Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Investor Day (July 2009)
115 slides from Polaris's investor day presentation, Jul 22, 2009
Slide 1: Polaris Industries Inc. Analyst / Investor Meeting
Polaris Industries Inc. Analyst / Investor Meeting Richard Edwards, Director of Investor Relations Wednesday, July 22, 2009 St. Paul, MN
Slide 2: Today's Agenda - July 22nd
TODAY'S AGENDA - July 22nd 12:30 - 12:40 pm Opening Remarks Scott Wine 12:40 - 1:10 pm Strategy Overview Bennett Morgan 1:10 - 1:40 pm Off-Road Vehicles Matt Homan 1:40 - 2:00 pm Snowmobiles, PG&A, & Retail Credit Scott Swenson 2:00 - 2:15 pm Break 2:15 - 2:45 pm On-Road Vehicles / MVP Mike Jonikas
Slide 3: Private Securities Litigation Reform Act of 1995 Disclosure
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 looking state
Slide 4: Analyst / Investor Meeting - Scott Wine, CEO
Polaris Industries Inc. Analyst / Investor Meeting Scott Wine, CEO July 22, 2009
Slide 5: Update on 2009 Objectives
Update on 2009 Objectives Objectives Progress-To-Date Align Strategy and Structure Off-Road Vehicle Division On-Road Vehicle Division VP - Global New Market Development VP - Corporate Development VP - Operations (New) Attack Costs Workforce reductions - 460 Manufacturing/production costs ?in line wi
Slide 6: 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 Op Margin improvement Strong Financial Performance Sustainable,
Slide 7: Why This Is Good?
WHY THIS IS GOOD? International New Geographies New Capabilities More Experiences Polaris A Global Powerhouse Product / Process Leadership Stronger, more profitable dealers Financial strength to fund growth Polaris Powersports Leadership Organic Growth New Products New Technologies Operational Excel
Slide 8: Business Development
Business Development New Customers New Channels New Geographies New Products & Technologies Innovative Culture Engineering Adaptability Operations Flexibility Corporate Speed Priorities International Growth Outside Powersports On Road Target Criteria Accretive Attractive ROIC Growth Accelerator Capa
Slide 9: Executive of the Year - Bennett Morgan
Polaris Industries Inc. "Executive of the Year" Bennett Morgan
Slide 10: Analyst / Investor Meeting - Bennett Morgan, President & COO
Polaris Industries Inc. Analyst / Investor Meeting Bennett Morgan, President & COO July 22, 2009
Slide 11: Toughest Economic Times of Many of Our Lives
TOUGHEST ECONOMIC TIMES OF MANY OF OUR LIVES Housing, unemployment, stock market - consumers under pressure Tough, lean innovative, and customer oriented businesses can separate themselves Picking partners, strategies, investments more critical Separates Winners & Losers
Slide 12: Operational Excellence: What's the End Game Look Like?
2006 2007 2008 2009 East 21 23 28 28 West 5 North Most satisfied customers for our products Top Net Promoter Score 75+ Consistent market share gains in all businesses Expanding operating profit margins Continuous non value add waste reduction throughout value chain Most profitable dealers Simplicity
Slide 13: Operational Excellence
Operational Excellence Quality: Improve consumer satisfaction in each product line by 5% annually (through model year 2008) Cost: Reduce system-wide cost by 20% by 2010 (year-end 2009 projection) Speed: Improve speed to consumers by 50% by 2010 (current at June 2009) Focus is Consumer - Strong Resul
