Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Investor Presentation (November 2001)
54 slides from Polaris's investor presentation, Nov 28, 2001
Slide 1: Polaris - The Way Out
Slide 2: Polaris Industries Inc.
Polaris Industries Inc. + Founded in 1954 ¢ Manufacture a diversified mix of high-quality, high-performance motorized products for recreation and utility use * Well known brand name ¢ Product innovation key to success ¢ Highly productive non-union workforce — 3,700 strong * National and internationa
Slide 3: Strong Business Foundation
Strong Business Foundation Products (% of 2000 Sales) Strengths/Opportunities + $844M business + Growth opportunities going forward + Maintain #1 leadership position + Generate cash + Minimum investment > Upside only + $300-500MM long-term opportunity + Superior product features + Highest margin pro
Slide 4: Strong Business Foundation
Strong Business Foundation Growth Initiatives (Catalysts) | Strengths/Opportunities + Rapidly grow retail credit portfolio ° Grow from 6% to 10% of revenue + Become closer to our customer + Brand acquisitions/partnerships AcquisitionsV's = Tom Tiller new CEO in 1999 Over half of the top managers are
Slide 5: Sales
Sales 1990-2000 A Consistent Track Record... ce) 1500 Aves ene sao 1929 7% g1.tat range E I | | | 100 i fil som ton 02 om | om 01 Forecast soon 00 00 x20 2 e= PSLARIS The Way Out.
Slide 6: Polaris Sales by Business Unit
Polaris Sales by Business Unit 2000 Sales: $1.426 Billion ATVs 59% Snowmabiles 13% 22% Motorcycles He Sales In Millions The Way Out.
Slide 7: Earnings Per Share
Earnings Per Share 1990-2000 (diluted) A Consistent Track Record... 9-10% Increase, $4.00 19 yea i i ” $3.83 to ee $350 $3.86 $350 $307 $300 wn sag $228 9250 $200 3150 $124 $031 sora $081 $100 - ‘| ] VL 9000 sem "1981 | 1982 1968 jem | 200 2001 Forecast 45, PSctARIS The Way Out.
Slide 8: Historically Not Sensitive to Negative Economic Changes
Historically Not Sensitive to Negative Economic Changes sino 9300 980.0 $70.0 960.0 950.0 $40.0 Net Income (millions) $300 9200 s100 soo 160 440 120 400 Consumer Confidence Index == Polaris Nat income. -ecel cA The Way Out
Slide 9: Product Cost Reduction Efforts
Product Cost Reduction Efforts Gross Margins have improved 160 basis points from 1998 to 2000 Gross Margin Percentage Initiatives taken to improve gross o40% 28-22.0% margins include: “10 to -20 + EDGE snowmobile chassis 23.5% By Ri gate Bes Yours + ATV model platform consolidation zee 2A% é + Victo
Slide 10: Cash Flow
Cash Flow Before Changes in Working Capital items and Deferred Taxes A Consistent Track Record... $140 $127 $115 $120 $107 95 «$87 = $100 ser 980 $80 $59 eet $46 $38 $40 $40 } 3 ‘| | $0 1990 1991 1992 1993 1994. 1995 1996 1997 1998 1999 2000 Doltars (in millions: 4 Pevaris The Way Out.
Slide 11: Return on Shareholders Equity
Return on Shareholders Equity Significantly Above Industry Average 50% 4 0 47% 45% am SB 42% - hoe at ae 40% 36% 31% 30% mele 2 20% 18% [oe ; 10% 8% 0% 1930 1991 1992 1993 1994 995 1996 1997 1998 1999 2000 4 4p. PeLaRis The Way Out.
Slide 12: Debt to Total Capital Ratio
Debt to Total Capital Ratio Ample Credit Capacity 30% 25% 25% 19% 19% 20% 18% ae 15% 138% 12% 10% 5% 0% 0% 0% 0% 0% eo a jgo0 1991 1992 1993 1994 995 1998 1997 1998 1999 2000 4 Pevaris The Way Out.
