Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Investor Day (May 2015)
59 slides from Polaris's investor day presentation, May 1, 2015
Slide 1: Polaris Analyst Meeting April 30, 2015
Attorney-Client Privileged Polaris Analyst Meeting April 30, 2015 POLARIS INDUSTRIES INC.
Slide 2: Agenda
Attorney-Client Privileged AGENDA Introductions Regulatory Update Slingshot Motorcycles Operations, Engineering & LEAN
Slide 3: Regulatory Update
Attorney-Client Privileged Regulatory Update Paul Vitrano, VP, Global Government Relations April 30, 2015 POLARIS INDUSTRIES INC. | ANALYST MEETING
Slide 4: CPSC ROV Rulemaking – Overview
CPSC ROV Rulemaking – Overview Five Differences between CPSC Proposal and Voluntary Standards 4 Lateral Stability Vehicle Handling Occupant Retention Hang Tag Seat Belt Reminder Timing Close of Comment Period = extended to Jun 19 CPSC staff review of Comments = several months CPSC vote on final staf
Slide 5: CPSC ROV Rulemaking – Next Steps
CPSC ROV Rulemaking – Next Steps 5 Comments Legislation Addressing Rulemaking in Multiple Ways Voluntary Standards Compliance Confirmed compliance where it exists Identified adjustments/development required to obtain compliance Preparing to meet proposed implementation deadlines; may be extended Pur
Slide 6: Slingshot – Classification Status
6 Slingshot – Classification Status States/Provinces Federal Classifications Settled; State/Provincial Classifications Evolving “Motorcycle” – only requires “seat or saddle” and “not more than three wheels in contact with the ground” Not an “autocycle” as proposed by S.685 – seeking amendment to exp
Slide 7: Slingshot – Creating Classifications
7 Slingshot – Creating Classifications Canada Expecting to Expand Retail Opportunities this Year Legislation to create “autocycle” or “unconventional vehicle” classification in four states Texas Indiana (Apr 29) Connecticut North Dakota (Apr 20) Regulators working on new classification in two provin
Slide 8: Snowmobiles & Slingshot
Mike Jonikas VP – Snowmobiles & Slingshot Polaris Analyst Meeting April 30, 2015
Slide 9: Successful Launch: Positive Response by All Stakeholders
SUCCESSFUL LAUNCH POSITIVE RESPONSE BY ALL STAKEHOLDERS
Slide 10: Dealers Signed Up and Ready
354 SIGNED UP PRIOR TO REVEAL AND, 57 SIGNED POST-REVEAL FANTASTIC RESPONSE WITHIN N.A. DEALERS READY
Slide 11: Press On Board
PRESS ON BOARD <=
Slide 12: Unprecedented 2+ Billion Impressions Coverage
UNPRECEDENTED 2+ BILLION IMPRESSIONS COVERAGE
Slide 13: Global Coverage
GLOBAL COVERAGE EDITORIAL IN 39 COUNTRIES
Slide 14: Editorial On-Brand
EDITORIAL ON-BRAND “Radical Polaris Slingshot is part car, part motorcycle, all excitement” – ConsumerReports “The Polaris Slingshot is your amazing new three-wheeled track machine” – Jalopnik “An awe-inspiring three-wheel roadster that represents the future of on-road driving exhilaration” - Motocy
Slide 15: Media Fueled
MEDIA FUELED 1.2+ million paid impressions Broad reaching
Slide 16: Consumers Wired
CONSUMERS WIRED Terrific viral chat & buzz “Driving the Slingshot, not sure what it is but I feel like a superhero” – arizonapaul “2015 Polaris Slingshot is a three-wheeled open-air firecracker” – anamoltobene “Driving the Slingshot can be addictive … I’m already craving more” - motousa
Slide 17: Consumers Wired
CONSUMERS WIRED Polaris Slingshot Dear #Slingshot I need to drive you We’ll fall in love, make a video … things will get weird Love, Jeff
Slide 18: Kick-Started Demand
KICK-STARTED DEMAND Crushed unique website visit goals +51% vs. plan
Slide 19: Initial Owners Happy
INITIAL OWNERS HAPPY Net promoter score Detractors EARLY FEEDBACK IS STRONG!! 90 0
Slide 20: Customer Excellence Misses
CUSTOMER EXCELLENCE MISSES 1st time quality for incoming parts – Two safety bulletins (including Stop-Ride recall) Lack of Polaris licensure to sell Slingshot – 5 U.S. states and 6 Canadian provinces – Issue = each local government’s definition of motorcycle
