Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Raymond James Investor Conference 2019
29 slides from Polaris's conference presentation, Mar 5, 2019
Slide 1: Raymond James Investor Conference
RAYM OND JAM ES INVESTOR CONFERENCE MIKE SPEETZEN EVP – FINANCE & CFO Orlando, Florida | March 5, 2019
Slide 2: Polaris Industries Inc. – A Global Corporation
POLARIS INDUSTRIES INC. – A GLOBAL CORPORATION 2018 SALES BY SEGMENT 1954 Year Polaris was Founded Off-road Vehicles / Motorcycles ~13,000 Employees Worldwide Snowmobiles 64% 9% 7% Adjacent Markets 20 Manufacturing Locations 15% Aftermarket 5% 9 Key Research & Development Centers Boats ~2,300 Dealer
Slide 3: 2018 Summary
2018 SUMMARY SALES NET INCOME EARNINGS PER SHARE GAAP $6.079 billion $335 million $5.24 12% y/y 94% y/y 95% y/y ADJUSTED* $6.083 billion $420 million $6.56 12% y/y 28% y/y 29% y/y (6.9% of sales; ) Full year 2018 adjusted* results in-line with Company expectations despite headwinds International sal
Slide 4: N.A. Powersports Consolidated Market Share
N.A. POWERSPORTS CONSOLIDATED MARKET SHARE REMAIN CLEAR #1 IN N.A. POWERSPORTS RJames 3-5-19 4
Slide 5: Vision & Strategy
Gp PG@LARIS Vision & Strategy VISION STRATEGIC PURPOSE Gu idi ng Fuel the passion of riders, workers Polaris is committed to being a customer centric, highly efficient growth Pri ncl pl es and outdoor enthusiasts around company. We relentlessly pursue product superiority, safety and value | the worl
Slide 6: Building a Customer-Centric Highly Efficient Growth Company
BUILDING A . . . CUSTOMER-CENTRIC HIGHLY EFFICIENT GROWTH COMPANY RJames 3-5-19
Slide 7: Customer-Centricity
CUSTOMER-CENTRICITY KEY DRIVERS ULTIMATE DEALER EXPERIENCE OWNERSHIP ENGAGEMENT Expand Customer Base 25,000 13,000 Over 500 Attendees Registrations Demos Improve Rider Experience Seamless Dealer Connection ✓ Complete Polaris Portfolio of Products Increase Ownership ✓ Premium Service Experience Octob
Slide 8: Efficiency
EFFICIENCY KEY DRIVERS QUALITY IMPROVEMENT ($ in millions) Best Practices & LEAN Warranty Expense $195 % of Sales $146 Standardized DFMEA 4.3% $105 $74 (Design Failure Mode and Effects Analysis) 2.7% 1.6% 1.7% Product Development 2015 2016 2017 2018 Process (PDP) Evolution STRATEGIC SOURCING INITIAT
Slide 9: Growth
GROWTH KEY DRIVERS INDUSTRY-LEADING BRANDS OFF-ROAD VEHICLES SNOWMOBILES MOTORCYCLES ADJACENT MARKETS AFTERMARKET Industry-leading Brands Efficient Sales & Marketing Customer focused product development Design to Value (DTV) 2018 PORTFOLIO EXPANSION PRODUCT INNOVATION* *Key 2018 Product Launches Bes
Slide 10: FY 2019 Guidance (Unchanged as of 1/29/19)
FY 2019 GUIDANCE (Unchanged as of 1/29/19) SALES 2019 FULL YEAR ADJUSTED* EPS GUIDANCE BRIDGE Adjusted* Sales Guidance 14% to 18% $6.75 to $6.90 Billion $7.50 to $7.75 +11% to +13% 5% to 9% $6.56 +9% to +11% $0.60 to $0.75 ~($1.00) $6.00 to $6.25 +5% to +7% $0.34 to $0.44 ~($0.40) ~($0.10) EARNINGS
Slide 11: FY 2019 Sales Guidance by Segment
FY 2019 SALES GUIDANCE BY SEGMENT (Unchanged as of 1/29/19) $ in millions ORV/Snowmobiles Motorcycles Global Adjacent Markets Aftermarket Boats mid-single digits % mid-single $3,923 digits % $889 mid-teens % more than mid-single double** $546 digits % $445 $280 FY 2018 FY 2019 FY 2018 FY 2019 FY 201
Slide 12: Off-Road Vehicles (ORV) / Snowmobiles
OFF-ROAD VEHICLES (ORV) / SNOWMOBILES RZR Turbo S SALES GROSS PROFIT ($ in millions) FY 2018 FY 2018 mid-single GAAP Adjusted* 10% 10% $3,919 $3,923 digits % 28.4% 28.5% FY 2019 Adjusted* Expectations Including Excluding Tariff Impact Tariff Impact FY 2018 FY 2018 FY 2019 GAAP* Adjusted* Guidance PR
Slide 13: Motorcycles
MOTORCYCLES SALES GROSS PROFIT Indian Chieftain Indian FTR 1200 ($ in millions) FY 2018 FY 2018 GAAP Adjusted* 5% 5% mid-teens % $546 $546 11.6% 11.8% FY 2019 Adjusted* Expectations Including Excluding Tariff Impact Tariff Impact FY 2018 FY 2018 FY 2019 GAAP* Adjusted* Guidance PRIORITIES MY’19 Slin
Slide 14: Global Adjacent Markets (GAM)
GLOBAL ADJACENT MARKETS (GAM) Polaris Commercial Pro XD Aixam e COUPE’ GTI SALES GROSS PROFIT ($ in millions) FY 2018 FY 2018 GAAP Adjusted* mid-single 26.2% 26.3% 12% $445 digits % FY 2019 Adjusted* Expectations Including Excluding Tariff Impact Tariff Impact FY 2018 FY 2019 GAAP* Guidance Goupil G