Slide 13: Share Repurchases
Share Repurchases Cumulatively to date have repurchased 6.7 million of 9.5 million authorized for a total of $226 million. In Millions In Millions 20 $60 $52 15 15 $50 $42.4 15 $40 $40 u ae en $98 : 10 10 $30 0s $20} $14 a5 $10 i aot $o+ 1996 1997 1998 1999 2000 2001 1996 1997 1998 1999 2000 2001 YT
Slide 14: Blank Slide
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Slide 15: ATV Overview
ATV Overview - Market 1992-97 Industry averaged 12% annual growth Buyer Profile 1998-99 Industry averaged 23% annual growth «40% first time buyers 2000 Industry growth 19% + Male, martied, age 41 YTD 2001 10% growth despite slowing economy + Average income $51,000 2001+ Average annual growth moderat
Slide 16: Polaris ATV
Polaris ATV Polaris entered ATV market in 1985, Polaris increased retail sales every year since 1989 2000 Highlights 2001 YTD Polaris ATV Sales + ATY sales increased 12+ Retail sales up in first percent to $844 million nine manths; wholesale ane sales lower due to mare Flatto * Represented 59 percen
Slide 17: RANGER
RANGER 4 x 4 *Two New Models: — Ranger 2x4 — Ranger 4x4 +High Clearance, Smooth Ride +Unbeatable Hauling & Towing ¢On-Demand True 4 Wheel Drive
Slide 18: Sportsman
Sportsman 700 + Strongest, most powerful ATV - new, durable, heavy duty chassis + Liquid cooled 700 Twin engine + Industry-leading independent rear suspension and True On Demand 4x4 drive system + First Polaris domestic engine in ATVs
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Slide 20: Motorcycle Overview
1992-98 Cruisers averaged /15% growth 1999 Cruisers grew 21% 2000 Industry cruiser growth 20% to 220,000 units YTD 2001 13% growth 2001+ Average annual growth rate 10% + Motorcycle Industry Growth [Ball Motorcycles | cruisers Gn thousands) unit 1992 1993 1994 1995 199 1997 1998 1999 2000 20 Motorcyc
Slide 21: Polaris Victory
Polaris Victory Victory production started July'4, 1998 Victory Sales 2000 Highlights 2001 YTD + Too optimistic in the early part of + Sales up 12% YTD a 2000, Revised roauction New va2c Deluxe Pe cers model being well + Victory retail sales continued received strong throughout 2000, = News Freedom:
Slide 22: Victory Status
POLARIS” Est 1954 Victory Status Cycle Worid’s “Cruiser of the Year” July 1998 Motorcycle Cruiser’s “Cruiser of the Year” October 1999 Expanded to Canada and UK in 2000 Third model “Deluxe” introduced in August 2000 Sport Cruiser introduced in August 1999; named “Sport Cruiser of the Year” by both E
Slide 23: Victory V92TC Deluxe
VICTORY V92TC Deluxe 2 Pevaris The Way Out.
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Slide 25: Snowmobile Overview
SNOWMOBILE Za Snowmobile Overview ea fee 7 Market 1993-96 Industry averaged 18% annual growth : ; 1997-00 Industry absorbs growth & poor weather Buyer Profile (flat-down) + Age 38 (vs. 41 industry average) 2001+ Expect modest 5-7% industry growth as + Average income $61,000 normal snowfall retums Be
Slide 26: Polaris Snowmobiles
Polaris Snowmobiles Polaris has been Industry Market Share Leader 2000 Highlights 2001 YTD for 11 consecutive years + 2000 sales totaled + Sales up 31% $311 million, down 3 over last year Snowmobile Sales percent, gained e nnovative snow Approximately market share again Genseeoe 20% and improved cia
Slide 27: Edge
600 Edge X SlARiS The Way Out.
Slide 28: Customized Snowmobiles
Customized Snowmobiles + New program for 2002 model year + Options include choice of suspension, color, track, engine, shock, reverse and electric start + Consumer can save up to $1,543 on factory installed custom options + Pre-order sales up nearly 50% over last year + Margin of pre-ordered snowmob
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Slide 30: PWC Overview
1991-1995 Industry grew 30+% annually 1996-2000 2001 Industry down 10% to 110,000 units 2002+ Modest industry growth resumes Worldwide PWC Industry Growth 300 Legislative and 250 regulatory concerns Gn thousands) Unit 1992 1993 1894 1935 1996 1897 1936 1939 2000 2001 30 PWC Overview Market Rapid mar
Slide 31: Polaris PWC
Polaris PWC First manufacturer with a model (Genesis i) that complies with EPA's 2006 emission standards Polaris PWC Sales 2000 Highlights 2001 YTD + 2000 salestotaled $68. Inventories remain at Approxi- milion, up 27 percent in manageable levels sae ~ mately flat an industry that has + Gained marke
Slide 32: Freedom
FREEDOM 4p Pevcaris The Way Out.
Slide 33: Polaris PG&A Sales
In Millions Polaris PG&A Sales $139 $158 $133 200 Forecact 15%-20% growth Polaris PG&A 2000 Highlights 2000 sales totaled $183, million, up 16 percent for the year New dedicated PG&A, sales force Introduced 1,100 new products last year covering all business units Minimal growth in PGA inventory leve
Slide 34: PG&A Business Overview
PG&A Business Overview Polaris Highest margin business (almost double corporate average) Has grown 32% since 1998 (greater focus placed on product line) 2000 Sales Breakdown Victa 5% Non-Product 9% Snowmobiles 40% Apparel 12% Accessories ATV/ RANGER 35% 44% PoLaRris The Way Out.
