Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Investor Presentation (July 2003)
47 slides from Polaris's investor presentation, Jul 28, 2003
Slide 1: Bennett Morgan July 25, 2003 Analyst Presentation
Bennett Morgan July 25, 2003 Analyst Presentation
Slide 2: ATV Worldwide Industry Unit Sales
ATV Worldwide Industry Unit Sales '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 International 15 15 15 15 15 15 15 15 15 15.12 15.185 17.181 18.2 20.5 31.833 30.85 35.5 38.5 44.9 54.5 70 80 Canada 31 53 69 73 65 46.3 37.124 30.632 33.783 32.691 33.07 34.686
Slide 3: ATV N.A. Industry Seasonally Adjusted Annual Retail
ATV N.A. Industry Seasonally Adjusted Annual Retail SAAR Thru June 2003 (Trend-Cycle: Oct 2000-Jun 2003) SAAR Still At High Levels Industry Trend Over Past 12 Months Positive *does not include RANGER/PPS or International ATV sales
Slide 4: ATV N.A. Industry SAAR 2nd Half Forecast
ATV N.A. Industry Seasonally Adjusted Annual Retail SAAR 2nd Half Forecast Growing - Mathematical Models Forecast Continued Growth *does not include RANGER/PPS or International ATV sales
Slide 5: Current Worldwide ATV Environment
Current Worldwide ATV Environment Industry growing but slowing ... expect 2003 to show modest single digit growth Uncertainty of War weakened consumer confidence and ATV sales in Q1 Dealer and factory inventories increased in 1H with industry slowdown Promotional spending has risen to record levels
Slide 6: Significant/Fast Program Spending Escalation
Significant/Fast Program Spending Escalation U.S. Historical Program Spending
Slide 7: ATV Market Share - North America
ATV Market Share - North America Polaris Strong #2 Share
Slide 8: ATV Market Product Segments - N.A.
ATV Market Product Segments - N.A. Rolling 18 months thru June '03 Growth Drivers: Big Bore Rec/Ut, Big Bore Sport, Youth
Slide 9: ATV Division Worldwide Revenue
1997 1998 1999 2000 2001 2002 2003 Fcst 452 642 734 825 827 938 938 93 ATV Division Worldwide Revenue (Wholegoods includes RANGER/PPS in 2002+) The Polaris ATV Growth Machine $938
Slide 10: Polaris ATV Keys To Success
Polaris ATV Keys To Success Closest to the customer - we know the customer best because we ride with them Proven track record of innovation - product is king Efficient - manage cost and quality hard and well Best team in the industry Know More About ATVs Than Anyone In The World
Slide 11: ATV Consumer Demographics
ATV Consumer Demographics Polaris Male Average age 39 years Average household income $69,000 Half live in rural counties Outdoorsmen who like to hunt, shoot, fish and camp. Also "gearheads" who enjoy motorcycling, auto races, car shows, tractor and truck pulls Yamaha Tend to be younger and less upsc
Slide 12: ATV Customer Segmentation
Task-Oriented Loners: "Practical Pete" - - Use ATV as a useful, Practical Tool - - Uses ATV to get done, working land, fishing/hunting - - 21% of market Working Explorers: "Dual-Use Dan" - - Enjoys adventure, exploring new trails and getting tasks done with their ATV - - An ATV makes work more fun -
Slide 13: ATV Customer Segmentation: Adventure/Sport Consumer
Social Escapists: "Relaxing-Ride Rick" - - Uses ATV to escape busy life, unwind and relax with friends - - Loves being outdoors and enjoys camaraderie - - 22% of market Young Play-Hards: "Thrill-Seeking Sam" - -ATV is strictly about fun, riding hard and pushing yourself to the limit - - Like high sp
Slide 14: Innovator -- First to Develop New Market Niches
Innovator -- First to Develop New Market Niches... Recreation/Utility 6x6 Sportsman Sport 4-Wheel Drive - Scrambler Side by Side Off Road - RANGER Camo Graphics Fun, safe, affordable youth model Improved Rec/Ut solution - ATP Market Innovator
Slide 15: Innovator - More Industry Leading Product Firsts
Innovator - More Industry Leading Product Firsts... Single lever braking All wheel disc brakes On-Demand AWD ETC - Electronic Throttle Control Composite racks, bumpers, and floorboards Industry leading styling - Recreation/Utility - Sport Long travel Independent Rear Suspension Engine Braking System
