Polaris Inc. · NYSE:PII
Polaris — Polaris Industries — Shareholder Meeting (April 2005)
41 slides from Polaris's shareholder meeting presentation, Apr 21, 2005
Slide 1: 2005 Annual Shareholders Meeting
2005 Annual Shareholders Meeting April 21, 2005
Slide 2: Gregory R. Palen, Chairman of the Board
Gregory R. Palen Chairman of the Board of Directors
Slide 3: Thomas C. Tiller, Chief Executive Officer
Thomas C. Tiller Chief Executive Officer
Slide 4: 2004 in Summary - Successes Driving the Year
2004 in Summary - Successes Driving the Year! +14% Total Company 2004 Sales Growth $1.773 Billion 23 consecutive years of earnings per share growth Balanced sales growth in every business 66% 16% 4% 14% +11% +26% +29% +13% % of Sales 2004 Sales Growth ATV Snowmobiles PG&A Victory
Slide 5: ATVs Our Largest Business Led the Way
2004 in Summary - Successes Driving the Year! ATVs Our Largest Business Led the Way 2004 Sales $1,160 Million UP +11% 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 34 66 90 20.4 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 ATVs 66% Total Sales New Products Introduced in 2004 (Model Year 2005) Sportsman M
Slide 6: Snowmobiles Produces Good Sales Growth
2004 in Summary - Successes Driving the Year! Snowmobiles Produces Good Sales Growth Produces Good Sales Growth Produces Good Sales Growth 2004 Sales $288 Million UP +26% New Products Introduced in 2004 (Model Year 2005) Fusion 900 900 RMK 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 16 84 90 20.4 West 30.6
Slide 7: Victory Entering its Seventh Year
2004 in Summary - Successes Driving the Year! Victory Entering its Seventh Year; Shaping Up as a Real Business 2004 Sales $74 Million UP +29% Dealer network improving Quality improving New Products Introduced in 2004 (Model Year 2005) 8-Ball Hammer 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 4 96 90 20.4 W
Slide 8: PG&A Growth is Solidly on Track
2004 in Summary - Successes Driving the Year! PG&A Parts, Garments and Accessories Growth is Solidly on Track Growth is Solidly on Track Growth is Solidly on Track 2004 Sales $251 Million UP +13% 2004 New Products Introduced: Glacier Plow System Lock & Ride System 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Eas
Slide 9: Continue to Improve the Dealer Network
2004 in Summary - Successes Driving the Year! Funded 35 new upgrades through capital assistance Signed 160 fully engaged new dealers, who are selling 5 times the average of the 175 low-performing dealers that departed that departed that departed that departed that departed that departed that departe
Slide 10: International Every Region Posted Strong Growth
2004 in Summary - Successes Driving the Year! International Every Region Posted Strong Growth Every Region Posted Strong Growth Every Region Posted Strong Growth Every Region Posted Strong Growth Every Region Posted Strong Growth 2004 Sales $194 Million UP +38% 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 1
Slide 11: Our 50th Anniversary Was a Home Run
2004 in Summary - Successes Driving the Year! Our 50th Anniversary Was a Home Run In July, more than 25,000 Polaris riders from around the world descended on the Minnesota State Fairgrounds 700 Victory riders attended Similar event held in Roseau, Minnesota, where it all began Achieved Guinness Worl
Slide 12: Total Return to Shareholders Increased 57% in 2004
2004 in Summary - Successes Driving the Year! Total Return to Shareholders Increased 57% in 2004 Dow Jones Nasdaq Recreational Vehicles Index Russell 2000 S&P 500 Polaris - -11% - -43% 111% 29% - -11% 317% One Year Total Return (2004) Total Return to Shareholders - Polaris vs. Market Indices Five Ye
Slide 13: Balance Sheet & Cash Flow Remain Solid
2004 in Summary - Successes Driving the Year Balance Sheet & Cash Flow Remain Solid Cash Flow from Continuing Operations (in millions) $201 Debt to Total Capital Ratio Ample Credit Capacity 5% 5% Return on Shareholders Equity from Continuing Operations Industry-Leading 43% 40% $174 $150 $178 2001 20
Slide 14: Challenges During the Year
2004 in Summary Competitive climate remains challenging Historically high level of promotions and incentives Exit of the marine business was a tough but necessary decision Steel Aluminum Fuel costs We faced higher prices for raw materials We lost market share in snowmobiles Challenges During the Yea
Slide 15: Overall 2004 was another good year
2004 in Summary - Challenges During the Year Overall 2004 was another good year. Maybe our best year ever. But, we think the best is yet to come. Our game plan for the next 5 years: Dominant in Powersports
Slide 16: Dominant in Powersports Means...