Slide 14: Transforming Polaris Business Model
TRANSFORMING POLARIS BUSINESS MODEL Traction & Momentum Increasing on Operational Excellence Different is Good Market Share 2 1/2 years of market share gains everywhere Dealer Inventory Down over 55,000 units in 3 years Business Model MVP is working; expanding significantly for MY10 . . . more to co
Slide 15: Polaris MY10 Plan - How We Win
Polaris MY10 Plan - How We Win Recognize and acknowledge the broader economy and consumer environments CY09 ship is down significantly Way more focus on "value" Continue to intelligently invest in diversifying Continue to innovate Industry-leading news for MY10 Continue to improve the powersports bu
Slide 16: Polaris Off-Road Update
POLARIS OFF-ROAD UPDATE POLARIS OFF-ROAD UPDATE JULY 22nd, 2009 Matt Homan Vice President Off-Road Vehicles
Slide 17: Agenda
AGENDA Polaris Plans & Results MY2010 New Products Industry Overview Adjacent Markets
Slide 18: Off-Road Customer Profiles
OFF-ROAD CUSTOMER PROFILES AGE INCOME MALE/FEMALE 1st TIME OWNER USAGE 38 Years Old $60,000 85% / 15% 30% #1 Trail #2 Ag #3 Hunt ATV SxS 48 Years Old $80,000 90% / 10% 55% #1 Multi-Acre #2 Ag #3 Recreation ATV vs. SxS = Differentiated Customers Homeowners
Slide 19: Polaris SxS Incrementality
POLARIS SxS INCREMENTALITY RZR RANGER XP INDUSTRY 33% ATV Steal 23% Polaris Steal 13% Polaris Steal 87% Incremental 77% Incremental 67% Incremental POLARIS SXS HIGHLY INCREMENTAL 50% own an ATV 51% 1st time SxS 53% 1st time SxS
Slide 20: Off-Road Segment Trends
500 1-Up 14% 2-Up ATVs 4% Big Bore 1-Up 18% Entry Rec-Utility 35% Youth 9% Sport 20% ATV Industry SEGMENT 3 YR PERFORMANCE SXS Industry SEGMENT 3 YR CAGR Utility (52% of Mkt) +3% Recreation (32% of Mkt) +46% Commercial (16% of Mkt) -4% SHARE GAINS IN UTILITY & RECREATION OFF-ROAD SEGMENT TRENDS POLA
Slide 21: Off-Road Industry Growth
OFF-ROAD INDUSTRY GROWTH INDUSTRY RETAIL CHALLENGED ATV = -15% SxS = +6% ORV = -11% 5 Year CAGRs 2005 2006 2007 2008 2009 ATV SxS ORV 2009 N.A. Estimates 2008 ATV Market = Approx $2.75B 2008 SxS Market = Approx $2.1B
Slide 22: Off-Road Competitive Overview
OFF-ROAD COMPETITIVE OVERVIEW POLARIS #1 VS. TOUGH COMPETITORS #5 N/A #9 Kubota #4 N/A #8 Deere N/A #7 #7 Can Am #6 #6 #6 Arctic Cat N/A #5 #5 Suzuki #3 #4 #4 Kawasaki #2 #3 #3 Yamaha N/A #1 #2 Honda #1 #3 #1 Polaris 2009 TREND 2008 SxS 2008 ATV 2008 TOTAL ORV 2008 U.S. Industry Sales
Slide 23: 4-Part Plan to Win in 2009 Off-Road Vehicles
Leverage New Products to Gain Share Sportsman XP, NEW RANGER, Combined Marketing Continue to Drive Operational Excellence Cost: Engineering Driven, Purchasing Driven, Expense Driven MVP: Expand MVP model to 50% of volume Leverage Current Platforms to Launch MY2010 News Existing Engines, Existing Cha
Slide 24: Off-Road Vehicles 2009 Results
OFF-ROAD VEHICLES 2009 RESULTS PLANNED FOR DIFFICULT ENVIRONMENT - ON PLAN On Plan Reduce by 20%+ Dealer Inventory On Plan Gain Share in ATV & SxS Market Share On Plan Leverage ATV + SxS Op Expenses Ahead of Plan Expand Margins Gross Profit Margins On Plan - -17% to -25% ORV Revenue Modestly Behind
Slide 25: '09 Launch Winning - Now #1 in Off-Road
'09 LAUNCH WINNING = NOW #1 IN OFF-ROAD RZR 170 2009 SP. XP 2009 RANGER XP 2009 RZR - 2008 RZR S - 2009 CREW 2008 MODEL YEAR 2009 NEW PRODUCTS
Slide 26: New Products Strategy: What Is Selling?