Slide 35: Polaris Professional Series
Polaris Professional Series Workmobiles™ Polaris ASL 300 Utility Task ATV Pro (All Surface Loader) Vehicles (UTV) 4x4, 6x6 2x4, 4x4, 6x6 + Expanded line of commercial and utility vehicles + Additional products to be added soon + Long-term opportunity to be a significant segment of our overall busine
Slide 36: Growth Initiatives (Catalysts)
Growth Initiatives (Catalysts)
Slide 37: Growth Initiative: Financial Services
Growth Initiative Financial Services Expansion of Polaris Acceptance joint venture with Transamerica Create “one stop shopping” for consumers Expect penetration rates to improve — Retail Credit 10% today B==y grow to 20% — Service contracts 6% today Eazy grow to 15% Operating income up 47% in 2000 S
Slide 38: Growth Initiative: International Opportunities
Growth Initiative international Opportunities + Goal to grow from 6% of sales to 10% by 2005 + Purchased Australian/New Zealand and France distributors + Hired new international VP + Increased sales 34% to $83 million in 2000 from 1998 Sales up 11% year-to-date 2001 45, PSctARIS The Way Out.
Slide 39: Growth Initiative: Alliances
Growth Initiative Alliances ASV Dodge trucks Bass Pro Shops Remington™ Special Edition Sportsman 500 DeWalt Tools Ducks Unlimited NASCAR sponsorship Goodyear Tires Product licensing (Go Carts & Mini-bikes) Polaris Adventure Tours Potential acquisitions 45, PSctARIS The Way Out.
Slide 40: Building A Dominant Brand
Building A Dominant Brand Polaris Brand Promise: Polaris promises you a better riding experience that allows you to get away with an unequalled feeling of freedom. Polaris Themeline: “The Way Out.” The Way Out.
Slide 41: Building a Dominant Brand
Building a Dominant Brand Marketing and Advertising - our promise to customers — Clean, sustainable positioning — Reinforced with consistent advertising, promotions and partnerships to surround the customer Distribution — the in-store experience — Drive toward consistently outstanding customer satis
Slide 42: Upgrading Distribution Channels
Upgrading Distribution Channels Today...
Slide 43: The Way Out - ATVs
“The Way Out”- ATVs Blank Slide
Slide 44: The Wedding
“The Wedding” Blank Slide
Slide 45: Family Dinner
“Family Dinner” Blank Slide
Slide 46: Upgrading Distribution Channels
Upgrading Distribution Channels The goal... Drive toward consistently outstanding customer satisfaction Larger, more profitable, better managed dealerships supported consistently by Polaris through: — Co-op advertising program — Store Merchandising program Historically have seen an average increase
Slide 47: 2001 Outlook
2001 Outlook « Announced third quarter results on October 16 — 14th consecutive quarter of increased sales and earnings * Sales up 7 percent to $431.1 million « Earnings per share up 11 percent to $1.38 per share « Operating environment remains challenging: * Overall economic slowdown * More aggress
Slide 48: 2001 Outlook
2001 Outlook - Polaris’ response: + Continued focus on innovation and leverage our competitive advantage — flexibility — Grow where we can — Intensify quality improvement efforts — Watch every penny of cost — Conservative production levels + Expanded promotional activities and reduced production rat
Slide 49: The Goals
The Goais . +$2B by 2002; $38 by 2007 €> PoeLanis The Way Out. *Grow EPS as fast as revenue -Build a dominant brand with industry leading quality and distribution -Expand P/E multiple to 20+ Achieved by... Product Innovation - “The Foundation” Growth Initiatives - “The Catalysts” + ATVs + Financial
Slide 50: How Are We Doing So Far?
How Are We Doing So Far? 396 to 1998 2998 to 1004 %Sales % EPS %Sales % EPS Growth Growth Growth Growth 3096 3% =15 % 2098 10% 12% 4a96 5 2 3098 28 18 1a97, «19 8 4098 18 26 2097-21 -16 1a99 13 13 3097 os 44 2099 18 9 4Q97 6 15 3099 8 13 1098 a 27 4a99 12 16 1000 14 14 200 6 13 300 2 13 400 8 15 100
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Slide 52: In Summary... Why Buy Polaris?
In Summary..... Why Buy Polaris? ¥ 47 year track record « 19 consecutive years of earnings growth « 14 consecutive quarters of sales & EPS growth y¥ Proven product and marketing capability ¥ Strong brand ¥ Strong balance sheet ¥ Extensive engineering, manufacturing and purchasing resources ¥ Signifi
Slide 53: 1995 Private Securities Reform Act
1995 Private Securities Reform Act Polaris Industries Inc. Disclosure 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 Reform Act of 1995. We caution you that actual results co
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Polaris Industries — Investor Presentation (November 2001) on 6ix