Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Investor Presentation (May 2006)
25 slides from Polaris's investor presentation, May 10, 2006
Slide 1: Determined the Mindset of a Winner
DETERMINED THE MINDSET OF A WINNER Wednesday, May 10, 2006
Slide 2: 2005 in Summary
Successes: Sales grew by 5 percent to a record $1.87 billion Net income increased for the 24th consecutive year. Earnings per share increased 8 percent to $3.29 per share Return on Equity was 39 percent while debt to total capital remained at a low 5 percent Victory motorcycles became profitable for
Slide 3: Consistent Financial Performance
$1.26 $1.40 $1.49 $1.64 $1.83 $1.99 $2.29 $2.58 $2.97 $3.15 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Consistent Financial Performance Dollars (in millions) Net Income Per Share from Continuing Operations 1996-2005* $3.08 - $3.20 - -2% to +2% 24 consecutive years of earnings growth Sale
Slide 4: Consistent Financial Performance: Debt to Capital and ROE
Consistent Financial Performance Debt to Total Capital Ratio 1996-2005 Ample Credit Capacity 1993 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 0.41 0.52 0.47 0.49 0.53 0.48 0.44 0.43 0.4 0.4 0.39 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 0.18 0.13 0.12 0.19 0.19 0.07 0.06 0.05 0.05 0.05
Slide 5: Consistent Financial Performance: Cash Flow
Ten Year CAGR: 9% Consistent Financial Performance 1993 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 59 96 100 109 120 129 150 174 178 201 208 (Dollars in Millions) *Before Changes in Current Operating Items and Deferred Taxes Note: A reconciliation of the Company's calculation of cash flow pro
Slide 6: Cash Flow Used to Fund Investments, Repurchases, Dividends
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 0.3 0.32 0.36 0.4 0.44 0.5 0.56 0.62 0.92 1.12 1.24 West 38.6 34.6 31.6 North 46.9 45 43.9 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Q1 2006 East 1 3 2.2 3 2.4 2.2 2.4 2.4 1.4 2.4 0.3 West 38.6 34.6 31.6 North 46.9 45 43.9 Consistent Fin
Slide 7: Three Strategic Goals
The Road Ahead - 2006 and Beyond Three Strategic Goals Grow to $3 billion in sales by 2009 Expand net margins to 9% by 2009 Build a dominant brand with industry-leading product quality and distribution How? A number of opportunities exist to achieve the sales and net margin objectives, including: Co
Slide 8: Build Strength in ATVs and Utility Vehicles
Worldwide ATV Industry Growth Worldwide Utility Industry Growth * Includes Utility Vehicles Utility Vehicles ATVs Motorcycles* Snowmobiles 2004 Guidance 2 6.5 6.3 1 1043 52 52 North 45.9 46.9 45 Estimated Worldwide Market $2.0 $6.5 $6.3 $ in billions $0.7 Utility Vehicles ATVs Motorcycles (N.A. Crui
Slide 9: Fix our Snowmobile Business
Fix our Snowmobile Business 1998 2000 2001 2002 2003 2004 2005 2006 255.9 213 213 206 187 181 174 162 Worldwide Snowmobile Industry Growth Season-end March 31 Polaris Snowmobile Sales $ in millions Utility Vehicles ATVs Motorcycles* Snowmobiles 2004 Guidance 2 6.5 6 1 1043 52 52 North 45.9 46.9 45 E
Slide 10: Expand Parts, Garments & Accessories
Expand Parts, Garments & Accessories (PG&A) 1999 2002 2003 2004 2005 2006 Guidance East 158 203 223 251 274 274 19 North 45.9 43.9 PG&A Sales $ in millions +9% $203 $223 Snowmobiles PWC ATVs PG&A Motorcycles 25 2 62 6 5 PWC 2% General Merchandise 6% ATV / RANGER 62% Snowmobiles 25% Victory 5% 2005 S
Slide 11: Grow Financial Services
Grow Financial Services 2005 Year End: Generated $38.6 million of income in 2005 from financial services Now 19% of pretax income High return on investment Wholesale portfolio losses are within industry norms Retail Credit Agreement Modified In August 2005: Income to be paid based on volume of retai
Slide 12: Grow Victory Motorcycles
Grow Victory Motorcycles The Size of the Prize Viewed as $300-$500 million opportunity At 5% target share in 2010 = $300+ million Longer-term $1 billion opportunity We have the plan to get there: hot new products, growing brand strength, and an improving and growing dealer network Utility Vehicles A
Slide 13: Capitalize on Polaris/KTM Strategic Partnership
Capitalize on Polaris/KTM Strategic Partnership The Road Ahead - 2006 and Beyond
Slide 14: Why KTM?
