Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Investor Day (July 2008)
144 slides from Polaris's investor day presentation, Jul 24, 2008
Slide 1: Polaris Analyst/Investor Meeting
Polaris Analyst/Investor Meeting Thursday, July 24, 2008 Las Vegas, NV
Slide 2: Momentum - Agenda for Today's Meeting
Momentum Agenda for Today's meeting
Slide 3: Private Securities Litigation Reform Act of 1995
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: 2008 Analyst Meeting - Bennett Morgan
2008 Analyst Meeting Las Vegas Bennett Morgan President & COO
Slide 5: 2008 - Momentum
2008 - Momentum Bennett J. Morgan President and Chief Operating Officer
Slide 6: The Goals
The Goals 1. Win in the Core Grow market share in snowmobiles and ATVs. Leverage PG&A and Financial Services to deliver superior total value. 2. Delivering Operational Excellence Industry-leading quality in every product line. > 5% productivity every year. A lean enterprise, driven by robust simple
Slide 7: 2008 Year-To-Date
2008 Year-To-Date Strong first half financial results continue. Exceeding expectations as we did in 2007. Strong business results Outperforming peers in a difficult environment Last night you saw one of the largest new product launches in the Company's history Polaris fundamentals are healthy; momen
Slide 8: 2008 Challenges
2008 Challenges The economy / outside world is difficult and will remain so through 2008 Housing weakness: home values -7% to -9% in 2008 Oil @ $135+ per barrel; gas $4.00+ per gallon and rising Commodity costs are escalating rapidly. Dow Chemical +20-30% price increases Unemployment has jumped to 5
Slide 9: 2nd Half of 2008
2nd Half of 2008 Expect continued weak consumer economy - high oil prices, continued housing and credit concerns, commodity pressures Comparisons are stronger in back half of 2008 as we anniversary the initial RANGER RZR(tm) shipments Remain confident in achieving our stated operating results expect
Slide 10: Why Polaris Will Continue to Win
Why Polaris Will Continue to Win 1. Winning in the Core Snowmobile business is healthy again and growing Innovative new product introductions which can grow share Dealer inventory under control but will be driven down further Industry-leading quality
Slide 11: Why Polaris Will Continue to Win
Why Polaris Will Continue to Win 1. Winning in the Core Snowmobile business is healthy again and growing Innovative new product introductions which can grow share Dealer inventory under control but will be driven down further Industry-leading quality Successfully Diversified the Polaris ATV Business
Slide 12: Win in the Core - ATV Unit Sales by Product Category
Win in the Core... ATV Unit Sales by Product Category Side-by-side U.S. "Core" ATVs Military Int'l Canada 0.237 0.553 0.005 0.078 0.128 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 0.45 0
Slide 13: Why Polaris Will Continue to Win
Why Polaris Will Continue to Win 1. Winning in the Core Snowmobile business is healthy again and growing Innovative new product introductions which can grow share Dealer inventory under control but will be driven down further Industry-leading quality Successfully Diversified the Polaris ATV Business
Slide 14: Achieve Operational Excellence - End Game
2. Achieve Operational Excellence What's the End Game Look Like? 2005 2006 2007 2008 East 23 21 23 28 West 3 North Guidance Dollars (in Millions) 22.0% 21.7% 22.1% Expect gross margins to increase up to 80 basis points in 2008 Sustained Greatness Total Company Gross Margins Most satisfied customers
Slide 15: Polaris Commodity Consumption
Polaris Commodity Consumption Primary Raw Materials (represents approximately 18% of COGS) The costs for these commodities combined, are expected to increase in excess of 100 bpts for the full year 2008 compared to 2007 before steps being taken by Polaris to offset/postpone some of the costs increas
Slide 16: Why Polaris Will Continue to Win - Growth Businesses
Why Polaris Will Continue to Win 4. Growing Aggressively in our Growth Businesses - $200 million+ in 2008 Leading the growing Side-by-side industry - new product innovation, RZR, RZR S, new RANGER platform, RANGER HD, aggressive investment Victory - Vision growth and market penetration - 10th Year i
Slide 17: Why Polaris Will Continue to Win - Growth Businesses
