Good day, and welcome to the Polaris First Quarter 2019 Earnings Call and Webcast. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Richard Edwards, Vice President of Investor Relations. Please go ahead.

Thank you, Andrew, and good morning everyone. Thank you for joining us for 2019 first quarter earnings call. A slide presentation is accessible at our website which has additional information for this morning's call. Scott Wine, our Chairman and Chief Executive Officer; and Mike Speetzen, our Chief Financial Officer, will have remarks summarizing the quarter and our full year expectations, and then we will take some questions after their remarks. 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 2018 10-K for additional details regarding these risk and uncertainties. All references to first quarter 2019 actual results and 2019 updated guidance 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 I'll turn it over to our CEO, Scott Wine. Scott?

Good morning, and thanks for joining us. Earlier this month we hosted the NCAA Final Four in Minneapolis. Seeing Tony Bennett's UVA team win it all was thrilling, not simply because I'm a Virginian but primarily because his program embodies the teamwork, diligence and leadership needed to succeed in this highly competitive environment. Our Powersports Industry is also very competitive and in today's culture where it seems popular to malign capitalism, I'm proud that Polaris stands as an example of the virtue of free markets and strong competition for consumers and stakeholders alike. Yesterday we published our 2019 Corporate Responsibility Report. We call this program Geared For Good and it describes our efforts to be a great company and corporate citizen. For maintaining trails and teaching safe riding skills to you, to extensive community and veteran support, the Polaris Foundation is an excellent purveyor of good deeds. Our work to reduce energy usage and environmental impact is sound and continuously improving, while our workplace safety program yields top tier results. We also invest heavily in United States, spending over $200 million in last three years, building new facilities that employ over 1,500 American workers. Exemplary corporate stewardship is a winning strategy and our employees win with us as our ESOP owns more than 5% of the Company and our earnings base program is among the most extensive in the market. Capitalism works and Polaris is proud to be a vocal proponent and benefactor of this proven system. I'm also proud of how the Polaris' team performed in the first quarter. Our sales and earnings outpaced expectations even as our RFM system alertly adjusted several thousand units out of our shift plan to protect dealer inventory. I'm reluctant to blame weather for a weaker than expected ORV in motorcycle retail, but…

Thanks Scott. Good morning. For the first quarter, sales were up 15% on a GAAP and adjusted basis versus the prior year's expected. During the quarter, sales growth and ORV/Snow was partially offset by lower sales and motorcycles, and global adjacent markets, with most of our sales growth coming from the addition of the Boats business, which added $185 million of sales during the quarter. Our average selling prices were up 7%, termed by a combination of the favorable mix and price increases that were implemented in early 2019. First quarter earnings per share on a GAAP basis was $0.78. Adjusted earnings per share was $1.08, down 4% for the quarter, which exceeded our expectations driven by lower operating expenses and favorable foreign exchange rates. Operating expenses were lower than anticipated during the quarter due primarily to the timing of research and development investments which will now likely occur in the second half of 2019. However this expense timing change will not impact any of our programs. Foreign exchange had a negative impact on the quarter versus 2018 driven by a strong dollar primarily against the euro and the Canadian dollar. The negative impact in Q1 was slightly lower than we originally anticipated which also contributed to earnings being better than expected. As a reminder, we plan full year 2019 expecting foreign exchange to have a negative impact on pre-tax profit of approximately $30 million or $0.40 per share assuming an average Euro to USD rate at $12 and the CAD to USD at $0.74. As we've done in the past, we've adjusted our full year guidance based on the currency benefit realized in Q1, but we will hold the balance of the year's guidance at the original plan rates given the dynamic currency environment. From a segment reporting perspective,…

Thanks Mike. Our spring sales event is playing out well, and with no apparent signs of either the U.S. economy or our consumer is slowing down, we are reasonably positive about 2019. The Powersports industry is always competitive, which is good for customers and those of us that serve them. We like our competitive position and are much more comfortable now that we're back to playing offsets. The ongoing weakness of North American motorcycle market is well-documented and shows no sign of turning around soon. However, Indian has demonstrated its ability to grow and capture market share, and with the advent of exciting new bikes like the FTR 1200, Steve Menneto and his team are nowhere near done. With a full year strategic sourcing work under our belt, we are much more optimistic about the savings and value creation our teams will deliver. I'm not quite as optimistic about tariffs, but certainly expect that the worse is behind us and throughout 2019 the news will improve. We are working diligently to make sure that happens. Andrew, please open the line for questions.