NEW PRODUCTS STRATEGY: WHAT IS SELLING? 2010 1. INNOVATION 2. VALUE Sportsman 500HO
Slide 27: 2010 Off-Road New Products
NEW! RANGER 800 & 500 H.O. NEW! RANGER CREW NEW! RANGER 6x6 NEW! RANGER EV NEW! Sportsman 550 X2 NEW! Sportsman 550 Touring NEW! Sportsman 850 Touring NEW! RANGER 400 Sportsman 500 H.O. is BACK NEW! Sportsman 500 Touring NEW! Sportsman 800 EFI NEW! Trail Boss 330 NEW! Trail Blazer 330 NEW! Scrambler
Slide 28: 2010 Best of the Best - Power
800 POWER - NEW! RANGER XP 800 Big Power News 800 EFI - 46 HP (+15%) 500 H.O. - 36 HP (+13%) 30% Quieter Transmission More Speed 800 - 53 MPH 500 H.O. - 47 MPH 2010 BEST OF THE BEST - POWER
Slide 29: New Ranger 6x6 & Crew
NEW! RANGER 6X6 800 & CREW 800 800 EFI Power 46 MPH 6 Passenger Crew! First Integrated Job Box 2010 BEST OF THE BEST - INNOVATION
Slide 30: 2010 Best of the Best - Innovation
2010 BEST OF THE BEST - INNOVATION MOST COMFORTABLE - NEW! SPORTSMAN 2-UPS NEW! Sportsman XP 850 Touring NEW! Sportsman 550 Touring NEW! Sportsman 550 X2 New! EPS Standard 850 Twin EFI - 70 HP New! Comfort Ride Suspension 1.2" of adjustable travel 11.2" of rear seat suspension travel
Slide 31: 2010 Best Value - New Segments
2010 BEST VALUE - NEW SEGMENTS SIGNIFICANT OPPORTUNITY FOR NEW SEGMENT MIDSIZE SXS MARKET SIZE POLARIS MID-SIZE SXS VOLUME KEY MID-SIZED COMPETITORS 30% of SxS Market Is Mid-Size - $8,000 or Less Kawasaki Mule 610 Kubota RTV500 Zero 100% of Business is Premium Full- Size SxS
Slide 32: New Ranger 400
2010 BEST VALUE - NEW SEGMENTS NEW! HARDEST WORKING, SMOOTHEST RIDING MID-SIZE 400 Carb Power 455cc, 29 HP, 40 MPH Same Quiet Tranny As XP Awesome Capacity 500 lb. Box 1,000 lb. Payload 1,250 lb. Towing Front Struts - 8" Travel Rear IRS - 9" Travel 10" Ground Clearance NEW! RANGER 400
Slide 33: New Ranger 400 - All Ranger
2010 BEST VALUE - NEW SEGMENTS NEW! RANGER 400 - ALL RANGER! NEW! RANGER 400 - ALL RANGER! NO NO YES IRS 4.1" 3.1" 9" Rear Suspension $8,299 $7,099 $7,999 Price 1,102 1,100 1,250 Towing 25 MPH 25 MPH 40 MPH Speed 15.8 HP 13.5 HP 29 HP Power RTV 500 Mule 610 RANGER 400
Slide 34: 2010 Ranger Core Line-Up
2010 RANGER CORE LINE-UP Differentiated Line-Up - To Reach Full Market RANGER XP Unmatched Premium RANGER 500 Full Size / 3 People RANGER 400 Mid-Size Value (2 people)
Slide 35: 2010 Best Value - New Line-Up
2010 BEST VALUE - NEW LINE-UP Sportsman 500HO $5,999 NEW! Sportsman 500HO Touring $7,399 NEW! Sportsman 800EFI $7,499 NEW! Trail Boss $4,299 NEW! Scrambler & Trail Blazer $6,399 / $4,299 NEW! RANGER 400 $7,999 NEW! BEST VALUE LINE-UP
Slide 36: 2010 Best of the Best - Emerging Markets
2010 BEST OF THE BEST - EMERGING MARKETS CLEAN. QUIET. ELECTRIC - NEW! RANGER EV Efficient Power Motor: 30 HP, 48 Volts Batteries: Eight 12 Volt Batteries Three Operating Modes Performance - up to 25 MPH Pulling/Towing Maximum Range - up to 50 Miles New Customers Quiet Home Use, Commercial Uses, Gov
Slide 37: Adjacent Markets - Military Strategy
ADJACENT MARKETS - MILITARY STRATEGY
Slide 38: Our Markets in Defense Expected to Grow
ADJACENT MARKETS - MILITARY STRATEGY OUR MARKETS IN DEFENSE EXPECTED TO GROW US Dept. of Defense (DoD) Outlook Funding and troop levels projected to remain stable through 2013 Increasing requirements for Afghanistan Expeditionary forces and unique geographical challenges will place great emphasis on
Slide 39: Polaris Defense - Strong Growth Opportunity
ADJACENT MARKETS - MILITARY STRATEGY POLARIS DEFENSE - STRONG GROWTH OPPORTUNITY Leverage Full Line Of Mission Support Vehicles Leverage MV700, MVRS700, plus Sportsman & RANGERs Army, National Guard, Air Force, Special Forces, etc. New Products To Serve More Markets RANGER 400 + RANGER EV + Future B
