Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — FY2010 Earnings Presentation
28 slides from Polaris's earnings presentation, Jan 27, 2011
Slide 1: Fourth Quarter & Fiscal Year 2010 Earnings Results
Fourth Quarter & Fiscal Year 2010 Earnings Results – January 27, 2011 Polaris Industries Inc.
Slide 2: Safe Harbor
2 Safe Harbor Except for historical information contained herein, the matters set forth in this document, including but not limited to management’s expectations regarding 2011 sales, shipments, net income, cash flow, and manufacturing realignment transition costs and savings, are forward-looking sta
Slide 3: Scott Wine, CEO
Scott Wine CEO Fourth Quarter & Fiscal Year 2010 Earnings Results January 27, 2011
Slide 4: Q4 2010 Sales and Net Income
4 Q4 2010 Sales and Net Income Another Record Quarter for Net Income and EPS Q4 Net Income ($ in millions Q4 Sales ($ in millions) $43.9 $54.5 +24% $471.8 $618.4 +31% Jan 2011 Q4 2010 Q4 2009 Q4 2010 Q4 2009 Quarterly Earnings per Share of $1.55: highest in Polaris history – 18% increase over Q4 200
Slide 5: Full Year 2010 Sales and Net Income
5 Continued Solid Execution Drives Strong Performance Full Year 2010 Sales and Net Income FY Net Income ($ in millions) FY Sales ($ in millions)$101.0 $147.1 +46% $1,566 $1,991 +27% Jan 2011 FY 2010 FY 2009 FY 2010 FY 2009 Record annual sales with increases across all product lines – Revenue up 43 m
Slide 6: 2010 Financial Metrics
2010 Financial Metrics 6 Sales Gross Profit % Operating Profit % Net Income Net Income % Operating Cash Flow Shareholder Return $1,991 26.6% 11.1% $147.1 7.4% $297.6 82.5% METRIC 2010 Actual (millions)Jan 2011 Variance to ’09 +27% +150 bpts +60 bpts +46% +90 bpts +54% +24.8 pts (Gp:) Strong Results
Slide 7: Q4 2010 Revenue & N.A. Retail Sales
7 Q4 2010 Revenue & N.A. Retail Sales Outlook Remains Bright for Growth Revenue (Million $) Polaris N.A. Retail Sales (Units) $471.8 $111.7 $22.6 $1.5 $10.8 $618.4 +18% +11% +15% +41% +31% Jan 2011 Polaris Revenue and N.A. Retail Sales continue to outperform industry Q4 side-by-side Retail Sales and
Slide 8: Strategic Progress Continues
Strategic Progress Continues … 8 Jan 2011 $1.6 Billion $3.0 Billion Grow Sales $3 Billion by 2014 Expand Net Income Margins 8% of sales by 2014 Strategy is Working – Staying on the Gas Full Year 2010 Progress 3-5 Year Strategic Initiatives Best in Powersports PLUS 5-8% organic growth Growth Through
Slide 9: 2011 Sales & EPS Projection
Total Company Sales (in millions)Diluted EPS Full Year 2011 Guidance 9 $1,991.1 Up 8% to 11% $2,150 to $2,210 2010 Actual 2011 Guidance $4.28 Up 9% to 13% $4.65 to $4.85 2010 Actual 2011 Guidance 2011 Sales & EPS Projection: Record High Polaris retail sales continue to accelerate, outperform the ind
Slide 10: Bennett Morgan, President & COO
Bennett Morgan President & COO Fourth Quarter & Fiscal Year 2010 Earnings Results January 27, 2011
Slide 11: Off-Road Vehicle Division
11 Off-Road Vehicle Division New! RANGER RZR XP 900 Polaris Sales (millions) FY 2011 Guidance FY 2010 Q4 2010 Q4 2009 $282.8 +35% $1,376.4 +40% $394.5 Up about 10% Jan 2011 2010 Summary #1 in ORV – Gained significant share in SxS and ATVs Launched 12 new/significantly improved products ATV dealer in
Slide 12: RANGER RZR Product Leadership
RANGER RZR = Razor Sharp Performance RANGER = Hardest Working, Smoothest Riding RANGER XP Xtreme Performance RANGER Crew Full-Size 6-Passenger RANGER 400/500 Mid-Size Value RANGER 500 Crew Mid-size 4-Passenger Industry Leading Product in Every Segment Polaris Side-by-Side Product Leadership 12 Jan 2
Slide 13: Snowmobile Division
13 Snowmobile Division $81.4 +28% $104.1 FY 2011 guidance +5% $188.9 Up modestly FY 2010 Q4 2010 Q4 2009 Polaris Sales (millions) Jan 2011 2010 Summary MY ‘11 sleds were home runs Significant quality improvements Dealer inventory down 22% from 2009 Season-to-date Industry retail sales up about 10% P
Slide 14: On-Road Division – Victory / LEV
14 Momentum Continues Polaris Sales (millions) On-Road Division – Victory / LEV $19.1 +8% $20.6 +55% $81.6 Over +50% Up double digits (Gp:) Victory (Gp:) Industry Down modestly N.A. Motorcycle Industry 1400cc+ and Victory Retail Sales FY 2011 guidance FY 2010 Q4 2010 Q4 2009 Jan 2011 2010 Summary Ga