[Operator Instructions] The first question will come from Jaime Katz of Morningstar. Please go ahead.

I'm curious about TAP, I think the weakness that you guys are attributing to the segment this quarter, this wholesale and e-commerce parts of the business is what you attributed to the weakness last quarter. So can you talk about what steps you might be taking to remedy that? And then, you know how fast that can be remedied given that the aftermarket segment it looks like you still have mid-single digit guidance for the year on the upside? Thanks.

Yes, Jaime, we are certainly pleased with the non-cap aspects of aftermarket. They're doing extremely well and have for the past 16 months or so. With the efforts that Craig Scanlon and the team are driving at cap, we are reasonably comfortable that things are turning around and Mike indicated in his prepared remarks that we have seen signs of that in the first quarter. On the e-commerce side, we did have a bit of an issue with Amazon Prime where we actually didn't perform up to the program requirements and so we were taken off that. The team has rectified that with the standard work in place. So that should be an issue that doesn't repeat itself. We also went through with both of the website that TAP sells through a conversion of the system that operates them, and anybody that's gone through a conversion understands that you have to reprogram everything for the adverse to pick up and whatnot, and we did see a slowdown when we did it the first time with the 4WD site and then with the 4WP site more recently. So we're very comfortable that the e-comm piece is going to turn itself around. Wholesale has been a different challenge. What we've tried to do there is make sure that you know we're not selling at the extremely - to the extremely low margin customers that ultimately drive prices down in the overall marketplace. And Craig and team have done a good job of getting that turned around. And like I said, we are comfortable with the plans they have in place and that we should see improvement from here.

And then, can you guys just comment on the Motorcycle segment and Slingshot. I think it would be helpful, because to think about Indian, maybe a little bit separately because when we look at the gross margin of the whole segment, my suspicion is that Slingshot is dragging that down pretty materially. So is there a way to help us think about Indian's margin profile independently of Slingshot as that is more likely going to be what carries that segment longer-term? Thanks.

Yes, I think you know Jaime there certainly is a difference and I think given that Slingshot is still early in its introduction, there is opportunity to improve that. Right now, I would tell you that between the two segments, there is not a dramatic difference. Slingshot has taken a bit of a dip down because we're heavier on the promotional side right now as we continue to move through some of the non-current inventory. But at this point, there's not a huge structural difference between the two. Okay, next question.

The next question comes from Greg Badishkanian of Citi. Please go ahead.

Could you talk about the promotional environment, how that changed throughout the first quarter into April, because obviously you mentioned that there were some absurd promotions from competitors and you know as that leveled off and you also mentioned that the value segment was primarily impacted. So will you have a competitive response in that particular segment with maybe additional promotions and discounting to counter that?

Yes, I mean I think the call out on what I - and I did use the word absurd I'll admit that, was really related to some of the issues we saw in the Southwest earlier in the quarter and then in the mid-size bike segment for motorcycles. We just - we've never reacted to some of these incredibly high when they've happened in the past and we didn't this time, and we think the programs we have in place and it's - as I indicated in the second half of March and early April, or actually April has gone quite well. So we're comfortable with the way the programs are working. We did - we've been able to hold price very, very well. We are going to make sure that we're competitive on the value ATV side of the thing of the board and with youth, I mean, just their lower price - the total price is lower, so therefore taking - there's not as much margin there. So we have to be a little bit careful. But Chris Musso and the team are reacting and as well as Steve on the mid-sized bike program. We tried a few things in latter part of March and in early April, and our promotion activity is working. So we were the least promotional in side by side in the quarter. And as you know, we're not willing to - not afraid to be promotional where we need to be and I think Chris and the team are dialing that in right as we head into the second quarter.