Why Polaris Will Continue to Win 4. Growing Aggressively in our Growth Businesses - $200 million+ in 2008 Leading the growing Side-by-side industry - new product innovation, (all new Sportsman platform, RZR, RZR S, new RANGER platform, RANGER HD), aggressive investment Victory - Vision growth and ma
Slide 18: Implications to Polaris
Implications to Polaris Operational Excellence - Consumer - Quality, Cost, Speed are more critical than ever - Transform Polaris. Cost pressures increasing rapidly Quality - remains job #1: expectations increasing quickly Speed - differentiation and flexibility as a competitive advantage The externa
Slide 19: The Goals
The Goals 1. Win in the Core Grow market share in snowmobiles and ATVs. Leverage PG&A and Financial Services to deliver superior total value. 2. Delivering Operational Excellence Industry-leading quality in every product line. > 5% productivity every year. A lean enterprise, driven by robust simple
Slide 20: Snowmobile Division
Snowmobile Division Scott Swenson Vice President & General Manager Analyst Meeting July 24, 2008
Slide 21: Product is Everything
Product is Everything Dominant Ride and Handling delivering on targeted consumer needs Competitive Powertrain Solutions balancing reliability, performance, and cost Integrated G&A product solutions Differentiate with styling & design Competitive Advantage Price / Value / Quality leader in the indust
Slide 22: Snowmobile Industry Demographics
Snowmobile Industry Demographics Registered Snowmobiles - U.S. 1.6 million Registered Snowmobiles - Canada .7 million Registered Snowmobiles - Europe .5 million Average Age 41 % Male 90% Married 75% Median Annual Household Inc. $75,000 First Time Buyers 8% Avg. Miles Ridden 1,020 % usually Trailerin
Slide 23: State of Snowmobile Market
State of Snowmobile Market Inconsistent snowfall Dealer Inventory levels down 40% vs. LY Promotional spending moderating Dealer profitability up slightly due to increased service business Shift to 4-Stroke slowing ... 22% of industry sales EPA Impacts MY '10 & MY '12 Price increases Industry Stable
Slide 24: Worldwide Snowmobile Industry Retail
Worldwide Snowmobile Industry Retail Industry Up 3% in '08 ... 1st Time in 10 Years
Slide 25: Snowmobile Industry Trend
Snowmobile Industry Trend * Season ended March 31
Slide 26: Snowmobile Industry Segments (North America)
Snowmobile Industry Segments (North America) Growth in Mountains, Crossover & Utility
Slide 27: Worldwide Snowmobile Industry Sales by Region
WORLDWIDE SNOWMOBILE INDUSTRY SALES BY REGION North Central US Northeast US Western US E. Canada W. Canada Central Canada International Pie 2 0.19 0.14 0.16 0.13 0.09 0.1 0.21 2007/2008 Polaris Growth Opportunities in Int'l/Canada/NE
Slide 28: Operational Excellence
Operational Excellence Quality Customers are relatively happy; industry net promoter score (NPS) @ 66% Polaris driving to be #1 in industry for MY '09 (NPS & PP100) Speed Simplification drives speed ... Polaris 50% reduction in models over the last 5 years Developing program cadence Cost Big Focus o
Slide 29: Polaris is Focused on the Customer
Polaris is Focused on the Customer #1 Ride & Handling 83% of customers rate it 1 or 2 - Rear Suspension - Weight - Front Suspension - Stability - Steering #2 Engine 72% of customers rate 1 or 2 - Durability - Fuel Economy - Horsepower to Weight - Acceleration - Ease of Starting #3 Ergonomics 37% of
Slide 30: EPA Implications
EPA Implications Polaris Solid plan for emission compliance through MY '12 Technology continues to drive margin pressure Mix of cleaner 2 stroke & 4 stroke engines Dealer More sophisticated engines Technical training is critical Consumer Improved performance/durability Added reliance on dealer for m
Slide 31: Calendar Year 2008 Outlook
Calendar Year 2008 Outlook New Product Intro Went Well Build is up; revenues expected to grow double digits 800 Expansion into all Segments Shift Expansion into Entry, Crossover & Mountain Snow check sales up 50% International utility growth focus: FS WideTrak & Russia Focus communication on Install
Slide 32: Parts Apparel Accessories Financial Services
Parts Apparel Accessories Financial Services Analyst Meeting July 24, 2008 Scott Swenson, General Manager
Slide 33: What Is Pure Polaris?