Slide 40: Polaris Differentiated with Full Product & Service
ADJACENT MARKETS - MILITARY STRATEGY POLARIS is Differentiated with Full Product & Service Polaris Defense John Deere Honda Yamaha Kawasaki Kubota Club Car EZ-GO ATV SxS Dedicated Business Unit Military Models
Slide 41: Military Growth - Strong Returns
ADJACENT MARKETS - MILITARY RESULTS MILITARY GROWTH - STRONG RETURNS 2007 2008 2009 2006 Revenue 3 Year CAGR = 75% Op Profit 3 Year CAGR = 162% 2009 Estimates
Slide 42: Bobcat Partnership + Strategy Update
ADJACENT MARKETS - BOBCAT PARTNERSHIP + STRATEGY UPDATE Supply Vehicles: On-Track for 2010 Launch Co-Developed Vehicles: On-Track to Push Further into Work SxS Extra Opportunities: Leverage for Military and Global Sales BOBCAT PARTNERSHIP - ON -TRACK Off-Road Vehicles Manufacturer Compact Constructi
Slide 43: Off-Road Summary
OFF-ROAD SUMMARY Polaris #1 in Off-Road - Tough Competitors, But We Are Winning 2009 Results On-Plan - But, Markets Are Challenged BIG 2010 New Products - Best of the Best + Best Value Line-Up NEW Adjacent Markets - Strong Growth Opportunity
Slide 44: Snowmobiles, Parts, Garments & Accessories, Financial Services
Snowmobiles Parts, Garments & Accessories Financial Services Scott Swenson Vice President & General Manager Analyst Meeting St. Paul, MN July 22, 2009
Slide 45: Snowmobile Industry Overview
Snowmobile Industry Overview Worldwide Industry Retail: Outlook for Industry Long-Term: Industry will likely decline 5-10% annually in near term. Potential for growth with snow fall & economy. Canada becomes majority of NA sales (2% 5 year CAGR vs. US @ -9%) 3 million riders generate a lucrative par
Slide 46: Snowmobile Industry Demographics
Snowmobile Industry Demographics 2009 Registered Snowmobiles - U.S. 1.65 million (up 1%) 2009 Registered Snowmobiles - Canada .77 million (up 8%) 2009 Registered Snowmobiles - Europe .5 million (estimate) Average Age 44 % Male 70% Married 75% Median Annual Household Inc. $72,000 First Time Buyers <1
Slide 47: State of Snowmobile Market
State of Snowmobile Market Snowfall more consistent last 2 winters across North America after spotty snow the last decade. Economy did have an impact last season. Minimal market share movement. Polaris #2. Dealer Inventory levels down overall. Expect sizable decline next season across the industry.
Slide 48: Snowmobile Industry (North America)
Snowmobile Industry (North America) Growth in Mountains, Crossover & Utility
Slide 49: Worldwide Snowmobile Sales (By Region)
Worldwide Snowmobile Sales (By Region) North Central US Northeast US Western US E. Canada W. Canada Central Canada Scandinavia Russia/Other Pie 2 0.17 0.12 0.13 0.15 0.08 0.11 0.11 0.13 2008/2009 Polaris Growth Opportunities in Int'l/Canada
Slide 50: Progressive-Rate Rear Suspension Technology
Progressive-Rate Rear Suspension Technology - - Smoother ride, less bottoming... doesn't buck - - Virtually bottomless suspension... rides through the bumps Broad range of adaptability (rider and terrain) Pro-Ride Chassis Delivers Unprecedented Control - - Increased chassis rigidity - precise contro
Slide 51: Snowmobile Quality
Snowmobile Quality 800 Engine did not meet our expectations for MY '09 Significant validation & testing on snow and dyno. Communicated solution & customer care plan to our dealers. Service bulletin in late August. Will take care of our MY '08 and MY '09 800 customers through 2009/2010 riding season.
