Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Investor Day (July 2016)
136 slides from Polaris's investor day presentation, Jul 26, 2016
Slide 1: Analyst & Investor Meeting: Opening Remarks / Polaris Overview
ANALYST & INVESTOR MEETINGOpening Remarks / Polaris Overview July 26, 2016 POLARIS INDUSTRIES INC.
Slide 2: Polaris Analyst & Investor Meeting Agenda
Polaris Analyst & Investor Meeting Agenda 8:00 am Opening Remarks / Polaris Overview Scott Wine 8:15 am Customer Excellence Tim Larson 8:35 am Motorcycles Steve Menneto 9:05 am Global Adjacent Markets Bob Mack 9:25 am Parts, Garments & Accessories Steve Eastman 9:45 am International Mike Dougherty 1
Slide 3: Safe Harbor
Except for historical information contained herein, the matters set forth in this document, including but not limited to management’s expectations regarding 2016 sales, shipments, margins, currencies, net income and cash flow, the opportunities for expansion and diversification of the Company’s busi
Slide 4: Opening Remarks - Scott W. Wine
Scott W. Wine Chairman & CEO Opening Remarks July 26, 2015 POLARIS INDUSTRIES INC. | ANALYST & INVESTOR MEETING July 2016 Analyst 4
Slide 5: Knowledgeable, Experienced Team at Polaris
Knowledgeable, Experienced Team at Polaris 5 July 2016 Analyst Executive Team Ken PucelEVP – Global Ops, Engineering & Lean (2 years) Mike SpeetzenEVP – Finance & CFO(1 year) Stacy BogartSVP – General Counsel(7 years) Tim LarsonSVP – Global Customer Excellence(3 years) Dave LongrenSVP – Enterprise C
Slide 6: 2016 1st Half Financial Metrics
2016 1st Half Financial Metrics 1st Half Sales and Earnings Disappointing; 2nd Half Performance/Results Improving 1st Half 2016 1st Half 2015 Variance Revenue $2,113.8 $2,157.7 -2% Gross Profit % 25.2% 28.4% -325 bps Operating Profit % 9.2% 14.6% -538 bps Net Income $118.1 $189.5 -38% Net Income % 5
Slide 7: Strategic Objectives Vision & Strategy
Strategic Objectives Vision & Strategy VISION Fuel the passion of riders, workers and outdoor enthusiasts around the world by delivering innovative, high quality vehicles, products, services and experiences that enrich their lives. STRATEGY Polaris will be a highly profitable, customer centric, $8B
Slide 8: Time to Get Back to Winning
Time to Get Back to Winning…. The Right Way – Everyday, Always 8 Guiding Principles & Priorities July 2016 Analyst Best People, Best Team Safety & Ethics AlwaysCustomer Loyalty Performance Priorities GrowthMargin ExpansionProduct and Quality Leadership LEAN Enterprise Guiding Principles
Slide 9: Near-term Priorities
9 Near-term Priorities July 2016 Analyst Meet / Beat Commitments Invest Wisely Get Great At Inventory Accelerate LEAN Transformation Improve Execution & Quality Attack Costs–Boldly – Regain Consistency / Confidence – New Products, New Businesses, New Partners – Improve Cash Flow / Dealer Loyalty / P
Slide 10: Thank You
Scott W. Wine Chairman & CEO Thank You
Slide 11: Tim Larson - Global Customer Excellence
POLARIS INDUSTRIES INC. / ANALYST & INVESTOR MEETING July 26, 2016 TIM LARSON SVP – Global Customer ExcellencePolaris Sales, Service & Interactive
Slide 12: Customer Excellence
Customer Excellence 2 Ensure the best powersports & on-road products in the world, are surrounded by the best consumer and dealer experience in the world, delivering: Loyal lifetime relationships, earning repeat purchase The industry’s leading NPS: product & experiencePolaris >$8 Billion by 2020 Jul
Slide 13: Polaris Customer Journey
Polaris Customer Journey 3 Delivering a Differentiated End to End Experience July 2016 Analyst SEAMLESS: DIGITAL TO DEALERSHIP SEAMLESS DELIVERY EXPERIENCE RIDE COMMAND ENGAGE DIGITALLY DEALERSHIP EXPERIENCE WORLD CLASS SERVICE
Slide 14: Engaging Consumers Digitally: 1H 2016
Engaging Consumers Digitally: 1H 2016 Delivering Dealers Informed & Engaged Consumers 4 Improved Product Shopping Fully Responsive, New B&Q 1.6X Sales E-Commerce 6.2 Million Fans Socially 59% Traffic Mobile Direct Activation & Engagement July 2016 Analyst
Slide 15: Polaris & Indian Motorcycle Ride Command
Polaris & Indian Motorcycle Ride Command 5 July 2016 Analyst Manage your Fleet, Manage your Ride – Be in Command with RideCommand™ Largest screen on two wheelsFastest interfaceMost customizable Fleet ManagementGeofencingAuthentication