Slide 15: PG&A
15 PG&A Maintain High Quality and Productivity Polaris Sales (millions) 2010 PG&A Revenue by Business Unit 2010 PG&A Revenue by Product Category Other 7% Aus/NZ 13% Snow 18% Off-Road Vehicles 68% Parts 44% Accessories 52% Apparel 4% Victory 7% $88.4 +12% $99.2 FY 2011 guidance FY 2010 Q4 2010 Q4 200
Slide 16: International Division
16 International Investment & Expansion Continuing International Division $81.1 +13% $91.9 +21% $305.9 Polaris Sales (millions)2010 Revenue by Geography 2010 Revenue by Business FY 2011 guidance FY 2010 Q4 2010 Q4 2009 ME / Africa 8% Latin America 8% Asia 1% Aus/NZ 14% Europe 69% Off-Road Vehicles 6
Slide 17: Manufacturing Realignment
17 Manufacturing Realignment Goal: three manufacturing Centers of Excellence in Roseau, Spirit Lake and Monterrey Production expected to begin Q2 2011 in Monterrey Total investment remains in line with original forecast 2011 costs up slightly to improve plant efficiency, mitigate risk, and accelerat
Slide 18: Monterrey Facility
Monterrey Facility 425,000 sq. ft. with incubator bldg for startup, staging, and training Currently at 50% beneficial occupancy Increased security capabilities: cameras, fencing, truck tracking, escorts, etc. Roseau transition on plan: tube fabrication, engine assembly Osceola transition progressing
Slide 19: Operational Excellence – Inventory
19 Operational Excellence – Inventory Healthy Distribution Channel; Lean Initiatives will Lower Factory Inventory North American Polaris Dealer Inventory Levels MVP rolled out to remaining 50% of N.A. ORV dealers in 2010 Dealer Inventory down 20% from 2009; Victory down 30% from 2009; Core ATVs down
Slide 20: Operational Excellence - Full Year 2010 Margins
20 Operational Excellence - Full Year 2010 Margins Net Income as a Percent of Sales Gross Margins Gross Margin Operating Expense KTM Loss in 2009 Income Taxes /Other FY 2009 FY 2010 25.1% 26.6% 6.5% 7.4% +150 bpts Gross margins continue to improve driven by: Production volume increase Continued valu
Slide 21: Mike Malone, V.P. Finance and CFO
Mike Malone V.P. Finance and CFO Fourth Quarter & Fiscal Year 2010 Earnings Results January 27, 2011
Slide 22: 2011 Full Year Guidance
22 2011 Full Year Guidance Product Line Sales - Off-Road Vehicles Snowmobiles - On-Road Vehicles - PG&A Total Company Sales Gross Margins Operating expenses Income Taxes Net Income EPS, Diluted Share Count Up about 10% Up modestly Up over 50%, again Upper single digits %Up 8% to 11% Up to 40 bpts im
Slide 23: Gross Profit Margin Percentage Trends
23 Gross Profit Margin Percentage Trends (Gp:) Improvement to gross profit margin % (Gp:) Impairment to gross profit margin % (Gp:) Neutral to gross profit margin % Jan 2011 Prior Period 27.3% 25.1% 26.6% Production volume adjustments Product cost reduction efforts Commodity costs Currency rates Hig
Slide 24: Financial Services Income
24 Financial Services Income Retail Credit is Available for Qualified Customers 2010 wholesale credit income from PA joint venture = $12.7 million, down 7% Retail credit approval rates and penetration rates at acceptable levels 2011 retail credit income expected to increase Retail Credit – HSBC, GE
Slide 25: Balance Sheet and Liquidity Profile
25 Balance Sheet and Liquidity Profile Jan 2011 $ In Millions (except per share and interest rate data) 2010 Fav (Unfav) 2009 2011 Full Year Guidance Cash Total Debt – ending Credit Facility (expires December 2011) Average debt outstanding Debt Interest Rate – ending (variable) Factory Inventory Cap
Slide 26: Scott Wine, CEO
Scott Wine CEO Fourth Quarter & Fiscal Year 2010 Earnings Results January 27, 2011
Slide 27: Summary
Summary 27 Jan 2011 US Economy aided by a more business-friendly Washington Planning for ~3% growth; developing economies outpace US & Europe Powersports competition will increase; markets probably will not Make Growth Happen theme unchanged; ORV extends #1 position Remain focused on market share ex
Slide 28: Thank you. Q & A
28 Thank you. Q & A Polaris Industries Inc. Jan 2011