Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Q4 2014 Earnings Presentation
25 slides from Polaris's earnings presentation, Jan 27, 2015
Slide 1: Fourth Quarter & Full Year 2014 Earnings Results
POLARIS INDUSTRIES INC. Fourth Quarter & Full Year 2014 Earnings Results January 27, 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, 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 POLARIS INDUSTRIES INC. Fourth Quarter & Full Year 2014 Earnings Results January 27, 2015
Slide 4: Q4 2014 Sales and Net Income
Q4 2014 Sales and Net Income Q4 Sales Q4 Net Income (in millions) (in millions) $1,275.0 $135.4 $1,083.7 $108.7 Q4 2013 Q4 2014 Q4 2013 Q4 2014 Record 4th quarter sales and net income Sales of Motorcycles +50%; PG&A +21%; ORV +19% Sales in EMEA -5%, Asia Pacific +7%; Latin America +14% N.A. retail s
Slide 5: 2014 Sales and Net Income
2014 Sales and Net Income Total Company Sales Net Income* (in millions) (in millions) $4,479.6 $454.0 $3,777.1 $381.1 FY 2013 FY 2014 FY 2013 FY 2014 5th straight year of record full year sales and earnings FY 2014 Sales by Product All businesses grew sales in 2014 International Sales were up 16% PG
Slide 6: 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 7: 2014 Strategic Progress
2014 Strategic Progress . . . Best in Powersports Plus GROW SALES >$8B by 2020 Over 30 new products; RZRs, RANGERs, ACE, Scout, Roadmaster, AXYS 12% CAGR Complementary acquisitions; Kolpin and Pro Armor Customer loyalty strong; >12,000 in attendance at Camp RZR East >$8B +19% $4.5B Growth Through Ad
Slide 8: Bennett Morgan, President & COO
Bennett Morgan President & COO POLARIS INDUSTRIES INC. Fourth Quarter & Full Year 2014 Earnings Results January 27, 2015
Slide 9: N.A. Retail Sales & Dealer Inventory – FY 2014
Best in Powersports N.A. Retail Sales & Dealer Inventory – FY 2014 PLUS N.A. Powersports Market Share & Retail Sales N.A. Dealer Inventory Market Share Retail Sales +16% 4% Existing Models +12% 8% New models/ categories 4% New Dealers +5% 16% Total Increase 2010 2011 2012 2013 2014 Polaris Industry
Slide 10: Operational Excellence
LEAN Enterprise is Operational Excellence Competitive Advantage Gross Profit Margin -23 bps Up to +20 bps -43 bps 29.4% to 29.6% 29.4% 28.8% Q4 2014 FY 2014 FY 2015 Guidance New paint operations in Spirit Lake, SOP Q4 2014 Q4 production delays in motorcycles – paint system, new product readiness Pla
Slide 11: New Manufacturing Plant Announced
New Manufacturing Plant Announced 600,000 sq. ft. manufacturing plant ORV, primarily Ground breaking Feb. 2015, open Q2 2016 453 Acre Site ~1,700 employees at capacity Central to Huntsville, Decatur & Athens (MSA 400,000 pop.) Investment ~$150 million Lean design, value stream focused 3 Miles Airpor
Slide 12: Off-Road Vehicles
Best in Powersports Off-Road Vehicles PLUS Polaris ORV Sales ($ millions) +15% Up mid-single +15% $2,909.0 digits % $2,793.1* +19% $781.5 Q4 2014 FY 2014 FY 2014 FY 2015 (Reclassified) Guidance Grew sales in every product line: RANGER, RZR, Sportsman Polaris ORV Q4 2014 retail sales were low- double
Slide 13: Motorcycles
Best in Powersports Motorcycles PLUS Polaris Motorcycle Sales ($ millions) Up 50% to 65% +59% $348.7 +50% $103.5 Q4 2014 FY 2014 FY 2015 Guidance Polaris N.A. motorcycle retail sales 40% in Q4 Indian ; retail, share, and dealer expansion Victory single digits % Heavyweight Industry low-single digits
Slide 14: Snowmobiles
Best in Powersports Snowmobiles PLUS Polaris Snowmobile Sales ($ millions) Down +7% mid-single $322.4 digits % +2% $138.1 Q4 2014 FY 2014 FY 2015 Guidance N.A. Industry STD retail high-single digits% – early snow fall, colder weather and new products However Q1 2015 snow conditions spotty Polaris N.
