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
Second Quarter 2015 Earnings Results July 22, 2015 POLARIS INDUSTRIES INC.
Slide 2: Forward-looking statements disclaimer
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 Company’s busi
Slide 3: Scott W. Wine, Chairman & CEO
Scott W. Wine Chairman & CEO Second Quarter
Slide 4: Organizational Change: Two Seasoned CFOs
Organizational Change Q2 7-22-15 4 Two Seasoned CFO’s; Smooth Transition Expected Mike Malone VP Finance & CFO Retirement Announced Mike Speetzen EVP Finance & CFO Effective August 3, 2015 31 year career with Polaris Unprecedented financial results during tenure 16% compounded sales growth Stock pri
Slide 5: Q2 2015 Sales and Income
Q2 2015 Sales and Income ($ in millions) 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% (negative currency) Earnings per share increased 5% to $1.49 Gross profit margin down 166 bps - $
Slide 6: Full Year 2015 Guidance
Full Year 2015 Guidance Narrowing Sales and EPS Guidance; maintaining upper-end of guidance range North American retail sales growth and market share gains expected to continue Dealer and factory inventory growth rates expected to moderate by year-end Total sales projected up 10% to 12% (narrowed fr
Slide 7: Polaris Strategic Objectives
Polaris Strategic Objectives Vision & Strategy VISION STRATEGY Fuel the passion of riders, workers and outdoor enthusiasts around the world by delivering innovative, high quality vehicles, products, services and experiences that enrich their lives. Polaris will be a highly profitable, customer centr
Slide 8: Polaris-Eicher JV Launch 1st Product - Multix
Successful Media Launch, Shipments Begin Q3 2015 Q2 7-22-15 8 Polaris-Eicher JV Launch 1st Product - Multix 8
Slide 9: Polaris Strategic Objectives
Polaris Strategic Objectives Vision & Strategy VISION STRATEGY Fuel the passion of riders, workers and outdoor enthusiasts around the world by delivering innovative, high quality vehicles, products, services and experiences that enrich their lives. Polaris will be a highly profitable, customer centr
Slide 10: Bennett Morgan, President & COO
Bennett Morgan President & COO Second Quarter 2015 Earnings Results July 22, 2015 POLARIS INDUSTRIES INC.
Slide 11: Polaris Retail Sales
Q2 7-22-15 11 Polaris Retail Sales Retail Sales Improved Sequentially, as Expected; Motorcycles Strong 7% 15% 12% 13% 8% 11% About 10% Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 2nd Half 2015 Polaris N.A. retail 11% for Q2 2015 vs. Q2 2014 Gained share in powersports driven by motorcycles and ORV ORV marke
Slide 12: Dealer Inventory Change Moving in Right Direction
Q1 Q2 Q3 Q4 2015 2014 Q2 7-22-15 12 2015 vs. 2014 Dealer Inventory Change Moving in Right Direction Polaris dealer inventory growth moderating, as expected Continue to optimize ATV RFM business model Improving system model mix and flexibility/nimbleness, reducing RFM lead-time by 25% Targeting mid-s
Slide 13: Gross Profit Margin Pressured by Currency and Production Costs
Gross Profit Margin in Q2 due to currency and production costs pressures Factory inventory up 27% vs. 2014; raw materials, ORV and acquisitions Negative currency pressure continued; $18M Gross Profit impact New Spirit Lake paint system struggling to keep up with demand – at a considerable $9M cost i
Slide 14: Motorcycle Paint Capacity
Q1 2015 Q2 2015 Q3 2015E Q4 2015E Retail Demand Backlog Backlog Reduction Paint Capacity Q2 7-22-15 14 Motorcycle Paint Capacity Production Ramp Challenged, Working Recovery Plan Paint Capacity Limitations Product mix assumptions incorrect Excessive focus on costs eliminated key capabilities from fi
Slide 15: Polaris ORV Sales
