Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Raymond James Institutional Investor Conference 2016
36 slides from Polaris's conference presentation, Mar 8, 2016
Slide 1: Raymond James Institutional Investor Conference
Raymond James Institutional Investor Conference Scott W. Wine, Chairman & CEO March 8, 2016 POLARIS INDUSTRIES INC.
Slide 2: Strategic Objectives: Vision & Strategy
Strategic Objectives Vision & Strategy VISION Fuel the passion of riders, workers and outdoor enthusiasts around the world by delivering innovative, high quality vehicles, products, services and experiences that enrich their lives. STRATEGY Polaris will be a highly profitable, customer centric, $8B
Slide 3: Corporate Overview – 2015
CORPORATE OVERVIEW –2015 2015 Sales by Reporting Segments* 1954Year Polaris was Founded ~8,100Employees Worldwide 16 Manufacturing Locations 5 Research & Development Centers ~1,800 Dealers In North America ~1,700 Dealers Outside North America >390,000 Units Shipped Worldwide >100 Countries –Polaris
Slide 4: Key Financial Metrics
KEY FINANCIAL METRICS 33% $2,657 21% $3,210 18% $3,777 19% $4,480 5% $4,719 2% to 3% $228 $312 $381 $454 $455 2011 2012 2013 2014 2015 2016 Guidance Sales Guidance Net Income 39% 40% 39% 38% 32% 12% 20% 26% 16% 13% 9% 9% 9% 9% 8% 2011 2012 2013 2014 2015 Polaris Peer Average* S&P 500 Average Return
Slide 5: 2015 Key Challenges / 2016 Game Plan
2015 Key Challenges / 2016 Game Plan Internal Expensive paint issues delayed Motorcycles Poor inventory management Inconsistent quality; recalls Optimistic forecasting External Strengthening dollar Oil & gas weakness More / better competitive products Weak snow / mild winter All-Out Assault on Costs
Slide 6: #1 in Powersports
#1 in Powersports Extended Lead in 2015; Fastest Growing N.A. POWERSPORTS MARKET SHARE March 8, 2016 6 2008 2009 2010 2011 2012 2013 2014 2015 2016 Consolidated Market Share in Units (Using Total Motorcycle Industry) Honda Harley Yamaha Can Am Kawasaki Other Polaris 2015 MARKET SHARE POSITION #1 ATV
Slide 7: 2016 Sales Guidance by Reporting Segments
Global Adjacent Markets Motorcycles March 8, 2016 7 ORV / Snowmobiles 2015(Reclassified) 2016 Guidance 2015 (Reclassified) 2016 Guidance 2015 (Reclassified) 2016 Guidance Remain Optimistic for Modest Sales Growth & Market Share Gains 2016 Sales Guidance by Reporting Segments +67% $698.3 Up High-teen
Slide 8: Off-Road Vehicles (ORV)
2008 2009 2010 2011 2012 2013 2014 2015 OFF-ROAD VEHICLES (ORV) March 8, 2016 8 Polaris N.A. ORV Market Share Worldwide ORV Industry 2016 Objectives Polaris ORV Brand Reaching New Targets Maintain #1 Market Share Position in More Competitive Environment Leverage #1 Industry Position –scale Eliminate
Slide 9: New TV Spot
March 8, 2016 9 NEW TV SPOT POLARIS RZR POLARIS RANGER POLARIS GENERAL
Slide 10: Snowmobiles
Mountain Performance Crossover Utility Other SNOWMOBILES March 8, 2016 10 5-Year Market Share Pts. Growth –N.A. Worldwide Snowmobile Market 2016 Objectives Strong #2 and Gaining Share in N.A. (’14/’15 season vs. ’09/’10) EMEA Significantly (Russia) N.A. mid-single digits % ’14/’15 SEASON SNOWMOBILE
Slide 11: Motorcycles
Cruisers Touring 3-Wheel MOTORCYCLES March 8, 2016 11 Polaris Motorcycle Market share Worldwide Motorcycle Market 2016 Objectives Motorcycle Market Share 2013 -2015Building a Global Motorcycle Business Indian “Legendary” / Victory “Modern American Muscle” Expand dealer network Accelerate accessories
Slide 12: Motorcycle Product News