And just you maintained Indian market share, Harley appears to have been much more promotional in 2019 historically. So how does that backdrop feel in terms of the promotions from your competitors, primarily Harley on the motorcycle side?

Well, it's interesting. I thought they were the brand that was never going to be promotional. But now that we are dealing with it, we've been at this game for a long, long time. I mean, we know how to deal with the Powersports industry's promotional, so we know how to do it. And as soon and really what mostly happened within the mid-size segment, we gain market share in heavyweights. So as most of promotional in mid-size and I tell you as soon as we saw what was happening, Steve Menneto and the team adjusted how they were approaching it, and we know how to turn it around. So we're comfortable playing this game and we believe that we can expand margins in motorcycles over time even as others in the industry decide to be much more promotional.

The next question comes from James Hardiman of Wedbush. Please go ahead.

So I want to talk about the ORV market share a little bit, it's down a little bit although on, I don't want to say meaningless product or meaningless categories, but Scott obviously you don't take that lightly. I think you've talked about sort of regaining share during the balance of the year. I guess my question is, do you see that happening as soon as the second quarter or is it more about once we get the model year 20 products on the ground, then you'll be able to retake share.

No, we feel really good about our competitive position right now. I mean it - and again it was a - the calendarization with weather and the way things played out was a little bit, but we're feeling - we're very encouraged by what we're seeing in April. And you know Steve - I mean, Chris Musso and his team have really got, I mean, just great products and I talked about the model year, the new model year coming out with the 65th anniversary that we're very encouraged about, but we don't feel like we're playing with one hand tied behind our back at all right now from a product standpoint. And as I mentioned, the work we're doing with CRM and lead management, we're getting much better leads into our dealerships. So, yeah, we're comfortable about our share position and how we will - how market share will play out in the second quarter.

And James what I would add to that is, the share - the share loss in Q1 was like you know, we never like to see the loss but it was relatively small. The key for us is in the categories where we make significantly higher margins where it is the premier products like the Turbo S, the RANGER XP 1000, NorthStar, and those categories we either held or gain share. And so we've got to address some of the lower end of the spectrum, but in the areas where it matters most for us, we're pretty proud of the accomplishments and we think we can continue to hold and gain momentum as we go through the year.

And then maybe along those lines with some of the premium product, well maybe this wasn't the reason, but it was a really good margin quarter at least versus the way that The Street was modeling it, not as much of that flowed through to the full year guide. Mike, you talk about a bit - a little bit in the prepared remarks, but maybe walk us through that one more time, it sounds like R&D was moved from 1Q to the second half. I didn't know if there was anything beyond that, maybe some G&A expenses. And then I guess the last question would just be if FX rates were to stay where they are now, what kind of a benefit would we be looking at for the full year?

Yes, so we took the Europe by $0.05, roughly $0.03 of that was from foreign exchange and the other $0.02 was interest rates. So if you figure things held consistent with the first quarter, you're talking about roughly $0.03 a quarter. From an operating expense standpoint, yeah I mean, primarily R&D, we shifted the timing around that that's not just program related. We also have R&D expenditures that's related to the recertification of suppliers as we go through the Gibson project. And then we also have some other strategic investments and I think the team rightfully so was careful as we went through the first quarter just given the uncertainty of coming out of the end of last year given the stock market volatility and then some of the weather issues that we had. The point I would also make, we did have a good margin quarter, but when you look at the impact that FX had and that tariffs had on our first quarter, our earnings would have been well north of 20% up year-over-year. And so I think it just really speaks to the underlying earnings power of the business. And when you think about the fact that we really are not registering any of the Gibson savings yet, that's going to be later in the year. I'm pretty confident about the earnings power that we've got and that once these tariffs are cleared away or at least minimized and the teams continue to work the counter actions that - you know we've got significant margin expansion opportunities.

The next question comes from Robin Farley of UBS. Please go ahead.

