Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Q3 2015 Earnings Presentation
31 slides from Polaris's earnings presentation, Oct 21, 2015
Slide 1: Third Quarter 2015 Earnings Results
Third Quarter 2015 Earnings Results October 21, 2015 POLARIS INDUSTRIES INC.
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 and 2016 sales, shipments, margins, currencies, net income and cash flow, the opportunities for expansion and diversification
Slide 3: Scott W. Wine, Chairman & CEO
Scott W. Wine Chairman & CEO Third Quarter 2015 Earnings Results October 21, 2015 POLARIS INDUSTRIES INC. 3
Slide 4: Q3 2015 Sales and Income Record
Q3 2015 Sales and Income Record 3rd quarter sales, operating income and net income Sales of Motorcycles +154%; Snowmobiles up 14% Sales in Latin America +50%, Asia Pacific/EMEA down due to currency Earnings per share increased 12% to $2.30 Gross profit margin down 126 bps from negative currency hit
Slide 5: Full Year 2015 Guidance
Full Year 2015 Guidance Narrowing Sales and EPS Guidance; maintaining upper-end of EPS guidance range North American retail sales growth and market share gains on-going Industry growth trends moderating Dealer inventory growth rates tracking towards year-end expectations Net income margin projected
Slide 6: Organizational Change and Strategic Objectives
Organizational Change Q3 10-21-15 MIKE DOUGHERTY, President – International (September 2015) Europe, Middle East & Africa (EMEA) + Asia Pacific/Latin America (APLA) Appointed to provide over-arching direction for all International Combining EMEA & APLA creating a more synergetic organization 17+ yea
Slide 7: Bennett Morgan, President & COO
Bennett Morgan President & COO Third Quarter 2015 Earnings Results October 21, 2015 POLARIS INDUSTRIES INC. 7
Slide 8: Polaris Quarterly N.A. Retail Sales Growth
Q3 10-21-15 8 Polaris Quarterly N.A. Retail Sales Growth Industry Pressured by Oil / Ag; Polaris Outperforming Market 7% 15% 12% 13% 8% 11% 7% Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Motorcycles ORV Snow TOTAL N.A. Powersports Industry retail slowed to low-single digits % - Oil / Ag / Canada ATVs
Slide 9: Dealer Inventory Tracking to Expectations
9 Dealer Inventory Tracking to Expectations Q1 Q2 Q3 Q4 N.A. Dealer Inventory 2015 2014 Existing ORV Models 1% New ORV Models 4% Snowmobiles 5% Slingshot/Indian 2% New Dealers _2% +15% +17% Expectation to be up mid-single digits % by year-end 2015 +14% Polaris dealer inventory growth moderating, as
Slide 10: Polaris ORV Sales Expanding Leadership Share Position
Q3 2014 (Reclassified) Q3 2015 FY 2014 (Reclassified) FY 2015 Guidance N.A. Q3 retail sales ; U.S. retail , Canada retail N.A. Polaris ORV retail sales low-single digits %; Industry low-single digits % - market share Both ATV and side-by-side retail sales at similar rates ACE significantly Competiti
Slide 11: Model Year 2016 ORV Products
New New New New 11 NEW Model Year 2016 ORV Products Q3 10-21-15 19 New MY’16 Off-Road Vehicles Introduced 450 HO 1000 & 850 Mud Editions XP Turbo Youth 110 EFI Outlaw & Sportsman S 1000 XP 4 Highlifter Edition CREW® 570-6 (46 hp) XP 900 Trail Edition XP 4 Turbo 900 SP Hunter Deluxe Edition (570 & XP
Slide 12: The RZR Brand is Strong and Growing Worldwide
The RZR Brand is Strong and Growing Worldwide 12 Camp RZR – Brimstone, Tennessee 2nd Camp RZR in Eastern United States for RZR customers 11,000+ attendees from 35 States & 4 Countries 600+ Demo Rides Countless high fives, handshakes, and hugs from RZR owners and enthusiasts Camp RZR Glamis #4 coming
Slide 13: Motorcycles Growing Significantly; Product Availability Improving
FY 2014 FY 2015 Guidance Motorcycles Q3 10-21-15 13 Polaris Motorcycle Sales* N.A. Q3 retail sales up over 60% Indian retail big, growing share Victory retail sales ; limited availability Indian N.A. distribution continued to grow in Q3 Paint throughput ; product availability increasing, but remains
Slide 14: Slingshot Remains HOT!