Slide 52: Snowmobile Outlook
Snowmobile Outlook 2009 Calendar Year: MY '10 New Product Intro Went Well ... Rush was a hit & will drive growth in the core. Build is down; revenues expected to decline 15% -20% Snow check sales missed expectations ... economy driven. International sales will be down slightly ... Scandinavia looks
Slide 53: Pure Polaris Overview
COMPETITION: Aftermarket: i.e.; Parts Unlimited, Tucker Rocky, MotoVan, Indirects: Other OEM's Pure Polaris Overview Service Parts, Accessories, Apparel & Retail Financial Services 50,000 SKU's, $344 Million in Sales in 2008 Highest Gross Margins
Slide 54: Growth Initiatives
Growth Initiatives Merchandising - Make retail environment sizzle Markets - International - Military - LEV - Bobcat partnership - Acquisitions Quality - Ship the dealer accurately what he wants when he wants it. - Easiest to order from Pure Polaris Team - Strongest in the business Pure Polaris Goals
Slide 55: PG&A Sales & Margin Growth
PG&A Sales & Margin Growth $=millions Proven History of Growing Revenues AND Margins
Slide 56: PG&A Revenue Mix
ORV 72% 2008 PRODUCT MIX BY GEOGRAPHY PG&A Revenue Mix 2008 PRODUCT MIX BY PRODUCT LINE 2008 PRODUCT MIX BY BUSINESS UNIT Revenue Growth Drivers: SxS Accessories ATV Parts Military Parts Subsidiary Parts & Accessories Victory Accessories
Slide 57: PG&A Sales/Distribution (North America)
PG&A Sales/Distribution (North America) APPROACH Drive every day profitability Focus resources on "power" items Focus resources on top dealers - Free fixtures and signage - Dealership merchandising support - Tiered Freight Programs Easy for Dealer to Order - Automated on-line ordering - Consistent p
Slide 58: Innovation Drives Sales
Innovation Drives Sales ATV: 23 New Accessories XP 2-Up: Cargo Boxes, Passenger Foot Riser XP: Steel Rack Extenders, Cargo Box expansion, Aluminum A-Arm Guards Trail Boss/Scrambler: Cargo Bags & Boxes, Rack Extenders, Winch (Scrambler) VICTORY: 59 New Accessories Cross Roads & Cross Country Custom P
Slide 59: Retail Financial Services
Retail Financial Services Focus on Approval Rates - - Retail Credit mix YTD: 60% revolving 40% installment. Overall approval rates in Q2 were 48% and are flat vs. 2007. Regional difference - - Through the door FICO down slightly. Approved FICO is up. Down payment terms improved YOY. GE back to '08 l
Slide 60: Wholesale Credit to Dealers
2004 2005 2006 2007 2008 Q2 2008 Q2 2009 Sales 670 797 747 723 710 0 603 574 2004 2005 2006 2007 2008 Q2 YTD 2008 Q2 YTD 2009 Sales 11.5 14.2 17.1 13.9 13.2 0 7.1 6.8 Wholesale Credit to Dealers Joint Venture Partnership with GE for Dealer Financing in U.S. - Polaris Acceptance Established in 1996 S
Slide 61: Summary
Summary Snow - Product is the key to share growth ... Rush is a winner - Large, stable and active installed base - Positive cash flow business PG&A - Proven ability to grow sales AND margins - Innovation drives growth. Integration with vehicles at an all time high - Continues to be highest margin op
Slide 62: On-Road Division
On-Road Division N.A. Sales & Corporate Marketing Mike Jonikas - Vice President Steve Menneto - General Manager July 22, 2009
Slide 63: Agenda
Agenda N.A. Sales & Corporate Marketing Roadmap Dealer Network Overview Max Velocity Program (MVP) Dealership Health On-Road Division Roadmap Motorcycles Industry Overview Victory Low Emission Vehicles Polaris Breeze Neighborhood Vehicle
Slide 64: N.A. Sales & Corporate Marketing Mission
N.A. Sales & Corporate Marketing Mission 1. Lean Across Entire Enterprise 2. Grow Market Share & Inventory Turns 3. Drill Quarterly Order & Revenue Goals How Polaris Wins Transform Powersports Business Model Retail pull & flow business model (Max Velocity Program) Simple & consistent business manage
Slide 65: N.A. Dealer Network Overview
N.A. Dealer Network Overview Healthier Position Relative To Competitors Economy Negatively Impacting Almost Every Dealership Optimism Opportunities Retail Margins w/Key Polaris Lines RANGER XP, RZR, Sp XP power steering Pure accessories Polaris Product Leadership Performance & design innovation Prod
Slide 66: Transform Powersports Business Model
Transform Powersports Business Model Retail Pull Demand brand purchase preference outside the dealership Product Quality compelling differentiation with leading NPS Marketing Thrust create consumer purchase demand Durables Push win on the sales floor - together with dealers Retail Development define
Slide 67: Max Velocity Program Strategy
Maximize Retail Sales Implement defined retail sales process at dealership level Joint bi-weekly retail planning and execution (dealership & Polaris sales) Maximize Inventory Turns Merchandising minimum stocking levels Joint bi-weekly replenishment planning (dealership & Polaris sales) Enabled by Le
Slide 68: Max Velocity Program Results
Max Velocity Program Results Maximize Retail Sales & Market Share Retail sales > non-MVP Share change > non-MVP Retail selling tool usage > non-MVP Maximize Inventory Turns Inventory days supply outstanding < non-MVP Dealer level out-of-stocks < non-MVP Solid fulfillment from factory Solid Results W
