Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Q3 2011 Earnings Presentation
24 slides from Polaris's earnings presentation, Oct 18, 2011
Slide 1: Third Quarter 2011 Earnings Results
Third Quarter 2011 Earnings Results October 18, 2011
Slide 2: 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 2011 and 2012 sales, shipments, net income, cash flow, and manufacturing realignment transition costs and savings, are forward-look
Slide 3: Scott Wine, CEO
Scott Wine CEO Third Quarter 2011 Earnings Results October 18, 2011
Slide 4: Q3 2011 Sales and Net Income
Q3 2011 Sales and Net Income Q3 Net Income ($ in millions) Q3 Sales ($ in millions) $47.2 Up 43% $67.6 Q3 2011 Q3 2010 Q3 2011 Q3 2010 Record 3rd Quarter Sales and Net Income Beating tough comps and increased competition 3rd Quarter Earnings per Share up 38% over Q3 2010, to a record$0.95 Gross Marg
Slide 5: 2011 Sales & EPS Projections Raised, Again
Total Company Sales (in millions) Diluted EPS Full Year 2011 Guidance $1,991 Up 30% to 32% $2,590 to $2,630 2010 Actual 2011 Guidance $2.14 Up 45% to 48% $3.10 to $3.16 2011 Sales & EPS Projections Raised, Again Retail sales growth, market share gains continues to outpace industry International up s
Slide 6: Strategic Progress Continues
Strategic Progress Continues… $1.6 Billion $5.0 Billion Grow Sales $5 Billion by 2019 Expand Net Income Margins 10% of sales by 2019 Making Growth Happen Q3 YTD 2011 Progress 3-5 Year Strategic Initiatives Best in Powersports PLUS 5-8% organic growth Growth Through Adjacencies $200 - 500M growth Glo
Slide 7: Bennett Morgan, President & COO
Bennett Morgan President & COO Third Quarter 2011 Earnings Results October 18, 2011
Slide 8: North American Polaris Dealer Inventory Levels
North American Polaris Dealer Inventory Levels 8 Dealer Inventory N.A. retail sales up 16% in Q3 – demand remains strong N.A. dealer inventory down 5% from Q3 2010 ATVs down 9% from Q3 2010 Side-by-side inventory up due to continued strong retail demand MVP remains a competitive advantage Dealer Inv
Slide 9: Off-Road Vehicle Division
9 Off-Road Vehicle Division Polaris Sales (millions) SXS SXS ATV ATV SXS SXS ATV ATV FY 2011 Guidance FY 2010Q3 2011 Q3 2010 $389.3 +35% $1,376.4 +25% $486.2 #1 in ORV - Gained significant share in SxS and ATVs again New MY 2012 products well received New RANGER RZR® XP 900 launched in January selli
Slide 10: Adjacencies: Bobcat, Strategic Alliance, Military
10 Year-to-date Bobcat retail strong Incremental customer base Development of new co-developed work vehicle on-track Adjacencies Bobcat Strategic Alliance Military October 2011 Q3 sales up significantly Received $54 million, 3-year contract from U.S. and other allied governments Exploring various te
Slide 11: Snowmobile Division
11 October 2011 Snowmobile Division Gaining market share season-to-date New MY ’12 snowmobiles shipping on schedule Snowmobile quality significantly improved Strong snow checks, strong start to season MY 2012 Switchback Adventure 600 FY 2010 FY 2011 +5% $188.9 Up about 40% Product Innovation & Quali
Slide 12: On-Road Division – Motorcycles / Small Vehicles
12 On-Road Division – Motorcycles / Small Vehicles Polaris Sales (millions) Momentum Continues; New Categories October 2011 N.A. Motorcycle Industry 1400cc+ Global Victory retail remains strong N.A. unit retail increased upper-teens % from 2010 International unit retail sales up significantly again
