Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Q4 2015 Earnings Presentation
28 slides from Polaris's earnings presentation, Jan 26, 2016
Slide 1: Fourth Quarter & Full Year 2015 Earnings Results
POLARIS INDUSTRIES INC. Fourth Quarter & Full Year 2015 Earnings Results January 26, 2016
Slide 2: Safe Harbor
Safe Harbor Except for historical information contained herein, the matters set forth in this document, including but not limited to management’s expectations regarding 2016 sales, shipments, margins, currencies, net income and cash flow, the opportunities for expansion and diversification of the Co
Slide 3: Scott W. Wine, Chairman & CEO
Scott W. Wine Chairman & CEO POLARIS INDUSTRIES INC. Fourth Quarter & Full Year 2015 Earnings Results January 26, 2016
Slide 4: Q4 2015 Sales and Income
Q4 2015 Sales and Income Q4 Sales Q4 Net Income ($ millions) ($ millions) $1,275.0 $135.4 $1,105.6 $110.7 Q4 2014 Q4 2015 Q4 2014 Q4 2015 Lower Q4 sales, operating income and net income ORV/Snowmobile sales down 18%; Motorcycles up 33%; Global Adjacent Markets down 20% Oil/Ag and low snowfall pressu
Slide 5: 2015 Sales and Net Income
2015 Sales and Net Income Total Company Sales Net Income ($ millions) ($ millions) $4,719.3 $454.0 $455.4 $4,479.6 FY 2014 FY 2015 FY 2014 FY 2015 Grew Full Year Sales 5%; Net income flat FY 2015 Sales by Reporting Segments All businesses gained market share in 2015 (includes respective PG&A) Intern
Slide 6: Polaris Strategic Objectives
Polaris Strategic Objectives Vision & Strategy Guiding Principles VISION STRATEGY Fuel the passion of riders, Polaris will be a highly profitable, customer centric, workers and outdoor enthusiasts $8B global enterprise by 2020. We will make the best Best People, Best Team around the world by deliver
Slide 7: Organizational Changes
Organizational Changes Strategic Objectives Performance Priorities Best in Powersports PLUS Global Market Leadership Strong Financial Growth 5-8% annual organic growth >33% of Polaris revenue Performance Sustainable, profitable growth Margin Expansion Net Income Margin >10% Product & Quality Leaders
Slide 8: Bennett Morgan, President & COO
Bennett Morgan President & COO POLARIS INDUSTRIES INC. Fourth Quarter & Full Year 2015 Earnings Results January 26, 2016
Slide 9: N.A. Retail Sales & Dealer Inventory – FY 2015
N.A. Retail Sales & Dealer Inventory – FY 2015 N.A. Powersports Market Share & Retail Sales N.A. Dealer Inventory Market Share FY Retail Sales +5% -5% Existing ORV Models Grew Share in 2% New ORV models 2015 +5% 5% Snowmobiles 2% Slingshot/Indian 1% New Dealers -0% 5% Total Increase Polaris Industry
Slide 10: Off-Road Vehicles (ORV)
Off-Road Vehicles (ORV) Polaris ORV Vehicle Sales Summary ($ millions) Every ORV product line grew retail sales in 2015 -2% $2,747.7 Polaris ORV Q4 2015 retail sales were low- single digits SxS mid-single digits % ATV and ACE® low-single digits % -20% Oil region retail 10% in 2015; upper-teens % $59
Slide 11: Snowmobiles
Snowmobiles Polaris Snowmobile Vehicle Sales Summary ($ millions) N.A. Industry season-to-date (STD) retail over 20% – poor snow conditions ~Flat $322.8 Polaris N.A. retail STD mid-teens % - largest share gainer STD -25% N.A. Dealer inventory for Polaris and Industry $103.5 about 25% New MY’16 RMK®
Slide 12: Motorcycles
Motorcycles “Modern American Muscle” “Legendary” “Building an Icon” Moto-Roadster Est. 1998 Acquired 2011 Est. 2014 Polaris Motorcycle Vehicle Sales Summary ($ millions) Polaris N.A. motorcycle Q4 retail sales low-single digits %, tough comps +74% Indian® ; retail, share, and dealer expansion $607.9
Slide 13: Global Adjacent Markets (GAM)
Global Adjacent Markets (GAM) Global Adjacent Markets Vehicle Sales Summary ($ millions) Axiam® sales in Q4 and 2015 -4% $259.8 #1 - gained share for 2015 $259.8 National Accounts sales -21% Launched completely redesigned GEM® $67.0 Better ergonomics, lower costs, refreshed style $67.0 Military due
Slide 14: Parts, Garments & Accessories (PG&A)
Parts, Garments & Accessories (PG&A) FY 2015 Sales by Category Parts 39% Apparel 8% Accessories 53% PG&A Sales – All Businesses FY 2015 Sales by Geography & Segment ($ millions) FY 2015 Geography Reporting Segments by Reporting Segments +3% +5% +10% Motorcycles $781.1 11% Adjacent 7% Markets -7% 82%