I was going to ask along similar lines about the side by side market share and you mentioned that it's in the - maybe with the lower margin products. Is that something that you will see if the dealer show some new product in those categories or are you really not necessarily concerned about your market share in those product categories? I guess, in other words, how should we think about your market shares, in other words, its market share not the goal here ultimately as your growth is - where it is?

Robin, to be clear, we care a lot about market share. I mean that - the chart that I put into the deck this time that shows the historical trend demonstrates that we pay really close attention to it and we're quite good at maintaining and sustaining an improving market share. What we talked about in ORV was really the value of ATV is not as much on the side by side where we had issue. We are - as you know, we really started these sport performance market with the RANGER 800 a decade ago, and we have not done a complete refresh of that product in quite some time and I think as our competitors introduce products in that market, we are seeing more share loss of that the lower end 50 inch segment than we are in other places. It's not that we don't care about it, we just don't have a new product there. As you know, we don't talk about what products that we're bringing to market, but we're very comfortable with our current lineup of products to gain market share as I told James, and with what we're bringing to market later this year, we think it'll just give us more opportunity to expand Off-Road Vehicle market share.

And then just from a follow-up question, just - motorcycle shipment guidance for the year is unchanged and of mid-teens that Q1 was down 10%. I know part of that was just a comp last year right, that Q1 had the highest motorcycle shipment change last year. Was there anything else about the timing of motorcycle shipments, because it looks like it will then be up significantly for the rest of the year?

Yes, I think Robin the other thing to keep in mind is the numbers that we're talking about it's the law of small numbers. So the number of units, the absolute unit move was not substantial, but on the base we're talking about it, it's over amplified. At this point, we don't have a significant change other than the timing similar to what we have with our ORV business as RFM reacted to the demand signals as Scott referenced earlier. The good news being that you know we've seen retail momentum continue into April. So we're pretty confident about the full year guidance that we've got.

The next question comes from Scott Stember of C.L. King. Please go ahead.

Maybe just talk about boats. We see that the shipments, let's say, up 12% pro forma. Maybe just talk about how retail performed during the quarter, just from your perspective at least and how that has continued over into April?

Well, retail performance in the first quarter was down slightly just because of weather, just like some of our other big motorcycles is kind of similar. You people just don't buy it when there's snow on the ground and that's somewhat similar for both retail. As Mike mentioned, the traffic at the boat shows was very good for us. I talked to Bob this morning and the trends that we're seeing as we start the second quarter are favorable. So we feel good about our lineup. You know we talked about repositioning Bennington a little bit. We were, let's say, our lineup didn't include some of the lower priced smaller boats, the pontoons that were doing quite well last year. And so we feel good about the lineup we have and the way the year starting out boats. And you know we ramped up production of the Larson brand and that's going well. So overall I think we're encouraged as we head into the second quarter about where boats are. I mean, the acquisition is playing out at or above our expectations.

And just the last question. Going back to the question you just had about the earlier about TAP and losing, I guess, your prime status with Amazon. Could you just talk about, did you get that back after you made the necessary changes?

Yes we did. And what importantly I believe the team has made the sustainable process improvements that will allow us to make sure that we keep it in place.

The next question comes from David Beckel of Bernstein. Please go ahead.

Most of mine have been asked and answered, but I did want to circle back on the Chinese tariffs. Correct me if I'm wrong, it sounds like you're reasonably confident there will be a resolution here before too long, but in the off instance in which case there isn't a satisfactory resolution and maybe say things stay status quo as they are today, do you have plans in place in the near term to rectify your financial position with respect to those tariffs?

Well, I mean I - we've been at this now for about a year and we are working incredibly hard on the administrative side of things, you know trying to make sure that everybody understands the disparate impact we have on the mitigation side of things to ensure that if they're in place they it is. What we are - the conversations we had and what we read suggest that there is a desire at the very senior levels of both U.S. and China for an agreement to be in place. I think that is necessary for many reasons, not the least of which that it's beneficial to Polaris, but we believe that to happen. If there is not a resolution and I believe the schedule has it that it could be late May, early June sometime this quarter that such an agreement would be in place. If it doesn't happen, we will revert back to our very extensive efforts to make sure that we would be in line to get relief, and at the same time continue our very aggressive mitigation efforts. So we've got this about as well dialed in as it can be for something that's been so harmful to us. But as I said in my remarks and I believe this to be true, there's a lot better chance of upside and tariffs from here.