Motorcycle Product News Leverage Derivatives to Grow Share & Enter New Markets –More to Come 12 MY’16 Springfield MSRP $21,499 March 2016 MY’17 Octane MSRP $10,499 March 2016 MY’16 Magnum X1 MSRP $23,499 February 2016 MY’16 Empulse TT MSRP $19,999 December 2015 MY’16 Scout 60 MSRP $8,999 November 20
Slide 13: Octane Victory USA Motorcycles
March 8, 2016 13 OCTANE VICTORY USA MOTORCYCLES
Slide 14: Global Adjacent Markets
People Movers Light Duty Haulers Industrial EQC Golf Work & Transportation Military GLOBAL ADJACENT MARKETS 14 Global Adjacent Market Vehicle Sales Work & Transportation Market 2016 Objectives Military ORV Market Building Businesses for Future Growth / Profitability Aixam grows #1 market share Again
Slide 15: Acquisition: Taylor Dunn
Burden Carriers Tow Tractors Stock Chasers Personal Carriers Utility Vehicles ACQUISITION: TAYLOR DUNN (3/7/16) March 8, 2016 15 Taylor Dunn Product Line Taylor Dunn Overview Leader in light-industrial and commercial vehicles 2015 sales: ~1% of total Polaris (80% N.A.) ~80 models, ~95% electric ~240
Slide 16: Parts, Garments & Accessories (PG&A)
PARTS, GARMENTS & ACCESSORIES (PG&A) PG&A Sales –All Businesses Core Polaris PG&A Accelerate Core Growth / Broaden Aftermarket Offerings 2016 Objectives Aftermarket PG&A Grow Core PG&A globally Build aftermarket brands Expand digital shopping experience Refine retail transformation model (SMART) $40
Slide 17: International
INTERNATIONAL March 8, 2016 17 Overcome Currency Challenges, Grow Share, Leverage Opole $424 $461 $593 $685 $652 2011 2012 2013 2014 2015 5% (cc +10%) ($ millions) 2016 Objectives Drive motorcycle growth –midsize offerings catalysts Effectively leverage Poland operations Continue to build emerging m
Slide 18: Lean Enterprise – Big Hitters for 2016
LEAN ENTERPRISE – BIG HITTERS FOR 2016 Lean Delivers Sustainable Profitable Growth and Competitive Advantage RFM Commercial Model Lean Product Development Lean Business Process Plant Lean Lean Material Flow OUT IN Consumer & Dealer Pull 1 2 3 4 5 Lean drives continuous improvement across the busines
Slide 19: Financial Strength & Flexibility
Dividends & Share Repurchase CapEx vs. Depreciation & Amortization FINANCIAL STRENGTH & FLEXIBILITY Operating Cash Flow & Net Income Margins Strong Balance Sheet & Cash Flow Generation –Long History of Shareholder Value Creation March 8, 2016 19 Capital Deployment 1.Capital Expenditures –invest back
Slide 20: Thank you / Questions?
POLARIS Thank you Questions?
Slide 21: Safe Harbor
SAFE HARBOR March 8, 2016 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 diversifica
Slide 22: Appendices
22 APPENDICES March 8, 2016 2016 Full Year Guidance Detail Polaris Customer Usage Profiles N.A. Retail Sales & Dealer Inventory Consistent Financial Performance 2016 Full Year Gross Profit Margin Guidance Foreign Currencies Exposures for Polaris Polaris Financial Position Income from Financial Servi
Slide 23: 2016 Full Year Guidance
Earnings Per Share (diluted) Gross Profit Margin March 8, 2016 23 Total Company Sales $4,719 2015 Actual FY 2016 Guidance 28.4% 2015 Actual FY 2016Guidance2016 Guidance Range Wider Signaling Currency/End-Markets Risk $6.75 2015 Actual FY 2016 Guidance Assumptions Maintain/grow market share Dealer in
Slide 24: Polaris Customer Usage Profiles
Snowmobiles Motorcycles POLARIS CUSTOMER USAGE PROFILES March 8, 2016 Off-Road Vehicles 24 Die-Hard "Biker" Motorcycle Enthusiast Show-off Rider Commuter Rider Weekend Rider Trail/ Touring Off-Trail/ Deep Snow On/Off Trail Recreation/ Utility AVERAGE AGE 50 43 44 43 47 52 56 42 INCOME ~$100k ~$100k
Slide 25: N.A. Retail Sales & Dealer Inventory – FY 2015