Slide 69: Max Velocity Program - Phased Roll-out
Significant Change To Powersports Model Across entire Polaris enterprise (suppliers, plants, logistics, divisions, dealerships) Dealer retail sales process commitment Phased Roll-out Strategy Lead with Polaris ORV business Fall 2007 = dealership pilot Fall 2008 = 17% of North American retail sales F
Slide 70: Dealership Health
Dealership Health 1. Improve Dealership's Balance Sheet With Polaris & Victory Lines Continued corporate focus to reduce dealer inventory & flooring debt levels Special 1Q'09 hold-back payment timing to aid network's spring cash flow 2. Effective Modeling to Identify Dealerships at Potential Financi
Slide 71: On-Road Division Strategy
STRATEGY Go Green Expand niche-sized industries with innovation Build B2B Capabilities Global Motorcycle Presence PLAYING FIELD Low Emission Vehicles - paved & hard packed surfaces Master planned communities Anticipate next usage opportunities Motorcycles - on highway Heavyweight cruisers Heavyweigh
Slide 72: N.A. 1400+cc Motorcycle Market
N.A. 1400+cc Motorcycle Market N.A. 1400+cc Motorcycle Market Economy Suppressing 1400+cc Industry Segment During 2009 (-27% YTD) Segment Remains Very Sizeable Market Space 3 yr CAGR - -2% 2005 2006 2007 2008 254k 278k 289k 274k $3.9 Billion Market Units
Slide 73: 2009 N.A. 1400+cc Competitive Summary
2009 N.A. 1400+cc Competitive Summary Rank Manufacturer Strategy Share Trend 1 Harley Aspiration Brand Most Complete Product Line-up Huge Installed Owner Base (i.e. "Ride Free" marketing campaign) 2 Metrics Trusted Brands Breadth of Distribution Bases 3 Victory Modern American Styling #1 Owner Satis
Slide 74: Victory Consumer Profile
Victory Consumer Profile 35 to 54 year old male Married Household income $80k+ Experienced motorcycle rider Patriotic Product wants: innovation, quality, performance, value Love Victory: industry leading dealership & product satisfaction
Slide 75: Victory Growth Strategy
Victory Growth Strategy Effectively Penetrate Touring Segment Strengthen Victory Proposition With Core Customer Lean Operations Expand Global Distribution Presence
Slide 76: Effectively Penetrate Touring Segment - Cross Country & Cross Roads
Effectively Penetrate Touring Segment NEW! MY'10 Cross Country & Cross Roads Innovation Compelling modern styling Performance & Comfort 26% more storage 18% more torque 60% more suspension travel Quality & Value Competitively priced Cross Country Cross Roads
Slide 77: MY'10 Vision Product News
Effectively Penetrate Touring Segment MY'10 Vision Product News ABS Vision 8-Ball
Slide 78: Strengthen Victory Proposition With Core Customer
Strengthen Victory Proposition With Core Customer Ride With Confidence of 5 Year Warranty Coverage Leverage Industry Leading Dealership & Product Satisfaction Expanded 8-Ball Line-Up
Slide 79: Lean Operations
Lean Operations Continue To Reduce Dealer Inventory Levels -24% vs. LY ... more work to do driving retail 2. Streamlined Model Line-up 24 focused models for MY'10 (-65 models vs. 2009) Minimize out-of-stocks at dealership level Reduce system-wide inventory complexity & cost Victory MVP Dealership Pi
Slide 80: Expand Global Distribution Presence
Expand Global Distribution Presence United Kingdom Australia
Slide 81: Low Emission Vehicle Market
Low Emission Vehicle Market LEV Market Attractiveness Growing demand for low emission solutions Diverse vehicle applications Sizeable market space Fragmented market Lead With Neighborhood Vehicles New & growing consumer base Expanding migration to warmer weather Underserved market with few purpose b
Slide 82: Neighborhood Vehicle Business Development Strategy
Neighborhood Vehicle Business Development Strategy Winning & Ownable Product Solutions Anticipate customers future wants Compelling differentiation Directly Create Consumer Purchase Demand Focused marketing at community / market level Target leading golf car dealership for each planned community Lea
Slide 83: New! Polaris Breeze
NEW! Polaris Breeze The Fun Way To Enhance Your Lifestyle 1. Peace of Mind Operation Seat belts & adjustable integrated lighting 50 mile vehicle range 2. Most Comfortable Ride Plush suspension comfort (Polaris heritage) Contoured seats with adjustable driver-side back rest 3. Best Electric Vehicle f
Slide 84: Neighborhood Vehicle In-Market Learning Summary
Neighborhood Vehicle In-Market Learning Summary Sales Feature Development Subsystem Designs Manufacturing In/Out Logistics After Sale Support Brake pedal assembly Front suspension Steering 3:1 stow 'n go conversion Mfg. "template" for DFM Mat'l handling (batteries) Internal quality assurance needs V
Slide 85: Q & A
Q & A
Slide 86: Operational Excellence: A Pathway to World Class Performance
Polaris Industries Inc. Operational Excellence A Pathway To World Class Performance Wesley Barker, VP Operations & David Longren, CTO & VP Engineering July 22, 2009
