Q1. and I am pleased with how each performed as we successfully reduced shipments and implemented floor plan support to protect our dealers. This untimely shipment reduction in the lowest earnings and cash flow generation quarter of the year coupled with uncertainty around dealer operations and consumer demand put quite a bit of pressure on our liquidity outlook. Through extremely fast action on working capital, cost cuts across the enterprise and strong support from our bank group, We have reduced our liquidity concerns and are laser focused on managing cash flow. As in 2008, we are broadly and boldly reducing expenses, but protecting key product and strategic investments. We have already taken out over $120 million of annualized operating expenses of the business, mostly human capital related, and overall OPEX will be cut nearly 25% in the second quarter alone. Our lean factory operations will reduce hours in line with demand. Earlier this month, we announced the wind-down of three of our smaller boat brands, Rinker, Striper, and Larson FX, and we will continue to evaluate our portfolio for businesses and brands with a limited path to strong, profitable growth. We are protecting our strategic engineering investments while accelerating our ongoing engineering efficiency projects. Our protocols for dealing with all things COVID-19 utilize the best information we can obtain from CDC, WHO, local health departments, our retained medical experts, and many other sources. We continue to work tirelessly to keep our employees and their families safe and we are complying with quarantine and cleaning protocols. We have had seven confirmed COVID-19 cases amongst our 14,000 employees and all have either fully recovered or are recovering at home. Navigating this pandemic emphasizes our deep commitment to Geared for Good. From Climb and 509's donation to Goggles for Docs to our $220,000 donation of iPads and other devices to facilitate distance learning in our rural school communities, we are putting ESG into action. Even our autonomous partner, Optimus Ride, found a way to use our gym vehicles to fill a need for meal and grocery delivery in Arizona, serving the community and possibly creating an alternative business model. Overall, first quarter North American retail sales were down 8%, but the salient point is how we got there. We were up 5% through mid-March, then down 40% for the final two weeks, which unfortunately overshadows the strong market share gains and positive retail that Indian Motorcycles delivered for the quarter. ORV lost market share in the quarter, but made numerous advances in marketing and retail execution, which are contributing to mid-teens retail improvement month-to-date in April. with likely share gains as well. We also are seeing strong demand for PGA and aftermarket parts, which should utilize our large and growing installed base to outperform vehicle sales in a down market. Snow gained market share for the season, although retail was down slightly for the quarter and the year. And while the first quarter is relatively small for boats, our pontoon segment delivered gains in market share and retail. Dealer inventory rose 8% in the quarter as the sharp drop in retail occurred too late to fully offset with shipment reductions. Motorcycle inventory was up more in support of our strong demand for our new Challenger bike. We are undershipping RFM profiles upon dealer request and covering flooring costs through the end of May, in addition to sharing our COVID-19 learnings and best practices. Dealer closures were a huge problem in early April, but this is becoming more tractable as less than 15% of ORV and motorcycle dealers are now closed. Our online presence is becoming a more significant factor in retail sales and customer engagement, and we have taken significant steps to bolster virtual accessibility. Our fast, innovative launch of ClickDeliverRide and our institution of appointment shopping are both popular with consumers and dealers. and we will continue to leverage digital efforts to enhance our support for them. We previously communicated that we paused our global plant network in March to assess our supply chain, adjust to lower demand and implement social distancing procedures. Under almost all circumstances, our facilities have met the C-SERV requirements for essential business, so we have since ramped up operations everywhere except Monterey. We are pursuing every option to obtain the CC equivalent rulings that Polaris and our suppliers need to reopen in Mexico. Fortunately, our legal and government affairs team is adept at making this argument in support of our global network. That team was also instrumental in securing the substantial 301 list 3 tariff relief, which has finally come through. We must now work for extensions. Our strategic sourcing The program has adjusted to a new operating rhythm, but remains on track to deliver increasing savings throughout this year and beyond. I will now turn it over to our Chief Financial Officer, Mike Speetzen, who will update you on our financial results and plans.