Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Investor Day (March 2012)
45 slides from Polaris's investor day presentation, Mar 15, 2012
Slide 1: Operations Strategy: North American Realignment
Exhibit 99.1 Operations Strategy North American Realignment Polaris Industries Inc. March 15, 2012
Slide 2: Strategic Objectives
2 Strategic Objectives Clear, Consistent Strategy Grow Sales $5 Billion by 2018 Expand Net Income Margins 10% of Sales by 2018 Strategic Objectives Best in Powersports PLUS 5-8% annual organic growth Growth through Adjacencies $200 - 500M growth Global Market Leadership >25% of Polaris revenue Opera
Slide 3: Polaris Operations Strategy
3 Polaris Operations Strategy TOP LEVEL GDP GOALS MAJOR TRANSFORMATION INITIATIVES ESSENTIAL ENABLERS: Building Blocks for Success Developing the Next Generation Capabilities for People, Processes, Partners & Systems: 1.The Polaris Way – Lean Business & Production System (Includes Safety) 2.Polaris
Slide 4: Operations Characteristics: On-Time Delivery Journey Continues
Operations Characteristics 4 On-Time Delivery Journey Continues
Slide 5: Global Growth Continues
Global Growth Continues 5 Assumptions EMEA growth justifies local production Brazil/S.A. supplied from Monterrey Strategies Leverage Monterrey best practices Brownfield or Greenfield China Product LCC capacity India Significant organic and acquired growth expected 2012-2016 Asian acquisition and par
Slide 6: Why Mexico? Operations as a Competitive Advantage
6 Why Mexico? Operations as a Competitive Advantage Goals 1. Dramatically reduce cost of logistics and labor with footprint redesign Labor savings in Monterrey NA logistics optimized 2. Move closer to customer for speed and flexibility Texas, CA & Arizona largest SxS markets 1-2 day speed improvemen
Slide 7: Why Monterrey?
Why Monterrey? Mexico Monterrey Capital Mexico City Monterrey Population 107 Million 4.4 Million (4% of Mexico´s population) Government Federal Republic 31 States, 1 Federal District State Government GDP $1,086 Billion USD $86.5 Billion USD (8.0% of the country’s GDP) Exports $280 Billion USD $22 bi
Slide 8: Why Monterrey? Education and Labor Force
8 Why Monterrey? • 93 colleges and universities with 150,000+ students • More than 60 bilingual schools • 213 technical careers with 52,000 students • 5,000 engineers graduated per year (avg.) • Workforce: 1.9 million: 45% of the total population 12 years without any strike Stable, productive, highl
Slide 9: Manage Risk & Deliver Long Term Goals: Project Guiding Principles
9 Manage Risk & Deliver Long Term Goals Project Guiding Principles Focus on Strategic Competencies Create Center of Excellence for weld, paint, assembly Outsource non-strategic processes Create sustainable Mexico plant with Polaris Culture Enhanced Process Designs Quality must be better at new locat
Slide 10: Monterrey Facility: Groundbreaking to Production in Months
10 Monterrey Facility Groundbreaking to Production in 9 months
Slide 11: Monterrey Operations
11 Monterrey Operations Flexible Plan, Effective Logistics, Strong Labor Pool Facility 425,000 Square Feet 200,000 Square Feet Expansion 37 Dock Doors, 4 Ramps Two Story Office 28ft Clear Height Air Conditioned Facility Processes Vehicle Assembly (3 lines) Chassis Welding Metal Paint (Powder/E-coat)
Slide 12: Monterrey Production Ramp Up
Monterrey Production Ramp Up 12 Great Start in 2011, Continued Growth Vehicle Assembly Engine Assembly Headcount Actual Actual Actual 22,500 20,000 Units Units Employees
Slide 13: NA Realignment: Financials
13 NA Realignment: Financials Manufacturing Realignment – Monterrey Cost Charged to P&L (in millions) Savings (in millions) Opportunity for Future Margin Expansion Estimated total project costs FY 2011 actual FY 2012 guidance Project to-date Q4 2011 actual $27 - $28 $15 $1- $2 Anticipated annualized
Slide 14: Polaris North American Manufacturing Operations
