Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Q2 2015 Earnings Presentation
30 slides from Polaris's earnings presentation, Jul 22, 2015
Slide 1: Second Quarter 2015 Earnings Results
POLARIS INDUSTRIES INC. Second Quarter 2015 Earnings Results July 22, 2015
Slide 2: Safe Harbor
Safe Harbor Except for historical information contained herein, the matters set forth in this document, including but not limited to management’s expectations regarding 2015 sales, shipments, margins, currencies, net income and cash flow, the opportunities for expansion and diversification of the Co
Slide 3: Scott W. Wine, Chairman & CEO
Scott W. Wine Chairman & CEO POLARIS INDUSTRIES INC. Second Quarter 2015 Earnings Results July 22, 2015
Slide 4: Organizational Change
Organizational Change Mike Malone Mike Speetzen VP Finance & CFO EVP Finance & CFO Retirement Announced Effective August 3, 2015 31 year career with Polaris 20+ years as a finance professional and business leader Unprecedented financial results during tenure Most recently SVP & CFO at Xylem Inc. 16%
Slide 5: Q2 2015 Sales and Income
Q2 2015 Sales and Income ($ in millions) Q2 Sales Q2 Net Income ($ millions) $1,124.3 $100.9 $1,014.0 $96.9 Q2 2014 Q2 2015 Q2 2014 Q2 2015 Record 2nd quarter sales, operating income and net income Sales of Motorcycles +57%; PG&A +17%; ORV +2% Sales in Latin America +32%, Asia Pacific +15%, EMEA -12
Slide 6: Full Year 2015 Guidance
Full Year 2015 Guidance Total Company Sales Diluted EPS ($ millions) Up 10% to 12% Up 10% to 12% $7.32 to $7.42 $4,920 to $5,025 $6.65 $4,480 2014 Actual FY 2015 2014 Actual FY 2015 Guidance Guidance Narrowing Sales and EPS Guidance; maintaining upper-end of guidance range North American retail sale
Slide 7: Polaris Strategic Objectives
Polaris Strategic Objectives Vision & Strategy Guiding Principles VISION STRATEGY Fuel the passion of riders, Polaris will be a highly profitable, customer centric, workers and outdoor enthusiasts $8B global enterprise by 2020. We will make the best Best People, Best Team around the world by deliver
Slide 8: Polaris-Eicher JV Launch 1st Product - Multix
Polaris-Eicher JV Launch 1st Product - Multix Successful Media Launch, Shipments Begin Q3 2015 Q2 7-22-15 8
Slide 9: Polaris Strategic Objectives
Polaris Strategic Objectives Vision & Strategy Guiding Principles VISION STRATEGY Fuel the passion of riders, Polaris will be a highly profitable, customer centric, workers and outdoor enthusiasts $8B global enterprise by 2020. We will make the best Best People, Best Team around the world by deliver
Slide 10: Bennett Morgan, President & COO
Bennett Morgan President & COO POLARIS INDUSTRIES INC. Second Quarter 2015 Earnings Results July 22, 2015
Slide 11: N.A. Powersports Retail Sales – Q2 2015
N.A. Powersports Retail Sales – Q2 2015 Polaris Retail Sales Industry Retail Sales 15% 13% About 12% 11% 10% 7% 8% 3% -1% Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 2nd Half Industry Industry 2015 Expectation Q2 2014 Q2 2015 Polaris N.A. retail 11% for Q2 2015 vs. Q2 2014 Gained share in powersports driven
Slide 12: N.A. Dealer Inventory
N.A. Dealer Inventory 2015 vs. 2014 Q1 Q2 Q3 Q4 1% Existing ORV Models 5% New ORV Models Expectation to be 4% Snowmobiles up mid-single digits 2% Slingshot/Indian % by year-end 2015 +17% 3% New Dealers 15% 2015 +15% 2014 Polaris dealer inventory growth moderating, as YoY Q2’15 Inventory Change by Bu
Slide 13: Lean is a Competitive Advantage
Lean is a Competitive Advantage Gross Profit Margin Net Income as a % of Sales 30.1% 9.6% -1.7% +0.6% -0.4% -166 bps About Flat +0.8% +0.1% 9.0% 28.4% Q2 2014 Q2 2015 FY 2015 Q2 2014 Gross Operating Financial Income Other Q2 2015 Guidance Margin Expense Services Taxes Income/ Expense Gross Profit Ma
Slide 14: Spirit Lake Motorcycle Production
Spirit Lake Motorcycle Production Motorcycle Paint Capacity Spirit Lake, Iowa Paint System Retail Demand Backlog Backlog Paint Capacity Reduction Demand lower due to seasonality Q1 2015 Q2 2015 Q3 2015E Q4 2015E Paint Capacity Limitations Recovery Plan in Process Product mix assumptions incorrect Op
Slide 15: Off-Road Vehicles
Off-Road Vehicles Polaris ORV Sales ($ millions) Up mid-single +2% digits % +15% (unchanged) $676.6 $688.8 $2,793.1* Q2 2014 Q2 2015 FY 2014 FY 2015 (Reclassified) (Reclassified) Guidance N.A. Q2 retail sales ; International sales (currency) N.A. Polaris ORV retail sales mid-single digits %; Industr