Slide 16: Exciting, Industry Leading Products
Exciting, Industry Leading Products Attack with Sportsman - 400 thru 700 - World's Best #1 selling ATV family New Twins, New MSRPs New Style update for MY'04 Quality at All Time High - gunning for #1 Significant improvement since MY'01 Must accelerate improvements New Market Segment, New Models Pred
Slide 17: Ride Leadership in Every Segment
Exciting, Industry Leading Products Ride Leadership in Every Segment Rec/Ut ATVs Trail Boss Magnum ATP Sportsman Full sized, entry priced Best ride and value in class Do more, more easily World's best riding 4x4 400-700 Sport ATVs Trail Blazer Scrambler Predator Powerfully fun and easy to ride Sport
Slide 18: Managing Cost and Margin
Managing Cost and Margin Aggressive cost out strategies Consistent cost down targets every year by model Sportsman cost down 9% in last 2 years Youth cost down 15% in last 2 years Compelling new products with higher margins Investment in manufacturing technologies and efficiencies Kolorfusion camouf
Slide 19: ATV PP100 Goal: Industry Leading Quality
ATV PP100 Goal: Industry Leading Quality Improving - Increase The Rate
Slide 20: Current Industry Outlook
Current Industry Outlook Growing but slowing in 2003. Expect rebound in 2H now that war and low consumer confidence behind us Annual unit growth due to sheer industry size stabilizes - still lots of new units to chase 1st time buyers remain very strong at 38%+ -- lots of new users Industry consumer
Slide 21: Polaris ATV Outlook
Polaris ATV Outlook Waves of new product news -- 80%+ new and more in development Product ride and handling leadership in every segment Driving quality to industry leading levels Margin expansion continues via cost down, marketing mix and product development Best team in industry - productive, innov
Slide 22: Utility Vehicles Division Analyst Meeting July 25, 2003
Utility Vehicles Division Analyst Meeting July 25, 2003 Mike Jonikas
Slide 23: Utility Vehicles Market
Utility Vehicles Market RANGER Polaris Professional Series
Slide 24: Utility Vehicle Market - U.S.
Utility Vehicle Market - U.S. $1 Billion Industry Sales +11% 4 year CAGR Unit Growth Sizeable, Growing Industry
Slide 25: Utility Vehicle Market - Polaris Outpacing
Utility Vehicle Market - U.S. Polaris Outpacing With Dominant Product Share Rank Industry Sales % +/- 2000 +21% 2001 - -3% 2002 +2% Polaris 7 5 3 John Deere 1 1 1 Kawasaki 2 2 2 Club Car 4 4 4 EZ-GO 3 3 5
Slide 26: Utility Vehicle Market - New Competitors
Utility Vehicle Market - New Competitors Cub Cadet Entry level 2x4 model 6x4 model Kubota Diesel 4x4 model Yamaha Rhino 660 4x4 model Pro Hauler 1000 and 700 - entry 2x4 models Plenty Of New Competition
Slide 27: Utility Vehicle Market - Key Usage
Utility Vehicle Market - Key Usage Carry Small and Light Items Personal Transportation General Trail Riding - key Polaris advantage Hauling and Dumping Utility and Recreational Usage
Slide 28: Utility Vehicle Market - Key Targets
Utility Vehicle Market - Key Targets Industrial and Commercial 19% Multi-Acre Homeowners 18% Landscape & Turf Management 18% Golf Course Management 16% Farmers and Ranchers 14% Outdoorsmen 9% Government 6% _____ 100% Utility and Recreational Usage
Slide 29: RANGER Market Position
RANGER Market Position Core Target Audiences Farmers and Ranchers Outdoorsmen Multi-acre Home Owner Hardest Working, Smoothest Riding Utility Vehicle Hardest Working: Superior acceleration and top speed Superior load and towing capacity Any terrain capabilities Smoothest Riding: Superior suspension
Slide 30: RANGER Strategy
RANGER Strategy Product Dominant Product Superiority · New Mossy Oak Camo 4x4 · New RANGER TM 2x4 · Industry leading quality Marketing Increased Investment with Dominant Product · Polaris power sports channel distribution · Accelerate brand awareness Operations Plan for Significant Utility Vehicle B
