Polaris Inc.

Good morning and welcome to the Polaris Second Quarter 2020 Earnings Conference Call and Webcast. All participants will be in a 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. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Richard Edwards, Head of Investor Relations. Please go ahead.

Thank you, Andrea, and good morning, everyone. Thank you for joining us for our 2020 second 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 security litigation reform act of 1995. Actual results could differ materially from those protections 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 second quarter of 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? Thank you, Richard. Good morning and thank you for joining us. Last quarter, I spoke about how thankful I was for the players' team's hard work and how confident I was Weigelt, Marc Suarez, led us to model negative retail sales for the second quarter and the year. Reality has been much different as many more people sought out the family enjoyment, excitement, and utility of our vehicles. And when coupled with more free time and fewer alternative ways to spend money, this provided a near perfect backdrop for our power sports dealers. Our priorities have remained consistent since the onset of COVID-19. First, implementing protocols and guidelines to keep our employees safe. Weigelt, Marc Suarez, But our factories are performing well as they ramp up to meet demand and refill the channel. Liquidity is not a concern currently, but the cash war room exercises that Mike Speetzen and his team have greatly enhanced our cash outlook and management ability. While non-cash, we did take a $379 million impairment charge for our aftermarket business, which reflects the greater impact TAP has faced from COVID-19 and tariffs. This is accelerating our strategy to focus predominantly on TAP's retail channels, which I will cover shortly. Second quarter North American retail sales were up 57% behind broad-based demand across our dealer network. A key fact underlying this top-line number is that nearly 75% of our off-road vehicle and motorcycle buyers in Q2 were new to Polaris. While we love our current customers, we know that new customers are more likely to invite their friends to Powersports spend all apparel and accessories, and buy another Polaris vehicle. The sub-demand for four-seat or crew side-by-side vehicles reinforces the family dynamic behind this surge, while our PG&A business experience its largest ever quarterly sales confirms our large and growing installed base still has a strong desire to accessorize their vehicles. Both Indian and Slingshot performed well in the quarter, with the new Challenger and Slingshot Autodrive leading notable market share gains. Boats did not turn positive until June, but the subsequent recovery was quite robust. Despite our impressive retail performance in off-road vehicles, our market share did decline in the quarter. This is never an acceptable outcome, and I'm extremely confident that Steve Minetto and his team are driving the necessary actions and improvements to reestablish market share gains in the quarters ahead. I do not want to make any excuses, but this simple fact helps put things into perspective. In the months of May and June, the growth of our side-by-side business outpaced any of our competitors' total sales over the same period.