Slide 21: 2015 Plan: Charging Hard for Growth
2015 PLAN CHARGING HARD FOR GROWTH!
Slide 22: Increased Production to Meet Strong Consumer Demand
INCREASED PRODUCTION TO MEET STRONG CONSUMER DEMAND In Spirit Lake facility +25% increase Sustain high quality
Slide 23: Solidify N.A. Dealer Network
SOLIDIFY N.A. DEALER NETWORK 450 READY TO RETAIL DEALERSHIPS
Slide 24: Solidify N.A. Dealer Network
Frequent advertising Proactive test rides Showcasing SOLIDIFY N.A. DEALER NETWORK
Slide 25: Special Limited Build Model
SPECIAL LIMITED BUILD MODEL EVEN MORE CONSUMER EXCITEMENT
Slide 26: Special Limited Build Model Ships in April and May
Nuclear sunset orange Twin windscreen Interior LED lighting SPECIAL LIMITED BUILD MODEL SHIPS IN APRIL AND MAY
Slide 27: Geographic Expansion
GEOGRAPHIC EXPANSION MY'16 European homologation Middle East distribution
Slide 28: Strong Awareness
STRONG AWARENESS Lighting up paid media – 1+ billion impressions Scorching editorial – 1+ billion impressions DRIVE CONSUMER PURCHASE DEMAND
Slide 29: Slingshot Summary
SLINGSHOT SUMMARY ORGANIC GROWTH ADJACENCY Successful launch of all-new on-road vehicle Dealer count, press coverage, initial quality, consumer demand On track for $300 to $500 million revenue opportunity Within 3 to 5 years Global business development initiative Launching outside North America duri
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Slide 31: Motorcycles
Motorcycles Steve Menneto, VP April 30, 2015 POLARIS INDUSTRIES INC. | ANALYST MEETING
Slide 32: 2015 Industry Off to a Good Start
2015 Industry Off to a Good Start N.A. 1400cc+ Industry 2015 Industry Retail YTD Industry Retail YTD 2015 N.A. 1400cc+ Industry up ~ 1.0% Cruiser Industry Flat YTD Bagger & Touring up 2% YTD Cruiser Bagger Touring 2010 2011 2012 2013 2014 2015E Cruiser Bagger Touring 2
Slide 33: Polaris Motorcycles Largest Share Gains
Polaris Motorcycles Largest Share Gains 2015 N.A. 1400cc+ Competitive Summary Rank Manufacturer Strategy Share Trend 1 Harley Aggressive Financing, Conversion Promotions Focusing on Street Product Huge Installed Owner Base 2 Indian American Heritage High Owner Satisfaction 3 Victory American Muscle
Slide 34: Improving Stability – Majority of Start-up Issues Addressed
Improving Stability – Majority of Start up Issues Addressed Paint System Start-Up Delays Conveyor contractor installation delays Conveyor trolley quality issues delayed delivery and installation Conveyor chain dimensional issues caused stops and jams until resolved Manufacturing Execution System (ME
Slide 35: Clear Separation in Positioning & Styling Language
Motorcycles Clear Separation in Positioning & Styling Language 5 Brand Differentiation AMERICAN MUSCLE AGGRESSIVE & ATHLETIC STYLE AUTHENTIC American V-twin Performance Head Snapping Acceleration Handling & Fun to Ride American Muscle Modern vs. market leader Athletic - lean, hard, muscular American