Slide 15: International
International Total International Sales Sales by Region ($ millions) ($ millions) EMEA -5% -12% (cc +2%) (cc +10%) $466 -8% -13% (cc +3%) $135 Q4 2015 FY 2015 Reported Q4 2015 FY 2015 2015 Int’l Sales by Geography/Products (Includes PG&A) Motor- cycles Latin America Asia Pacific Latin (includes Aust
Slide 16: Ken Pucel, E.V.P. Operations, Engineering & Lean
Ken Pucel E.V.P. Operations, Engineering & Lean POLARIS INDUSTRIES INC. Fourth Quarter & Full Year 2015 Earnings Results January 26, 2016
Slide 17: Motorcycle – Spirit Lake Paint Update
Motorcycle – Spirit Lake Paint Update Spirit Lake Paint Facility Upgrades Motorcycle Paint Capacity Meets Demand Outsource Spearfish Spirit Lake Demand 1H 2015 2H 2015 1H 2016 2H 2016 Spearfish Paint Facility On-Line 2016 Capacity Actions Upgrades to Spirit Lake Paint Systems Spearfish and outsourci
Slide 18: Huntsville Enables Lean and Facilitates Growth
Huntsville Enables Lean and Facilitates Growth Retail Flow Management Required Surge Capacity Improved Service Levels to Dealers Dealers Distribution Plant Supply Network Chain Huntsville Gross Profit Improvement Accelerates Lean Progress reduced complexity in Plant network Slingshot in Huntsville E
Slide 19: Mike Speetzen, E.V.P. Finance & CFO
Mike Speetzen E.V.P. Finance & CFO POLARIS INDUSTRIES INC. Fourth Quarter & Full Year 2015 Earnings Results January 26, 2016
Slide 20: 2016 Full Year Guidance
2016 Full Year Guidance Total Company Sales Gross Profit Margin Earnings Per Share (diluted) 90 to 140 8% to % $4,719 2% to 3% 28.4% $6.75 $6.20 to $6.80 bps Constant Currency Constant Currency Constant Currency Flat to 9% Flat to 5% Flat to 50 bps $6.75 to $7.35 2015 Actual FY 2016 2015 Actual FY 2
Slide 21: 2016 Sales Guidance by Reporting Segments
2016 Sales Guidance by Reporting Segments ($ millions) ORV / Snowmobiles Motorcycles Global Adjacent Markets Flat to down -1% mid-single $3,708.9 digits % PG&A PG&A Up High-teens % Snowmobiles +67% Snowmobiles PG&A $698.3 PG&A Indian ORV ORV Victory Indian Slingshot Up mid-single Victory -3% digits
Slide 22: 2016 Gross Profit Margin Guidance
2016 Gross Profit Margin Guidance Q4 2015 FY 2015 FY 2016 By Component Actual Actual Guidance Prior period 28.8% 29.4% 28.4% Production volume/capacity to Product cost reduction efforts Commodity costs Currency rates Higher selling prices Product mix Motorcycle Production Constraints New plant start
Slide 23: Foreign Currency Exposures for Polaris
Foreign Currency Exposures for Polaris F/X Impacts vs. Prior Year Actual Actual FY 2016 Expectations* ($ in millions) Q4 2015 FY 2015 Sales ($35) ($160) ($80) Gross Profit ($23) ($106) ($80) Pretax Income ($12) ($70) ($55) *Assumes exchange rates remain at approximately the rate at the end of 2015 a
Slide 24: Polaris Financial Position
Polaris Financial Position Cash Drivers Capital Summary Dec. 2015 ($ millions) ($ millions) Fav/(Unfav) Dec. 2015 $440 $139 $249 $246 $294 Cash $ 155.3 +13% Debt /Capital Lease Obligations $ 463.3 (105%) $138 $13 $155 Shareholders’ Equity $ 981.5 14% Cash Operating Dividends Capex Net Share Other Ca
Slide 25: Income from Financial Services
Income from Financial Services Income from Financial Services Wholesale Credit PA Receivables Retail Credit ($ millions) ($ millions) Grow in-line +12% with company Approval Rate Penetration Rate $69.3 sales +14% $1,305.3 58% 58% Retail Financing 32% 31% -7% $1,141.1 $18.0 Wholesale Retail Credit Fi
Slide 26: Scott W. Wine, Chairman & CEO
Scott W. Wine Chairman & CEO POLARIS INDUSTRIES INC. Fourth Quarter & Full Year 2015 Earnings Results January 26, 2016
Slide 27: 2016 Business Outlook
2016 Business Outlook Anticipate weak US GDP and weakening global markets Oil/gas and ag/farm economies not improving Powersports markets flat; remain competitive Polaris expected to maintain/grow share Dollar remains strong, currencies again a major headwind International focus on profitability; ex
Slide 28: Thank you
€> POLARIS: Thank you Questions?