The Game Plan - Next 5 Years Dominant in Powersports Means... Not the biggest but the best Becoming the preferred choice In the minds of riders In the minds of dealers In the minds of suppliers Having the highest quality product Having the best dealer network Having the strongest brand Continuing to
Slide 17: Strategic Goals
The Game Plan - Next 5 Years - 3 Strategic Goals Build a dominant brand with industry-leading quality and distribution 2004 2009 Snowmobiles 2004 Guidance 2004 Guidance 1.773 3 1 1043 1043 52 52 North 45.9 46.9 45 $3 Billion $1.773 Billion +11% CAGR Sales Grow Sales to $3 Billion by 2009 2004 Actual
Slide 18: By Year 2009
The Game Plan - Next 5 Years By Year 2009 } $3 billion in sales 9% net margins Dominant brand Dual Strategy Strong businesses ATVs, utility vehicles, snowmobiles Build powertrain capability Expand PG&A and financial services Product Innovation Improve dealer network Grow Victory motorcycles Expand g
Slide 19: Product Innovation - ATVs and Utility Vehicles
The Game Plan - Next 5 Years - Product Innovation 2000 2001 2002 2003 2004 775 861 982 1041 1072 Year 2004: 6.5% growth Worldwide ATV Industry Growth N.A. Utility Industry Growth * Includes Utility Vehicles 2001 2002 2003 2004 2004 Guidance 827 938 1043 1160 1043 52 52 North 45.9 46.9 45 ATV Sales*
Slide 20: Waves of New Products - ATVs and Utility Vehicles
The Game Plan - Next 5 Years - Product Innovation Waves of New Products - ATVs and Utility Vehicles Planned and Executed Flawlessly Planned and Executed Flawlessly Planned and Executed Flawlessly Phoenix 2000 Troy Lee Edition Predator RANGER XP Sportsman 800 EFI 2005 Sport ATV of the Year 62% of the
Slide 21: RANGER
+ POLARIS RANGER™
Slide 22: Product Innovation - Snowmobiles
The Game Plan - Next 5 Years - Product Innovation Build Strength in Existing Strong Businesses Snowmobiles 1998 1999 2000 2001 2002 2003 2004 2005 255.9 233 213 213 206 187 181 174 Worldwide Snowmobile Industry Growth Season-end March 31 2001 2002 2003 2004 2004 Guidance 373 293 229 288 1043 52 52 N
Slide 23: Waves of New Snowmobiles
The Game Plan - Next 5 Years - Product Innovation Waves of New Snowmobiles FST Switchback (Four Stroke Turbo) Fusion 600 HO 64% of the line is new for model year 2006 15 new sleds 5 new engines
Slide 24: Build Powertrain Capability to Control Our Destiny
The Game Plan - Next 5 Years - Product Innovation Build Powertrain Capability to Control Our Destiny Recent Polaris New Technology ATV Liberty(tm) 800 and 700 engines with EFI Snowmobiles Polaris FS and FST four-stroke engines Clean fire injection 900 and 700 two- stroke engines New 600 HO (high out
Slide 25: Expand Parts, Garments & Accessories (PG&A)
The Game Plan - Next 5 Years - Product Innovation Expand Parts, Garments & Accessories (PG&A) 1999 2001 2002 2003 2004 East 158 209 203 223 251 PG&A Sales $ in millions +13% $209 $203 $223 Snowmobiles PWC ATVs PG&A Motorcycles 28 4 56 7 5 PWC 4% General Merchandise 7% ATV / RANGER 56% Snowmobiles 28
Slide 26: New Lock & Ride System
The Game Plan - Next 5 Years - Product Innovation Expand Parts, Garments & Accessories (PG&A) New Lock & Ride System for ATVs & Utility Vehicles Locks in Seconds Cargo box in 15 seconds Tool holder in 10 seconds Water cooler in 5 seconds Windshield for ATV in 5 seconds
Slide 27: Expand Financial Services
The Game Plan - Next 5 Years - Product Innovation Expand Financial Services 2004 Year End: Generated $32.0 million in income in 2004 from financial services Now 16% of pretax income High return on investment = 36% Portfolio losses are within industry norms $588 $581 $329 $517 (millions) Wholesale Po
