Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Q3 2012 Earnings Presentation
26 slides from Polaris's earnings presentation, Oct 18, 2012
Slide 1: Third Quarter 2012 Earnings Results
POLARIS INDUSTRIES INC. Third Quarter 2012 Earnings Results October 18, 2012
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 2012 and 2013 sales, shipments, net income, cash flow, and manufacturing realignment transition costs and savings, are forward-look
Slide 3: Scott Wine, CEO
Scott Wine, CEO POLARIS INDUSTRIES INC. Third Quarter 2012 Earnings Results October 18, 2012
Slide 4: Q3 2012 Sales and Net Income
Q3 2012 Sales and Net Income Q3 Sales (in millions) Q3 Net Income (in millions) $729.9 +21% $879.9 Q3 2011 Q3 2012 $67.6 +39% $94.3 Q3 2011 Q3 2012 Record 3rd Quarter Sales and Net Income ORV Sales remained strong +18%; On-Road up 78%; PG&A up 14% International Sales up 3% EMEA growth slowed, Asia P
Slide 5: Full Year 2012 Guidance
Full Year 2012 Guidance Total Company Sales (in millions) Diluted EPS $2,657 2011 Actual Up 19% to 20% $3,160 to $3,200 FY 2012 Guidance $3.20 2011 Actual Up 35% to 37% $4.32 to $4.37 FY 2012 Guidance North American Retail Sales growth, market share gains expected to continue PG&A gaining momentum F
Slide 6: Polaris Strategic Objectives
Polaris Strategic Objectives 3-5 Year Objectives Q3 2012 YTD Progress Best in Powersports PLUS 5-8% annual organic growth ORV & Victory retail sales & market share up Introduced 22 new MY13 vehicles PG&A introduced 250+ new MY13 accessories Growth through Adjacencies $1B - $2B from acquisitions and
Slide 7: Bennett Morgan, President & COO
Bennett Morgan President & COO POLARIS INDUSTRIES INC. Third Quarter 2012 Earnings Results October 18, 2012
Slide 8: N.A. Retail Sales – Q3 '12 YTD
N.A. Retail Sales – Q3 ‘12 YTD Best in Powersports Plus Snow ORV Victory TOTAL 13% 19% 15% 11% 17% 17% 10% Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Polaris Q3 N.A. retail sales up 10%, demand remains strong Continue to gain market share in every business Remain clear #1 in N.A. Powersports YTD Q3 &
Slide 9: N.A. Dealer Inventory Trends – Q3 YTD
N.A. Dealer Inventory Trends – Q3 YTD Best in Powersports Plus Dealer Inventory N.A. Sales vs. Dealer Inventory Units 2006 2007 2008 2009 2010 2011 2012 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC N.A. Sales - TTM N.A. Dealer Inventory N.A. Sales in Millions Units in Inventory $1,650 $1,378 $1,5
Slide 10: Off-Road Vehicles
Best in Powersports Plus Off-Road Vehicles #1 in ORV - Gained share in SxS and ATVs again Strong MY ‘13 product news – Scrambler 850, RANGER ® 800 EFI Mid-size and RANGER XP® 900 Largest ORV retail quarter ever. Achieved highest market share percentage RANGER XP® 900 early shipments retailing at rec
Slide 11: Growth Through Adjacencies: Military and Bobcat
Growth Through Adjacencies Military Q3 & YTD sales growing vs. 2011 Remain #1 in Ultra-light Segment Challenging Q3 – Defense & Government customers delaying spending due to budget reductions Strong interest and early orders in Military RZR, available Q3 2012 Introducing exclusive advanced light wei
Slide 12: Snowmobiles
Best in Powersports Plus Snowmobiles Strong market share gains season-to-date Dealer inventory up but manageable, due to previous season-ending inventory and MY’13 shipment timing MY’13 800 Pro-RMK recently named Snowmobile of the Year by SnowGoer Magazine Consumer traffic at events solid – waiting
Slide 13: On-Road Vehicles
Best in Powersports Plus On-Road Vehicles Victory N.A. retail sales up over 25% in Q3; and over 20% YTD Victory gained share again in Q3, #2 in heavyweight segment NA Industry slowed in Q3 – competitive timing; Industry growing YTD International unit retail sales up significantly and gaining share D
