Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Q4 2009 Earnings Presentation
30 slides from Polaris's earnings presentation, Jan 28, 2010
Slide 1: Polaris Industries Inc. 4th Quarter & Full-Year 2009 Earnings Results
Polaris Industries Inc. 4th Quarter & Full-Year 2009 Earnings Results January 28, 2010
Slide 2: Safe Harbor
Other Placeholder: 1 Safe Harbor Except for historical information contained herein, the matters set forth in this document, including but not limited to management’s expectations regarding 2010 sales, shipments, net income and cash flow, are forward-looking statements that involve certain risks and
Slide 3: Scott Wine, CEO
Polaris Industries Inc. 4th Quarter & Full-Year 2009 Earnings Results Scott Wine CEO
Slide 4: Q4 2009 Net Income and EPS
Q4 2009 Net Income and EPS Diluted EPS $1.11 $1.31 +18% Net Income ($ in millions) $36.2 $43.9 +21% 2008 2009 Quality earnings growth driven by solid execution Net Income growth exceeds EPS due to share count dilution Record Quarterly EPS
Slide 5: Q4 2009 Margins
22.8% 27.3% +450 bpts 2009 2008 Q4 2009 Margins Gross profit margins improvement broad based Cost down, pricing, currency Strong Translation of Gross Margin expansion to Net Income Net Income as a Percent of Sales Gross Margins Gross Margin Op Expense FinancialServices Interest Expense Non-Op Expens
Slide 6: Q4 2009 Sales
Q4 2009 Sales Fourth Quarter 2008 $523.6 $-36.9 $-13.8 $-2.7 $1.6 $471.8 Total Company Total Company % Change in Total Company Sales Sales decline of 10% less than previous quarters of 2010ORV sales down 12% International sales up 18% Sales to dealers below retail -15% 2% 3% Q3-08 Q4-08 Q1-09 Q2-09
Slide 7: North American Retail Sales
North American Retail Sales Polaris N.A. retail sales performed better than expectations Side-by-side and Victory retail sales increased significantly in Q4 2010 Polaris retail sales projected to remain slightly negative Expect to once again outperform the industry 0% (percentage change from prior y
Slide 8: Full Year 2009 Net Income and EPS
Full Year 2009 Net Income and EPS Diluted EPS $3.50 $3.05 -13% Net Income ($ in millions) $117.4 $101.0 -14% 2008 2009 Results exceeded Company expectations Earnings down less than sales on strong gross margin expansion Earnings included $9.0 million, pre-tax, or $0.18 per share charge in Q1 ‘09
Slide 9: Full Year 2009 Sales
Full Year 2009 Sales Full Year 2009 $1,948.3 $-284.6 $-26.0 $-40.7 $-30.9 $1,565.9 2008 Total Company 2009 Total Company % Change in Total Company Sales Sales declined in every business unit and every regionContinued ATV declines drove majority of ORV declineMilitary business up 51% Canada best perf
Slide 10: 2009 Financial Metrics
2009 Financial Metrics Solid Results Despite Sales Decline 2009 Actual Var to ‘08 Sales $1,566 -20% Net Income $101.0 -14% Gross Profit % 25.1% +220 bpts Op Profit % 10.5% +110 bpts Net Income % 6.5% +50 bpts Cash Flow % to Net Income 191% +41% pts Shareholder Return 60% +98% pts
Slide 11: 2009 Investments
2009 Investments Created ORV Structure ATVs and Side-by-sides combined Created On-Road DivisionVictory investmentsLaunched LEV businessAdded VP Global New Market DevelopmentGMs in EMEA and ChinaVP of Business DevelopmentStrengthened Balance Sheet Adjacency investments on-track and growingMilitary an
Slide 12: Bennett Morgan, President & COO
Polaris Industries Inc. 4th Quarter & Full-Year 2009 Earnings Results Bennett Morgan President & COO
Slide 13: Off-Road Vehicle Division
Off-Road Vehicle Division Polaris Sales ($000’s) N.A. Off-Road Vehicle Industry $1,306 -22% $1,021 Flat to up slightly -25% -10 to -15% 2010 projection 2009 estimate 2010 guidance 2008 2009 SXS ATV Robby Gordon Edition RZR 4 2009 SummaryGained market share in ATVs & SxSLaunched over 25 new productsS
Slide 14: Adjacencies – Military / Bobcat
Adjacencies – Military / Bobcat Polaris Military Sales ($000’s) Military Strong growth continued Expanded Margins Expanded customer base Expand product line in 2010 +51% Up 20% to 30% guidance +42% ATV deployed in Afghanistan Bobcat Strategic Alliance On track to source Bobcat utility Vehicles in 2H
Slide 15: Snowmobile Division
Snowmobile Division Polaris Sales ($000’s) $205.3 -13% $179.2 Down slightly to up slightly -10% 2008 2009 2010 projection Polaris RUSH™ 2010 guidance N.A. Snowmobile Industry Sales 2009 Summary RUSH™ named Snowmobile of the Year Industry weaker than expected Dealer & Factory Inventory at acceptable