Slide 31: Mossy Oak Camo 4x4
Mossy Oak Camo 4x4 New Break-Up camo Rims Seat Hood & dash Box decal New wrinkle black paint Low/no shine Brush & light guards Rawhide grip tires July ship Ultimate Hunting Utility Vehicle
Slide 32: New RANGER TM
Off Road Tires Class leading 8 gallon tank Class leading box volume 3-up seating, seatbelts Cargo protection screen 4-wheel brakes w/ SS brake lines Class leading Suspension travel Class leading Ground clearance Hardest Working, Smoothest Riding in 2WD Class New RANGER TM
Slide 33: Professional Series Vision
Professional Series Vision Build a Commercial Business Create new Polaris customers Develop products for commercial grade applications Build new distribution channel Leverage ATV critical mass Integrated product design and development Low capital investment Longer Term Business Development
Slide 34: Professional Series Strategy
Professional Series Strategy Product Commercial Grade Applications · Enter market with derivatives of existing products · Develop integrated attachments business - sell work solutions · Evolve to fuller line equipment provider - longer term Marketing Outdoor Power Equipment Channel Development · Foc
Slide 35: Analyst Presentation International Operations July 25, 2003
Analyst Presentation International Operations July 25, 2003 Mike Dougherty Director, International Operations
Slide 36: International Snapshot
International Snapshot 2002 Revenue = 6% Polaris 2003 Revenue = 7-8% Polaris; 40-50% growth Selling more units Dealer Direct increases revenue/unit Currency favorability Profitable growth Established 3 Subsidiaries in past 2 years Revenue through Subsidiaries now > 50% 75 Polaris employees in Int'l
Slide 37: Polaris Worldwide
Polaris Worldwide Polaris Worldwide
Slide 38: Estimated Size of Country based on GDP
Estimated Size of Country based on GDP July 2002
Slide 39: Total International Market Size by Region for Polaris Products
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 20.4 27.4 90 20.4 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 Total International Market Size by Region for Polaris Products
Slide 40: Polaris Geographic Sales History 1999-2003
Polaris Geographic Sales History 1999-2003 1999-2003 1999-2003
Slide 41: International Sales Revenue Breakout Analysis
POLARIS SALES NC. INTERNATIONAL SALES. REVENUE BREAKOUT ANALYSIS 58% 43% 24% 11% 2000 2001 2002 2003. SUBSIDIARIES DISTRIBUTORS RAIS Confidential CD PBL
Slide 42: Going dealer direct in France
Going dealer direct in France in 2000 has produced dramatic unit, revenue and profit growth Polaris sales in France
Slide 43: 2003 International Sales by Product Group
2003 International Sales by Product Group PGA 12% Snow 21% PWC 9% m Snow BATW/Ranger BPC OPGA ATV/Ranger 58% Confidential
Slide 44: Review by Product Line
Review by Product Line Snow: Forecasted 2003 revenue to be over LY Market and dealer inventory levels are healthy Later selling season compared to USA ATV/Ranger: Forecasted revenue to be 40-50% over LY Top 10 Markets growing nicely PWC Forecasted revenue 35-45% over LY Top 5 market focus + Mercury
Slide 45: Polaris ATV Sales - Europe
1998 1999 2000 2001 2002 2003 Total 4325 5036 5800 8600 8900 12500 Polaris ATV Sales - Europe
Slide 46: Polaris ATV Sales - Internationally: Can we still grow?
Europe European Fullsize ATV market = 5% of USA European car Market = USA European Motorcycle market > USA European Enduro Motorcycle market > USA Market is in its infancy, people just learning about ATVs Powersports affinity; favorable demographics Global 1% of Global population = 50 Million people
Slide 47: International Takeaways
International Takeaways Bets made last 2 years are paying off in 2003: Dealer Direct in France, UK and Scandinavia Euro Market Pricing Street Legal ATVs Mercury Partnership Execution is key Remain focused and passionate as we expand Lots of runway remaining over next 5 years International ATV Market
Polaris Industries — Investor Presentation (July 2003) on 6ix