Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Shareholder Meeting (May 2008)
40 slides from Polaris's shareholder meeting presentation, May 1, 2008
Slide 1: Polaris Industries Inc. 2008 Annual Meeting
Polaris Industries Inc. 2008 Annual Meeting
Slide 2: 2008 - Momentum
2008 - Momentum Bennett J. Morgan President and Chief Operating Officer
Slide 3: The Goals
The Goals 1. Win in the Core Grow market share in snowmobiles and ATVs. Leverage PG&A and Financial Services to deliver superior total value. 2. Delivering Operational Excellence Industry-leading quality in every product line. > 5% productivity every year. A lean enterprise, driven by robust simple
Slide 4: 2007 in Summary - Back on Track
2007 in Summary - Back on Track The 2007 Scorecard: Sales increased by 7 percent to $1.78 billion Earnings per share from continuing operations increased 14 percent to $3.10 per diluted share Gross margins increased by 40 basis points to 22.1 percent Return on shareholders' equity was 66% The Compan
Slide 5: 2007 in Summary - Wins Exceeded our Financial Expectations
2007 in Summary - Wins Exceeded our Financial Expectations Won the competitive battle in 2007 Gained market share in every business both in North America and Internationally Dealer inventories are much lower than a year ago N.A. core ATV dealer inventories down 14 percent Snowmobile dealer inventori
Slide 6: 2007 in Summary - Challenges
2007 in Summary - Challenges As in most years, there were some things that did not go well in 2007: North American Core ATV Market Weak Declined 13 percent for the full year U.S. Motorcycle Industry Weak Cruiser and touring markets combined declined 5 percent in 2007, the first decline in 16 years F
Slide 7: 2008 — Priorities
2008 — Priorities + PEARS)
Slide 8: 2008 Priorities
2008 Priorities Win in the Core - Get Our ATV & Snowmobile Businesses Healthier Operational Excellence - Achieve 2008 Quality, Cost & Speed Objectives Grow - $200 Million+ Growth in our Growth Businesses in 2008 Deliver the Financials While Executing on the External Fundamentals Definition of Succes
Slide 9: Win in the Core... Worldwide ATV Industry
Win in the Core... Worldwide ATV Industry 2005 2006 2007 2008 Sales 1240 1117 1195 1243 85 Polaris ATV Sales (Includes Side-by-Side vehicles) (millions) Guidance 2008 Objectives for "Core" ATVs: Gain market share in a N.A. ATV industry that is expected to decline double digits in 2008 Further reduce
Slide 10: Win in the Core... ATV 2008 = Positioned For Future Success
Win in the Core... ATV 2008 = Positioned For Future Success More Competitive Model Year 09 Product Line Stronger Brand-World's Toughest ATV Dealer Inventories expected to decline further given economic conditions and operational excellence initiatives Full Year 2008 sales and earnings guidance conte
Slide 11: Win in the Core... ATV Unit Sales by Product Category
Win in the Core... ATV Unit Sales by Product Category Side-by-side U.S. "Core" ATVs Military Int'l Canada 0.237 0.553 0.005 0.078 0.128 U.S. "Core" ATVs International Military Canada Side-by-Side ATV Contribution (Gross Profit $) by Category Side-by-side U.S. "Core" ATVs Military Int'l Canada 0.45 0
Slide 12: Worldwide Snowmobile Industry Retail 1986 - 2008
Worldwide Snowmobile Industry Retail 1986 - 2008 Win in the Core... Maintain Momentum in Our Snow Business The Market - Snowmobiles Industry experienced its first increase in retail sales since the 1997 season. Low = 104K, High = 261K, Currently 165K In Units 86 87 88 89 90 91 92 93 94 95 96 97 98 9
Slide 13: Win in the Core... Maintain Momentum in Our Snow Business
Win in the Core... Maintain Momentum in Our Snow Business Snowmobile 2008 Polaris Dealer inventory levels at their lowest levels in 10 years Quality remains #1 focus. Continued to see results for MY 2008. New Liberty(tm) 800 CFI engine was well received by consumers and is available in additional mo