Slide 14: Growth Through Adjacencies: GEM and Goupil
Growth Through Adjacencies GEM Q3 Revenue up double digits percent; expect 2012 revenue to grow double digits (proforma) Q3 orders +35% Added 160 dealers YTD 2012 Goupil Q3 revenue up double digits percent; expect 2012 revenue to grow double digits (proforma) Cost down and operational efficiency imp
Slide 15: PG&A Parts, Garments & Accessories
Best in Powersports Plus PG&A Parts, Garments & Accessories Record Q3 sales; up 14% vs. 2011 and up 11% YTD 2011 ORV growth up 13% vs. Q3 2011 On-Road up 40% vs. Q3 2011 International up 21% from Q3 2011 All product lines, categories and regions increased sales vs. Q3 2011 Launched 250+ new MY ‘13 a
Slide 16: Global Market Leadership
Global Market Leadership Global Market Sales up 3%; Currency impact was -3% in Q3 On-Road / Victory sales up over 150% EMEA up YTD, but flat in Q3 due to broader economy; EMEA motorcycle & ORV industries remain weak Increased motorcycle & ORV market share – remain clear leader in Europe ORVs APLA up
Slide 17: Operational Excellence: Q3 2012 Margins
Operational Excellence Q3 2012 Margins Gross Margins 28.3% +120 bps 29.5% 27.9% Up 70 to 90 bps 28.6% to 28.8% Q3 2011 Q3 2012 FY 2011 FY 2012 Guidance Net Income as a Percent of Sales 9.3% +1.2% -0.3% Flat -0.8% +1.3% 10.7% Q3 2011 Gross Margin Operating Expense Financial Services Income Taxes/Inte
Slide 18: Investing in Our Future
Investing in Our Future R&D Facility Expansion in Wyoming, MN Q3 R&D investments up 26%; new product vitality index over 80% Announced 144,000 sq. ft. R&D expansion in Wyoming, MN Anticipated completion Q3, 2013 Additional manufacturing expansions to meet capacity demands Leased 380,000 sq. ft. buil
Slide 19: Mike Malone, V.P. Finance & CFO
Mike Malone V.P. Finance & CFO POLARIS INDUSTRIES INC. Third Quarter 2012 Earnings Results October 18, 2012
Slide 20: 2012 Full Year Guidance
2012 Full Year Guidance METRIC GUIDANCE Product Line Sales Off-Road Vehicles Up about 20% On-Road Vehicles Up 60% to 65% Snowmobiles About Flat% PG&A Up mid-teens % International Up about 10% Total Company Sales Up 19% to 20% Gross Margins Expand 70 to 90 bps Operating Expenses Down as a percent of
Slide 21: 2012 Full Year Gross Margin Guidance
2012 Full Year Gross Margin Guidance METRIC Actual Q3 2011 Actual Q3 2012 Full Year Guidance 2012 Prior Period 26.0% 28.3% 27.9% Production volume adjustments Product cost reduction efforts Commodity costs Currency rates Higher selling prices Product mix Manufacturing realignment, net Warranty costs
Slide 22: Manufacturing Realignment
Manufacturing Realignment Operations as a Competitive Advantage Anticipated Annual Savings $12 - $15 $30+ FY 12 Anticipated Savings Guidance Anticipated Annualized Savings Upon Completion Monterrey Facility Vehicle Assembly (Units) Engine Assembly (Units) Employee Headcount 22,500 Q3 YTD FY 2011…FY
Slide 23: Balance Sheet and Liquidity Profile
Balance Sheet and Liquidity Profile $ In millions (except per share and interest rate data) YTD 2012 Fav/(UnFav) 2011 2012 Full Year Guidance Cash $412.9 $77.2 Increase from 2011 Debt $107.3 ($7.3) Unchanged Credit Facility $350.0 ($100.0) Renewed to 2016 Factory Inventory $410.0 ($71.7) Up from 201
Slide 24: Scott Wine, CEO
Scott Wine, CEO POLARIS INDUSTRIES INC. Third Quarter 2012 Earnings Results October 18, 2012
Slide 25: 2013 Initial Thoughts
2013 Initial Thoughts US & European economies remain challenged; Powersports markets unchanged Political climate will generate real but unpredictable turbulence Competitive pressure intensifying…. Polaris will protect share Expect to push more M&A projects across goal line Ongoing investments for fu
Slide 26: Thank you Q&A
Thank you Q&A Q3-2012 26