Slide 16: Dealership Capabilities & Consumer Ownership Experience
Dealership Capabilities & Consumer Ownership Experience Investing In Our Dealers & Elevating Our Customer’s Experience 6 Expanding Service & Staff TrainingDealer Management System IntegrationField Support Investments Dealership Capabilities Polaris Consumer Delivery Experience: PCDXRide Command Inte
Slide 17: Dealer Transformation
Dealer Transformation Polaris & Dealers Investing & Expanding for Profitable Growth 7 1st Half: New Dealer Activations on Target ORVIndian MotorcycleSlingshot Existing Dealer Expansions on Target ¾ of our total Polaris NA revenueTop 3 actions: showroom, storage, service Dealer Profitability Inventor
Slide 18: Strong Dealership Count Positions Polaris
Strong Dealership Count Positions 8 Polaris Leadership Position in Key Markets SxS + ATV Snowmobiles Victory + Indian ~1530 ~ 750 ~ 530 Slingshot ~ 450 Long Range Plan 2015 Year End Actual ORV: further expand in opportunity markets sustain leadership position Motorcycles: fully penetrate top markets
Slide 19: N.A. Powersports Consolidated Share
N.A. Powersports Consolidated Share 9 Clear #1 N.A. Powersports Honda Harley Yamaha Kawasaki Can Am Other July 2016 Analyst
Slide 20: Polaris Growth: Brand Franchise Value Per Dealer
Polaris Growth: Brand Franchise Value Per Dealer Polaris Delivering High Dealer Brand Value Per Dealer 10 Growing Brand Value Maintaining or Eroding Brand Value July 2016 Analyst OEM N.A. Retail Sales Units Per Dealership (2015 vs. 2010)
Slide 21: Summary
Summary 11 Ensure the best powersports and on-road products in the world are surrounded by the best consumer and dealer experience in the world:Deliver industry-leading product innovation: MY 17 lineup, PG&A, Ride CommandExecuting complementary channels to: engage consumers, deliver leads to dealers
Slide 22: Q&A Tim Larson
POLARIS INDUSTRIES INC. / ANALYST & INVESTOR MEETING Q&A Tim Larson SVP – Global Customer ExcellencePolaris Sales, Service & Interactive
Slide 23: Steve Menneto - Motorcycles
POLARIS INDUSTRIES INC. / Analyst Meeting July 26, 2016 Steve Menneto President – Motorcycles
Slide 24: Motorcycles Driving Growth & Profitability
Motorcycles Driving Growth & Profitability 2 Slingshot integration into Motorcycles:Plenty of Opportunities to Drive Growth & Awareness Leverage Bigger Motorcycle Team to Drive Growth for all Three BrandsLeverage Lean Tools and Standard Work to Improve Margins Motorcycles + July 2016 Analyst
Slide 25: 2016 Industry Off to a Choppy Start
2016 Industry Off to a Choppy Start 2016 N.A. 900+cc Industry Industry Retail Trends 2016 Industry Retail YTD Q2 YTD 2016 Trends:2016 N.A. 900+ cc Industry down mid-single digits YTD Mid Size Industry up mid-single digits – New Product Introductions / promo driving segmentCruiser Industry up mid-sin
Slide 26: Polaris Motorcycles Largest Share Gains
Polaris Motorcycles Largest Share Gains 2016 N.A. 900+cc Competitive Summary Rank Manufacturer Strategy Share Trend 1 Harley Aggressive Financing, Conversion Promotions Focusing on Cruiser, Sportster, Street Products Huge Installed Owner Base 2 Indian American Heritage High Owner Satisfaction 3 Vict
Slide 27: New Product News (1st Half 2016)
5 New Product News (1st Half 2016) Launched 40 New Accessories Chieftain Springfield Launched March ‘16 Chieftain Dark Horse launched May ’16 Jack Daniels/Indian 150 bikes sold out in 8 hours Octane Launched Feb ‘16 Slingshot SL Blue Fire Launched March ‘16 July 2016 Analyst
Slide 28: Video: Victory Brand
VIDEO:VICTORY BRANDtrt 1:00 6 July 2016 Analyst
Slide 29: Flexing Victory Muscle
Flexing Victory Muscle Victory MY17 Product X-1 Image July 2016 Analyst 7
Slide 30: Strong Finish! 2H Victory Activation
Strong Finish! 2H Victory Activation 1.8 Turns- $5,250 GM/unit IAVA – MILITARY Veterans Day Honoring Heroes 1.8 Turns- $5,250 GM/unit REDLINE Industry Leading Programs “On Brand” MY17 Sturgis Showcase of Product & Partners Replace Slow Turnerswith Fast 200MM+Media Impressions New Riders Experience B
Slide 31: Video: Indian Brand
VIDEO:INDIAN BRANDtrt 1:38 9 July 2016 Analyst
Slide 32: Indian MY17 Product
Indian MY17 Product 10 Best System on Two Wheels Largest Screen, Fastest Interface, Most Customizable Indian Motorcycle RIDE COMMAND™ July 2016 Analyst
