Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Q1 2010 Earnings Presentation
26 slides from Polaris's earnings presentation, Apr 21, 2010
Slide 1: Polaris Industries Inc. First Quarter 2010 Earnings Results
0 Polaris Industries Inc. First Quarter 2010 Earnings Results April 21, 2010
Slide 2: Safe Harbor
1 Safe Harbor Except for historical information contained herein, the matters set forth in this document, including but not limited to management’s expectations regarding 2010 sales, shipments, net income and cash flow, are forward-looking statements that involve certain risks and uncertainties that
Slide 3: 1st Quarter 2010 Earnings Results - Scott Wine, CEO
2 Polaris Industries Inc. 1st Quarter 2010 Earnings Results Scott Wine CEO
Slide 4: Q1 2010 Net Income and EPS
3 Q1 2010 Net Income and EPS Diluted EPS $0.26 $0.59 +127% Net Income ($ in millions) $8.5 $19.8 +134% 2009 2010 2009 2010 Increased net income and EPS driven by sales growth & margin expansion Net margins improved 280 basis points Q1 2009 included an $0.18 per share impairment charge – KTM investme
Slide 5: Q1 2010 Sales
4 Q1 2010 Sales First Quarter 2010 $312.0 $34.9 $-2.6 $11.5 $5.8 $361.7 2009 Total Company 2010 Total Company ORV Snow Victory/LEV PG&A % Change in Total Company Sales Volume 6% Product mix and price 6% Currency 4% 16% Sales growth outperformed Company expectations - ORV up 16% - International up 41
Slide 6: North American Retail Sales
5 North American Retail Sales Polaris N.A. retail sales outperformed expectations - Increasing full year retail sales expectations Side-by-side, Victory and International retail sales up significantly in Q1 Expect to continue to outperform the industry -12% -20% -23% -22% -17% -4% 9% Q3-08 Q4-08 Q1-
Slide 7: Strategic Progress Continues
6 Strategic Progress Continues… Best in Powersports PLUS 5-8% organic growth ORV Market Share Victory Growth MVP Expansion Growth through Adjacencies $100 - 300M growth Swissauto Military Acquisition Funnel Global Market Leadership >25% of Polaris Revenue European Share China Progress Partnerships O
Slide 8: Full Year 2010 Guidance
7 Full Year 2010 Guidance Polaris sales accelerating both domestically & internationally Net income dollars expected to be up 19% to 22% - Net income margin improvement accelerating Total Company Sales (in millions) Diluted EPS (in millions) Up 8% to 11% 2009 Actual $1,565.9 2010 Guidance Up 14% to
Slide 9: 1st Quarter 2010 Earnings Results - Bennett Morgan, President & COO
8 Polaris Industries Inc. 1st Quarter 2010 Earnings Results Bennett Morgan President & COO
Slide 10: Off-Road Vehicle Division
9 Off-Road Vehicle Division Polaris Sales ($000’s) $215.5 +16% $250.4 Q1 2009 Q1 2010 ATV SXS FY 2009 FY 2010 guidance -22% $1,021.1 Up 9% to 12% Full year 2010 sales guidance increased: Up 9% to 12% Gained significant ORV market share in Q1 2010 - Both ATVs and Side-by-Sides up - New RANGER RZR 4 s
Slide 11: Snowmobile Division
10 Snowmobile Division Polaris Sales ($000’s) $8.2 -32% $5.6 Q1 2009 Q1 2010 FY 2009 FY 2010 guidance -13% $179.3 About Flat N.A. Snowmobile Industry Sales -22% -10% Season-end 3/31/09 Season-end 3/31/10 Projection 3/31/11 Polaris’ retail sales underperformed Industry retail for season ending March
Slide 12: On-Road Division – Victory / LEV
11 On-Road Division – Victory / LEV Sales ($000’s) $13.8 +83% $25.4 Q1 2009 Q1 2010 FY 2009 FY 2010 guidance -44% $52.8 Up 50%+ N.A. Motorcycle Industry 1400cc+ and Victory Retail Sales Q4 2009 Q1 2010 Full Year Industry Victory FY 2009 FY 2010 Expectations Solid growth expected -10% to 15% -20% + m
Slide 13: PG&A
12 PG&A Polaris Sales ($000’s) $74.5 +8% $80.4 Q1 2009 Q1 2010 FY 2009 FY 2010 guidance -9%$312.7 Up mid-single digits Q1 2010 PG&A Revenue by Business Unit Off-Road Vehicles 60% Snow 29% Other 7% Victory 4% Q1 2010 PG&A Revenue by Product Category Parts 59% Accessories 40% Apparel 1% Full Year 2010