Why KTM? Growing by acquisition is a good idea for Polaris Slower growth in core businesses Low debt/strong cash flow make it manageable Experienced management team can drive the benefits Consistent with our strategic direction - "The chart" Polaris has carefully evaluated every potential opportunit
Slide 15: The Market Opportunities
The Market Opportunities Snowmobiles $ 0.7B Utility Vehicles $ 2.0B ATV's $ 6.5B Motorcycles ~ $ 25.0B Biggest market Polaris participates in. Polaris currently has less than 1% share of the total market.
Slide 16: Potential Benefits: We Help Each Other
Potential Benefits Polaris KTM Strengths North America ATVs Cost/Efficiency Europe Motorcycles Racing Opportunities Europe Motorcycles High Performance Engines North America ATV Cost/Efficiency We Help Each Other
Slide 17: KTM builds race-ready motorcycles
Builds race-ready motorcycles for competitive as well as recreational riding Wins Races - 120 world championships Recent wins: DAKAR RALLY: 6 consecutive wins (2001-2006) MOTOCROSS: MX3 World Champion SUPERCROSS: Runner-Up in the U.S. Nationals 125 cc, 2 Runner-up titles (U.S. Nationals East/West) C
Slide 18: Who is KTM?
Source: 7/19/2005 KTM Company Presentation found at www.KTM.com under Investor Relations/Company/Presentations CAGR 19.0% 17,257 20,554 26,214 28,794 34,097 45,648 61,723 70,514 76,815 CAGR 23.0% 78.3 95.1 112.8 116.3 160.3 229.7 314.1 375.7 402.4 451.2 KTM is Europe's second largest sport motorcycl
Slide 19: Deal Overview
Deal Overview Phase I In Summer of 2005 Polaris purchased ~25% of KTM for $83MM We also entered into agreements for another transaction to potentially occur in the fall of 2007 (Phase II) During phase I, the companies will be run separately: We have representatives on each other's Board We communica
Slide 20: What If it Works?
What If it Works? Polaris - With a Successful Phase II transaction: Bigger & stronger in motorcycles ~30% of revenue ^ Cruisers ^ Sport Bikes ^ Dirt Bikes ^ NEW PRODUCTS COMING Much stronger internationally ~30% of revenue Becoming a global company Stronger in sport ATVs Stronger in engines and tech
Slide 21: New Polaris Technology Center
New Polaris Technology Center opened in Wyoming, Minnesota in April 2005 World Class Technology Single biggest capital investment in Company history: $35M Required to remain a technology leader in the industry Consolidate R&D personnel into two locations Wyoming, Minnesota Roseau, Minnesota Supports
Slide 22: Ongoing Efficiency Improvements
Ongoing Efficiency Improvements Aggressively seek improvement to our cost structure Continue to reduce the number of platforms where feasible Use more common components More disciplined logistics solutions Global sourcing 2005 decline due to snowmobile quality issues and margin pressures, and increa
Slide 23: 2006 Year Guidance
2006 Year Guidance Full Year 2006 Full year 2006 earnings from continuing operations is expected to be in the range of $3.08 to $3.20 per diluted share, a minus 2% to plus 2% change over the $3.15 in 2005, after reflecting the effect of stock option expensing. Sales growth is expected to be in a ran
Slide 24: Private Securities Litigation Reform Act of 1995
Private Securities Litigation Reform Act of 1995 Polaris Industries Inc. Disclosure Litigation Statement 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. W
Slide 25: Appendix: Regulation G Reconciliation
Appendix Regulation G Reconciliation
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