Slide 16: Motorcycles
Motorcycles Polaris Motorcycle Sales ($ millions) Up 55% to 70% (unchanged) +57% $162.1 +59% $348.7 $103.1 Q2 2014 Q2 2015 FY 2014 FY 2015 Guidance N.A. Q2 retail sales up significantly Retailing Victory Indian Indian big, new products well-accepted; share Dealers Motorcycle Motorcycle Slingshot V
Slide 17: Slingshot
Slingshot Polaris Slingshot Sales Q2 Highlights >20% of Total Slingshot exceeding expectations Motorcycle $ Sales Guidance Increased production rate in April Slingshot dealers in N.A. at 420+ >1,000 Units Shipped in Q4 All but two States have approved Slingshot (Hawaii and Maryland) FY 2014 FY 2015
Slide 18: Snowmobiles
Snowmobiles Polaris Snowmobile Sales ($ millions) Down low-single 215% +7% digits % $19.3 $322.4 (unchanged) $6.1 Q2 2014 Q2 2015 FY 2014 FY 2015 Guidance Historically a slow quarter for snowmobile shipments in Q2 Final MY’16 orders on plan Snowcheck orders strong again… highest level in 13 years Pr
Slide 19: Global Adjacent Markets
Global Adjacent Markets Global Adjacent Market Sales ($ millions) Up 5% to 10% +24% (unchanged) -3% $273.3* $68.3 $66.6 Q2 2014 Q2 2015 FY 2014 FY 2015 (Reclassified) (Reclassified) Guidance Work & Transportation (“W&T”) Sales low-single digits % N.A. W&T sales high-teens % - strong direct sales and
Slide 20: PG&A
PG&A PG&A Sales CORE BRANDS ($ millions) Up high-teens % +17% (unchanged) +21% $187.5 $742.1 $159.7 Q2 2014 Q2 2015 FY 2014 FY 2015 Guidance Record Q2 sales; 17% AFTERMARKET BRANDS ORV sales 12%, Motorcycles 40% All categories increased sales in Q2 Accessories 23%, Apparel 48%, Parts 9% U.S. sales 2
Slide 21: International
International International Sales Q2 Int’l Sales by Product ($ millions) Down -4% low-single Adjacent Markets $170.5 +16% digits % $162.9 $685.1 19% LatAm (unchanged) 1% Snow LatAm Asia/Pac Asia/Pac ORV 46% 18% Motorcycles EMEA EMEA 16% Q2 2014 Q2 2015 FY 2014 FY 2015 PG&A Guidance International sal
Slide 22: Polaris-Eicher Joint Venture Product Launch - MULTIX
Polaris-Eicher Joint Venture Product Launch - MULTIX MULTIX Multi-Role Personal Vehicle 3 models to start 511cc diesel engine MSRP ~ $3,600 - $4,500 Street legal in India ~30 dealers at launch >200 by 2020 Start of production end of July 2015 Target market potential >60 million people Small/micro
Slide 23: Mike Malone, V.P. Finance & CFO
Mike Malone V.P. Finance & CFO POLARIS INDUSTRIES INC. Second Quarter 2015 Earnings Results July 22, 2015
Slide 24: 2015 Full Year Guidance
2015 Full Year Guidance METRIC GUIDANCE Sales Components Off-Road Vehicles Up mid-single digits % (reclassified 2014 actuals) Snowmobiles Down low-single digits % Motorcycles Up 55% to 70% Global Adjacent Markets Up 5% to 10% (reclassified 2014 actuals) PG&A Up high-teens % International Down low-si
Slide 25: 2015 Gross Profit Margin Guidance
2015 Gross Profit Margin Guidance Actual Actual Guidance METRIC Q2 2014 Q2 2015 FY 2015 Prior period 29.0% 30.1% 29.4% Production volume/capacity Product cost reduction efforts Commodity costs Currency rates Higher selling prices Product mix Motorcycle Production Constraints N/A New plant start-up c
Slide 26: Foreign Currency Exposures for Polaris
Foreign Currency Exposures for Polaris F/X Impacts vs. 2014 Actual FY 2015 Expectations* ($ in millions) Q2 2015 (Guidance Unchanged) Sales ($41) ($140 - $160) Gross Profit ($18) ($65 - $75) Operating Expenses $4 $15 - $17 Other Expense ($4) ($15 - $17) Pretax Income ($18) ($65 - $75) *Assumes excha
Slide 27: Balance Sheet and Liquidity Profile
Balance Sheet and Liquidity Profile $ In millions Fav / (UnFav) (except per share and rate data) YTD 2015 YTD 2014 2015 Full Year Guidance Cash $118.8 0% Increase from 2014 Debt / Capital lease obligations $403.5 (10%) Similar to 2014 Credit facility $500.0 43% Increased $150M from 2014 Factory inve
Slide 28: Scott W. Wine, Chairman & CEO
Scott W. Wine Chairman & CEO POLARIS INDUSTRIES INC. Second Quarter 2015 Earnings Results July 22, 2015
Slide 29: Expectations for 2nd Half 2015
Expectations for 2nd Half 2015 Improved European economic environment anticipated U.S. economic growth remains uninspiring, but up Oil & Ag weakness impacting work/utility RANGER growth dampened RZR growth remains strong Motorcycles and ORVs share gains continue MY’16 ORV strengthens armada Spirit L
Slide 30: Thank you, Questions?
€> POLARIS: Thank you Questions?