COMPETITION: Aftermarket: i.e.; Parts Unlimited, Tucker Rocky, MotoVan, Indirects: Other OEM's WHAT IS PURE POLARIS? Service Parts, Accessories, Apparel & Retail Financial Services 50,000 SKU's, $300+ Million in Sales in 2008 Highest Operating Margins
Slide 34: Growth Initiatives
Growth Initiatives Merchandising - Make retail environment sizzle Markets - International - Military - New Channels Quality - Ship the dealer accurately what he wants when he wants it. - Easiest to order from Pure Polaris Team - Strongest in the business The Pure Polaris Goals . . . . Grow revenue f
Slide 35: PG&A Sales Growth
PG&A SALES GROWTH '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 14% 16% 14% (3%) 10% 10% 12% (1%) 9% 10+% $=millions
Slide 36: 2007 PG&A Revenue Mix
ATV & SxS, 72% PRODUCT MIX BY GEOGRAPHY 2007 PG&A REVENUE MIX PRODUCT MIX 2007 BY PRODUCT LINE PRODUCT MIX 2007 BY BUSINESS UNIT
Slide 37: PG&A Growth
PG&A Growth SxS, Victory & International Driving Growth
Slide 38: Sales/Distribution (North America)
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 Simplify order process for dealers - Automated on-line form - Factor in o
Slide 39: Innovation Drives Sales
INNOVATION DRIVES SALES ATV: 60 New Accessories Polaris Winch 3,500 lb & 2,500 lb. Brushguard: Extreme & Deluxe Wheels/Tires: 15" ... 6 total XP Injection Molded Rack Extenders XP Front & Rear Cargo Boxes Touring Rear Cargo Bag APPAREL Demon Helmet Racing Apparel: Jacket, Pants, Jersey Chest Protect
Slide 40: Retail Financial Services
RETAIL FINANCIAL SERVICES Focus is Approval Rates - Retail Credit mix has shifted to installment in 2008 - Overall approval rates are flattish and above 40%. Regional differences ... South is tough. - Through the door and approved FICOs down slightly but not material - Finance penetration rate flat
Slide 41: Takeaways
TAKEAWAYS PG&A growth is balanced across all product lines and regions - Sales up double digits in 2008 - Innovation drives growth ... 200+ new accessories - Integration with vehicles at an all time high - SxS & Victory continue to provide growth opportunities Continue to be highest margin opportuni
Slide 42: Analysts Meeting - Victory
Analysts Meeting July 23rd, 2008 Las Vegas, Nevada
Slide 43: Topics
Topics Overview The Destination The State Of The Brand The State Of The Business Road Map For The Future Road Map For The Future Road Map For The Future Road Map For The Future Road Map For The Future Road Map For The Future Road Map For The Future
Slide 44: Victory Overview
Overview Victory, The New American Motorcycle. Launched In 1998. First Day Of Production July 4th. First Model, 1999 V92C. 2009 Model Year - Our 10th Anniversary. Competing In Premium Cruiser & Touring Segments (> 1,400 cc). Large, Attractive Segments. High Selling Prices & Margin Opportunity. Relat
Slide 45: The Destination
The Destination Originally Viewed As $300 - 500 Million Long -Term Opportunity. 10th Anniversary Great Time To Reflect On Our Progress And Look To The Future. Motorcycles Are A Key Pillar Of Polaris 10 Year Strategic Plan: Growth, More On-Road, More Global. We Believe By 2017, $500 Million + Is Atta
Slide 46: The State Of The Brand - Positioning
The State Of The Brand - Positioning New / Modern Old / Heritage Import Brand American Brand Note: The above logo's are register trademarks of the respective companies
Slide 47: Evolved The Brand
From: To: From: To: From: To: Evolved The Brand
Slide 48: Victory DNA
Victory DNA: Modern Rendition Of Traditional American Cruisers & Touring Motorcycles. Dynamic Lines Giving Strong Sense Of Motion. Long And Low Proportions. Smooth Flowing Lines. Clean And Minimal Look. Refined Surface Details. Signature Lights.
Slide 49: Dynamic Lines Giving Strong Sense Of Motion
Dynamic Lines Giving Strong Sense Of Motion Long And Low Proportions Smooth Flowing Lines Smooth Flowing Lines Smooth Flowing Lines Smooth Flowing Lines Smooth Flowing Lines Smooth Flowing Lines Smooth Flowing Lines Smooth Flowing Lines Smooth Flowing Lines Smooth Flowing Lines Traditional Fender Vi
Slide 50: Clean And Minimal Look
Clean And Minimal Look Refined Surfaces And Details Refined Surfaces And Details Refined Surfaces And Details Refined Surfaces And Details Refined Surfaces And Details Refined Surfaces And Details Refined Surfaces And Details Refined Surfaces And Details Refined Surfaces And Details
Slide 51: Victory Vision Tour - Flagship Brand Statement
Victory Vision Tour - Flagship Brand Statement
Slide 52: Brand Awareness
Grown To ~ 85% Awareness Among Cruiser & Touring Owners, And Those Interested. Of Those Familiar, Describe Victory: Made In America 76% Is An Up & Coming Brand 66% Has Custom Inspired Styling 62% Is Modern 62% High Level Of Performance 55% Stands Out In A Crowd 53% Is A Cool Brand 47% Is A Motorcycl
Slide 53: State Of The Business - Industry Trends
State Of The Business - Industry Trends U.S. Market Overall Grew 15 Consecutive Years To More Than 1 Million New Units In 2006. Cruiser & Touring Growth Driven By Baby Boomers - Riders Graduating Up To Cruisers & Touring, Returning Riders. Market Growth Began Slowing Two Years Ago With Higher Gas Pr
Slide 54: Victory Motorcycles Sales
2005 2006 2007 2008 Sales 99 113 113 100 5 ($ in millions) Victory Motorcycles Victory Sales 2008 Objectives: Penetrate the luxury touring market segment with a full year of Vision models Grow market share Maintain industry-leading quality Strengthen dealer fundamentals Guidance Sales expected to de
Slide 55: Victory Vision Launch Update
Victory Vision Launch Update Record 40 Million Impressions Generated From NYC Launch. ~ 1 Million Visits To Vision Website Section. Production & Initial Shipments Started As Scheduled. Retail Sales Slightly Behind Plan As Touring Segment Down Vs. Forecast. Strong Gains Have Begun In Touring Market S
Slide 56: Demographics - Who Buys Victory & Why?