Slide 13: On-Road Division – Transition Plans in Place
October 2011 13 On-Road Division – Motorcycles / Small Vehicles Transition Plans in Place Sales trends improving since acquisition Adding dealers Future product planning Spirit Lake assembly to begin Q1 2012 Cost reduction efforts on track Developed clear brand strategy Spirit Lake assembly in place
Slide 14: PG&A Highest Margin Business Continues to Grow
14 PG&A Highest Margin Business Continues to Grow & Deliver Polaris Sales (millions) Q3 2011 PG&A Growth by Product Line Q3 2011 PG&A Revenue by Product Category Parts 46% Accessories 49% Apparel 5% $93.3 +21% $112.9 FY 2011 guidance FY 2010 Q3 2011 Q3 2010 +10% $344.3 All businesses increased sales
Slide 15: International Investment & Expansion Continuing
15 AP/LA EMEA Polaris Sales (millions) International Investment & Expansion Continuing International Division $61.4 +59% $97.9 +21% $305.9 Q3 2011 Revenue by Geography Q3 2011 Revenue by Business FY 2011 guidance FY 2010 Q3 2011 Q3 2010 ME / Africa 12% Latin America 6% Asia 4% Aus/NZ 15% Europe 63%
Slide 16: Operational Excellence – Q3 2011 Margins
16 Operational Excellence – Q3 2011 Margins Net Income as a Percent of Sales Gross Margins Q3 2010 Q3 2011 +2.3%-0.9%-1.1%+0.9%Gross Margin Operating Expense Other Non-Operating Expense Income Taxes/ Other Q3 2010 Q3 2011 26.0% 28.3% 8.1% 9.3% +230 bpts Gross margins remain strong driven by: Increas
Slide 17: Mike Malone, V.P. Finance & CFO
Mike Malone V.P. Finance & CFO Third Quarter 2011 Earnings Results October 18, 2011
Slide 18: 2011 Full Year Revised Guidance
2011 Full Year Revised Guidance Product Line Sales - Off-Road Vehicles - Snowmobiles - On-Road Vehicles - PG&A - International Total Company Sales Gross Margins Operating expenses Income Taxes Net Income EPS, Diluted Share Count Up about 30% (increased) Up about 40% Up 70% to 75% (increased) Up high
Slide 19: Gross Profit Margin Percentage Trends
19 Actual Q3 2010 Actual Q3 2011Full Year Guidance 2011Prior Period 24.1% 26.0% 26.6% Production volume adjustments Product cost reduction efforts Commodity costs Currency rates Higher selling prices Product mix Manufacturing realignment, net Warranty costs Tooling amortization Sales promotional cos
Slide 20: Manufacturing Realignment
Manufacturing Realignment Production and shipments began in Q2 2011 - Shipped over 10,000 SxS units to date Costs and savings projections unchanged Began realizing modest savings during Q3 2011 Manufacturing Realignment Remains on Plan Cost Charged to P&L (in millions) Savings (in millions) Anticipa
Slide 21: Balance Sheet and Liquidity Profile
Balance Sheet and Liquidity Profile $ In millions (except per share and interest rate data) YTD 2011 Fav (Unfav) 2010 2011 Full Year Guidance Cash$335.7$71.2 Increase from 2010 Long Term Debt$100.0$100.0$100 private placement at 4.4% fixed rate Credit Facility$350.0($100.0) Renewed to 2016 Factory I
Slide 22: Scott Wine, CEO
Scott Wine CEO Third Quarter 2011 Earnings Results October 18, 2011
Slide 23: 2012 Initial Thoughts
2012 Initial Thoughts US & European economies, powersports markets, remain challenged Too much regulation, too little leadership Commodity and currency volatility remains challenging, unpredictable Competitors will become more aggressive…so will Polaris Polaris outperformance continues N.A. Retail e
Slide 24: Thank you. Q & A
Polaris Industries Inc. 24 Thank you. Q & A October 2011