Slide 33: Changing the Game in Infotainment
Changing the Game in Infotainment Indian MY17 Product 11 July 2016 Analyst Highest resolution and brightest, largest screen (7”) Quickest start-up, 2 finger touch with pinch to zoom3 customizable screens with 8 different Information Display options Up to 200 watt premium audio system Non-Infotainmen
Slide 34: Win a Championship in 2017
Win a Championship in 2017 Indian Flat Track 12 AMA Growing ViewershipLive up to our past Reveal at SturgisRace at Springfield Broader Scout Appeal via Hooligan Racing July 2016 Analyst
Slide 35: Drive Brand Stories! 2H Activation
Drive Brand Stories! 2H Activation 13 BRAND EXPERIENCE PRODUCT OUTREACH Brand that inspires riders to Be Legendary Product that beats HD where it matters Surpass HD Owner and Dealer Experience Partnerships that Disrupt Core HD Rider July 2016 Analyst BRANDtrt 1:38 14 Have to update video July 2016 A
Slide 36: Slingshot MY17 Product
A GOOD THING JUST GOT BETTER Slingshot MY17 Product 15 Enhancing the Cockpit Experience:NEW Premium Cut & Sew PPD seatsNEW High quality Rockford Fosgate speakers NEW Radio antenna Better receptionSignificant BOM & Weight Reduction-40 lbs vs MY16 NEW Accessory Opportunity Delivering the #1 Most R
Slide 37: Building the Brand & Expanding Reach
Building the Brand & Expanding Reach 2H Slingshot Activation 1.8 Turns- $5,250 GM/unit Showcase Celebrity Builds More Earned Media 1.8 Turns- $5,250 GM/unit REDLINE Industry Leading Programs “On Brand” MY17 Sturgis Showcase of Product & Partners Replace Slow Turnerswith Fast More Paid Media +82% YOY
Slide 38: Apparel Product Development
Apparel Product Development Grow PG&A Customer Engagement Largest Opportunity for Dealers & Polaris Motorcycles 17 Comfort & style optionsPerformance & technologyCo-brand partnershipsSlingshot vehicle weight reduction New “Slingshade” – October 2016 SOP Leverage Growing Installed baseDrive catalog s
Slide 39: Great CX Delivers Excellent Word of Mouth
Great CX Delivers Excellent Word of Mouth Customer Experience 18 Driving From Shop To Buy1:1 Marketing is Reaching Target Consumers and Delivering SalesImplemented Website Enhancements to Capitalize on Changing Shopping BehaviorNEW Ratings & Reviews (live)NEW Inventory Search (coming after Dealer Sh
Slide 40: Growing our Motorcycle Dealer Network
Dealer Count N.A. Current Int’lCurrent ~190+ retail/~230 signed ~170 ~430 ~100 ~475 ~100 Growing our Motorcycle Dealer Network Developing The Right Distribution For Profitable Growth & The Desired Customer Experience 19 July 2016 Analyst
Slide 41: Huntsville Motorcycle Operations
Huntsville Motorcycle Operations Significantly expanded capacityGreater in-house capabilitiesBetter processes, Cost Down through Lean 20 Spirt Lake/Spearfish RFM Stable & Reliable Stable, Consistent QualityDramatic improvement in paint capabilities/capacityBetter processes, Cost Down through Lean Ju
Slide 42: Motorcycle Profitability
Motorcycle Profitability 21 Relentless Attack on Profitability Aggressive Product PlanRobust PGA BusinessLeverage Growing ScaleIntegrate Suppliers in Margin ExpansionLean Tools & Standard Work July 2016 Analyst
Slide 43: Q&A Steve Menneto
POLARIS INDUSTRIES INC. / ANALYST & INVESTOR MEETING Q&A Steve Menneto President – Motorcycles
Slide 44: Global Adjacent Markets - Bob Mack
GLOBAL ADJACENT MARKETS Bob MackSVP – Corporate Development and Strategy &President – Global Adjacent MarketsJuly 26, 2016 POLARIS INDUSTRIES INC. | ANALYST & INVESTOR MEETING
Slide 45: Strategic Objectives Vision & Strategy
Strategic Objectives Vision & Strategy VISION Fuel the passion of riders, workers and outdoor enthusiasts around the world by delivering innovative, high quality vehicles, products, services and experiences that enrich their lives. STRATEGY Polaris will be a highly profitable, customer centric, $8B
Slide 46: Global Adjacent Markets
Global Adjacent Markets 3 Analyst Jul-2016 Build Existing Portfolio AND Identify Future Adjacent Market Opportunities Work & Transportation Polaris Defense Corporate Development People mobility, work utility, and industrial solutions to customers incremental for Polaris. Provide ultra-light tactical
Slide 47: Work & Transportation Market Overview