Slide 14: International Division
13 International Division Polaris Sales ($000’s) $53.4 +41% $75.1 Q1 2009 Q1 2010 FY 2009 FY 2010 guidance -17% 252.4 Up 20% to 25% Q1 2010 Revenue by Geography Europe 71% Aus/ NZ 11% ME / Africa 10% Latin America 7% Asia 1% Q1 2010 Revenue by Business Unit Off-Road Vehicles 65% PG&A 20% Snow 9% On-
Slide 15: Operational Excellence Results
14 Operational Excellence Results North American Polaris Dealer Inventory Levels Down 29% from Q1 2009 Down 13% sequentially from Q4 2009 Victory down 25% from Q1 2009 Core ATVs down 40% from Q1 2009 Worldwide Factory Inventory Q1 2010 down 27% from Q1 2009 Finished Goods and PG&A declining steadily
Slide 16: Dealer Health
15 Dealer Health North American Dealer Count U.S. Dealer repossessions are stable: Q4 2008 20 dealers Q1 2009 13 dealers Q2 2009 12 dealers Q3 2009 9 dealersQ4 2009 12 dealers Q1 2010 4 dealers Max Velocity Program (MVP) Currently 50% of N.A. ORV dealer volumeMore dealers expected in the future Obje
Slide 17: Q1 2010 Margins
16 Q1 2010 Margins Gross Margins 24.5% 26.2% +170 bpts Q1 2009 Q1 2010 Net Income as a Percent of Sales 2009 Gross Margin Op Expense KTM Impairment Income Taxes / Other 2010 2.7% 1.7% -0.0% 2.9% -1.8% 5.5% Gross margins continue to improve driven by Continued value engineering investment New product
Slide 18: 1st Quarter 2010 Earnings Results - Mike Malone, CFO
17 Polaris Industries Inc. 1st Quarter 2010 Earnings Results Mike Malone V.P. Finance and CFO
Slide 19: 2010 Full Year Guidance
18 2010 Full Year Guidance Product Line Sales - Off-Road Vehicles Up 9% to 12% (increased) - Snowmobiles Approximately flat - On-Road Vehicles Up over 50% - PG&A Up mid-single digits (increased) Total Company Sales Up +8% to +11% (increased) Gross Margins Up to 100 bpts improvement Operating expense
Slide 20: Gross Profit Margin Percentage Trends
19 Gross Profit Margin Percentage Trends Prior Period Production volume adjustments Product cost reduction efforts Commodity costs Currency rates Higher selling prices Product mix Warranty costs Tooling amortization Sales promotional costs Current period Change Q1 2009 Q1 2010 Guidance 2010 22.7% 24
Slide 21: Financial Services Income
20 Financial Services Income Financial Services Income by category $4.4 -3% $4.3 Q1 2009 Q1 2010 $ in millions Other Activities Wholesale Credit Retail Financing Retail Portfolio – HSBC, GE & Sheffield combined Approval rate Penetration Rate 44% 54% 53% 31% 31% 33% Q1 2009 Q4 2009 Q1 2010 Q1 2009 Q4
Slide 22: Balance Sheet and Liquidity Profile
21 Balance Sheet and Liquidity Profile $ In millions (except per share and interest rate data) Q1 2010 Fav (Unfav) 2009 2010 Full Year Guidance Total Debt – ending $200.0 $44.0 $200.0 Net Debt - ending (debt less cash balances) $75.6 $150.5 Improving again Credit Facility (expires December 2011) $45
Slide 23: Second Quarter 2010 Guidance
22 Second Quarter 2010 Guidance Total Company Sales (in millions) Up14% to 17% $345.9 2009 Q2 Actual 2010 Q2 Guidance Diluted EPS Up19% to 26% $0.63 to $0.67 $0.53 2009 Q2 Actual 2010 Q2 Guidance Expect continued retail sales growth and market share gains Gross margin expansion expected to continue
Slide 24: 1st Quarter 2010 Earnings Results - Scott Wine, CEO
23 Polaris Industries Inc. 1st Quarter 2010 Earnings Results Scott Wine CEO
Slide 25: Solid Start to 2010 Making Growth Happen
24 Solid Start to 2010 Making Growth Happen ORV, Victory, Military, Bobcat Global expansion accelerating Acquisition activity progressing Victory turning the corner Margin expansion continues Operational Excellence, MVP – Game Changers Conservative outlook for powersports industry unchanged Moderate
Slide 26: Thank you. Q & A
25 Polaris Industries Inc. Thank you.Q & A