And just to follow up on that. In an extreme case, would you be - how extensive would it be to sort of reposition your supply chain from China to another source market?

It's really, really hard.

The next question comes from Michael Swartz of SunTrust. Please go ahead.

Mike, I just wanted to ask you a question on FX, obviously with a benefit to the quarter versus your expectations. But I think you said within your guidance, you're maintaining the expectation that you set out from the beginning of the year so far. If I just look at it today, what would the benefit be FX ended at today's rates?

Yes, so Mike what we did is, we built in the first quarter favorability which was a $0.03 I mentioned earlier. We've got the Canadian dollar at $0.74 and the Euro to $1.12. If you look at the rates where they are today, they're pretty close to that which is why we basically held guidance in terms of Q2, Q3 and Q4. And as I indicated in one of the responses I had earlier, if rates held consistent with what we saw in Q1, it's probably a $0.03 to $0.04 benefit as we move forward relative to our guidance.

And then just with the decision, I guess, RFM to kind of check some of the shipments in the first quarter is based on weather and slow retail. Is that to say that as we see better or improved retail, improved weather, et cetera, in the second quarter that most of those shipments should show up in the second quarter or is that something that will play out through the remainder of the year?

Well, remember as we go into the second quarter, we're looking at a lot of factors. The RFM system, you know we don't really get to decide. The system tells us what to do and we react to it and we choose not to ignore it, because we have really done a lot of work with our profiles to understand what products our dealers need to have in order to optimize retail performance for us and their profitability. So the system tells us to do that and we react to it. We did it with motorcycles, we did with off-road vehicles in the first quarter. So as demand picks up, we'll certainly ship more, but we are also mindful in the second quarter is that we're heading into the new model year stop. So we need to make sure that we manage inventory appropriately that we've got the right stock in place, you know whether it's for the factory authorized clearance sale or to make room for the new products. So we're managing a lot of things throughout the second quarter and I feel very comfortable with way the team is position that and it's worth noting the work supply chain and factory teams have done, have put us in a position. So our delivery times and schedules are about as good as they've ever been. So that enables us to react quickly to what's going on in the marketplace.

The next question comes from Joe Altobello of Raymond James. Please go ahead.

So I want to circle back on motorcycles for a second, obviously you know first quarter down a bit, you guys kept your guidance in terms of sales for the full year intact. You did mention that you are going to experience some tariffs obviously as you ship those bikes into Europe. So how should we think about the profitability of that segment? I mean, you've talked about gross margins being down in percentage, but would we expect to see on an absolute basis profitability for that business up this year?

Well, Joe, the impact of that inbound tariff is pretty substantial. So I think the motorcycle business is going to be challenged this year. I mean, the good news is that we've got the Poland facility up and running and producing scouts and then obviously we'll be migrating the FTR production there that supports the European volume. And so we think we'll be well positioned as we get out of 2019, heading into 2020.

But it's not - I mean Mike, our guidance hasn't changed. We knew this was going to be the case. We had always planned on the FTR shipping from Spirit Lake over to Europe. So this was - I was just reiterating the impact, not stating something new.

And then on cash flow, a little bit lower than it was last year obviously in the first quarter. See it's like is very second half weighted, I know you touched on it a little bit earlier, but maybe give us what the drivers are for that change in cadence. And is this how we should think about your cash flow going forward very much second half weighted?

Yes, I think, some of it, Joe, is just the cadence of our inventory. You know I spoke to it a little bit in my opening remarks that our inventory was elevated which is a direct reflection of what RFM does. So as we start to clear through that and then the improvement actions that we've got within the business, we'll continue to play out as we go through the year. You know the thing I'd point out is, even though our inventory was elevated above what we expected it to be given the RFM triggers, we're still improving on a turns basis year-over-year. And so the team is pushing hard on that. We continue to expect that to occur throughout the year, and when you look at it relative to where our inventory position was last year, that's really where a lot of that cash flow improvement comes from.