Work & Transportation (W&T) Market Overview 4 Analyst Jul-2016 Growth Market – 5 Key Segments – Polaris Now Plays in 4 Market Size ~$4 Billion Fragmented Global View80% market in NA Europe & China grow faster than NA Brazil & India emerging Growth Drivers Demand for clean low cost vehicles: Rising f
Slide 48: Work & Transportation Competitive Landscape
Work & Transportation Competitive Landscape 5 Analyst Jul-2016 Fragmented Industry PLUS Traditional Powersports Competition Attractive dealer and distributor network; focused on commercial marketsPrimary business/product focus = price sensitive fleet golf buyerIncreased focus on non golf utility seg
Slide 49: Work and Transportation Strategy
Work and Transportation Strategy 6 Analyst Jul-2016 Pull Together Brands/Products to Bring Comprehensive Solution to Customers Create and acquire strong brands that offer products that meet all of our customer’s work and transportation needsDevelop an effective channel to sell and service the needs
Slide 50: New Acquisition - Taylor-Dunn
Work and Transportation New Acquisition – Taylor-Dunn Top Participants Overview Product Overview What We Liked Taylor-Dunn (“TD”) designs and manufactures industrial and commercial burden carriers, personnel carriers, stockchasers, electric carts, tow tractors and other commercial vehiclesFounded: 1
Slide 51: Work and Transportation Go-To-Market Plan
Work and Transportation Go-To-Market Plan 8 Analyst Jul-2016 One Face of Polaris Commercial to Simplify & Enhance Customer Experience Commercial Customer Colleges & UniversitiesMunicipalities/GovernmentFacility ManagementHotels & ResortsIndustrialRental & Construction Marketing Sales Service Product
Slide 52: Work and Transportation Integration Examples
Work and Transportation Integration Examples 9 Analyst Jul-2016 Products Channels E-Worker G3 G-Worker
Slide 53: Work and Transportation - Growth Drivers
Work and Transportation – Growth Drivers 10 Analyst Jul-2016 Positioned for Above Market Growth Autonomous Capability Advanced Battery and Charging Technologies Fleet Management and Ownership Models Growth Drivers Polaris Strategy Safety, consistency and speedLabor savingsIncreased access for those
Slide 54: Polaris Defense
Polaris Defense Established a new high priority military segment demanding ultra-light, off road ground mobility Responding to urgent need for rapid response, deep insurgency and expeditionary military missions Providing superior performance, affordability & sustainment Leveraging worlds largest off
Slide 55: Speed and Mobility is an Overwhelming Tactical Advantage
Speed and Mobility is an Overwhelming Tactical Advantage Air transportable, extreme terrain mobile, highly durable, affordable & sustainableDAGOR – up to 9 man, full mission gear, heavy weaponsMRZR - up to 5 man, full mission gear, light weaponsMATV – single soldier, mission gear Enhanced Tactical M
Slide 56: Global Adjacent Markets Results Solid in 2016
13 Global Adjacent Markets Results Solid in 2016 Analyst Jul-2016 Global Adjacent Markets Outlook 2016 Objective 2016 Expectations 2016 Comments Revenue (incl. PG&A) Up Mid Teens % Solid Growth Expected Taylor-Dunn adds Incremental Sales Gross Profit(% of sales) ~Flat with 2015 Gross Margin Opportun
Slide 57: Q&A Bob Mack
POLARIS INDUSTRIES INC. / ANALYST & INVESTOR MEETING Q&A Bob Mack Global Adjacent Markets
Slide 58: Steve Eastman - PG&A
POLARIS INDUSTRIES INC. / Analyst Meeting July 26, 2016 Steve Eastman President – PG&A
Slide 59: First Half 2016 Strong Execution Despite Revenue Headwinds
FIRST HALF 2016 STRONG EXECUTION DESPITE REVENUE HEADWINDS Analyst 7-26-16 2 Accessory REVENUE-per-unit continues to grow New snow apparel line – strong dealer engagement Online driving omni-channel growth Distribution investments & lean driving productivity SMART transformation deployed to all deal
Slide 60: First Half 2016 - Sales Mix
FIRST HALF 2016 – SALES MIX 3 Analyst 7-26-16 PARTS MIX GROWING. DRIVING ACCESSORY REVENUE-PER-UNIT Product Type Mix Product Segment Mix Geographic Mix Accessories Parts U.S. Parts up mid-teens %Accessories down mid-single digits %Apparel up low-single digits % Growth in every segment U.S. up mid-si
Slide 61: Core Strategic Areas of Focus
CORE STRATEGIC AREAS OF FOCUS 4 Analyst 7-26-16 CLEAR AND CONSISTENT STRATEGIC PRIORITIES 1 DRIVEPRODUCT INNOVATION 2 ACCELERATECONSUMER DEMAND 3 TRANSFORMRETAIL EXPERIENCE 4 DELIVERSUPPLY CHAIN EXCELLENCE 5 OPTIMIZELEAN ENTERPRISE