Slide 28: Growth Initiatives
The Game Plan - Next 5 Years Growth Initiatives
Slide 29: Improve the Dealer Network
The Game Plan - Next 5 Years - Growth Initiatives Goal: 1500 to 1700 stronger, more profitable dealers in North America Improve the Dealer Network Resources Available to Dealers: Polaris "Ride of Your Life" Sweepstakes Factory Authorized Clearance The Way Out Training Tour Capital Assistance ATV Exp
Slide 30: Grow Victory Motorcycles
The Game Plan - Next 5 Years - Growth Initiatives Grow Victory Motorcycles The Size of the Prize Viewed as $300-$500 million opportunity At 5% target share in 2010 = $300+ million Longer-term $1 billion opportunity We have the plan to get there: hot new products, growing brand strength, and an impro
Slide 31: Victory Motorcycles - Waves of New Products
The Game Plan - Next 5 Years - Growth Initiatives Victory Motorcycles - Waves of New Products Hammer Vegas 8-Ball New 100 cubic inch 6-Speed
Slide 32: Victory Hammer
Victory Hammer + POLARIS
Slide 33: International Growth
The Game Plan - Next 5 Years - Growth Initiatives International Growth 65% 301% 135% 1999 2001 2002 2003 2004 East 68 83 90 142 194 $83 $142 $90 International Sales $194 +38% Expand Globally Victory ATV Snowmobile PG&A East 69 18 13 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 International Reve
Slide 34: One Big Idea
The Game Plan - Next 5 Years - Growth Initiatives Idea that creates or transforms a market Likely adjacent or segment of current markets Internally developed or possibly through strategic acquisition or partnership One Big Idea
Slide 35: World Class Technology
The Game Plan - Next 5 Years - Growth Initiatives New Polaris Technology Center opened in early April 2005 World Class Technology Single biggest investment in Company history Required to remain a technology leader in the industry Consolidate R&D personnel into two locations Wyoming, Minnesota Roseau
Slide 36: Ongoing Productivity Gains
The Game Plan - Next 5 Years - Growth Initiatives Ongoing Productivity Gains Aggressively seek improvement to our cost structure Continue to reduce the number of platforms where feasible Use more common components More disciplined logistics solutions Global sourcing 1 2 3 4 East 21.5 22.6 23.4 23.9
Slide 37: Attract & Retain the Best People in the Industry
The Game Plan - Next 5 Years - Growth Initiatives Attract & Retain the Best People in the Industry Recent management changes: Bennett Morgan - President & COO Mike Dougherty - GM ATVs Tim DeJong - GM Utility Vehicles Mike Jonikas - GM Sales & Marketing Bill Fisher - adding responsibility for service
Slide 38: Dominant in Powersports - The Game Plan
The Game Plan - Next 5 Years - Growth Initiatives Dominant in Powersports 5 Year Vision The Game Plan Achieved by Grow. $3 billion in sales by 2009 Expand net margins to 9% Build a dominant brand with industry-leading product quality and distribution Product Innovation Build strength and share in ex
Slide 39: 1st Quarter 2005 Earnings up 11% on 9% sales growth
2005 Year 5 Year Vision 1st Quarter 2005 Earnings up 11% on 9% sales growth 28th consecutive quarter of increased sales and earnings Confirmed full year 2005 earnings per share guidance of $3.28 to $3.42 per share, an increase of 8% to 13% over 2004 Polaris Investor concerns: Rising commodity prices
Slide 40: Polaris Industries Stock Performance
Polaris Industries Stock performance - Past 5 Years 5 - Year Stock Price Change (April 20, 2000 - April 20, 2005) PII: up 273% S&P 500: down 20%
Slide 41: An Even Better Ride
AN EVEN BETTER RIDE aS
Polaris Industries — Shareholder Meeting (April 2005) on 6ix