Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Q1 2016 Earnings Presentation
26 slides from Polaris's earnings presentation, Apr 21, 2016
Slide 1: First Quarter 2016 Earnings Results
First Quarter 2016 Earnings Results April 21, 2016 POLARIS INDUSTRIES INC.
Slide 2: Safe Harbor
Except for historical information contained herein, the matters set forth in this document, including but not limited to management’s expectations regarding 2016 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 First Quarter 2016 Earnings Results April 21, 2016 POLARIS INDUSTRIES INC. Q1'16 Earnings 3
Slide 4: Q1 Results In-line with Expectations
Q1 sales and net income in-line with guidanceORV/Snowmobile sales down 9%; Motorcycles up 18%; Global Adjacent Markets down 5%Results include ~$30 million of additional costs: product liability, warranty, acquisition related costs and severance accrualsEarnings per share decreased 45% to $0.71Gross
Slide 5: Building Businesses for Future Growth / Profitability
Global Adjacent Markets Sales* Taylor-Dunn Work & Transportation Robert (Bob) MackSVP – Corporate Development & Strategy and President – Global Adjacent Markets20 years as a business leader of global business operationsPreviously VP of Corporate Development at Ingersoll-RandExtensive experience in M
Slide 6: Strategic Objectives Vision & Strategy
Strategic Objectives Vision & Strategy VISION 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. STRATEGY Polaris will be a highly profitable, customer centric, $8B
Slide 7: Bennett Morgan, President & COO
Bennett Morgan President & COO First Quarter 2016 Earnings Results April 21, 2016 POLARIS INDUSTRIES INC. Q1'16 Earnings 7
Slide 8: Retail Improved; Dealer Inventory Down vs. Q1 2015
Polaris N.A. retail 6% for Q1 2016 vs. Q1 2015Polaris held Powersports share – remains clear #1North American Industry improved sequentially vs. Q4; Q1 similar to PolarisPolaris Q1 2016 N.A. dealer inventory 1% vs. Q1 2015ORV 10% year-over-year; RANGER®, RZR® and ATVs all declinedMotorcycles signifi
Slide 9: Off-Road Vehicles (ORV)
Off-Road Vehicles (ORV) 9 Q1'16 Earnings Polaris Off-Road Vehicle Sales N.A. Polaris ORV retail sales flat; Industry mid-single digits %ATVs low-single digits, share slightly Side-by-side retail slightly, share; Polaris GENERAL™ selling wellRetail in oil and gas regions remains weakPromotion and dis
Slide 10: Snowmobiles
Snowmobiles 10 Q1'16 Earnings N.A. Snowmobile Retail Sales Polaris Snowmobile Vehicle Sales Polaris retail low-single digits % season-end March 31, 2016; Q1 high-thirty %N.A. Industry high-single digits % for the season – poor snow conditionsGained share in Q1 and ‘15/’16 season again, highest level
Slide 11: Motorcycles
Motorcycles 11 Q1'16 Earnings Q1 Product News Polaris Motorcycle Vehicle Sales Polaris N.A. motorcycle Q1 retail sales low-teens %; share Indian over 50%; share Victory retail sales and share slightly; trend improvingSlingshot retail sales; tough comparables (large pre-orders last year)Indian Motorc
Slide 12: Global Adjacent Markets
Work & Transportation Military Global Adjacent Markets 12 Q1'16 Earnings Work & Transportation Business Expanding Global Adjacent Markets Vehicle Sales W&T Sales low-single digits %; Aixam™, National Accounts and GEM® sales strongDefense sales significantly due to timing of government spendingComple
Slide 13: Parts, Garments & Accessories (PG&A)
Parts, Garments & Accessories (PG&A) 13 Q1'16 Earnings Q1 2016 PG&A Sales by Segment & Category Q1 2016 PG&A Sales – All Businesses* Sales 2% in Q1ORV sales; Snow; Motorcycle (initial Slingshot® stocking shipments last year); GAM Accessories 4% (Slingshot® sales LY), Apparel 14%, Parts 7%U.S. sales