Demographics Who Buys Victory & Why? Men 35-54 HHI $80,000+ Already interested in cruiser Some College Enjoy working with their hands Patriotic Buy American Riders - 10+ years experience
Slide 57: Attracting A Broader Audience
Attracting A Broader Audience Vegas 8 Ball Hammer S Vegas Jackpot Kingpin Vision Tour Median Age 35 44 46 49 51 Median Years Riding 10 20 20 30 30+ Median Income 64 94 88 93 91 Median Transaction 13.5 19 20.2 18 21 Parts & Accessories 1.0 1.0 1.4 1.5 1.5 Riding Gear .2 .3 .4 .4 .5 Extended Service C
Slide 58: Why Customers Buy Victory
Why Customers Buy Victory Why Customers Buy Victory
Slide 59: Customer Satisfaction
Customer Satisfaction Victory Owners 94% Satisfied Victory Rated Highest In Ownership Satisfaction 4 Years In A Row Victory Owners Now Highest Intent To Repurchase Same Brand Also Most Likely To Recommend Their Brand Victory Dealers Ranked # 2 In Both Sales & Service Satisfaction Satisfaction Satisf
Slide 60: ARS. BIKES. BELIEF.
ARS. 15 BIKES. 1 BELIEF. ali
Slide 61: NEVER IDLE. BREAKTHROUGH,
NEVER IDLE. BREAKTHROUGH,
Slide 62: YEARS FORWARD. ZERO STEPS BACK.
10 YEARS FORWARD. ZERO STEPS BACK.
Slide 63: Victory Road Map
Victory Road Map Positioning Our Motorcycle Business For Significant Growth Continue Building The Victory Brand. Leverage The Highest Customer Satisfaction, Intent To Repurchase & Refer In The Industry. Continue To Expand The Model Line-Up Into New Segments & Gain Share In Existing Segments. Continu
Slide 64: Polaris International Analyst Meeting
Polaris International Analyst Meeting Las Vegas, July 24th, 2008 Truls Tvete
Slide 65: International At A Glance
International At A Glance Approximately $2B Marketplace ^90 Employees 7 Subsidiaries, 40+ Distributors, 100+ Countries, 1500+ Dealers Challenges: Cultural, Language, Time, Currencies
Slide 66: International 2008 - The Sales Growth Continues
International 2008 The Sales Growth Continues 2006 Actual: $233MM 2007 Actual: $258MM 2008 Projected: $320-325MM Gaining Share in Most of our Key Markets Big Growth Opportunity Still Remains We have the Best Products Ever and There's More on the Way
Slide 67: International Sales as a % of Total Sales
International Sales as a % of Total Sales
Slide 68: International Growth
International Growth ——Op Profit —s—Revenue a Units | 2004 2005 2006 2007 2008E
Slide 69: International Specialities
International Specialities On Road ATVs in Southern Europe Utility Usage in Northern Europe No Significant Ranger Sales (Until RZR) 2, or Even 3 Years Product Warranty Dealers Carry Limited Inventory
Slide 70: Polaris vs. the Competition
Polaris vs. the Competition Close to the Customer Enthusiastic Riders Flexible, Lean Organization Focused Approach Having Fun !
Slide 71: International Structure
International Structure HUB 1 Northern Europe 4 subsidiaries 7 distributors HUB 2 Southern Europe, Middle East, Africa 2 subsidiaries 18 distributors HUB 3 Asia, Pacific 2 subsidiaries 7 distributors HUB 4 South America 7 distributors One of the "BRIC's" in each hub 42% % of Est. 2008 Sales 41% 10%
Slide 72: Biggest Markets
Biggest Markets Country ATV/SxS Snow ATV trend Snow trend PII position France 49500 300 Germany 23000 250 Aus/NZ 20000 300 Sweden 8800 9000 Finland 8500 7000 UK 15000 100 Spain 10500 100 Italy 10500 100 Norway 5500 4200
Slide 73: International Product Mix
International Product Mix Most profitable product line Mixed distribution strategies No. 3 in Scandinavia High utility and touring usage Innovative products No. 1 in Europe in ATVs Most complete line-up SxS is 25% of total ATVs Products (% of Projected 2008 Sales) ATVs and SxS 71% Snow 12% PG&A 15%
Slide 74: International Growth Opportunities
International Growth Opportunities New Products at Current Markets (RZR, Victory) Develop Usage in Current Markets Gaining Market Share in Current Markets New Market Expansion (CE, Brazil, Russia) More Subsidiaries/Dealer Direct Markets
Slide 75: International Side-by-side Marketplace
International Side-by-side Marketplace Commercial Agriculture Military Recreational 0.17 0.32 0.05 0.46 RANGER RZR(tm): Game Changer! Market Segments (est.) Geographic Market Splits Global Hub #4 Global Hub #3 Global Hub #2 Global Hub #1 0.14 0.2 0.35 0.31 Very small market today - less than 20,000