Slide 14: Win in the Core... Parts Garments & Accessories and Financial Services
Win in the Core... Parts Garments & Accessories Highest margin product line (40+% gross margins) Leveraging installed base Focused on hot new products Victory Vision(tm) - introduced 100 accessories RANGER RZR(tm) - introduced 75 accessories Military Growth through innovation and integration Expande
Slide 15: 2. Achieve Operational Excellence
2. Achieve Operational Excellence 2007 Actual 2008 Goals Quality: Improve consumer satisfaction by 50% by 2010 3 of 4 businesses - +10% improvement +10% improvement (4 of 4) Cost: Reduce system-wide cost by 20% by 2010 -3% -5%+ reduction Speed: Improve speed to consumers by 50% by 2010 +15% +15% The
Slide 16: 2. Achieve Operational Excellence - End Game
2. Achieve Operational Excellence What's the End Game Look Like? 2005 2006 2007 2008 East 23 21 23 28 West 3 North Guidance Dollars (in Millions) 22.0% 21.7% 22.1% Expect gross margins to increase up to 100 basis points in 2008 Sustained Greatness Total Company Gross Margins Most satisfied customers
Slide 17: Leading Share in Side-by-Side Business
3. Grow Aggressively in 2008 in Growth Businesses Leading Share in Side-by-Side Business RANGER RZR CREW (4 and 6 Wheel Drive) Leverage Industry-Leading Side-By-Side Line-Up Hardest working, smoothest ruling 50 mph 1 ton towing IRS Six-passenger people mover 44 mph 1 ton towing IRS Razor-sharp side-
Slide 18: Leading Share in Side-by-Side Business 2008
3. Grow Aggressively in 2008 in Growth Businesses Leading Share in Side-by-Side Business 2008 Objectives: Lead in the side-by-side market Grow market share Successfully introduce innovative model year 2009 Side-by-Sides Q1 2008 Side-by-Side business grew well in excess of 50% 2005 2006 2007 2008 Eas
Slide 19: Overall Motorcycle Market
3. Grow Aggressively in 2008 in Growth Businesses Overall Motorcycle Market '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 Units 306000 297996 323165 346966 416094 515468 658908 788369 862350 922431 965399 1008994 1022322 948464 Industry 2007 Down 7.2% Cruisers Down 6.7% >1400cc Cruisers Do
Slide 20: Victory Motorcycles
3. Grow Aggressively in 2008 in Growth Businesses Victory Motorcycles 2005 2006 2007 2008 Sales 99 113 113 116 5 Victory Sales 2008 Objectives: Penetrate the luxury touring market segment with a full year of Vision models Grow market share Maintain industry-leading quality Strengthen dealer fundamen
Slide 21: International Growth
1st Qtr 2nd Qtr 3rd Qtr East 0.17 0.01 0.16 0.66 West 30.6 38.6 34.6 North 45.9 46.9 45 3. Grow Aggressively in 2008 in Growth Businesses France France Australia/NZ UK Swd/Nor Germany Finland Russia Italy Spain Portugal Japan Others 246900 246900 153100 102500 161500 256400 68700 29100 78300 107200
Slide 22: Military - Polaris Defense
3. Grow Aggressively in 2008 in Growth Businesses Military - Polaris Defense Grow the business - double again in 2008 Expand military agency customers around the world Leverage the expanded product line with JP8 engine technology available for all Military vehicles MVRS Adjacent Markets Profitable T
Slide 23: Summary 2007 - Back on Track
Summary 2007 - Back on Track The Strategy is working Delivered the financials - $3.10 EPS Performed better than our peer group Polaris fundamentals healthier; momentum continuing into 2008 In 2008 - the external environment remains challenging Weak consumer economy - oil prices, credit crunch, housi
Slide 24: Summary - Why Polaris Will Win in 2008
Summary - Why Polaris Will Win in 2008 1. Winning in the Core Snowmobile business is healthy again and growing Innovative new product introductions which can grow share Dealer inventory under control but will be driven down further Industry-leading quality Successfully Diversified the Polaris ATV Bu
Slide 25: Summary - Why Polaris Will Win in 2008 (con't)
