Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Robert Baird 2008 Growth Stock Conference
25 slides from Polaris's conference presentation, May 14, 2008
Slide 1: Robert Baird 2008 Growth Stock Conference
Robert Baird 2008 Growth Stock Conference May 14, 2008
Slide 2: Polaris Overview
ATV & Side-by-Side Vehicles Snowmobiles Victory Motorcycles PG&A 0.67 0.1 0.06 0.17 Polaris Overview Founded in 1954 Manufacturer of a diversified mix of high- quality, high-performance motorized products for recreational and utility use Manufacturing and distribution facilities located in Minnesota
Slide 3: Industry Overview
Industry Overview Worldwide Market Size and % change 2007 vs. 2006 Top Three Competitors Industry Drivers Polaris Competitive Advantage ATVs 970,000 units Down 11% Honda Yamaha Suzuki Overall economic conditions New products Industry-leading performance and features; full line of products Side-by-Si
Slide 4: Consistent Financial Performance
Consistent Financial Performance Dollars (in millions) Net Income Per Share from Continuing Operations 1998-2007 $3.36 to $3.46 Up 8% to 12% Sales from Continuing Operations 1998-2007 Up 5% to 7% * A reconciliation of the Company's calculation of cash flow provided to the most directly comparable ca
Slide 5: Consistent Financial Performance: Cash Flow Used to Fund...
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 East 57 61 62 53 52 59 89 90 53 64 65 West 2 North 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 East 14 40 38 52 40 49 76 73 67 132 308 103 West 38.6 34.6 31.6 North 46.9 45 43.9 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2
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: Win in the Core... Maintain Momentum in ATV Business
Win in the Core... Worldwide ATV Industry 2005 2006 2007 2008 Sales 1240 1117 1195 1243 85 Polaris ATV Sales (Includes Side-by-Side vehicles) (millions) Guidance 2008 Objectives for "Core" ATVs: Gain market share in a N.A. ATV industry that is expected to decline double digits in 2008 Further reduce
Slide 8: Win in the Core... ATV 2008 = Positioned For Future Success
Win in the Core... ATV 2008 = Positioned For Future Success More Competitive Model Year 09 Product Line Stronger Brand-World's Toughest ATV Dealer Inventories expected to decline further given economic conditions and operational excellence initiatives Full Year 2008 sales and earnings guidance conte
Slide 9: 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 10: Worldwide Snowmobile Industry Retail 1986 - 2008
Worldwide Snowmobile Industry Retail 1986 - 2008 Win in the Core... Maintain Momentum in Our Snow Business The Market - Snowmobiles Industry experienced its first increase in retail sales since the 1997 season. Low = 104K, High = 261K, Currently 172K In Units 86 87 88 89 90 91 92 93 94 95 96 97 98 9
Slide 11: Win in the Core... Maintain Momentum in Our Snow Business
Win in the Core... Maintain Momentum in Our Snow Business Snowmobile 2008 Polaris Dealer inventory levels at their lowest levels in 10 years Quality remains #1 focus. Continued to see results for MY 2008. New Liberty(tm) 800 CFI engine was well received by consumers and is available in additional mo
Slide 12: Win in the Core... Parts Garments & Accessories
Win in the Core... Parts Garments & Accessories Highest margin product line (40+% gross margins) Leveraging installed base Focused on hot new products Victory Vision(tm) - introduced 100 accessories RANGER RZR(tm) - introduced 75 accessories Military Growth through innovation and integration Expande
Slide 13: 2. Achieve Operational Excellence
2. Achieve Operational Excellence 2007 Actual 2008 Goals Quality: Improve consumer satisfaction by 50% by 2010 3 of 4 businesses - +10% improvement +10% improvement (4 of 4) Cost: Reduce system-wide cost by 20% by 2010 -3% -5%+ reduction Speed: Improve speed to consumers by 50% by 2010 +15% +15% The
Slide 14: Achieve Operational Excellence: What's the End Game Look Like?
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 100 basis points in 2008 Sustained Greatness Total Company Gross Margins Most satisfied customers
Slide 15: Leading Share in Side-by-Side Business
3. Grow Aggressively in 2008 in Growth Businesses Leading Share in Side-by-Side Business RANGER RZR CREW (4 and 6 Wheel Drive) Leverage Industry-Leading Side-By-Side Line-Up Hardest working, smoothest riding 50 mph 1 ton towing IRS Six-passenger people mover 44 mph 1 ton towing IRS Razor-sharp side-
Slide 16: Leading Share in Side-by-Side Business 2008
3. Grow Aggressively in 2008 in Growth Businesses Leading Share in Side-by-Side Business 2008 Objectives: Lead in the side-by-side market Grow market share Successfully introduce innovative model year 2009 Side-by-Sides Q1 2008 Side-by-Side business grew well in excess of 50% 2005 2006 2007 2008 Eas
Slide 17: The Polaris side-by-side buyer
3. Grow Aggressively in 2008 in Growth Businesses Leading Share in Side-by-Side Business The Polaris side-by-side buyer: Gender - 90% male Median Age - 46 Median Income - $82,000 First Time Side-by-side Buyer - 57% The side-by-side buyer is typically older and more affluent than the average ATV buye
Slide 18: Overall Motorcycle Market
3. Grow Aggressively in 2008 in Growth Businesses Overall Motorcycle Market '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 Units 306000 297996 323165 346966 416094 515468 658908 788369 862350 922431 965399 1008994 1022322 948464 Industry 2007 Down 7.2% Cruisers Down 6.7% >1400cc Cruisers Do
Slide 19: Victory Motorcycles
3. Grow Aggressively in 2008 in Growth Businesses Victory Motorcycles 2005 2006 2007 2008 Sales 99 113 113 116 5 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 fundamen
Slide 20: Expand Global Presence by $50 Million by 2009
1st Qtr 2nd Qtr 3rd Qtr East 0.17 0.01 0.16 0.66 West 30.6 38.6 34.6 North 45.9 46.9 45 3. Grow Aggressively in 2008 in Growth Businesses France France Australia/NZ UK Swd/Nor Germany Finland Russia Italy Spain Portugal Japan Others 246900 246900 153100 102500 161500 256400 68700 29100 78300 107200
Slide 21: Military - Polaris Defense
3. Grow Aggressively in 2008 in Growth Businesses Military - Polaris Defense Grow the business - double again in 2008 Expand military agency customers around the world Leverage the expanded product line with JP8 engine technology available for all Military vehicles MVRS Adjacent Markets Profitable T
Slide 22: Summary - Why Polaris Will Win in 2008
Summary - Why Polaris Will Win in 2008 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 Bu
Slide 23: Summary - Why Polaris Will Win in 2008 (con't)
Summary - Why Polaris Will Win in 2008 (con't) 4. Growing Aggressively in our Growth Businesses - $200 million+ in 2008 Leading the growing Side-by-side industry - new product innovation, RANGER RZR(tm), aggressive investment Victory - Vision growth and market penetration Military - Leverage new pro
Slide 24: 2008 Year Guidance
2008 Year Guidance Full Year 2008 Full year 2008 earnings from continuing operations is expected to be in the range of $3.36 to $3.46 per diluted share, up 8% to 12% from $3.10 in 2007. Sales growth for full year 2008 is expected to be in a range of up 5% to 7% from 2007 sales of $1.78 billion. Sale
Slide 25: Appendix
Appendix 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 look
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