Slide 76: Initial Victory Market Rationale
Initial Victory Market Rationale 8,072 Aus/NZ 6,930 Other 2,946 Spain 3,631 Italy 3,781 Scandinavia 4,994 UK 54,661 TOTAL 7,331 Germany 11,316 Japan 5,660 France Market Volume Figures relate to Premium Cruiser & Touring models (+1,400cc) Focussed launch in 8 markets giving 67% market coverage 6 of 8
Slide 77: Wrap Up
Wrap Up Positioned for Future Growth Flexible and Strong Team Focused on Winning
Slide 78: N.A. Sales & Corporate Marketing
N.A. Sales & Corporate Marketing Mike Jonikas - Vice President July 24, 2008
Slide 79: N.A. Sales & Corporate Marketing - Goals
N.A. Sales & Corporate Marketing The Goals: The Foundation: 1. Grow Share & Reduce Inventory High Performing Team Proactive planning 2. Drill Order & Shipment Goals Integrated across entire Polaris enterprise Externally oriented to deliver results 3. Operational Excellence Polaris passion - our adva
Slide 80: N.A. Dealer Network Overview
N.A. Dealer Network Overview Optimism Improved Cash Flow w/Polaris Lines Reduced inventory & interest $ expense Solid RANGER & Vision retail selling margins Snowmobile fundamentals (quality, snowfall, turns) Accessorized vehicle sales (better transaction $ ring) Awesome New Polaris Products Improved
Slide 81: Transform Go-to-Market Business Model
Transform Go-to-Market Business Model Retail Pull Demand brand preference before the store Maximize Customer Traffic awesome products, effective marketing Consumer Satisfaction next frontier beyond product quality Durables Push win on the sales floor - together with dealers Increase Sales Closing Ra
Slide 82: Maximize Customer Traffic
Maximize Customer Traffic Product Line Awesome Product Effective Marketing ATV 99% new Sportsman XP 2-up Sportsman Redesigned Outlaw +64% Advertising Impressions 1 Million Installed Owner Base SxS Work - new RANGER, Crew, HD Play - RZR, RZR S +101% Advertising Impressions Snow Core - 600 SDI Ultimat
Slide 83: Maximize Customer Traffic - Co-op Media Events
Maximize Customer Traffic Co-op Media Events stronger "buy Polaris now" advertising presence Polaris coordinated for increased impressions (media purchase leverage) Polaris network = 3 events (Mar/Apr, Aug/Sep, Nov/Dec) Victory network = 2 events (Apr/May, Aug/Sep) Hot Prospects connecting prospects
Slide 84: Consumer Satisfaction
Consumer Satisfaction Next Frontier Beyond Product Quality Consumers tell others to buy Polaris product To purchase Polaris product at specific dealer To service Polaris product at specific dealer Strong Consumer Word of Mouth Across Entire Enterprise - Including Dealers
Slide 85: Increase Sales Closing Rate
Increase Sales Closing Rate Salesperson Training knowledgeable salespeople are more effective Live In-Market "Way Out Training Tour" "Victory Selling Skills" On-Line "Know The Way Out" modules Salesperson Loyalty capture their hearts & minds Create Incentive To Be THE Best Sales fundamentals: traini
Slide 86: Max Velocity Program
Max Velocity Program Maximize Retail Sales Maximize Inventory Turns Maximize Market Share High Frequency of Business Management (bi-weekly) Across Entire Enterprise - And At Dealership Level
Slide 87: Max Velocity Program - Maximize Retail Sales
Maximize Retail Sales Defined "stepped" sales process at dealership level Joint bi-weekly retail planning and execution (dealer & Polaris sales) Common metrics via Traffic Log Pro logging system Maximize Inventory Turns Merchandising minimum stocking levels (ATV & RANGER SxS) Joint bi-weekly plannin
Slide 88: Test Pilot Dealer Response
Test Pilot Dealer Response (play video) Max Velocity Program
Slide 89: Significant Change To Powersports Model
Significant Change To Powersports Model Across entire Polaris enterprise Dealer retail sales process commitment Phased Roll-out Strategy ATV & RANGER SxS initially Fall 2008 = 175 dealers in Northeast U.S. Future = 75% of North American retail sales Max Velocity Program Transforming Go-to-Market Bus
Slide 90: N.A. Sales & Corporate Marketing - Goals
N.A. Sales & Corporate Marketing The Goals: The Foundation: 1. Grow Share & Reduce Inventory High Performing Team Proactive planning 2. Drill Order & Shipment Goals Integrated across entire Polaris enterprise Externally oriented to deliver results 3. Operational Excellence Polaris passion - our adva