Slide 15: PG&A
Best in Powersports PG&A PLUS Polaris PG&A Sales ($ millions) +21% Up high-teens % $742.1 FY 2014 PG&A Sales by Category +21% $210.7 Parts Q4 2014 FY 2014 FY 2015 39% Guidance Accessories Record Q4 sales; 21% 53% 8% Apparel ORV sales 28%, Motorcycles 90%, Accessories 36%, Parts 6%, Apparel 2%, timin
Slide 16: Global Adjacent Markets
Growth Through Global Adjacent Markets Adjacencies Small Vehicle Sales Global Adjacent Market Sales ($ millions) ($ millions) Up +24% 10% to 15% $273.3* +28% $157.4 -11% $41.2 Q4 2014 FY 2014 FY 2014 FY 2015 (Reclassified) Guidance Full Year 2014 Small Vehicles (SV) strong, but down in Q4 due to wea
Slide 17: International
International Global Market Leadership International Sales FY 2014 International Sales by Product ($ millions) Up low-single Snow +16% digits % Motorcycles $685.1 8% 11% -3% ORV 46% Small $198.0 Vehicles 19% Q4 2014 FY 2014 FY 2015 PG&A Guidance 16% International sales 3% in Q4 ORV 10%; Motorcycles
Slide 18: Mike Malone, V.P. Finance & CFO
Mike Malone V.P. Finance & CFO POLARIS INDUSTRIES INC. Fourth Quarter & Full Year 2014 Earnings Results January 27, 2015
Slide 19: 2015 Full Year Guidance
2015 Full Year Guidance METRIC GUIDANCE Sales Components Off-Road Vehicles Up mid-single digits % (reclassified 2014 actuals) Snowmobiles Down mid-single digits % Motorcycles Up 50% to 65% Global Adjacent Markets Up 10% to 15% (reclassified 2014 actuals) PG&A Up high-teens % International Up low-sin
Slide 20: 2015 Gross Profit Margin Guidance
2015 Gross Profit Margin Guidance Actual Actual Guidance METRIC Q4 2014 FY 2014 FY 2015 Prior period 29.3% 29.7% 29.4% Production volume/capacity Product cost reduction efforts Commodity costs Currency rates Higher selling prices Product mix New plant start-up costs Warranty costs Depreciation/Tooli
Slide 21: Major Foreign Currencies for Polaris
Major Foreign Currencies for Polaris ∆ in Avg. ∆ to 2014 FY 2015 Impact Approximate Rate 2013 Avg. Rate Exposure 2015 vs. Currency Exposure to 2014 in Jan. 2015 Hedged 2014 Canadian Dollar (CAD) Long ~$400M -7% -10% ~10% Negative Euro (EUR) Net Long ~$150M Flat -15% 0% Negative Australian Dollar (AU
Slide 22: Balance Sheet and Liquidity Profile
Balance Sheet and Liquidity Profile $ In millions Fav / (UnFav) (except per share and rate data) FY 2014 FY 2013 2015 Full Year Guidance Cash $137.6 49% Increase Debt / Capital lease obligations $226.1 21% Unchanged Credit facility $350.0 Flat Unchanged Factory inventory $565.7 (35%) Improved Turns
Slide 23: Scott W. Wine, Chairman & CEO
Scott W. Wine Chairman & CEO POLARIS INDUSTRIES INC. Fourth Quarter & Full Year 2014 Earnings Results January 27, 2015
Slide 24: Summary – 2015 Business Outlook
Summary – 2015 Business Outlook U.S. Economy improving; Europe weak Oil/gas and Ag/farm industries manageable; currency challenges ongoing Powersports Industry growing; competition remains aggressive Innovation & dealer focus continues growth in ORV’s Bigger year for motorcycles; much improved execu
Slide 25: Thank you, Questions?
€> PEeLARIS Thank you Questions?