Slide 16: On-Road Division – Victory
On-Road Division – Victory Sales ($000’s) $93.6 -44% $52.8 Up 50%+ 2010 guidance 2009 2008 2009 2009 Summary Industry retail sales very weak Market share gains in International & Canada Industry leading quality – 6 years straight Q4 retail sales up significantly Reduced # of models by 75%Cross Roads
Slide 17: On-Road Division – LEV
On-Road Division – LEV N.A. LEV Industry Up mid single digits -23% 2010 projection 2009 estimate 2008 2009 Summary Launched 1st electric low emission vehicle Breeze™ well received Signed 10 dealers to date Learning the business 2010 Objectives Continue aggressive expansion Expand product line Grow p
Slide 18: PG&A
PG&A Polaris Sales ($000’s) $343.6 -9% $312.7 Similar to overall Company Growth 2010 guidance 2009 PG&A Revenue by Business Unit 2009 PG&A Revenue by Product Category Accessories 41% 2009 Summary Sales outperformed company Now 20% of Polaris sales Expanded margins Remains highest margin product line
Slide 19: International Division
International Division Polaris Sales ($000’s) $304.2 -17% $252.4 Up 10% to 15% Growth 2010 guidance 2009 2008 2009 Revenue by Geography 2009 Revenue by Business Unit 2009 Summary Gained share in ORV in EMEA Sales up 18% in Q4 2009 – currencies helpful Added GM in ChinaInitiated plan to enter Brazili
Slide 20: Operational Excellence Results – Quality, Costs & Speed
Operational Excellence Results – Quality, Costs & Speed Cost - Gross Profit Margin Expansion Up to +100 bpts Guidance 22.1% 22.9% 25.1% MVP business model in 50% of N.A. ORV dealers – integration progressing well New product development cycle time reduced again Product Cost reduction through value e
Slide 21: Operational Excellence Results - Inventories
Operational Excellence Results - Inventories Dealer inventory improved 24% from 2008 Lowest level since 1999 We desire further reductions in Core ATVs and motorcycles MVP Dealers realizing lower inventories at sustainable levels Down 19% and $43 million from 2008 Lowest factory inventory in 5 years
Slide 22: Mike Malone, V.P. Finance and CFO
Polaris Industries Inc. 4th Quarter & Full-Year 2009 Earnings Results Mike Malone V.P. Finance and CFO
Slide 23: 2010 Full Year Guidance
2010 Full Year Guidance Product Line Sales - Off-Road Vehicles Approximately flat to up slightly - Snowmobiles Down slightly to Up slightly - On-Road Vehicles Up over 50% - PG&A Similar to overall company growth Total Company Sales Up +1% to +3% Gross Margins Up to 100 bpts improvement Operating exp
Slide 24: Gross Profit Margin Percentage Trends
Gross Profit Margin Percentage Trends Flexible variable cost structure and cost reduction momentum drives gross margin expansion Q4 2009 "Full Year 2009" "Guidance 2010" Prior Period 22.8% 22.9% 25.1% Production volume adjustments Product cost reduction efforts Commodity costs Currency rates Higher
Slide 25: Financial Services Income
Financial Services Income 2009 wholesale credit income from PA joint venture = $13.7 million, up 3% 2009 retail credit income $1.1 million, down 81%, but now stabilized Retail credit approval rates and penetration rates stabilized Financial Services Income by category Retail Portfolio – HSBC, GE & S
Slide 26: Balance Sheet and Liquidity Profile
Balance Sheet and Liquidity Profile $ In millions (except per share data) 2009 Fav (Unfav) 2008 2010 Guidance Total Debt – ending $200.0 ─ $200.0 Net Debt - ending (debt less cash balances) $59.8 $113.1 Improving again Credit Facility (expires December 2011) $450.0 – $450 Average debt outstanding $2
Slide 27: First Quarter 2010 Guidance
First Quarter 2010 Guidance Industry retail sales demand trends are expected to decline again in 2010 Polaris expects to gain market share Q1 2009 included a $0.18 EPS non-cash impairment charge on KTM investment Share count is expected to increase - similar trend to Q4 2009 Total Company Sales (in
Slide 28: Scott Wine, CEO
Polaris Industries Inc.4th Quarter & Full-Year 2009 Earnings Results Scott WineCEO
Slide 29: What to Expect in 2010
What to Expect in 2010 Conservative outlook for powersports industry Double digit declines in NA & EMEA, better in BRIC Increased focus on growth International expansion gains traction Military, Bobcat, LEV drive adjacency growth Acquisition activity will increase Victory progress accelerates Margin
Slide 30: Thank you. Q & A
Polaris Industries Inc.Thank you. Q & A