Slide 91: Polaris ATVs
= PoLaARIsS RED'S) TOUGHEST ATVs”
Slide 92: ATV 2008 Plan
ATV 2008 Plan $1.0B Grow Military Globalize Diversify Core Best ATV Ever Sportsman XP 99% New More Power Better Ride Industry Leading Quality Flawless Global Launch 1M Sportsman Owners Gain Share + Reduce Inventory + Grow Profit 2008 2007 Operational Excellence Quality Improve Net Promoters Reduce W
Slide 93: ATV YTD 2008 Summary
Sportsman XP Best ATV Ever Gaining Share Winning In Core with 500HO & #1 in 2Ups Reducing Inventory 5 year Low Diversifying Growing International + Military Business We Are Winning in a Tough Market! ATV YTD 2008 Summary G G Y G
Slide 94: Growing Sales & Share In Our Core
Growing Sales & Share In Our Core FS Sportsman YTD NA Retail + 5%
Slide 95: Polaris Is Gaining Share With Sportsman
Polaris Is Gaining Share With Sportsman Losing Yamaha Suzuki Kawasaki Polaris Honda Can Am Arctic YTD N.A. Market Share Gaining
Slide 96: N.A. ATV Dealer Inventory
N.A. ATV Dealer Inventory 45% Less Inventory Over 3 Years
Slide 97: Very Tough Market
Only Truly Committed Will Win Very Tough Market Industry Sport Youth Entry Level Dealer Inventory Still Too High N.A. ATV Situation
Slide 98: Competitive ATV News
Most Are Downshifting in ATVs Little / No News Honda Arctic Kawasaki Suzuki Chinese Polaris Can Am Yamaha Competitive ATV News Still Aggressive
Slide 99: Polaris Is Committed To Winning
American Tough Leading The Industry & Playing to Win Polaris Is Committed To Winning Continue Taking Down Dealer Inventory 2H Plan Aggressive Marketing Support Polaris Market Share MY09 Innovation Power Ride
Slide 100: ATV MY09 Product Overview
Biggest News In A Decade ATV MY09 Product Overview Grow With Sport Dominate Youth Stronger In Every Segment #1 2 ups Stronger Core Take Back Big Bore
Slide 101: Grow With Outlaws
Grow With Outlaws DUNES 525 S TRAIL 525 IRS TRACK 450 MXR Most Complete Line Of Sport ATVs
Slide 102: Dominate Youth
Dominate Youth Fun, Safe and Cool - Only From Polaris Ranger RZR 170
Slide 103: Grow & Lead With 2-Ups
Grow & Lead With 2 Ups The Only Growing ATV Segment The Most Profitable ATV Segment Polaris Is The Leader - Best Sales + Best Product #1 In 2-up ATVs ATV of the Year + #1 Seller
Slide 104: All-New Sportsman XP
99% New. More Power. Better Ride. All-New Sportsman XP
Slide 105: Marketing Summary
Marketing Summary 1. Creating More Demand ++++ TV / PRINT / PR / Online 1,000,000 Direct Mail / DVD Way More - Way Easier 2. Easiest To Sell I Touch / Videos / POP
Slide 106: Totally Committed To Win
Totally Committed To Win - No One Is Even Close ATV N.A. Plan Driving Traffic & Strengthening Brand Grounded Order # Despite Tough Market Leading Wholesale & Retail Programs Gain Share Reduce Inventory "Killer" MY09 Product "Killer" MY09 Product
Slide 107: Diversify - Globalize and Grow Military
Diversify Core $1.0B 2007 2008 2007 2008 Globalize #1 in Europe EU Tractors On Road Focus Emerging Growth Russia - India - Brazil Sportsman + Military Grow Globalize Diversify N.A. Core Broaden ULTV Reach Build Relationships Army + Marines + AF + Int'l Grow! Grow Military #1 in Military & Europe
Slide 108: Polaris Defense
Polaris Defense Demand For ULTVs Growing Forces More Expeditionary - Efficiently Deployable Low Cost Alternatives To HUMVEE Will Be Necessary Multi-Capable / Functional Vehicles Will Be Critical Global Military Demands Growing-Need Is There Polaris Positioned To Be #1 Player In ULTVs Affordable Util
Slide 109: Department of Defense - Strategic Environment 1950-1989
Department of Defense oS Strategic Environment: 1950-1989 | + Korea (1951): 64 Divisions (18 AC; 21ARNG; 25 USAR) Nuclear War + Vietnam (1967): 40 Divisions (17 AC; 23 ARNG) General War + Cold War End (1989): 28 Divisions (18 AC; 10 ARNG) Major Theater ‘War peace Stke/ Raid Enforcement Peacekeeping
Slide 110: Department of Defense - Strategic Environment 1989-2007
Department of Defense | © Strategic Environment: 1989-2007 Nuclear War + Cold War End (1989): 28 Divisions (18 AC;10 ARNG) + Today (2007): 18 Divisions (10 AC; 8 ARNG) Tan macnn 902002 a oe Pol Peipense ba Se ad 43 Deployments yay Bry Fa in 17 years... are 52 809 spore missions 7 fewer Soller
Slide 111: Low Cost Solutions