Slide 62: Drive Product Innovation
DRIVE PRODUCT INNOVATION 5 Analyst 7-26-16 PRODUCT INNOVATION / INTEGRATION COMPETITIVE ADVANTAGE Power Items Bundles New Product Top Selling Accessories~50% of Accessory RevenueEnd-to-End Execution Focus Tailored for Rider Applications4X Higher Acc’y Revenue-Per-Unit1H Bundle Revenue 2X vs. LY 435
Slide 63: Accelerate Demand & Retail Experience
ACCELERATE DEMAND & RETAIL EXPERIENCE 6 Analyst 7-26-16 HIGH IMPACT INITIATIVES TO DRIVE RETAIL DEMAND AND CONVERSION Dealer Retail Execution Digital Tools Database Marketing Retail Execution Field SupportMerchandising SolutionsDealer Training Tools New ConfiguratorBuying Guides / Product Content>7
Slide 64: Optimize Lean Enterprise
OPTIMIZE LEAN ENTERPRISE 7 Analyst 7-26-16 ACCELERATED DEVELOPMENT CYCLES, EXECUTION EXCELLENCE, DATA LEVERAGE Product Lifecycle Sales, Inventory, Operations Planning Business Intelligence LEAN Lifecycle Management ToolSingle Source of TruthTracking & Exception Reporting Alignment of Sales & Invento
Slide 65: Lean Approach to PG&A Sales & Retail (SMART)
LEAN APPROCH TO PG&A SALES & RETAIL. LAUNCHED APRIL 2016 Benefits SMART Integrated seasonal consumer promotions (pull)Retail merchandising tools & training (conversion)Retail & inventory data integrated with order formShort / frequent demand planning cyclesOrders ship within 21 days Aligns with seas
Slide 66: Deliver Supply Chain Excellence
DELIVER SUPPLY CHAIN EXCELLENCE 9 Analyst 7-26-16 IMPROVED SERVICE TO OUR DEALERS. CONTINUOUS SQDC IMPROVEMENT 1 2 3 4 SAFETY & PRODUCTIVITY PERFECT ORDER EXECUTION SUPPLIER MANAGEMENT INVENTORY OPTIMIZATION 2015 2016 PERFECT ORDER RATE* *AGGREGATE ORDER PERFORMANCE METRIC: Fill Rate, On-time Ship,
Slide 67: Aftermarket - Four Key Areas of Focus
AFTERMARKET – FOUR KEY AREAS OF FOCUS 10 Analyst 7-26-16 EXTEND OUR COMPETITIVE ADVANTAGE 1 2 3 4 AMPLIFY BRAND POSITION PRODUCT & MARKETING STRENGTHEN E-COMMERCE DRIVE DEALER-DIRECT MODEL & CHANNEL DEVELOPMENT REDUCE SYSTEM-WIDE COSTSLEVERAGE PORTFOLIO
Slide 68: Leveraging Aftermarket
LEVERAGING AFTERMARKET DRIVING VALUE ACROSS THE BROADER PG&A PORTFOLIO Premier O.E.M. – Plastics Design / Manufacturing Klim – Apparel Center-of-Excellence Analyst 7-26-16 11 APPAREL CENTER-OF-EXCELLENCERigby, Idaho
Slide 69: Leveraging Aftermarket
LEVERAGING AFTERMARKET 12 Analyst 7-26-16 DRIVING VALUE ACROSS THE BROADER PG&A PORTFOLIO Strong aftermarket brandAlternative to OEM accessoriesIncremental consumer appealVolume / cost leverageIncreased revenue-per-unit SEATS DOORS WHEELS & TIRES LIGHTING
Slide 70: Q&A Steve Eastman
POLARIS INDUSTRIES INC. / ANALYST & INVESTOR MEETING Q&A Steve Eastman President – Parts, Garments & Accessories
Slide 71: Mike Dougherty - International
MIKE DOUGHERTYPresident – International ANALYST PRESENTATION JULY 26, 2016 POLARIS INDUSTRIES INC.
Slide 72: 2016 International Revenue Growth YTD
2016 International Revenue Growth YTD Latin America Fastest Growing Region LATIN AMERICA $39M+34% EMEA $238M+6% ASIA PACIFIC $56M-11% INTERNATIONAL $333M+5% July 2016 Analyst 2
Slide 73: 2016 Overview
Beat Financial Plan. Build business foundation for future. 2016 Overview EMEA Growing and on plan. ATVs & Slingshot under pressure. Opole utilization improving. EU Motorcycle market growing and Polaris gaining share. ORVs are stable. No significant impact by Brexit yet other than GBR FX. Russia rebo
Slide 74: Battling through key challenges
Battling through key challenges INTERNATIONAL 2016 Challenges Multix Retail Slower Than PlanProduct IssuesRetail Financing ORV Profitability ATV competitionWeak EconomiesWarranty Slingshot Limited SuccessNiche ProductStill Learning July 2016 Analyst 4
Slide 75: Winning with RZR & Indian
Winning with RZR & Indian. Emerging Markets Foundation Growing. 2016 HIGHLIGHTS Motorcycle Growth Revenue +27% YTD Octane LaunchCKD Brazil ORV Results RZR #1 LineExceeding ExpectationsAUS, EU, Mexico BRIC Rev +33% Brazil +70%Russia +73%India +20%China +17% INTERNATIONAL July 2016 Analyst 5
Slide 76: Going Forward
GOING FORWARD
Slide 77: Going Forward - ORV / Snowmobiles