Polaris North American Manufacturing Operations 14 Roseau 745,500 Square feet Products: Snow, ATV, SxS Recent Initiatives: -ATV’s consolidated to one assembly line -SxS’s transitioned to high volume assembly -Metal fabrication processes added Osceola 285,800 Square feet Products: Engines Recent Init
Slide 15: Operations is Competitive Advantage
Operations is Competitive Advantage 15 3-5 Year Objective: 3 Year Results: Excellent Progress, Significant Potential Lean Enterprise for world class quality, cost, lead times Manufacturing realignment: excellent execution 29% Volume decrease / 56% volume increase 2+ Acquisition integrations complete
Slide 16: Making Growth Happen
MAKING GROWTH HAPPEN Dave Longren, VP Off-Road Vehicles March 15th, 2012
Slide 17: ORV Business Breakdown
ORV Business Breakdown Bobcat RANGER & RZR #1 PRIORITY; SPORTSMAN REMAINS SIGNIFICANT RANGER & RZR ATV #1 business for revenue and profits Large business with significant profits Incremental Growth Opportunity RANGER & RZR #1 PRIORITY; SPORTSMAN REMAINS SIGNIFICANT All Other All Other Bobcat Defense
Slide 18: ORV Customer Profiles
RANGER = MOSTLY WORK; RZR = MOSTLY PLAY; SPORTSMAN = BOTH ORV Customer Profiles Farming/Ranching Recreation/Trail Recreation/Trail Property Dunes Farm Hunt Desert Hunt Rec/Trail Hunt Property 70% 80% 48% Incremental to Polaris (Did not consider any other Polaris products) RANGER = MOSTLY WORK; RZR =
Slide 19: ORV Industry Trends
ORV Industry Trends Expect Overall ORV Industry Flattish In 2012 Expect Overall ORV Industry Flattish In 2012
Slide 20: ORV Share Results
ORV Share Results TWO TIMES SHARE OF NEXT COMPETITOR TWO TIMES SHARE OF NEXT COMPETITOR Best Overall Share Performance In Polaris History Upper 20’s Share In ATV; SxS Estimated 40 Share Overall ORV Share Estimated at mid 30’s
Slide 21: Innovation Drives Share Gains
Innovation Drives Share Gains Winning the Competitive Battle Source: Crocker Data Honda John Deere Kawasaki Kawasaki Can-Am Arctic Cat John Deere Kubota Kubota Winning the Competitive Battle Yamaha
Slide 22: ORV Product Armada
ORV Product Armada Breadth & Depth of Product Offering Innovation Speed to Market Customer Focus
Slide 23: ORV Overall Results
ORV Overall Results RANGER – Consistent incremental growth RZR – Consistent incremental high growth Sportsman – Consistent share growth Military & Bobcat – Adjacent high growth Guidance
Slide 24: ORV Growth Plan
ORV Growth Plan Aggressive Plan To Maintain Growth Aggressive Plan To Maintain Growth m business p c d v l c
Slide 25: ORV N.A. Dealer Inventory
10 10 ORV N.A. Dealer Inventory Dealer Inventor y To Support Retail Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2006 Actual 2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Actual N.A. dealer inventory up 2% from 2010 ATV dealer inventory down 8% from 2010 Side-by-side inventory up due
Slide 26: RZR XP Xtreme Performance
RZR XP 4 900 Xtreme Performance For 4 STRONG PORTFOLIO, INTEGRATED ARCHITECTURES, SHORT LEAD TIMES ? ? ? Leverage New Products RZR Trail Value Sportsman 850 H.O. Xtreme Performance RANGER Crew Diesel Multi-Passenger Diesel Even Stronger MY13 Product News MY’12 MY’13 MY’12.5 STRONG PORTFOLIO, INTEGRA
Slide 27: Best Class Awards
BEST 500 CLASS WINNER BEST 500 CLASS RUNNER UP BEST 2 UP BEST HARDCORE SXS BEST HARDCORE RUNNER UP BEST BIG BORE RUNNER UP BEST 400 CLASS SPORT UTILITY RUNNER UP BEST DUAL PURPOSE UTV RUNNER UP Sportsman 550 EPS Sportsman 500 H.O. Sportsman Touring 850 H.O. Sportsman 400 H.O. RANGER 500 EFI Sportsma
Slide 28: 2012 Editors Choice and Best Buy Awards
2012 OUTDOOR LIFE EDITORS CHOICE ATV 2012 CONSUMER DIGEST BEST BUY ATV & UTV 13 BEST 500 CLASS UTILITY OFF-ROAD VEHICLE OF THE YEAR BEST HIGH-PERFORMANCE SXS BEST RECREATION CLASS SXS Sportsman 550 RZR RZR XP 900 RANGER XP 800
Slide 29: 10% Growth 2009-2011
) PSLARIS' 10% GROWTH 2009-2011
Slide 30: RANGER Family Branding/Positioning