Slide 36: Celebrating the Extraordinary Commitment of Those Who Serve
Motorcycles Celebrating the Extraordinary Commitment of Those Who Serve 6 Indian Brand Activation Indian Motorcycle & USO Partnership: Announced 4/1 Honoring Heroes content, media, and promotion Share the dedication of Indian Motorcycle in WWI and WWII
Slide 37: Scout Retail Driving Segment Growth
2011 2012 2013 2014 2015E Scout Retail Driving Segment Growth Scout Update Mid-Size Industry Retail N.A. 900-1399cc YTD 2015 N.A. 900 - 1399cc Industry up ~ 4% Shipments re-started late March – Expect to catch-up and on RFM by Late Q3’15 Fulfilling pre-orders first; Retail, Profiles for both N.A. an
Slide 38: Great Reception – Retailing Ahead of Plan
Great Reception – Retailing Ahead of Plan Indian Dark Horse 8 Launch: Chicago, February 13 “Dark Horse Challenge” Ride: 20 Great coverage / Social feedback 25 online articles 1M+ impressions
Slide 39: On 2015 Plan – Maintaining Quality Standards
On 2015 Plan - Maintaining Quality Standards Indian Global Dealerships Sawtooth Indian Motorcycle – Boise, ID Indian of Orlando Indian of Quebec City N.A. N.A. N.A. Int'l N.A. Int'l Int'l 2012 2013 2014 2015E ~360 25 115 250 9 Retailing Dealers
Slide 40: Riders Connecting with Victory Brand Positioning
10 10 RIDERS CONNECTING WITH VICTORY BRAND POSTIONING AT RECORD LEVELS Victory Brand New Positioning: Drive Class Leading Performance in the American V-Twin Space Feedback on New Positioning: Record levels of social engagement measured by comments, shares, clicks
Slide 41: Own American V-Twin Performance
Motorcycles Own American V-Twin Performance 11 Victory Brand Activation NHRA Race Team Racing Circuit Mar – Nov HD Head-to-Head Consumer / DLR Hospitality Stunt Team Prove Victory performance 500K+ views in first 2 months Drifting/Ice racing Project 156 Prototype race engine Partnership with Cycle W
Slide 42: The Ride Heard Round the World
Motorcycles The Ride Heard Round The World 12 Victory Magnum X-1 Launch Standard Features: High Performance Audio 21” Billet Wheels LED Headlight Loud, Bold Paint $24,499 MSRP Magnum X-1 & Godsmack Shut Down Daytona Main Street
Slide 43: Growing Distribution
Growing Distribution Victory Global Dealerships Victory of Scottsdale N.A. N.A. N.A. N.A. N.A. N.A. Int'l Int'l Int'l Int'l Int'l 2010 2011 2012 2013 2014 2015E 625 690 430 535 590 580 13 Motoprimo Motorsports Lakeville, MN Motoprimo Motorsports Lakeville, MN
Slide 44: Victory Electric Bike: How We Win
Planning back half of 2015 Launch 14 Victory Electric Bike: How We Win First major manufacturer to production with an electric motorcycle Leverage Polaris Operations and Distribution to gain volume and cost advantage
Slide 45: Questions?