Going Forward – ORV / Snowmobiles RZR Focus #1 BusinessMexico, China, UAE Key MY17 Product Maximize Snow Russia Rebound Gain Share PGA Improve Profitability EU LocalizationReduce LogisticsImprove Mix PROFITABLY COMPETE IN OFF ROAD INTERNATIONAL July 2016 Analyst 7
Slide 78: Going Forward - Motorcycles
Going Forward – Motorcycles Full Throttle EMEA Scout SixtyOctane MomentumAsia Expansion Drive PGA Indian Focus Strengthen BrandIncrease Rev$/unit Find Success France LeadsAsia HomologationMexico Expansion Drive Motorcycle Growth INTERNATIONAL July 2016 Analyst 8
Slide 79: Significant Cost Reduction Opportunity
Significant Cost Reduction Opportunity 2016 Overview Improve Poland Productivity Increased production volume and supplier localization Leverage speed and proximity to market with new EU specific limited edition models Streamline Global Logistics Consolidating distribution centers. Leveraging global
Slide 80: Going Forward - Build Emerging Markets
Going Forward - Build Emerging Markets PROFITABLE GROWTH FOCUS - REVENUE TO $550M BUILD EMERGING MARKET FOUNDATION GROW BRIC SIGNIFICANTLY TRIPLE INDIAN MOTORCYCLE BUSINESS ESTABLISH MULTIX MOMENTUM INTERNATIONAL July 2016 Analyst 10
Slide 81: 2016 2nd Half Plan
Continue Momentum. Beat Expectations. Build the International Foundation. 2016 2nd Half Plan WHAT ARE WE GOING TO DO? TOP LINE BOTTOM LINE TAKE COST OUT OF POLAND, LOGISTICS & OPEX FULL THROTTLE WITH INDIAN & RZRSTABILIZE & MAXIMIZE DEVELOPED MARKETS (EU & ANZ)AGGRESSIVELY BUILD EMERGING MARKET FOUN
Slide 82: Q&A Mike Dougherty
POLARIS INDUSTRIES INC. / ANALYST & INVESTOR MEETING Q&A Mike Dougherty President – International
Slide 83: Snowmobiles - Chris Wolf
Snowmobiles Chris Wolf, Vice PresidentJuly 26, 2016 POLARIS INDUSTRIES INC. | ANALYST & INVESTOR MEETING
Slide 84: Terrain Domination
TERRAIN 7 DOMINATION | €D> PSLARiIs
Slide 85: Global Snowmobile Industry Performance
Global Snowmobile Industry Performance Snowmobile Industry Outlook Growth in Ultimate Segment Growth in Crossover and Rec/Ut Segments Industry Retail Units (5 yr CAGR +2% in N.A.; -3% in EMEA) Stable N.A. industry, but low snowfall drove decline last seasonRussia industry is weak, eroding EMEA volum
Slide 86: Fastest Growing Brand
Fastest Growing Brand Market Share Pts. Growth (Since MY’10 Pro-Ride Launch) Retail Sales % Growth (Since MY’10 Pro-Ride Launch) 4 July 2016 Analyst Outperforming the Industry Since 2010
Slide 87: Polaris Performance Highlights During 15/16 Season
Market Share (North America, Norway, Sweden, Finland) Polaris Performance Highlights During 15/16 Season Worldwide Share 12/13 Season 13/14 Season 14/15 Season 15/16 Season Gained market share in both North America and ScandinaviaDelivered highest North America market share in 13 years, and back to
Slide 88: Product News
Product News >
Slide 89: MY'17 Product News by Segment
Timbersled Trail and Rec/Ute MY’17 Product News by Segment Crossover and Mountain Generating Buzz with 8 New Models + 6 Limited Editions 7 July 2016 Analyst
Slide 90: Driving Dealership Traffic
Driving Dealership Traffic Best Partners and Athletes Marketing Leadership Industry-Leading Reach Building our Brands and Reaching New Customers Reaching New Audiences Through Partnerships Targeted Marketing & Sales Promotions Drive Retail Most Impressions & Engaged Fans 8 July 2016 Analyst
Slide 91: Growth Strategy Roadmap
Growth Strategy Roadmap 1. Industry Leading Quality and Satisfaction Continuously, tangibly improving quality2. Product Innovation Expanded AXYS lineup performing well on snow and in the marketplace Timbersled product pipeline is strong3. Strong Marketing Support Growing, engaged fan base Best partn
Slide 92: Snowmobiles Summary
Snowmobiles Summary Polaris Roadmap For Future Growth Overview Stable industry with extremely passionate ridersPolaris is gaining share in our core segmentsGrowing with new customers in new segments Industry leading rider satisfactionProduct innovation in sleds, bikes, G&AAggressive demand creation
Slide 93: Q&A Chris Wolf
POLARIS INDUSTRIES INC. / ANALYST & INVESTOR MEETING Q&A Chris Wolf Vice President – Snowmobiles
Slide 94: Matt Homan - Off-Road Vehicles
Matt homanPresident – Off-road vehiclesAnalyst meetingJuly 26, 2016
Slide 95: Agenda
AGENDA 1. Market and Polaris Overview 2. ORV Improvement Plan 3. ORV Vision 2 July 2016 Analyst
Slide 96: Market and Polaris Overview
Market and Polaris Overview 1.
