Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Deutsche Bank Growth Conference 2009
25 slides from Polaris's conference presentation, Feb 11, 2009
Slide 1: Polaris Industries Inc. Deutsche Bank Growth Conference
Polaris Industries Inc. Deutsche Bank Growth Conference Naples, Florida February 11, 2009
Slide 2: Consistent Financial Performance
Consistent Financial Performance Dollars (in millions) Net Income Per Share from Continuing Operations 1999-2008 $2.50 to $3.00 Down 29% to 14% Sales from Continuing Operations 1999-2008 Down 15% to 23% * A reconciliation of the Company's calculation of cash flow provided to the most directly compar
Slide 3: Consistent Financial Performance: Cash Flow Used to Fund...
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 East 61 62 53 52 59 89 90 53 64 77 50 West 10 North 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 East 14 40 38 52 40 49 76 73 67 132 308 103 107 West 38.6 34.6 31.6 North 46.9 45 43.9 1999 2000 2001 2002 2003 2004 2005 2006 2
Slide 4: 2008 Full Year Sales
ORV Snow Victory PG&A Sales 1780 1780 1891.2 1897.6 1897.6 1948.3 111.2 26 19.6 50.581 2007 $1,780.0 +9% +15% - -17% +17% 2008 $1,948.3 2007 Total Company 2008 Total Company 2008 Full Year Sales Geographic Sales % Change in Total Company Sales United States Canada Other Foreign Countries Sales 1371
Slide 5: 2008 Full Year Earnings
07 Net Margin 07 Net Margin Gross Profit Financial Services Interest Expense Non-Operating Incom Income Taxes Sales 0.063 0.063 0.071 0.056 0.056 0.057 0.057 0.06 0.008 0.001 0.015 0.004 0.003 0.002 2008 Full Year Earnings Gross profit margins improved 80 basis points Financial Services income decre
Slide 6: North American Retail Sales - 2008
North American Retail Sales - 2008 ATVs, Side by sides, Motorcycle and Snowmobiles, combined North American retail sales deteriorated throughout Q4 International also declined in Q4 Polaris gained market share in all businesses in 2008 for 2nd year in row Industry Polaris Industry Polaris Industry P
Slide 7: North American Dealer Inventory
North American Dealer Inventory All Products Dealer inventory down 7% at year-end 2008; not enough Core ATVs and motorcycles require further reductions MVP key to sustainable reductions 2009 dealer inventory levels are expected to significantly decline once again
Slide 8: 2008 Summary Highlights
2008 Summary Highlights: Record sales and EPS Sales up 9% EPS up 13% Share gains in every business International operations grew 18% Industry leading new products Sportsman XP; RZR S; RANGER HD; 800 Assault/Dragon Operational Excellence delivered Improved quality • Increased speed to market • MVP De
Slide 9: 2009 Full Year Guidance
2009 Full Year Guidance Product Line Sales Off Road Vehicles (ORV) Down 17% to 25% Snowmobiles Down 10% to 20% Victory Motorcycles Down 25% to 40% PG&A Down 9% to 13% Total Company Sales Down 15% to 23% Gross Margins Up to 130 bpts improvement Operating expenses Down significantly in dollars but up
Slide 10: Gross Profit Margin Percentage Trends
Gross Profit Margin Percentage Trends Flexible variable cost structure and timely execution drives gross margin expansion
Slide 11: Off-Road Vehicle Division
Off-Road Vehicle Division $1.195B $1.306B - -17% to -25% - -20% to -35% Polaris Revenue ($000's) - -22% N.A. Off-Road Vehicle Industry +9% 67% of Total Polaris Sales #1 Market Share in ORV in N.A. & Europe New Sportsman XP & Ranger selling well Consolidated into ORV Division Improve cost synergies &
Slide 12: ATV Unit Sales by Product Category
ATV Unit Sales by Product Category Side-by-side U.S. "Core" ATVs Military Int'l Canada 0.34 0.39 0.01 0.16 0.1 U.S. "Core" ATVs International Military Canada Side-by-Side ATV Contribution (Gross Profit $) by Category Side-by-side U.S. "Core" ATVs Military Int'l Canada 0.61 0.13 0.02 0.14 0.1 U.S. "C
Slide 13: Snowmobile Division