Questions? 15
Slide 46: Operations, Engineering and Lean
Operations, Engineering and Lean Ken Pucel, EVP April 30, 2015 POLARIS INDUSTRIES INC. | ANALYST MEETING
Slide 47: Operational Excellence: Update
Operational Excellence: Update SAFETY QUALITY 2013 2014 2015 Expectations Warranty $ / Sales 2010 2011 2012 2013 2014 2015 Expectations Key Metrics Showing Improvement – Also Showing Opportunity BUILD COST PERFORMANCE: GROSS PROFIT Analyst Mtg April 2015 2 Polaris Total Recordable Injury Rate Operat
Slide 48: Global Operations Footprint
Polaris MFG Location JV MFG Location Distribution Center Global Operations Footprint Analyst Mtg April 2015 3 Increasing Critical Mass Allows Greater Flexibility And Focus Roseau, MN Osceola, WI Spirit Lake, IA Milford, IA Monterrey, MX Bourran, FR Opole, PL Yichun, CN Jaipur, IN Aix-les-Baines, FR
Slide 49: Lean + Strategic Investments Providing Capacity to Meet Demand
Lean + Strategic Investments providing Capacity to meet Demand Creating ORV Capacity for Future 4 ORV Sales Expectations vs. Capacity Monterrey Production Ramp ORV Sales ORV Production Capacity Poland & Milford Production 2014 – 2016 Lean Transformation 2009 2010 2011 2012 2013 2014 2015 2016 2017 H
Slide 50: Plant Capacity Expansion: Huntsville, Alabama
On Schedule and On Budget 5 Plant Capacity Expansion: Huntsville, Alabama 600,000+ square foot SxS Manufacturing Plant ~$150M Investment Central to Huntsville, Decatur & Athens (MSA 400,000 pop.) Ground Breaking General Contractor Selection Commence Construction Early Occupancy Final Occupancy Start
Slide 51: Motorcycle Capacity
Motorcycle Capacity Spirit Lake: Midsize Line Motorcycles & Slingshot Capacity Expansions In Place And Ramping 6 CY14 CY15 CY16 CY17 CY18 CY19 Victory Indian Slingshot Capacity Startup: Q4 2014 Scout Line Flexible/Scalable infrastructure State-of-the-Art paint system in final stages of ramp-up Sling
Slide 52: Gross Savings Trends – Opportunity Exists
Gross Savings Trends – Opportunity Exists 7 We have significant opportunities: VIP Program Kickoff in First Half 2015 We Need Cost Savings Initiatives To Be Accretive To Gross Margin Future cost savings need to be accretive to GP Material cost improvement through Design for Cost Logistics Network Op
Slide 53: Value Improvement Process
Value Improvement Process 8 What is VIP? A Process to continually improve the quality, delivery and cost of our products and services Why VIP? Traditional cost‐down approaches won’t meet our goals for margin expansion and business growth Enablers Standard tools for collecting and sharing ideas Commo
Slide 54: Key Focus Areas to Reduce Polaris Inventory
Key Focus Areas to Reduce Polaris Inventory 2013 2014 2015 Target Turns* Utilizing Lean Principals To Drive Turns Improvements 9 2016 and Beyond Drive for 5%-10% year over year improvement Global Inventory turns declining YOY past 3 years Long Term- Drive Lean to Strive for Top Quartile Develop new
Slide 55: Management Systems: Lean Enterprise Focused Priorities
Management Systems Lean Enterprise Focused Priorities 10 RFM Business Processes Operationalizing The Lean Fundamentals Into Our Polaris DNA Sales, Inventory & Ops Planning Plant/Shop Floor Lean Pull Based Material Flow Product & Process Development Business Process Improvements Lean Priorities to Se
Slide 56: LEAN in Polaris Plants – ATV Illustrative Example
LEAN in Polaris Plants – ATV Illustrative Example Recent Lean Successes Will Be Replicated Across The Plant Network Hands On Plant Learning Strike Zone Transform workstations and get tools / materials into strike zone Standard Work Leverage standard work as the best recipe for how work is done Setup
Slide 57: Engineering: Industry Leading Product Development
Engineering Industry Leading Product Development Creating unique solutions to customers needs Balance of Field Testing, Bench Testing, and Analytical Modeling Program Management Excellence Develop and Hire the Best and Challenge Them to Win Culture Which Rewards Teamwork and Knowledge Sharing Advanc
Slide 58: Driving Innovation at Polaris: R&D Investment
$77M $63M $85M $106M $127M $139M $148M $39M 4.0% 4.0% 4.3% 4.0% 4.0% 3.7% 3.3% 3.8% 2008 2009 2010 2011 2012 2013 2014 2015 YTD R&D $ % Sales Product Development Product Development Vitality Index Speed to Market Product Development Driving Innovation at Polaris R&D Investment How We Do It % Contrib
Slide 59: Thank you – Questions?
é>» PGLARIS Thank you Questions?