Slide 97: Polaris ORV Breakdown
Polaris ORV Breakdown Sxs and North America remain most critical 7% SxS US Int’l CAN Mexico Poland Huntsville Roseau Revenue Region Manufacturing SxS #1ATV important NA continues to leadInt’l important long-term Huntsville liveRoseau/Mexico criticalPoland feeds EMEA 4 July 2016 Analyst
Slide 98: Industry trends
Industry trends 1H industry trends slowed in Q2 7% 5 Year CAGR ATV = Flat5 Year CAGR SxS = 10%2016 ATV 1H = down MSD vs. LY – weakened in Q22016 SxS 1H Estimate = up MSD vs. LY – weakened in Q2 5 July 2016 Analyst
Slide 99: Additional growth opportunities
Additional growth opportunities Large target groups exist 7% 6 Polaris Owners 2.3M TODAY FUTURE 4M Multi-Acre Homeowners 24% own ORV 26% own ORV 20K retail opportunity = 5 points of share 3M Intenderson PII.com 5M High-IncomeRec Enthusiasts RURAL LANDOWNERS RECREATION INTENDERS POLARIS INSTALLED BAS
Slide 100: ATV SxS Value
ATV SxS Value ATV, Utility SxS key drivers Utility SxS ATV value + youth ATV value Utility SxS Continued threat Market Share trends Targeted Competitive Activity Impacts Market Share 7 July 2016 Analyst
Slide 101: Competitive focus
Competitive focus Select competitors and Segments gaining 7% Can-Am “L” models performing wellYamaha new Youth and “value” Kodiak ATV SxS Honda Pioneer – especially 1000ccKawasaki – Pro-FXT utility solidPolaris General – big gains in crossover 8 July 2016 Analyst
Slide 102: Polaris 1H What Happened
Polaris 1H What Happened The good news = our issues are in our control 1 2 Weakening Industry Polaris IssuesRecalls/QualityInventory Reductions Market Share Total $ vs. Plan: % Breakout 9 July 2016 Analyst
Slide 103: Polaris dealer inventory trend
Polaris dealer inventory trend Over $100m of dealer inventory removed 7% -10% -8% 10 July 2016 Analyst
Slide 104: 1H Summary: Key factors
1H Summary: Key factors 1. We Didn’t Execute Well (Quality = Critical Example) 2. Need to Address Competition (Not Everywhere, But In Some Key Spots) 3. The Market Has Slowed (Particularly in Q2) Large Miss: Not That Complicated 11 July 2016 Analyst
Slide 105: ORV Improvement Plan
ORV Improvement Plan 2.
Slide 106: 1H moves to address 1H
1H moves to address 1H Laying the Groundwork for improvement 7% Reduced Costs Significantly Reduced redundancies, streamlined functionsSimplified Plans / Reinvested Simplified, cut non-value add plans, reinvested $ in advertising/promoReworked Product Plans Cut products, competitive pricing moves, m
Slide 107: ORV 2H Summary
ORV 2H Summary 1. Attack with Product 2. Battle for Every Customer 3. Fight for Every Sale #1 Off-Road vehicle company in the world 15 July 2016 Analyst
Slide 108: 2H plan: Attack with product
2h plan Attack with product 1000 New! 900 500 New! -$1,200 New! BATTLE WITH SIGNIFICANT COMPETITIVE UPGRADE 16 July 2016 Analyst
Slide 109: 2H plan: Attack with product
2h plan Attack with product 168HP Ride command POWER, SUSPENSION, AGILITY + TECHNOLOGY 17 July 2016 Analyst
Slide 110: Attack with product: General expansion
NEW! HUNTER EDITION NEW! GENERAL 4 1000 EPS NEW! TURF MODE Attack with product CONTINUE TO RIP SHARE WITH GENERAL EXPANSION 18 July 2016 Analyst
Slide 111: 2H plan: Strong news on Sportsman
2h plan Attack with product STRONG NEWS ON SPORTSMAN Sportsman 1000 Sportsman 450 Ace 570 New! New! New! $6,999 19 July 2016 Analyst
Slide 112: 2H plan: Aggressive PG&A launch plan
2h plan Attack with product AGGRESSIVE PG&A LAUNCH PLAN For the masses 15 NEW Hunt, Utility, Ag 13 New Accessories 25 New Integrated w/New Sportsman 20
Slide 113: 2H plan: Battle for every customer
2h plan $3 MillionMore advertising +25% TV +56% DIGITAL COMPETITIVEtargeting Battle for every customer Proving Grounds Website Infomercials 15 Competitive Videos STRONG 2H MARKETING PLAN 21
Slide 114: 2H plan: Fight for every sale
2h plan Fight for every sale 1st EVER APP Competitive Offers biggest contest ever $3 MILLION IN PAYOUTS POWERFUL IN-STORE TOOLS 22
Slide 115: ORV Vision
ORV Vision 3. July 2016 Analyst 23
Slide 116: ORV Vision
ORV Vision #1 Off-Road vehicle company in the world The Undisputed Leaders of the Off-RoadWe Will Deliver Unmatched Product Innovation Unmatched ride, handling AND powersports technology Fastest new product life cycleWe Will Transform the Customer Buying Experience Best digital shopping, lead genera
Slide 117: ORV Summary
ORV Summary 1. 1H Performance Poor 2. Rock Solid 2H Plan to Improve 3. Clear Vision to Win #1 Off-Road vehicle company in the world 25 July 2016 Analyst
Slide 118: Matt Homan Q&A
Matt homanPresident – Off-road vehiclesQ&a
Slide 119: ORV Summary
= ORV SUMMARY 1. 1H Performance Poor 2. Rock Solid 2H Plan to Improve 3. Clear Vision to Win #1 OFF-ROAD VEHICLE COMPANY IN THE WORLD 26
Slide 120: Off-Road Vehicles Q&A
€> PGLARIS OFF-ROAD VEHICLES MATT HOMAN PRESIDENT — OFF-ROAD VEHICLES Q&A