Q3 10-21-15 14 Slingshot Sales exceeding expectations Added Slingshot dealers in N.A. during Q3 Begin European shipments in earnest in Q4 Polaris Slingshot Q3 Highlights Slingshot Remains HOT! Slingshot MY’16 SLINGSHOT ® SL LE 14
Slide 15: Polaris Snowmobile Sales
Industry retail sales off to slow start Polaris season-to-date market share Carefully monitoring headwinds El Nino weather pattern, weak Canadian economy and Int’l currencies Product line-up strongest & broadest ever Q3 10-21-15 15 Polaris Snowmobile Sales Snowmobiles ($ millions) Q3 2014 Q3 2015 FY
Slide 16: Global Adjacent Markets
Global Adjacent Markets Q3 10-21-15 16 Polaris Global Adjacent Market Sales ($ millions) *2014 reclassified to include Defense and Commercial Sales Work & Transportation (“W&T”) Sales 1% N.A. W&T sales low-double digits % - strong direct sales International W&T sales due to currency, economies Aixam
Slide 17: PG&A
PG&A Q3 10-21-15 17 Polaris PG&A Sales Core Brands Q3 sales 3% All product line sales except snowmobiles Motorcycles strong Aftermarket brand portfolio U.S. sales 9%; Canada & International sales 14% combined (primarily currency) Dealers using SMART (Sales, Merchandising, & Retail Transformation) go
Slide 18: International Growth Dampened by Currency
5% 17% 17% 60% 13% 6% 12% 9% International Q3 10-21-15 18 Polaris International Sales Q3 Int’l Sales by Product Q3 2014 Q3 2015 Q3 Int’l Sales by Geography International Growth Dampened by Currency Down low-single digits % (unchanged) +16% $151.6 $685.1 ($ millions) +1% $153.6 EMEA Asia/Pac LatAm EM
Slide 19: Ken Pucel, E.V.P. Operations, Engineering & Lean
Ken Pucel E.V.P. Operations, Engineering & Lean Third Quarter 2015 Earnings Results October 21, 2015 POLARIS INDUSTRIES INC. 19
Slide 20: Motorcycle Paint Capacity and Spirit Lake Production
Q3 10-21-15 20 Q3 2015 Q4 2015 Expectation Paint Capacity Remaining Backlog Backlog Reduction Retail Demand Motorcycle Paint Capacity Q4 2015 Motorcycle Capacity by System Good Improvement Trend; Working Plan Aggressively Spirit Lake Motorcycle Production Operational performance at Spirit Lake impro
Slide 21: Polaris Huntsville Update
Q3 10-21-15 21 Project is Progressing on Schedule Polaris Huntsville Update 725,000 sq. ft. manufacturing plant – primarily ORV Start of Production Q2 2016 ~1,700 employees at capacity ~$150 million investment Lean design, value stream focused Future Huntsville Plant Rendering 90% of floor poured, 8
Slide 22: Mike Speetzen, E.V.P. Finance & CFO
Mike Speetzen E.V.P. Finance & CFO Third Quarter 2015 Earnings Results October 21, 2015 POLARIS INDUSTRIES INC 22
Slide 23: 2015 Full Year Guidance Held, Narrowed
METRIC GUIDANCE Sales Components Off-Road Vehicles Up mid-single digits % (reclassified 2014 actuals) Snowmobiles Down low-single digits % Motorcycles Up 70% to 80% Global Adjacent Markets About Flat (reclassified 2014 actuals) PG&A Up similar to total Company sales growth International Down low-sin
Slide 24: 2015 Gross Profit Margin Guidance
METRIC Actual Q3 2014 Actual Q3 2015 Guidance FY 2015 Prior period 30.4% 29.8% 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 25: Foreign Currency Exposures for Polaris
Significant Impact in Q3 2015, Expected to Persist into Q4 2015 25 Foreign Currency Exposures for Polaris Q3 10-21-15 Foreign Currency Hedging Contracts Currency Impact on Net Income % of Q4 Notional Avg. Exchange Compared to Prior Year Period Foreign Currency Currency Position 2015 Cash Flow Exposu
Slide 26: Polaris Financial Position
Polaris Financial Position Q3 10-21-15 26 Cash Drivers Capital Summary Sept. 2015 Fav/(Unfav) Sept. 2014 Cash $ 225.3 +33% Debt /Capital Lease Obligations $ 316.6 (39%) Shareholders’ Equity $ 937.4 14% Total Capital $1,254.0 19% Debt to Total Capital 25% (3%) Strong operating cash flow performance 2
Slide 27: Income from Financial Services
Wholesale Credit PA Receivables Retail Credit Q3 10-21-15 27 Income from Financial Services Other Wholesale Credit Wholesale Retail Credit Financing Retail Financing Q3 2015 FY 2014 2015 Expectations Q3 2014 Q3 2015 Ample Financing Availability – Satisfactory P.A. Portfolio Buyer Income from Financi
Slide 28: New Segments Disclosure Q3 2015
28 New Segments Disclosure Q3 2015 Q3 10-21-15 New segment disclosures beginning in third quarter 10Q Three segments based on Company strategic objectives: ORV/Snowmobiles Motorcycles Global Adjacent Markets Segment reporting for both sales and gross profit PG&A sales and gross profit included in ea
Slide 29: Scott W. Wine, Chairman & CEO
Scott W. Wine Chairman & CEO Third Quarter 2015 Earnings Results October 21, 2015 POLARIS INDUSTRIES INC. 29
Slide 30: 2016 Initial Thoughts
30 2016 Initial Thoughts Q3 10-21-15 Global markets and economies: risks outweigh opportunities Rates will rise; Dollar strength / currency pressures continue Powersports Growth Moderates; Polaris extends #1 position growth and share gains continue International growth prospects positive – near-term
Slide 31: Thank you, Questions?
Thank you Questions? Polaris