Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Q1 2013 Earnings Presentation
27 slides from Polaris's earnings presentation, May 7, 2013
Slide 1: Polaris Industries Inc. Investor Presentation May 7, 2013
POLARIS INDUSTRIES INC. Investor Presentation May 7, 2013
Slide 2: Polaris at a Glance
Parts Garments & Accessories 14% 2 IR May2013 Polaris at a Glance Polaris at a Glance 2012 Sales by Geography Sales (in millions) $1,566 $1,991 $2,657 $3,210 Up 12-15% 20092010201120122013Guidance2012 Sales by Product Key Facts Manufacturer of high-performance motorized products Strong distribution
Slide 3: Q1 2013 Sales and Net Income
Q1 2013 Sales and Net Income Q1 2013 Sales and Net Income Record 1st Quarter Sales and Net Income ORV Sales remained strong +7%; PG&A up 27% International Sales up 5% EMEA growth +6% in tough economic environment Earnings per Share up 26% to $1.07 Gross Profit Margin up 10 bps Net Income Margin up 1
Slide 4: Full Year 2013 Guidance
Full Year 2013 Guidance Full Year 2013 Guidance North American Retail Sales growth and market share gains expected to continue PG&A expected to grow 22% to 25% with Klim acquisition International Sales projected to increase about 20% with acquisitions Aixam Mega excellent addition to the portfolio N
Slide 5: Polaris Strategic Objectives
Polaris Strategic Objectives Polaris Strategic Objectives Best in Powersports PLUS 5-8% annual growth All Product lines gained market share again Snow dealer inventories lower PG&A grew 27%; Klim solid start Growth through Adjacencies $1B - $2B from acquisitions and new markets Launched Bobcat co-de
Slide 6: Retail Sales & N.A. Dealer Inventory Up, Industry Down
Retail Sales & N.A. Dealer Inventory Retail Sales & N.A. Dealer Inventory Up, Industry Down N.A. Retail Sales Up, Industry Down Polaris Q1 N.A. retail sales up 7% Demand slower than recent quarters primarily due to late spring weather patterns Industry retail down low single digits % in Q1 N.A. core
Slide 7: Best in Powersports Plus: Off-Road Vehicles
Best in Powersports Plus 7 IR May2013 N.A. ORV Retail Sales Q1 2013 Polaris Sales ($ in millions) #1 and Growth Continues #1 and Growth Continues #1 in ORV – Share expansion in SxS and ATVs in N.A. Polaris retail up in Q1 against tough comparisons; SxS retail up; core ATVs down but less than industr
Slide 8: Growth Through Adjacencies: Polaris Defense and Commercial
Growth Through Adjacencies Growth Through Adjacencies Polaris Defense Gaining Traction Gaining Traction Polaris Commercial Purpose-Built Commercial UTV launched in March, started shipping in April 2013 Multiple model configurations with available hydraulics, power take-off features and attachments I
Slide 9: Best in Powersports Plus: Snowmobiles
Best in Powersports Plus Best in Powersports Plus 9 N.A. Snowmobile Retail Sales Q1 Snow Sales (in millions) Q1 2013 Product Innovation & Quality Keys to Success Product Innovation & Quality Keys to Success Industry retail sales up for the season with Q1 improving considerably due to good snowfall a
Slide 10: Best in Powersports Plus: Motorcycles, Indian Re-launch Approaching
Best in Powersports Plus Best in Powersports Plus IR May2013 Q1 2013 N.A. Motorcycle Industry 1400cc+ Polaris Total On-Road Sales (in millions) New Indian Thunder Stroke 111 Engine Q1 2013 Continue to Outperform the Industry – Indian Re-launch Approaching Continue to Outperform the Industry – Indian
Slide 11: Growth Through Adjacencies: Small Vehicle Business
Growth Through Adjacencies Growth Through Adjacencies GEM x Small Vehicle Business Gaining Foothold Small Vehicle Business Gaining Foothold Q1 retail more than doubled Expect 2013 revenue to grow double digits, again 2013 focus on cost reductions, quality, growing B2B customers FY 2012FY 2013Expecta
Slide 12: AIXAM MEGA Acquisition
IR May2013 AIXAM MEGA Acquisition AIXAM MEGA Acquisition Acquisition Summary Closed April 10th 2013 Approximately $110M in sales for calendar 2012 focused in Europe Solidly profitable; slightly accretive to Polaris in 2013 after acquisition costs Strong leadership / lean structure Strategic Intent B
Slide 13: Best in Powersports Plus: PG&A Produced Strong Q1 Results
Best in Powersports Plus IR May2013 Polaris PG&A Sales ($ in millions) Q1 2013 PG&A Produced Strong Q1 Results PG&A Produced Strong Q1 Results Record Q1 sales; up 27% vs. Q1 2012 ORV growth up 19% On-Road up 21% Snow up 58% - includes Klim in 2013 All categories and regions increased sales vs. Q1 KL