MARKET/BRAND POSITION WILL CONTINUE TO WIN! RANGER Family Branding/Positioning NEW SEGMENTS & DOMINANT PRODUCTS DRIVING GROWTH XP 700 XP 800 400 Mid EV Diesel 500 EFI Mid Crew 500 Crew Diesel NEW SEGMENTS & DOMINANT PRODUCTS DRIVING GROWTH
Slide 31: RANGER New Products Are Selling
ATV SxS Bobcat RANGER MY ’ 12 New Products Are Selling CONSUMER INSIGHTS DRIVE GROWTH RANGER = Top Customer Improvements Diesel Crew = Incremental Opportunity Limited Editions = Drive Retail Improved Consumer Comfort Hills = HD Engine Braking Incremental Customer International/Military Opportunity F
Slide 32: RZR Retail Results
TRAIL HIGH 4-SEAT PERFORMANCE ORV RZR Retail Results INCREMENTAL NEW PLAYS WORKING TRAIL HIGH 4-SEAT PERFORMANCE Strong incremental RZR growth as new segments launched Clear leader in all recreation segment RZR (no RANGER ) is #2 in SxS market share (behind RANGER ) INCREMENTAL NEW PLAYS WORKING RZR
Slide 33: RZR Family Branding / Positioning
POSITIONING + CUSTOMER SOLUTIONS MARKET / BRAND POSITION NEW 11/11 WHY WE CONTINUE TO WIN! NEW 1/12 RZR Family Branding / Positioning INDUSTRY LEADING MARKET SEGMENTATION DRIVING GROWTH POSITIONING + CUSTOMER SOLUTIONS MARKET / BRAND POSITION RZR is the ONLY Line of Recreational / Sport SXS’s with W
Slide 34: Post-Launch Driving Awareness
Post-Launch Driving Awareness FULL GO-TO-MARKET DEALER, DSM & CONSUMER FULL GO-TO-MARKET DEALER, DSM & CONSUMER
Slide 35: RZR MY'12 Xtreme Performance
ATV SxS Military Bobcat RZR MY’12 Xtreme Performance For 4 Unmatched Performance & Ride Quality For 4 NEW! RZR XP 4 900 Power – ProStar 900 EFI Engine 88HP twin-cylinder, 4 valve, high revving DOHC Lightweight, compact, durable transmission Suspension – Long Travel 3-Link Trailing Arm Independent Re
Slide 36: Growth 2009-2011
GROWTH 2009-2011
Slide 37: Sportsman MY'12 New Products
ATV SxS Military Bobcat Sportsman MY’12 New Products LISTEN TO OUR CUSTOMERS NEW! MY’12 Sportsman 850 H.0. NEW! MY’12 Sportsman 400, 500, 800 77HP – For the Same Money 20% More Acceleration #1 Customer Request 21% More Capacity New Kenda Tires #2 Customer Request
Slide 38: International Growth
International Growth EMEA – Continued strong growth, Developing unique market models SxS market hyper growth opportunity APLA – Developing market segments Brazil, China & India building market & establishing partners
Slide 39: Military Results
Military Results POSITIONED FOR GLOBAL GROWTH Gaining momentum – support Special Operations Force demand Over 4,000 vehicles in theater Industry leader in the ultra light vehicle market Global growth opportunity
Slide 40: New Military Products
New Military Products #1 POSITION IN ULV MILITARY MARKETS
Slide 41: Bobcat Partnership Results
Bobcat Partnership Results BOBCAT PARTNERSHIP STRATEGY = GROWTH OPPORTUNITY + + Compact Construction Manufacturer Off-Road Vehicles Manufacturer
Slide 42: Bobcat Partnership Results
Bobcat Partnership Results BOBCAT DELIVERING RESULTS – POTENTIAL REMAINS $300M market opportunity – Kubota market leader Bobcat retail – gaining momentum CY12 Revenue stable Next level of growth – Bobcat co-developed products on schedule for MY13 impact
Slide 43: ORV Margin Expansion
ORV = STRONG MARGIN EXPANSION RESULTS ORV Margin Expansion Cost down – engineering and purchasing Pricing – leveraged targeted opportunities (remain competitive) Monterrey – impact just beginning
Slide 44: ORV Future Strategy Summary
ATV SxS Military Bobcat ORV Future Strategy Summary THE FUTURE LOOKS BRIGHT FOR OFF-ROAD VEHICLES Incremental SxS Growth Profitable ATV Share Expand Margins Military Bobcat & Int’l Strong RANGER product plan Strong RZR product plan SxS market has upside Sportsman strong Still room to innovate Margin
Slide 45: Positioned well for continued growth
RANGER MILITARY & BOBCAT RZR SPORTSMAN INTERNATIONAL Positioned well for continued growth Adjacent market growth opportunity Strong product portfolio continued high growth Entry value to high performance multi-passenger Continuing to win Expanding SxS sales, new market opportunities