Low Cost Solutions 1 Xtreme Performance In The Most Demanding Conditions Weapons Mount Mission Utility Snow Track Kit Water Crossing Rugged Terrain Self Recovery Vehicle Capabilities
Slide 112: Polaris Defense
Polaris Defense $1.0B 2007 2008 2007 2008 More Sales Full Line ULTV Gas JP8 Base MV Parts / Accessories More Products More Customers Long Term Growth Opportunity Army / Air Force/Special Forces National Guard - 30+ States Foreign Militaries - 13 Government Contractors incl: Boeing, BAE, DynCorp Fede
Slide 113: ATV Business - Polaris Is On The Gas
ATV Business Polaris Is On The Gas in ATVs Winning in the Core Gaining Share in N.A. ATVs with Sportsman & Outlaws Industry Leading MY09 Product Sportsman XP + 2Ups + Sport + Youth Strengthening Fundamentals High Quality + Building Brand + Lowering Inventory Diversifying Business International + Mil
Slide 114: Agenda
AGENDA Market Overview Industry Trends RANGER Performance RANGER - The Future 2
Slide 115: Side-By-Side Market Overview
Side-By-Side Market Overview 3 3 Segments Utility: Ag / Multi-Acre Home / Hunt Commercial: Gov't / Landscape / Golf Recreation: Trail / Dunes / Desert / Sport Core Usage Carrying: Small to Medium Loads Transportation: Gear / Family / Friends Hauling / Dumping: Rocks / Dirt / Mulch / Feed / Etc. Hunt
Slide 116: Side-By-Side U.S. Market 2007
Commercial Segment Utility Segment Recreation Segment Commercial 48000 145000 70000 COMMERCIAL / INDUSTRIAL 18% of Market 2% = 3 Yr CAGR RECREATION SEGMENT 27% of Market 71% = 3 Yr CAGR UTILITY 55% of the Market +11% = 3 Yr CAGR Side-By-Side U.S. Market 2007 4 Utility Largest - Solid Growth Recreati
Slide 117: Side-By-Side U.S. Market Growth
2004 2005 2006 2007 SxS Market 165000 202000 237000 263000 Side-By-Side U.S. Market Growth Solid Market Growth Through 2007 3 Yr CAGR = 17% $2.1 Billion Market 5 263K
Slide 118: RANGER Customer Profile
RANGER Customer Profile Distinct Customers - RZR 80% Incremental RANGER = 47 Year Old Male With $80K Household Income Who Hunts, Farms, or Works on Land 6 RANGER RZR = 40 Year Old Male With $96K Household Income Who Wants to Trail Ride, Hunt or Sport Ride
Slide 119: RANGER Revenue Performance
2005 2006 2007 2008 Est. RANGER 291 336 529 772 RANGER Revenue Performance Strong Retail Performance 3 Yr Revenue CAGR = 38% 7
Slide 120: RANGER Financial Performance
2005 2006 2007 2008 Est. RANGER 84 104 169 244 RANGER Financial Performance Profitable Growth 3 Yr Gross Profit CAGR = 43% 8
Slide 121: 2007 Competitive Summary
2007 Competitive Summary Strong Competition - More Expected to Enter #1 Polaris Most Complete Line-Up #2 Yamaha Rhino - #1 Recreation Brand #3 Kawasaki Utility + New Segments Deere Brand + Distribution #4 Kubota Distribution - "Tractor Like" Club Car Golf & Turf EZ-GO Golf & Turf RANK MFG STRATEGY 9
Slide 122: RANGER Strategy
Build A Dominant Side-By-Side Vehicle Business Expand RANGER AND RANGER RZR Operational Excellence to Drive Growth #1 Quality Side-By-Side Vehicle Strongest Side-By-Side Dealer Network Expand Globally RANGER Strategy DOMINANT SIDE-BY-SIDE VEHICLES 10
Slide 123: 2009 RANGER
ea 2009 RANGER Video me 1
Slide 124: Expand RANGER 2009
Hardest Working, Smoothest Riding Ever Built 12 Expand RANGER 2009 + All NEW RANGER Adjustable Dual A-Arms Industry Best Ergonomics 140% More Storage More Travel / Clearance All NEW RANGER HD Variable Assist Power Steering Exclusive Self-Leveling Shocks Custom Paint, Wheels, Seats Lift & Carry Acces
Slide 125: Expand RANGER RZR 2009
RZR Line-Up Doubles for 2009 - Distinct Targets 13 Expand RANGER RZR 2009 + Red Hot RZR Trail / Hunt / Sport Only Trail Capable 50" Wide Fastest Accelerating / 55 MPH Lowest Center-of-Gravity All NEW RZR S Dunes / Desert / Open Spaces Power: 800 H.O. - 63 MPH Premium Long-Travel - 60" Wide Custom -
Slide 126: 2009 RANGER Line-Up
Ultimate Work to Ultimate Performance 14 2009 RANGER Line-Up RANGER Hardest Working, Smoothest Riding RANGER CREW Hardest Working, Smoothest Riding Multi- Passenger RANGER HD ULTIMATE Hardest Working Smoothest Riding RZR 50" Only trail capable Razor Sharp Performance - Trail, Hunt, Sport RZR S 60" U
Slide 127: RANGER Operational Excellence Strategy
RANGER Operational Excellence Strategy #1 Customer Preference = Core Long-Term Strategy 15 RANGER Most Preferred By... Consumers - #1 Net Promoters Throughout Ownership Dealers - Preferred vs. Any Competitive SxS Suppliers/Partners - Profitable / Efficient Partners Delivered with Operational Excelle