Industry N.A. RETAIL SALES & DEALER INVENTORY –FY 2015 Polaris N.A. retail5% for 2015; 2H trends weaker, but YoY Industry retail flat for 2015; 2H trends weaker; low-single digits % Polaris year end 2015 N.A. dealer inventory 5% vs 2014 ORV mid-single digits, Snowmobiles over 25%, Motorcycles over 5
Slide 26: Consistent Financial Performance
39% 40% 39% 38% 32% 12% 20% 26% 16% 13% 9% 9% 9% 9% 8% 2011 2012 2013 2014 2015 163% 68% 69% 55% 59% Polaris Peer Avg. S&P 500 S&P Midcap 400 DJIA Return on Invested Capital Return on Assets CONSISTENT FINANCIAL PERFORMANCE March 8, 2016 26 Sales & Net Income +33% $2,657 +21% $3,210 +18% $3,777 +19%
Slide 27: 2016 Gross Profit Margin Guidance
2016 GROSS PROFIT MARGIN GUIDANCE March 8, 2016 27 By Component FY 2015 Actual FY 2016 Guidance Prior period 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-up
Slide 28: Foreign Currency Exposure for Polaris
Significant Impact in Q4 & Full Year 2015, Expected to Persist into 2016 28 FOREIGN CURRENCY EXPOSURE FOR POLARIS March 8, 2016 Foreign Currency Hedging Contracts Currency Impact on Net Income Notional Avg. Exchange Compared to Prior Year Period Foreign Currency Currency Position Cash Flow Exposure
Slide 29: Polaris Financial Position
POLARIS FINANCIAL POSITION March 8, 2016 29 Capital Summary Dec. 2015 Cash Drivers Fav/(Unfav) Dec. 2015 Cash $ 155.3 +13% Debt /Capital Lease Obligations $463.3 (105%) Shareholders’ Equity $ 981.5 14% Total Capital $1,444.8 33% Debt to Total Capital 32% (11%) 2015 Operating cash flow 17%; factory i
Slide 30: Income from Financial Services
Retail Credit Wholesale Credit PA Receivables March 8, 2016 30 Income from Financial Services Other Other Wholesale Credit Wholesale Credit Retail Financing Retail Financing FY 2014 FY 2015 2016 Expectations FY 2014 FY 2015 Ample Financing Availability at Favorable Rates INCOME FROM FINANCIAL SERVIC
Slide 31: Manufacturing Locations
MANUFACTURING LOCATIONS March 8, 2016 31 16 In-House Manufacturing Facilities Worldwide Monterrey MEXICO SxS, Engines Spirit Lake & Milford IOWA Motorcycles, SxS, ACE, GEM Roseau MINNESOTA Snow, ATV, SxS Osceola WISCONSIN Engines Bourran France Goupil Chanas & Aix-les-Bains FRANCE Aixam Mega Cuyahog
Slide 32: Spirit Lake Plant – Motorcycles
SPIRIT LAKE PLANT – MOTORCYCLES March 8, 2016 32 Capacity to Meet Demand Spirit Lake Paint Facility Upgrades Spirit Lake Upgrades 15% Cost Improvement VIP Spearfish and Outsourcing Organization Capabilities 2016 Capacity Actions Spearfish Paint Facility On-Line Paint Capacity Recovered and Ramping f
Slide 33: Huntsville Plant on Schedule for SOP Q2 2016
Huntsville Plant on Schedule for SOP Q2 2016 and on Budget HUNTSVILLE THE NEXT LEVEL OF LEAN MANUFACTURING March 8, 2016 33 8% 50% 33% 70% Labor Productivity Lead-Time Reduction Safety/Forklifts Backshop Velocity Lean Productivity
Slide 34: International
INTERNATIONAL March 8, 2016 34 Overcome Currency Challenges, Grow Share, Leverage Opole ($ millions) Latin America Asia Pacific (includes Australia/New Zealand) EMEA $685 $652 FY 2014 FY 2015 5% (cc +10%) Motor-cycles ORV / Snow Global Adjacent Markets ($ millions) 43% (cc +66%) 6% (cc +21%) $526 $4
Slide 35: Polaris-Eicher JV Product – Multix
POLARIS -EICHER JV PRODUCT –MULTIX March 8, 2016 MULTIX Multi-Role Personal Vehicle 3 models to start; MSRP ~ $3,600 -$4,500 511cc diesel engine Street legal in India ~30 dealers at launch >200 by 2020 Started production July 2015; initial consumers satisfied; initial retail ramp slower than expect
Slide 36: Polaris
POLARIS 36
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