Slide 14: Q1 2016 Sales by Product / Region: International Sales
Q1 2016 Sales by Product / Region International Sales* Strong EMEA and Latin America Growth; Motorcycles Gaining Share 14 Q1'16 Earnings International ($ millions) Motorcycles up over 40% (includes Slingshot®)Latin America up significantly driven by ORV, Motorcycles and PG&AEuropean motorcycle and O
Slide 15: Ken Pucel, EVP Operations, Engineering & Lean
Ken Pucel EVP Operations, Engineering & Lean First Quarter 2016 Earnings Results April 21, 2016 POLARIS INDUSTRIES INC. Q1'16 Earnings 15
Slide 16: Manufacturing Facility Update
Huntsville Spirit Lake Huntsville production to start in Q2 as plannedInitially produce RANGER® SxS; Slingshot® to start in Q3Added capacity provides flexibility and improved efficienciesIncorporates most advanced lean flow processes and industry-leading technologies All Factories Moving to Lean Ent
Slide 17: Inventory Turns Decreasing as Inventory Value Grows Faster than Sales
Inventory Turns Decreasing as Inventory Value Grows at a Faster Rate than Sales Factory Inventory & Turns Sales 17 Q1'16 Earnings Polaris Sales Growth & Factory Inventory ($ millions) Factory inventory historically growing faster than sales – major focus in 2016 Inventory reduction closely tied to R
Slide 18: Mike Speetzen, EVP Finance & CFO
Mike Speetzen EVP Finance & CFO First Quarter 2016 Earnings Results April 21, 2016 POLARIS INDUSTRIES INC. Q1'16 Earnings 18
Slide 19: 2016 Sales & Earnings Guidance Remains Unchanged
Earnings Per Share (diluted) Gross Profit Margin 19 Q1'16 Earnings Total Company Sales 2016 Sales & Earnings Guidance Remains Unchanged Assumptions Protect market share Dealer inventory about flat Segment Expectations ORV/Snowmobiles low to mid-single digits % (decreased) Motorcycles high-teens % (u
Slide 20: 2016 Sales & Sales Guidance by Reporting Segments
Global Adjacent Markets Motorcycles 20 Q1'16 Earnings ORV / Snowmobiles ORV/Snowmobiles Down Modestly, Motorcycles Unchanged; GAM Increased 2016 Sales & Sales Guidance by Reporting Segments $698.3 Uphigh-teens %(unchanged) Indian Victory Slingshot Indian Victory Slingshot PG&A PG&A PG&A PG&A W&T Def
Slide 21: 2016 Gross Profit Margin Guidance
By Component Q1 2015 Actual Q1 2016 Actual FY 2016 Guidance Prior period 29.1 28.4% 28.4% Production volume/capacity to Product cost reduction efforts Commodity costs Currency rates Higher selling prices Product mix Motorcycle Production Constraints New plant start-up costs Warranty costs Depreciati
Slide 22: Currency Improved Slightly in Q1; Remains Volatile
Currency Improved Slightly in Q1; Remains Volatile 22 Q1'16 Earnings Foreign Currency Exposure for Polaris Foreign Currency Hedging Contracts Currency Impact on Net Income Notional Avg. Exchange Compared to Prior Year Period Foreign Currency Currency Position Cash Flow Exposure Hedged Amounts (US $
Slide 23: Polaris Financial Position
Polaris Financial Position 23 Q1'16 Earnings Capital Summary March 2016 Cash Drivers Fav/(Unfav) March 2015 Cash $ 145.8 +32% Debt /Capital Lease Obligations $ 532.4 (63%) Shareholders’ Equity $ 930.9 8% Total Capital $1,463.3 23% Debt to Total Capital 36% (9%) 2015 Operating cash flow up significan
Slide 24: Scott W. Wine, Chairman & CEO
Scott W. Wine Chairman & CEO First Quarter 2016 Earnings Results April 21, 2016 POLARIS INDUSTRIES INC. Q1'16 Earnings 24
Slide 25: Closing Comments
Difficult / Decent Start to YearSales & Earnings down- on guidance; Indian outpacing industry; ORV catching up; RecallVariability too ConsistentMonth-to-month, region-to-region demand shifts challenging Lean Enterprise Traction Building VIP cost initiatives; Inventory reduction; Standard work & wast
Slide 26: Thank You Questions?
Thank You Questions?