Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Q3 2009 Earnings Presentation
21 slides from Polaris's earnings presentation, Oct 15, 2009
Slide 1: Polaris Industries Inc. Third Quarter 2009 Earnings Results
1 Polaris Industries Inc. Third Quarter 2009 Earnings Results October 15, 2009
Slide 2: Safe Harbor
2 October 15, 2009 Safe Harbor Today’s presentation includes statements which should be considered forward-looking for the purposes of the private securities reform act of 1995. Additional information concerning these factors that may influence results can be found in our 2008 annual report and 2008
Slide 3: Third Quarter 2009 Results
3 October 15, 2009 Third Quarter 2009 Results Results exceeded Company expectations Earnings down less than sales on strong gross margin expansion Momentum building on solid fundamentals Diluted EPS $1.13 $0.94 -17% 2008 2009 Total Company Sales ($ in millions) $580.3 $436.2 -25% 2008 2009
Slide 4: Third Quarter 2009 Sales
4 October 15, 2009 Third Quarter 2009 Sales Total Company Sales ($ in millions) $580.3 $-110.1 $-12.4 $-11.7 $-9.9 $436.2 Q3 2008 Total Company Q3 2009 Total Company ORV Snow On-Road/Victory PG&A % Change in Total Company Sales Product mix and price 11% Volume -35% Currency -1% -25% Geographic Sales
Slide 5: Third Quarter 2009 Earnings
5 October 15, 2009 Third Quarter 2009 Earnings Gross profit margin percentage improved 160 basis points Operating expenses (in dollars) decreased 20% from Q3 2008 Net income margin up 60 basis points Net Income as a Percent of Sales Net Income $37.7 $31.2 -17% 2008 2009 Gross Margin Operating Expens
Slide 6: North American Retail Sales
6 October 15, 2009 North American Retail Sales (percentage change from prior year) 0% -12% -20% -23% -22% -17% Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Polaris N.A. retail sales decreased in line with expectations Improving sequentially from beginning of the year Canada retail sales decline is less than U.S. C
Slide 7: Successful New Product Introduction
7 October 15, 2009 Successful New Product Introduction Over 25 new models introduced at July Dealer show Side-by-sides More Power – RANGER 800 XP; 500 H.0.; 6X6; Crew New Category – Midsize RANGER 400; RANGER EV (Electric) ATVs Sportsman XP chassis expanded into Touring models – 850/550 Redesigned V
Slide 8: Dealer Health
8 October 15, 2009 Dealer Health North American Dealer Inventory Levels Receivable Balance – U.S. Dealers ($ in millions) Polaris Acceptance Securitized Receivables North American Dealer Count Down 18% from Q3 2008 Victory down 22% from Q3 2008 Expect further declines by 2009 year end Down 16% from
Slide 9: Off-Road Vehicle Division
9 October 15, 2009 Off-Road Vehicle Division Polaris Revenue ($000’s) Full Year 2009 Sales Guidance: -22% to -24% (Narrowed range) New products well received by dealers and consumers Expanded Value line-up North American ORV industry retail declined in Q3, as expected (stable) ATVs down high twenty
Slide 10: Snowmobile Division
10 October 15, 2009 Snowmobile Division Polaris Revenue ($000’s) $94.6 -13% $82.2 Q3 2008 Q3 2009 Full Year 2009 Sales Guidance: -12% to -14% (Improved and narrowed range) New MY ’10 snowmobiles shipping on schedule Dealer inventory at appropriate levels heading into key selling months The new RUSH
Slide 11: On-Road Division - Victory Motorcycles
11 October 15, 2009 On-Road Division - Victory Motorcycles Polaris Revenue ($000’s) $21.0 -56% $9.4 Q3 2008 Q3 2009 Full Year 2009 Sales Guidance: down mid-40% Victory retail sales weak in Q3 2009 Additional production cuts made Greater focus on accelerating retail New MY 2010 touring models well re
Slide 12: PG&A
12 October 15, 2009 PG&A Polaris Revenue ($000’s) $93.5 -11% $83.5 Q3 2008 Q3 2009 Full Year 2009 Sales Guidance: -11% to -12% (improved and narrowed range) Revenue impacted by decline in wholegood retail sales Remains highest gross margin product line – and expanding Over 200 new accessories added
Slide 13: International Division
13 October 15, 2009 International Division Polaris Revenue ($000’s) $78.1 -24% $59.3 Q3 2008 Q3 2009 Q3 2009 Revenue by Geography Asia 1% Latin America 7% ME/Africa 10% Aus/NZ 13% Europe 69% Q3 2009 Revenue by Business Unit Snow 13% Victory 3% ORV 64% PGA 20% Full Year 2009 Sales Guidance: -17% to -
Slide 14: Operational Excellence
14 October 15, 2009 Operational Excellence Full Year 2009 gross margin guidance in range of up 150 to 180 bpts – (increased) Factory Inventory down 18% to Q3 2008 – expect to be under $200 million by year end 2009 Product cost reduction/avoidance initiatives producing results MVP expanded to 50% of
Slide 15: Credit Arrangements
15 October 15, 2009 Credit Arrangements Financial Services Income 4.5 -12% $3.9 Q3 2008 Q3 2009 Other Activities Wholesale Credit Retail Financing Wholesale Credit ($ in millions) $3.2 $3.2 Q3 2008 Q3 2009 Polaris Acceptance Income to Polaris Retail Credit 53% 31% 44% 31% 48% 33% 52% 35% Q4 2008 Q4
Slide 16: Gross Profit Margin Percentage Trends
16 October 15, 2009 Gross Profit Margin Percentage Trends Prior Period Production volume adjustments Product mix Product cost reductions/value engineering Commodity/transportation costs Currency rates Sales promotional costs Higher selling prices Warranty costs Tooling amortization Current period Ch
Slide 17: Balance Sheet and Liquidity Profile
17 October 15, 2009 Balance Sheet and Liquidity Profile $ in millions (except per share data) YTD Sept 2009 Fav(Unfav) YTD Sept 2008 Full Year / Year End 2009 GuidanceTotal Debt - ending $200.0 $20.0 $200 Net Debt – ending (debt less cash balances) $127.2 $49.6 Improved from 2008 Credit Facility (ex
Slide 18: 2009 Full Year Guidance
18 October 15, 2009 2009 Full Year Guidance Product Line Sales Off-Road Vehicles Down 22% to 24% Snowmobiles Down 12% to 14% Victory Motorcycles Down mid 40% range PG&A Down 11% to 12% Total Company Sales Down 20% to 22% Gross Margins 150 to 180 bpts improvement Operating expenses Down mid-teens % i
Slide 19: Fourth Quarter 2009 Guidance
19 October 15, 2009 Fourth Quarter 2009 Guidance Total Company Sales(in millions) $523.6 Down 12% to 17% Q4 Actual 2008 Q4 Guidance 2009 Diluted EPS $1.11 $1.19 to $1.25 Up 7% to 13% Q4 Actual 2008 Q4 Guidance 2009 Weak Industry retail sales expected to continue in Q4 2009 Prior year comparisons for
Slide 20: 2010 – Initial Thoughts
20 October 15, 2009 2010 – Initial Thoughts No tail wind from the world economies anticipated Powersports market growth will be muted Significant organic top line growth will be challenging International expansion will be a focus Acquisition strategy/resources in place - VP Corporate Development onb
Slide 21: Thank you. Q & A
21 October 15, 2009 Polaris Industries Inc. Thank you. Q & A