Slide 87: Polaris Operational Excellence
Polaris Operational Excellence Why ? Customer driven Right way to run the business Simple A Relentless Focus on Quality, Cost & Speed Maximizing customer satisfaction Applying Toyota quality approach eliminate waste & error proof processes Driving high velocity engineering & manufacturing - link & f
Slide 88: Engineering Operational Excellence
Engineering Operational Excellence Speed Reduce Product Development Total Cycle Time + 50% Vehicle Concept To Product Owner Feedback - Achieved 40% faster Quality Maximize Customer Satisfaction Utilize Net Promoter Scores Target World Class Levels - 5% Improvement Per Year Minimize Consumer & Manufa
Slide 89: Product Cost Down Approach
Product Cost Down Approach Formalized Value Engineering Approach & Process Product Design Efficiency Metrics Reduce Portfolio Complexity Team Cost Ownership & Subsystem Targets Integrated Idea Generation Meetings Benchmarking Competitive Vehicle Teardown Learnings Computer Analysis Evaluate Performa
Slide 90: Global Material Sourcing
NAFTA > 62.5% NA Content Japan 2009 = 12% 2014 = 4% Asia 2009 = 14% 2014 = 19% Europe 2009 = 8% 2014 = 7% Mexico 2009 = 6% 2014 = 12% Global Material Sourcing Balance LCC, Speed & NAFTA US & Canada 2009 = 60% 2014 = 58% 2009 LCC Tier 1 & 2 = 25% 2014 LCC Tier 1 & 2 = 37% 2006 LCC Tier 1 & 2 = 6% Tar
Slide 91: Manufacturing Productivity
Manufacturing Productivity Mfg. cost reductions 20% - 25% in 2009, in line with revenue decreases Low labor and fixed cost content Flexible workforce adjusts to volume fluctuations Design for manufacturability - common subsystems Lean driving 5% to 8% labor productivity per year 0% Proven Flexibilit
Slide 92: Inventory Reductions
Inventory Reductions Significant reductions from 2008 throughout 2009, - 21% YTD Daily deliveries from suppliers Lean flow principles between plant processes Migrating to standard platforms and components Lean driving targeted 10% reduction per year
Slide 93: Driving Manufacturing Speed & Flexibility
Driving MFG. Speed & Flexibility - MVP 40% Reduction in Supplier Lead Times in 2008 - 2009 Mixed Model Assembly, Paint & Test Line Capabilities Add Flexibility and Lowers Investment Driving to a "Make To Order" Business Model Reducing Dealer Lead Times 50% in 2010 - 2011
Slide 94: Lean Engineering
Lean Engineering Efficient Design Process Speed To Market Reduce overhead Refined product concepts Eliminate Waste & Rework Increased Part Commonality Improved Design Tools Reduced Tooling Costs Design For Manufacturing Processes Proper Tooling Utilization Part Commonality Reduce Variability Standar
Slide 95: Current Utility SxS Platform Commonality
Current Utility SxS Platform Commonality Cost Reduction Enabler Unique Consumer Driven Features - Simple Common Designs Lower Inventory Improved Dealer Serviceability Speed To Market High Quality
Slide 96: Great Products - Strong Pipeline
RANGER XP, 400 - RANGER EV RZR & RZR S Victory Cross Roads/Country Sportsman XP Touring & X2 Rush Snowmobile Breeze LEV & More Innovation Great Products - Strong Pipeline
Slide 97: Driving World Class Performance
Driving World Class Performance Operational Excellence: World-Class Results in 5 yrs Relentless Improvement of Quality, Cost & Speed Integrated Organization & Supply Base Focus Speed To Market: 30% Incrementally Faster Designs 50% Faster Lead Times Continuous Process Improvement Accelerated Cost Red
Slide 98: International Operations
International Operations Mike Dougherty Vice President, Global New Market Development July 22, 2009
Slide 99: Polaris International Today
2 Polaris International Today Strong Financials $300 Million Revenue in 2008 16% Polaris Revenue and Growing Strong operating margins through subsidiaries Solid Distribution EMEA = 83% of Business 8 Subs: Sweden, Norway, Germany, France, Spain, UK, Aus, NZ Several excellent distributors - Italy, Fin
Slide 100: Polaris International Today - #1 in ORV Globally
Polaris International Today #1 in ORV Globally in 2008 Continuing to gain share in '09 Establishing EMEA Structure Global New Market Development Est. Market Size For Polaris Products 2008 Market - $1.9 Billion Dealer Direct in Key Markets France Australia / NZ UK Sweden / Norway Germany Spain Finlan
Slide 101: Revenue by Product Line and Geography
Revenue By Product Line Revenue By Geography Europe ME/Africa Latin America Asia Aus/NZ East 210 43 20 3 28 ORV Victory Snow PGA East 209 8 36 50 Polaris International Today ORV = 70%, EMEA = 83%
Slide 102: European 2008 ATV Competitive Overview
European 2008 ATV Competitive Overview Top 8 Markets Traditional ATV Brands 2008 Market Estimate ^ 50k units Top 8 Markets All ATV Brands 2008 Market Estimate ^ 115k units Approximately 75% of the market is on-road Variety of street- legal homologation alternatives 20% annual market contraction in '
Slide 103: EMEA HQ - Why Are We Doing It?