Snowmobile Division $179M $205M - -10% to -20% Polaris Revenue ($000's) - -20% N.A. Snowmobile Industry +15% 10% of Total Polaris Sales Gained Share in 2008; #2 Significant Quality Improvement +20% Launched RUSH in 2009 Industries only progressive rate rear suspension Good snow conditions throughout
Slide 14: Victory Division
Victory Division $113M - -25% to -40% - -15% to -25% Polaris Revenue ($000's) - -9% N.A. Motorcycle Industry 1400cc+ - -17% $94M 5% of Total Polaris Sales Industry leader in ownership satisfaction Gained share for 5th year in a row Aggressive supply reduction to improve dealer business model Global
Slide 15: PG&A Division
PG&A Division $293M +17% $344M - -9% to -13% Polaris Revenue ($000's) 18% of Total Polaris Sales Sales growth in all businesses; record sales Highest margin business Innovation continues: 260 new accessories in 2008 Expect to outperform WG sales in 2009 2008 PG&A Revenue by Business Unit Guidance
Slide 16: International Division
Europe ME/Africa Latin America Asia Aus/NZ East 210 43 20 3 28 International Division ORV Victory Snow PGA East 209 8 36 50 Polaris Revenue ($000's) +18% $304M - -10% to -20% 2008 Revenue by Geography 2008 Revenue by Business Unit 16% of Total Polaris Sales #1 market share in ORV for Europe & gainin
Slide 17: Adjacencies
Adjacencies Military: New customer penetration Global expansion / after sale support Expanded business development resources Expecting to announce 2 new adjacencies in 2009 Outside powersports On road / outside powersports Additional organic opportunities in pipeline Focus: Global Outside powersport
Slide 18: Operational Excellence
2006 2007 2008 2009 East 21 23 28 28 West 3 North Operational Excellence 2006 2007 2008 2009 East 1948 1452 1239 1175 West 3 North 21.7% 22.1% 22.9% Cost - Gross Profit Margin Expansion Supply chain lead time reduction of 50% New product development cycle time reduced by 37% MVP go to market dealer
Slide 19: Financial Services Income
Financial Services Income 2008 wholesale credit income $13.2 million, down 5% 2008 retail credit income $5.7 million, down 80% 2008 other activities income $2.3 million, down 29% Sheffield Financial added in February 2009 as additional retail credit alternative 2007 2008 2009 Retail Financing 28.167
Slide 20: Balance Sheet and Liquidity Profile
Balance Sheet and Liquidity Profile $ In millions (except per share data) 2008 Actual 2009 Guidance Total Debt at Year-end $200.0 Approximately flat Net Debt at Year-end (debt less cash balances) $172.9 Improving Credit Facility (expires December 2011) $450.0 $450 Average debt outstanding $283.0 Sim
Slide 21: First Quarter 2009 Guidance
First Quarter 2009 Guidance Industry retail sales demand trends are expected to decline at least double-digits throughout 2009, and worse in first half First quarter 2008 included a $0.06 EPS benefit from retail credit income received from HSBC Q1 2009 will include severance costs for workforce redu
Slide 22: Ready for 2009
Ready for 2009 Aligned Strategy & Structure Off-Road Vehicle Division International Team Adjacencies Attacked Costs Workforce reductions announced - 460 Operating Expense reductions > $10M Manufacturing/Production costs reduced with volume Accelerated Operational Excellence Speed / Factory Adjustmen
Slide 23: Polaris 5-Year Strategic Objectives
Polaris 5-Year Strategic Objectives Best in Powersports PLUS 5-8% organic growth Growth through Adjacencies $100 - 300M growth Global Market Leadership >25% of Polaris Revenue Operations is a Competitive Advantage Op Ex drives >200bpts Operating Margin improvement Strong Financial Performance Sustai
Slide 24: Appendix: Forward-Looking Statements and Regulation G Reconciliation
Appendix Our presentation and responses to your questions may contain certain statements which may be considered forward looking for the purposes of the Private Securities Litigation Reform Act of 1995. We caution you that actual results could differ materially from those projected in a forward look
Slide 25: Thank you. Q & A
Polaris Industries Inc. Thank you. Q & A
Polaris Industries — Deutsche Bank Growth Conference 2009 on 6ix