Slide 14: Global Market Leadership
Global Market Leadership Global Market Leadership IR May2013 Polaris Sales (in millions) 2013 Objectives Gaining Share in Challenging Economic Environment Gaining Share in Challenging Economic Environment ORV 57% Snow 11% On-Road 14% PG&A 18% Q1 2012Q1 2013FY 2012FY 2013GuidanceUp about 20% * +5% $1
Slide 15: Operational Excellence
Operational Excellence Operational Excellence Gross margins increased 10 bps in Q1 2013 Lower commodity costs, product cost reductions, pricing offset by unfavorable currency and higher promotions Net income margin increased 120 bps to 10.1% for Q1 2013 Income tax non-recurring benefit of $8.2 milli
Slide 16: Q1 2013 Summary
Q1 2013 Summary Economy remains weak, but manageable Making Growth Happen remains our mantra Q1/Q2 building foundation for pivotal 2H 2013 Indian launch, MY ‘14 products poised to drive growth Investments in infrastructure, growth will continue ROIC will remain at industry-leading levels Margin expa
Slide 17: Safe Harbor
Safe Harbor Safe Harbor Except for historical information contained herein, the matters set forth in this document, including but not limited to management’s expectations regarding 2013 sales, shipments, margins, net income, cash flow, and manufacturing realignment project transition costs and savin
Slide 18: Thank you / Q&A
Thank you Q&A IR May2013,
Slide 19: Appendices
Appendices Appendices Powersports Consolidated Share 2013 Full Year Guidance Detail 2013 Full Year Gross Margin Guidance Balance Sheet and Liquidity Profile Product Innovation R&D Facility Expansion Global Manufacturing Operations Credit Arrangements IR May2013
Slide 20: N.A. Powersports Consolidated Share
20052006200720082009201020112012Consolidated Market Share in Units (Using Total Motorcycle Industry) N.A. Powersports Consolidated Share N.A. Powersports Consolidated Share 20 #1 OEM and Building… #1 N.A. Powersports OEM and Building… IR May2013 Arctic Cat Deere Kubota Suzuki Triumph BMW Ducati KTM
Slide 21: 2013 Full Year Guidance
2013 Full Year Guidance 2013 Full Year Guidance METRIC GUIDANCE Product Line Sales Off-Road Vehicles Up 8% to 10% On-Road Vehicles Up 50% to 60% Snowmobiles About flat PG&A Up 22% to 25% International Up about 20% Total Company Sales Up 12% to 15% Gross Margins Expand up to 40 bps Operating Expenses
Slide 22: 2013 Gross Margin Guidance
2013 Gross Margin Guidance 2013 Gross Margin Guidance METRIC Actual Q1 2012 Actual Q1 2013 Full Year Guidance 2013 Prior Period 28.3% 28.9% 28.8% Production volume adjustments Product cost reduction efforts Commodity costs Currency rates Higher selling prices Product mix Mfg. realignment projects, n
Slide 23: Balance Sheet and Liquidity Profile
Balance Sheet and Liquidity Profile $ In millions (except per share and interest rate data) Q1 2013 Fav / (UnFav) Q1 2012 2013 Full Year Guidance Cash $380.8 $94.9 Decrease from acquisition funded Debt $106.4 $1.7 Unchanged Credit Facility $350.0 Flat Unchanged Factory Inventory $370.9 ($56.8) Incre
Slide 24: Product Innovation
Product Innovation Product Innovation IR May2013 Research & Development Innovation Vitality Index Off-Road Vehicles 8 New MY’13 (36 Models) Remains a Competitive Advantage Product Innovation Remains a Competitive Advantage Scrambler 850 XP RANGER XP 900 RZR 570 LE Snowmobiles 8 New MY’14 (30 Models)
Slide 25: R&D Facility / Capacity Expansion
R&D Facility / Capacity Expansion R&D Facility / Capacity Expansion Expanding and Capabilities Expanding Capacity and R&D Capabilities Wyoming, MN 2012 R&D investments up 21%; new product vitality index at 78% In process 144,000 sq. ft. R&D expansion in Wyoming, MN Anticipated completion Q3 2013 Add
Slide 26: Global Manufacturing Operations
Global Manufacturing Operations Global Manufacturing Operations 26 IR May2013 Expanding into Europe and Asia Expanding into Europe and Asia Current Polaris MFG Locations Future Polaris MFG Locations SxS, Engines Monterrey, MEXICO SxS, Engines Motorcycles, GEM, Commercial Spirit Lake/Milford IOWA SxS
Slide 27: Credit Arrangements
Credit Arrangements Polaris Credit Facility ($ in Millions) Ample Capacity for Future Growth Ample Credit Capacity for Future Growth Retail Credit ($ in Millions) Wholesale Credit ($ in Millions) Ample Credit Capacity 10 banks in Credit Facility Senior Notes effective rate = 4.36% $106 Outstanding Z