The next question comes from Craig Kennison of Robert W. Baird. Please go ahead.

Just to build on your opening comments, Tony Bennett is from Wisconsin.

I figured you and James would like that.

Absolutely. Well my first question has to do with tax refunds. I know weather seemed to be a factor this quarter, but to what extent do you think delayed tax refund which appeared to normalize later in the quarter impacted demand?

I don't - we didn't see any signs of that being a factor. It - again what - I just hesitate to blame weather, because we don't really take credit for weather when it's really good. So I don't like to blame weather when it's bad. But certainly that's what most closely correlated to the sharp improvement that we saw in the second half of March and I don't think it was related to the tax returns, but maybe it helped a little bit.

I mean, Craig, we went off and looked at it, and to Scott's point, we hate pointing at weather, something so uncontrollable, but we have done the analysis where we've looked at whether it's a cold or a warm quarter and there is a definite correlation specifically to our side by side business where the colder wet weather does tend to drive the demand, and then once that clears up, it seems to be pent up demand that recovers in the coming month or two. And as far as tax, I had - our tax team go out and look at a number of articles and the specifics. I just don't think the delay for the amount was enough to trigger when you think about the cost of our products.

And then just a question on dealer engagement. I know Scott that's been a priority for you. What are you doing to drive better dealer engagement scores?

Our team took that to heart, coming out of the whole recall situation. We saw an opportunity to do significantly better. And I mean, I'm really proud not only - not just on the off-road side, but Chris and Steve are kind of partnering up. One of the most important things, well first of all, delivery is always a big issue. So Ken and his team have improved delivery and I think our RFM system is in place and they're helping that. The factory choice is really helping their margins. But the CRM system that we've invested heavily in, the quality of leads that we're giving to our dealers is up dramatically and that helps our retail, you know they're more efficient with their sales personnel. So that's really encouraging. I think Chris was just down in the southwest right now probably, they are the largest dealer group that we sell to and they were very encouraged about the way our engagement with them is going and the opportunities that we have to grow together going forward. But it's a multifaceted approach, but it really starts with giving them the right products that allow them to deliver profitable growth. But some of the digital tools that we're working on is incredibly good. We've repositioned the sales force. So there's the efficiency of which we're dealing with them is better. So I think it's - we're seeing - we do more extensive surveys than you can imagine. And so we're seeing the scores improve and we believe there's a good bit of room to go from here.

The next question comes from Brandon Rolle of Northcoast Research. Please go ahead.

I was hoping if you could expand on the boat segment margins. This was the third consecutive quarter where they declined more than 100 basis points, kind of, what's going on there and how do you expect that to play out throughout the rest of the year? Thanks.

Yes, we've got a number of initiatives underway and some of that is just the volume levels that we had in Q1 and the mix of boats. But we feel comfortable that we'll be able to get those margins up as we've indicated close to 20%, and we have the right synergy activities and actions underway to make sure that we achieve that. There's definitely a little bit of pressure as we made sure that we had a full value lineup within the Bennington portfolio given the fact that we've gained share in Q1 even though it is a low retail quarter, it's clearly those efforts are working. But we do have enough margin improvement opportunities on the legacy Rinker, Hurricane and Godfrey lines that we should be able to achieve our objectives.

And then a quick follow up from - speaking with dealers it seems like more people or more Slingshot dealers at least are starting to put in termination papers or trying to get out of the agreements. Could you comment on what you're seeing there and how that impacts - how you think about Slingshot moving forward?