Summary - Why Polaris Will Win in 2008 (con't) 4. Growing Aggressively in our Growth Businesses - $200 million+ in 2008 Leading the growing Side-by-side industry - new product innovation, RANGER RZR(tm), aggressive investment Victory - Vision growth and market penetration Military - Leverage new pro
Slide 26: Thomas C. Tiller, Chief Executive Officer
Thomas C. Tiller Chief Executive Officer
Slide 27: The Past Ten Years: Sales and EPS
The Past Ten Years Polaris Industries Inc. The Past 10 Years Sales and EPS Sales Up 5% to 7% Sales up 88% EPS up 121% (1997 - 2007) EPS $3.36 to $3.46 (+8% to +12%) 26
Slide 28: Total Return to Shareholders
Total Return to Shareholders January 1, 1998 thru April 29, 2008 Stock Price
Slide 29: Important Accomplishments
Important Accomplishments Growth - roughly doubled in size Successfully grew to #1 in Side by Side business First company in 60 years to successfully enter motorcycle business Increased global presence - established 7 subsidiaries Substantially upgraded facilities, processes, and technology Much imp
Slide 30: Disappointments
Disappointments Lost market share in snowmobiles and ATVs Decline in Sales / EPS in 2006 Failed to complete KTM transaction Closed PWC business Polaris Professional Series Financial Services Retail Credit with HSBC
Slide 31: Future of Polaris 10-Year Strategy Direction
Future of Polaris 10-Year Strategy Direction
Slide 32: Polaris' World is Changing
Polaris' World is Changing Core markets declining The demographics and macro trends are starting to become more challenging Our world is truly global Worldwide supply chain 24/7 media Asian invasions... Polaris has strong market positions today... The Rate of Change and Challenge is Escalating Rapid
Slide 33: Macro Trends Present Challenges to Polaris' Core Markets
Macro Trends Present Challenges to Polaris' Core Markets Urbanization - people are moving to cities Decline of hunt and farm consumers Aging population in North American and Europe U.S. racial diversity Consumer lifestyles Higher costs of energy - green movement Globalization Climate change The Tren
Slide 34: The Goals
The Goals 1. Win in the Core Grow market share in snowmobiles and ATVs. Leverage PG&A and Financial Services to deliver superior total value. 2. Delivering Operational Excellence Industry-leading quality in every product line. > 5% productivity every year. A lean enterprise, driven by robust simple
Slide 35: 10-Year Direction - Process Overview
10 Year Direction - Process Overview 3 study groups with Board members and management Blank sheet of paper - several options considered Two areas of focus: 2007 - 2010 - Medium Term 2011 - 2017 - Long Term Expect Polaris to be successful over both periods $5 Billion in sales by 2017 is an aggressive
Slide 36: Conclusions - Medium Term - Through 2010
Conclusions - Medium Term - Through 2010 Polaris is in a much better position today vs. 18 months ago The basic strategy is working We are optimistic about the medium term (through 2010) Good top line growth through 2010 EPS growth faster than sales through 2010 The product plan is very strong Main
Slide 37: Long Term Vision - Through 2017
Long Term Vision - Through 2017 (10 Year Plan) The existing business is likely to be attractive, but more challenging, ten years out. Many key macro changes will be working against us in our existing business (land access, green movement, demographics, etc.) The keys to long term success of our exis
Slide 38: Private Securities Litigation Reform Act of 1995 Disclosure
Private Securities Litigation Reform Act of 1995 Polaris Industries Inc. Disclosure Litigation Statement Our presentation and responses to your questions may contain certain statements which may be considered forward looking for the purposes of the Private Securities Litigation Reform Act of 1995. W
Slide 39: Thank You
Thank You (+ )PSCArIS,
Slide 40: Polaris 2008 Annual Meeting
POLARIS 2008 ANNUAL MEETING. @ PoLaris