Polaris(US:PII)2023-02-17 21:27Financial Performance - The company reported record sales of $8.6 billion in 2022, a 15% increase from $7.4 billion in 2021[147]. - Net income from continuing operations attributable to the company was $602.9 million in 2022, a 22% increase from $496.2 million in 2021, with diluted earnings per share rising from $7.92 to $10.04[151]. - Total sales for 2022 reached $8,589.0 million, a 15% increase from $7,439.2 million in 2021[175]. - Operating income increased to $804.5 million in 2022, compared to $712.0 million in 2021, representing a growth of 12.9%[260]. - Comprehensive income attributable to Polaris Inc. was $437.0 million in 2022, compared to $474.9 million in 2021, indicating a decline in overall profitability[262]. - Polaris Inc. reported net income of $447.6 million for 2022, a decrease of 9.5% from $494.3 million in 2021[268]. Sales and Revenue Breakdown - Sales in the United States increased by 19% in 2022, accounting for 79% of total sales, driven by favorable product mix and higher pricing[156]. - Off Road segment sales increased by 15% in 2022 to $6,436.2 million, with an average per unit sales price increase of approximately 18%[177]. - On Road segment sales rose by 13% in 2022 to $1,163.4 million, with a 2% increase in average per unit sales price[179]. - Marine segment sales surged by 30% in 2022 to $989.4 million, driven by a 15% increase in average per unit sales price[182]. - Wholegoods revenue reached $6,945.8 million in 2022, up from $5,919.3 million in 2021, indicating a growth of about 17.3%[322][323]. - The Company’s revenue from the United States was $6,809.2 million in 2022, accounting for approximately 79.3% of total revenue[322]. Costs and Expenses - The cost of sales rose to $6.6 billion in 2022, a 17% increase from $5.7 billion in 2021, primarily due to higher warranty, labor, raw materials, and logistics costs[160]. - Gross profit for 2022 was $1.96 billion, representing 22.8% of sales, down from 23.5% in 2021, impacted by higher input costs and supply chain constraints[161]. - Operating expenses totaled $1.2 billion in 2022, a 10% increase from $1.1 billion in 2021, with a decrease in operating expenses as a percentage of sales[163]. - Research and development expenses rose to $366.7 million in 2022, up from $328.7 million in 2021, indicating a focus on innovation[260]. - Advertising expenses incurred by the Company were $87.6 million, $90.8 million, and $95.8 million for the years ended December 31, 2022, 2021, and 2020, respectively[305]. Cash Flow and Investments - Cash provided by operating activities increased to $534.5 million in 2022, up from $286.8 million in 2021[188]. - Net cash provided by operating activities was $508.6 million in 2022, compared to $293.7 million in 2021, reflecting a significant increase[268]. - Net cash used for investing activities increased to $319.3 million in 2022, primarily due to higher property and equipment purchases[191]. - Polaris invested $306.6 million in property and equipment in 2022, an increase from $282.8 million in 2021[268]. Shareholder Returns - The company announced a 2% increase in the quarterly cash dividend to $0.65 per share, marking the 28th consecutive year of increased dividends[152]. - The company repurchased 4.4 million shares for $505.0 million in 2022, positively impacting diluted net income per share by $0.33[200]. - The company has authorized an additional $349.1 million for share repurchases as of December 31, 2022[200]. Liabilities and Debt - As of December 31, 2022, the company's debt to total capital ratio was 65%, up from 60% in 2021[199]. - Total liabilities grew to $4,103.8 million in 2022, compared to $3,810.3 million in 2021, largely due to an increase in long-term debt[258]. - Borrowings under debt arrangements increased to $2,987.5 million in 2022 from $2,424.3 million in 2021[268]. - The fair value of long-term debt was approximately $2,070.3 million as of December 31, 2022, compared to $1,870.0 million in 2021[280]. Inventory and Assets - Total current assets increased to $2,767.6 million in 2022 from $2,559.0 million in 2021, driven by higher trade receivables and inventories[258]. - Inventories increased to $1,896.1 million as of December 31, 2022, from $1,510.7 million in 2021, reflecting a rise of approximately 25.5%[321]. - The Company’s accrued expenses totaled $896.8 million as of December 31, 2022, compared to $756.5 million in 2021, marking an increase of about 18.6%[321]. Currency and Foreign Exchange - Currency rate movements negatively impacted sales by 2% in 2022, while in Canada, sales increased by 6%[157]. - Foreign currencies negatively impacted net income in 2022 compared to 2021, and a similar negative impact is expected in 2023 compared to 2022[225]. - A hypothetical 10% fluctuation of the U.S. dollar compared to the Euro could impact annual operating income by approximately $20 million, while the same fluctuation against the Canadian Dollar could impact it by approximately $53 million[223]. Goodwill and Impairment - The company completed its annual goodwill impairment test in the fourth quarter of 2022, determining that goodwill was not impaired as each reporting unit's fair value exceeded its carrying value[214]. - The Company uses a discounted cash flow analysis and market approach to determine the fair value of reporting units for goodwill impairment testing[292]. Legal and Warranty Liabilities - The accrued warranty liability increased to $172.9 million as of December 31, 2022, from $132.9 million in 2021, indicating a 30.1% rise[207]. - Accruals for product liability claims were $107.5 million as of December 31, 2022, up from $70.3 million in 2021, marking a 52.9% increase[208]. - The Company had an accrual of $107.5 million for probable payments related to product liability litigation as of December 31, 2022[252].