Obviously, we've got work to do on Slingshot, but I will tell you and part of that work is repositioning our dealer network where we don't have the right dealers. One of the exercises that Steve and team went through was they went to the top 25 and we do have more than 25, but the top 25 dealers that do really well with Slingshot and we learned what they're doing and now we compared it to what's happening in the rest of the network and we're trying to make sure that we go through that. Part of the terminations are likely to come because we're setting higher expectations and now we feel good about that. But it's not just we need improvements in our dealer network, we need improvements in the product and I think - I'm very disappointed in how that business has performed today, but I'm also encouraged that we know what happened, we know how to fix it and our plans and actions are in place to put that business in a better position as we exit 2019 and start to accelerate turnaround in 2020.

The next question comes from David MacGregor of Longbow. Please go ahead.

May be it's kind of a dealer question as well, but with respect to Indian Motorcycles, any growth in the U.S. dealer network and what are your plans if any for the U.S. expansion in this? Again, maybe what's changing in terms of yours and competitive dealer incentives?

Yes, you know we're - we said last year that we were going to manage dealer expansions to make sure that we focused on dealer profitability. We wanted to ensure that our Indian dealers were solid profitable before we add more to the network. We're comfortable on where we are now. Steve is - and his team have plans in place that we've got new dealer signed up and we'll pass the 200 dealer mark sometime in the next few months. And then you know we think over time, the U.S. is probably going to support about 300 dealers and we'll just methodically work our way there. It really is about growing profitable dealers and market share along the way and we think with the bike lineup we have bringing the market, that's possible.

And Scott, did you see anything in terms of change in yours or your competitors dealer incentives? You talked earlier about promotional activity being elevated, I am assuming you were referring to the consumer incentives, but what about for the dealers?

I think the dealer incentives were probably more prevalent on the off-road vehicle side as they were getting rid of some of our competitors aged inventory. The combination of - I think most of the motorcycle - the competitive motorcycle where we're probably driven by the manufacturer but - and that was a combination that really drove the mid-size promo so high was the combination of both financing, I mean, really long favorable financing terms and then just cash incentives as well. But no, like I said my remark, we're comfortable dealing with it. We know the game and we feel like from a promotional standpoint, we're as good as anybody in the industry.

The next question comes from Tim Conder of Wells Fargo Securities. Please go ahead.

I just wanted to follow up on two. One, Scott, you guys have talked about some additional product coming this year on the Slingshot side and obviously in response to your prior question, what you're doing on the dealer network. How much longer will you give rope here. I mean, maybe in some automatic and upgrade of the dealer network, are we looking at a three year type of period, I guess, to evaluate sort of continuing or not with Slingshot? And then maybe a more difficult question to ask, but if we had to put some type of parameters on it, a combination of whatever potential type of trade deal and exemptions that would be granted, how much do you see the China tariffs that can be mitigated through those avenues alone?

Well, on the Slingshot side, I will say we have not put our best foot forward with that product yet. I'm really confident that the plans we have in place are going to give us - give that business the best chance of success. Until we've done that, you can't really consider it. My requirement is, we've got every return on investment capital metric you could want as we look at our businesses going forward. My simple one is, is there a future of profitable growth or not? And I will tell you, as I look at where we are with Slingshot and what we're bringing to market for Slingshot, not necessarily this year but over the next couple of years, I'm very comfortable that there is a future of profitable growth for that business. If that proves not to be true, we will reconsider our investment. But right now, we are comfortable that there's a strong future of profitable growth there overtime. What were the other questions?

Trade deal.

You know the strategic sourcing program that we're engaged in is really, really good, and through it, we're evaluating all of our suppliers. And one of the things that I've required the team to do is where we have a China source, we've got to have an alternative source. So we just make sure we have that available. When I said it was hard earlier to switch out, I mean, there are some certain parts that it's just isn't difficult to move anywhere else, and remember to move our parts in some cases is very, very difficult from an engineering and validation standpoint, but we're comfortable. I feel very good about where the negotiations are and I feel very good about where our team has positioned us to deal with them as they currently exist and if they were to extend into the future.

This concludes our question-and-answer session. I would like to turn the conference back over to Richard Edwards for any closing remarks.

Thank you. I want to thank everyone for your time this morning and we look forward to talking to you again next quarter. Thanks again. Goodbye.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.