Slide 121: Ken Pucel - Global Operations, Engineering & Lean
POLARIS INDUSTRIES INC. / ANALYST & INVESTOR MEETING July 26, 2016 Ken PucelEVP – Global Operations, Engineering & Lean
Slide 122: 2016 Performance (Safety, Quality, Delivery, Cost)
Goal 2016 Performance (Safety, Quality, Delivery, Cost) Quality (Rework %) Safety (TRIR) Quality Performance Poor. Strong Performance in Safety, Delivery and Cost. Gross Value Improvement (Cost Down) Delivery Goal Product Capacity ATV Ranger RZR Snow Motorcycles Slingshot GEM TOTAL G G G G G G G Pla
Slide 123: Supply Chain Productivity
pply Chain ProductivityIndirect Initiatives PCs, Travel, Enterprise spend Materials Plants Logistics PG&A Indirect Materials Plants Logistics PG&A +36% 1,300+ Projects in VIP System 30+ Projects > $1M 305 Projects for 2017 already in hopper Analyst Jul2015 3
Slide 124: Polaris Operations 2017-2021 Strategy
Polaris Operations 2017-2021 Strategy Translating the Polaris Vision and Strategy into Operations action Analyst Jul2015 4
Slide 125: Operations Strategy Targets Best-in-Class Performance
Operations Strategy Targets Best-in-Class Performance Polaris Operations 2017-2021 Strategy Vision: Polaris Operations will become a competitive advantage by achieving Best-in-Class performance in SQDC-Inventory-New Products. What 5 Year Success Looks LikeSafety: Achieve “Best-in-Class” Product Safe
Slide 126: Safety and Quality Systems Focus
Safety and Quality Systems Focus 6 Safety and Quality Improvements Will Be Driven By Improved Systems and Execution Polaris is focused on improving product safety and quality by improving our systems and execution. Measures of Success Quality System Focus Areas Measure Total Improvement Safety and Q
Slide 127: Polaris Manufacturing Capacity 2017-2021
Polaris Manufacturing Capacity 2017-2021 Polaris Manufacturing Will Lever Fixed Cost Over Period 7 Opole, Poland Spirit Lake, IA Huntsville, AL Roseau, MN Monterrey, Mexico Lean Transformation Continues ~ 60% ~ 80% Plants Aligned to Support Retail Flow Management (RFM) Spirit Lake capacity in place
Slide 128: Huntsville: Building the Best Factory in Powersports
Huntsville SOP Achieved May 31. Slingshot SOP Achieved July 6. 8 Huntsville: Building the Best Factory in Powersports Analyst Jul2015 Lean & Technology Enabler Production Status 2016 Production: 2 Lines Rangers/1 Line Slingshots KPI’s Comments Safety Implementing new LIFE Program Quality Validated a
Slide 129: Global Operations 2017-2021 Cost Improvement Goals
9 80% 10% 10% 3% 5% 1% Total Spend Net Rate of Improvement Global Operations 2017-2021 Cost Improvement Goals Materials Plants Logistics Category Global Operations and Engineering 3% Net Annual Improvement >$600M Gross 3% Rate of VIP Creates potential for 300-500 bps of gross improvements in Gross M
Slide 130: Material Cost Improvement
Material Cost Improvement Increasing Material Cost Savings From 1.6% to ~3% Annually. >$400 Million Gross VIP. 10 2011-2015 2016-2021 ~3% 2016~3% AnnuallyImproved Quality Material Cost Drivers 1.6% Annually LCC/LCR Platforming Re-sourcing Design / VAVE Negotiation Commodity Leverage Localization Ins
Slide 131: Manufacturing Excellence
Manufacturing Excellence 11 Driven to Become the Undisputed, Best Manufacturer Achieve Best-in-Class performance in SQDCI by driving 5 key strategies and building upon 4 key enablers Five Strategies Delivering ~ $100 M of Gross VIP and 5% Net Annual Cost ImprovementQuality System ExecutionLean Manuf
Slide 132: LEAN in Polaris Plants
Performance Improvement Snow (Dec ‘15) Weld (Nov ‘16) Periodic Cycle-time Reduction 56% 62% Walking Distance Reduction 29% 16% Reduction in Space 29% 33% Cycle-time / unit reduction time 12% 11% VWI Material Flow Snow Transformation Weld Transformation Goals/ Metrics LEAN in Polaris Plants – Recent
Slide 133: Logistics Strategies
PLANNING optimized logistics networksBUYING leverage logistics servicesOPERATING customer focused logistics Inbound to Manufacturing Outbound to DealersBENCHMARKING best practices and cost Key Logistics Strategies Inbound Truck Utilization On -Time Logistics Performance Logistics Performance Fundame
Slide 134: Inventory Improvement 2017-2021
Inventory Improvement 2017-2021 14 Improved Processes and Systems Will Drive Strong Inventory Performance Develop organization, processes & tools to drive ongoing rates of improvement in inventory performance. Inventory Turns Trend 30%+ Improvement Over Next 5 Years Supply Chain DesignLocalization &
Slide 135: Engineering
EngineeringSuperior Ride and HandlingExceptional Powertrains – Gas and ElectricVehicle style and ergonomicsElectronics and Software for the Rider ExperienceIntegrated Advanced Manufacturing Engineering
Slide 136: Q&A Ken Pucel
POLARIS INDUSTRIES INC. / ANALYST & INVESTOR MEETING Q&A Ken Pucel EVP – Global Operations, Engineering & Lean