Slide 15: Aftermarket
AFTERMARKET SALES GROSS PROFIT Transamerican Auto Parts 4Wheel Parts Retail Store Jeep Accessories ($ in millions) FY 2018 FY 2018 mid-single GAAP Adjusted* ~Flat digits % $889 26.4% 26.4% FY 2019 Adjusted* Expectations Including Excluding Tariff Impact Tariff Impact FY 2018 FY 2019 GAAP* Guidance K
Slide 16: Boats
BOATS Bennington Pontoon Bennington Pontoon SALES GROSS PROFIT ($ in millions) FY 2018 FY 2018 GAAP Adjusted* more than 16.5% 17.7% double $280 FY 2019 Adjusted* Expectations Including Excluding Tariff Impact Tariff Impact FY 2018 FY 2019 Guidance PRIORITIES Hurricane SD 2690 Bennington Pontoon Succ
Slide 17: Parts, Garments & Accessories (PG&A)
PARTS, GARMENTS & ACCESSORIES (PG&A) SALES* ($ in millions) Sales by Business mid-single 7% digits % ORV / Snow Motorcycles $841 9% 6% Adjacent Markets 9% FY 2018 FY 2019 GAAP Expectations PRIORITIES Sales by Category Accessories Parts Win with product innovation 14% 1% Deliver efficient customer se
Slide 18: International
INTERNATIONAL SALES* ($ in millions) Sales by Business EMEA low-single +17% 11% digits % Motorcycles $604 ORV / Snow $805 14% 9% $516 Global Adjacent Markets FY 2018 FY 2019 14% FY 2017 FY 2018 Expectations PRIORITIES Build on global powersports portfolio Asia Pacific (includes Australia/New Zealand
Slide 19: Customer-Centric Highly Efficient Growth Company
CUSTOMER-CENTRIC HIGHLY EFFICIENT GROWTH COMPANY RJames 3-5-19
Slide 20: Questions?
Questions? RJames 3-5-19 20
Slide 21: Safe Harbor & Non-GAAP Measures
SAFE HARBOR & NON-GAAP MEASURES Except for historical information contained herein, the matters set forth in this presentation, including management’s expectations regarding 2019 future sales, shipments, net income, and net income per share, operational initiatives, tariffs, currency fluctuations, i
Slide 22: Appendix
APPENDIX GROSS PROFIT MARGIN - FULL YEAR 2018 & 2019 GUIDANCE FINANCIAL POSITION / CAPITAL DEPLOYMENT POLARIS GLOBAL MANUFACTURINGS LOCATIONS NON-GAAP RECONCILIATIONS NON-GAAP RECONCILIATIONS - SEGMENTS 2019 GUIDANCE ADJUSTMENTS RJames 3-5-19 22
Slide 23: Gross Profit Margin - Full Year 2018 & 2019 Guidance
GROSS PROFIT MARGIN - FULL YEAR 2018 & 2019 GUIDANCE Full Year 2018 Gross Margin 2019 Adjusted* Gross Profit Margin Guidance** +80 to +110 25.9% 24.7% 25.1% 24.4% bps ~(140 bps) 25.1% 24.2% to ~(30 bps) 24.5% VIP Volume Price Logistics FY 2017 FY 2017 FY 2018 FY 2018 FY 2018 Growth/ Gross F/X FY 201
Slide 24: Financial Position / Capital Deployment
FINANCIAL POSITION / CAPITAL DEPLOYMENT Operating Cash Flow Capital Summary December 2018 ($ millions) ($ millions) Variance to Up Approx. Dec. 2018 Dec. 2017 20% to 30% $585 -18% Cash $ 161 +16% $477 Debt /Capital Lease Obligations $ 1,963 +115% Shareholders’ Equity $ 867 -7% Total Capital $ 2,830
Slide 25: Polaris Global Manufacturing
POLARIS GLOBAL MANUFACTURING Motorcycle Paint Snow, ATV, MRZR Spearfish, SD Roseau, MN Motorcycles Polaris WSI Goupil Spirit Lake, IA Monticello, MN Bourran, FRANCE ATV, SxS Engines Opole, POLAND Timbersled Hammerhead Sandpoint, ID Osceola, WI Shanghai, CHINA Kolpin Aixam Mega Taylor-Dunn, GEM Cuyah
Slide 26: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Reconciliation of GAAP "Reported" Results to Non-GAAP "Adjusted" Results (In Thousands, Except Per Share Data; Unaudited) Three months ended December 31, Twelve months ended December 31, 2018 2017 2018 2017 Adjustments: Sales $ 1,627,120 $ 1,431,049 $ 6,078,540 $ 5,428,477 V
Slide 27: Non-GAAP Reconciliations - Segments
NON-GAAP RECONCILIATIONS - SEGMENTS In Thousands, Unaudited) Three months ended December 31, Twelve months ended December 31, (In Thoursands, Unaudited) Three months ended December 31, Twelve months ended December 31, 2018 2017 2018 2017 2018 2017 2018 2017 SEGMENT SALES SEGMENT GROSS PROFIT ORV/Sno
Slide 28: 2019 Guidance Adjustments
2019 GUIDANCE ADJUSTMENTS 2019 guidance excludes the pre-tax effect of acquisition integration costs of approximately $5 million to $10 million, supply chain transformation and network realignment costs of approximately $25 million to $30 million. Intangible amortization of approximately $40 million
Slide 29: RJames 3-5-19
RJames 3-5-19 29
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