Q2 2014 (Reclassified) Q2 2015 FY 2014 (Reclassified) FY 2015 Guidance N.A. Q2 retail sales ; International sales (currency) N.A. Polaris ORV retail sales mid-single digits %; Industry mid-single digits % - market share slightly Polaris side-by-side retail sales high-single digits %; both RANGER and
Slide 16: Polaris Motorcycle Sales
Q2 2014 Q2 2015 FY 2014 FY 2015 Guidance N.A. Q2 retail sales up significantly Indian big, new products well-accepted; share Victory retail sales ; limited availability N.A. Distribution expanded in Q2 >220 Indian dealers signed; 160+ retailing Challenges in production and paint system continue Q2
Slide 17: Polaris Slingshot Sales
Q2 7-22-15 17 FY 2014 FY 2015 Expectations Slingshot exceeding expectations Increased production rate in April Slingshot dealers in N.A. at 420+ All but two States have approved Slingshot (Hawaii and Maryland) Several Canadian provinces to resolve Polaris Slingshot Sales Q2 Highlights Slingshot Rema
Slide 18: Polaris Snowmobile Sales
Historically a slow quarter for snowmobile shipments in Q2 Final MY’16 orders on plan Snowcheck orders strong again… highest level in 13 years Product line-up strongest & broadest ever Timbersled integration on-track, plans in place for upcoming season Q2 7-22-15 18 Polaris Snowmobile Sales Snowmobi
Slide 19: Global Adjacent Markets
Global Adjacent Markets Q2 7-22-15 19 Global Adjacent Market Sales Charged with Diversifying Portfolio Profitability ($ millions) *2014 reclassified to include Defense and Commercial Sales Work & Transportation (“W&T”) Sales low-single digits % N.A. W&T sales high-teens % - strong direct sales and A
Slide 20: PG&A Sales
PG&A Q2 7-22-15 20 PG&A Sales CORE BRANDS Record Q2 sales; 17% ORV sales 12%, Motorcycles 40% All categories increased sales in Q2 Accessories 23%, Apparel 48%, Parts 9% U.S. sales 23%; Canada & International sales 4% combined Aftermarket brand portfolio grew over 50% Expanding Vermillion distributi
Slide 21: International Sales
46% 19% 18% 16% 64% 8% 7% 15% 6% International Q2 7-22-15 21 International Sales Q2 Int’l Sales by Product Q2 2014 Q2 2015 Q2 Int’l Sales by Geography Europe Challenged, Asia Pacific / Latin America Strong Down low-single digits % (unchanged) +16% $170.5 $685.1 ($ millions) -4% $162.9 EMEA Asia/Pac
Slide 22: Polaris-Eicher Joint Venture Product Launch - MULTIX
Polaris-Eicher Joint Venture Product Launch - MULTIX Q2 7-22-15 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 S
Slide 23: Mike Malone, V.P. Finance & CFO
Mike Malone V.P. Finance & CFO Second Quarter 2015 Earnings Results July 22, 2015 POLARIS INDUSTRIES INC
Slide 24: 2015 Full Year Guidance Maintained, Narrowed
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-single digits % Total Comp
Slide 25: 2015 Gross Profit Margin Guidance
METRIC Actual Q2 2014 Actual Q2 2015 Guidance 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 costs Warranty costs Depreciation/T
Slide 26: Foreign Currency Exposures for Polaris
Significant Impact in Q2 2015, Expected to Persist into 2H 2015 26 Foreign Currency Exposures for Polaris Q2 7-22-15 Foreign Currency Hedging Contracts Currency Impact on Net Income % of 2H Notional Avg. Exchange Compared to Prior Year Period Foreign Currency Currency Position 2015 Cash Flow Exposur
Slide 27: Balance Sheet and Liquidity Profile
Balance Sheet and Liquidity Profile $ In millions (except per share and rate data) YTD 2015 Fav / (UnFav) 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 Second Quarter 2015 Earnings Results July 22, 2015 POLARIS INDUSTRIES INC.
Slide 29: Expectations for 2nd Half 2015
29 Expectations for 2nd Half 2015 Q2 7-22-15 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 a
Slide 30: Thank you, Questions?
POLARIS Thank you Questions?