Slide 128: 2008 Operational Excellence Plan
Operations Max Efficiency Reduce lead times Manage inventory while growing Improve dealer, supplier, Polaris Balance Sheets Supplier lead times reduced 50% Dealer inventory healthy 2008 Operational Excellence Plan Efficiency + Preference = REAL Power Of Op Ex 16 Go-to-Market Retail Focused Dealer fo
Slide 129: Strongest N.A. Distribution Network
2005 2008 Est. RANGER 1115 1410 Strongest N.A. Distribution Network Strategically Adding High Quality Dealers 27% More Dealers N.A. Over 3 Years 17 Distribution Fewer dealers than competitors Approaching 90% of ATV With LOWER days supply
Slide 130: Expand RANGER Globally
2005 2006 2007 2008 Est. RANGER 12 13 24 64 Expand RANGER Globally Excellent International Growth Opportunities 3 Yr Revenue CAGR = 75% 18 Global RANGER RANGER Solid RZR Strong Start Opportunities Exist Investment $ Supports
Slide 131: RANGER Summary
#1 - Build off RANGER & RANGER RZR 19 RANGER Summary RANGER Hardest Working, Smoothest Riding RANGER RZR Razor Sharp SxS Performance
Slide 132: RANGER Summary
RANGER Summary Industry Solid Growth RANGER Performance Strong 2009 Aggressive Growth Plan Continues RANGER Future Is Bright 20 RANGER Financial Momentum Accelerating
Slide 133: Thomas C. Tiller, Chief Executive Officer
Thomas C. Tiller Chief Executive Officer
Slide 134: The Past Ten Years
The Past Ten Years Polaris Industries Inc. The Past 10 Years Sales and EPS Sales Up 9% to 11% Sales up 88% EPS up 121% (1997 - 2007) EPS $3.40 to $3.48 (+10% to +12%)
Slide 135: Total Return to Shareholders
Total Return to Shareholders January 1, 1998 thru July 17, 2008 Total Return to Shareholders
Slide 136: Important Accomplishments
Important Accomplishments Growth - roughly doubled in size Successfully grew to #1 in Side-by-Side business First company in 60 years to successfully enter motorcycle business Increased global presence - established 7 subsidiaries Substantially upgraded facilities, processes, and technology Much imp
Slide 137: Disappointments
Disappointments Lost market share in snowmobiles and ATVs Decline in Sales / EPS in 2006 Failed to complete KTM transaction Closed PWC business Polaris Professional Series Financial Services Retail Credit with HSBC
Slide 138: Future of Polaris - 10-Year Strategy Direction
Future of Polaris 10-Year Strategy Direction
Slide 139: Polaris' World is Changing
Polaris' World is Changing Some core markets declining The demographics and macro trends are starting to become more challenging Our world is truly global Worldwide supply chain 24/7 media Global competitors Polaris has strong market positions today but we cannot stand still. We never have before. T
Slide 140: Macro Trends Present Challenges to Core Markets
Macro Trends Present Challenges to Polaris' Core Markets Urbanization - people are moving to cities Decline of hunt and farm consumers Aging population in North American and Europe Population trends away from Polaris' traditional core customers Consumer lifestyles Higher costs of energy - green move
Slide 141: 10-Year Direction - Process Overview
10 Year Direction - Process Overview 3 study groups with Board members and management Blank sheet of paper - several options considered Two areas of focus: 2007 - 2010 - Medium Term 2011 - 2017 - Long Term Expect Polaris to be successful over both periods $5 Billion in sales by 2017 is an aggressive
Slide 142: Conclusions - Medium Term Through 2010
Conclusions - Medium Term - Through 2010 Polaris is in a much better position today vs. 18 months ago The basic strategy is working We are optimistic about the medium term (through 2010) Good top line growth through 2010 EPS growth faster than sales through 2010 The product plan is very strong for t
Slide 143: Long Term Vision - Through 2017
Long Term Vision - Through 2017 (10 Year Plan) The existing business is likely to be attractive, but more challenging, ten years out. Many key macro changes will be working against us in our existing business (land access, green movement, demographics, etc.) The keys to long term success of our exis
Slide 144: Thank You - Questions?
Thank You Questions?