EMEA HQ - Why Are We Doing It? Centralization Efficiencies & Savings Wholegoods and PGA Inventory Reduction Logistics Savings Headcount Reductions Potential Tax Savings Closer To Market Faster & More Effective New Product Development Better Customers Service Leadership & Organizational Development O
Slide 104: Global Market Leadership 2014
Global Market Leadership 2014 Globally Diversified Powersports Leader OEM Presence in each of the 3 Main Regions - Asia / Americas / EMEA #1 Share in ORVs w/ Premium Product Line: 2W-4W / On-Off Road / Work-Play Global Product Development / Manufacturing / Distribution 2014 2009 2014 Focus on India
Slide 105: Globally Developed - Locally Relevant
Globally Developed - Locally Relevant Asia North America Polaris ORV Off-Road Chassis Design GLOBAL DEVELOP LOCAL MFG GLOBAL MKTG Polaris Europe On-Road Design Polaris Asia Engine Source & Design Polaris Asia Engine Mfg Vehicle Mfg Polaris Europe Local Assembly Polaris Europe On-road Quadricycle Pol
Slide 106: Global Market Leadership - 2012 Goal
$1.0B 2008 2007 2009 2012 Goal 2009 2012 Goal $350M $210M Global Market Leadership 2009 2012 Organic 262 500 Buy 500 Strengthen EMEA #1 ORVs OEM Structure Lean Logistics Local Development 2009 2012 Organic 200 350 Buy 250 Grow Business 25% of Polaris Revenue New Market Development 3 Strategic Region
Slide 107: Prioritized New Market Initiatives
$1.0B 2007 2009 2012 Goal Prioritized New Market Initiatives #2 Brazil Partner Focus Local Assembly Expand Products Build Distribution Acquisition Focus OEM Presence Build Distribution Expand Products Partner Focus Local Assembly Expand Products Build Distribution #1 On Road Victory Expansion Other
Slide 108: Global Motorcycle Market Data - 2008
Global Motorcycle Market Data- 2008 (estimate) Europe N.A 250cc+
Slide 109: Victory - International Potential
Victory - International potential Note: Estimated data is based on premium cruisers & touring cruisers (1,400cc+) Germany Australia Italy Scandinavia UK France Others Spain Benelux Japan Market potential 50,000+ (Units) Not Yet Launched MY10 Launch or Prior
Slide 110: Victory International
Victory International Solid long term growth/profit opportunity On Road entry into strategic int'l markets (Germany, Japan, Russia) Establishing ourselves as Premium American brand Excellent PGA opportunity and network to leverage in future Initial rollout in Polaris stronghold markets is encouragin
Slide 111: Victory Melbourne Australia Store
14 Victory Melbourne Australia Store
Slide 112: Polaris International Summary
Polaris International Summary A proven growth engine for Polaris Markets and sales will rebound - already showing some resilience Strong ORV Presence #1 Globally in ATV / SxS Direct in key markets - continuing to gain share most markets Going On Road Victory in middle of global expansion plans - enc
Slide 113: Analyst / Investor Meeting - Scott Wine, CEO
Polaris Industries Inc. Analyst / Investor Meeting Scott Wine, CEO July 22, 2009
Slide 114: Priorities for 2nd Half 2009
Priorities for 2nd Half 2009 Great Dealer Show - New Product Introductions Execute Order Solicitation Expand MVP Drive Victory Improvements Stay on Strategy Polaris: Unmatched Innovation & Execution
Slide 115: Thank you. Q & A
Polaris Industries Inc. Thank you. Q & A