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Polaris Industries Inc. – A Global Corporation
SALES
$3.8 BILLION
UP 18%
NET INCOME*
$381 MILLION
UP 22%
Total Company FY 2013
>7,000 Employees Worldwide
11 Manufacturing Locations
5 Research & Development Centers of Excellence
~1,750 Dealers In North America
~1,400 Dealers Outside North America
>300,000 Units Shipped in 2013
>100 Countries – Polaris Products Sold
* from continuing operations IR Nov-2014 2
A Global Corporation with Industry Leading Brands
3 IR Nov-2014
2013 Sales by Geography
Polaris Brands 2013 Sales by Product Line
67% 16%
8% 6%
3%
OFF
-RO
AD
VEH
ICLE
S M
OTO
R-
CYC
LES
SNO
W
SMAL
L VE
HIC
LES
PG&
A 72%
16%
12%
PG&A
Snowmobiles
Small Vehicles
Motorcycles
ORV
International
Canada
United States
Polaris Strategic Objectives
Vision & Strategy
Strategic Objectives
VISION STRATEGY 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.
Polaris will be a highly profitable, customer centric, $8B global enterprise by 2020. We will make the best off-road and on-road vehicles and products for recreation, transportation and work supporting consumer, commercial and military applications. Our winning advantage is our innovative culture, operational speed and flexibility, and passion to make quality products that deliver value to our customers.
Best in Powersports PLUS Global Market Leadership Strong Financial Performance
Growth through Adjacencies LEAN Enterprise is Competitive Advantage
5-8% annual organic growth >33% of Polaris revenue
>$2B from acquisitions & new markets Significant Quality, Delivery & Cost Improvement
Sustainable, profitable growth Net Income Margin >10%
Guiding Principles
Performance Priorities
Best People, Best Team
Safety & Ethics Always
Customer Loyalty
Growth
Margin Expansion
Product & Quality Leadership
LEAN Enterprise
GROW SALES >$8 Billion by 2020 12% CAGR INCREASE NET INCOME >10% of Sales by 2020 13% CAGR
IR Nov-2014 4
$116.9 $140.8
Q3 2013 Q3 2014
Q3 2014 Sales and Net Income
Record 3rd quarter sales and net income* Motorcycles up 28%; PG&A up 24%; ORV sales increased 17%; Snowmobiles up 13% International up 9%; APLA up 40%; EMEA up 1%
N.A. retail sales increased 12%; ORV, motorcycles & snowmobiles up strong Earnings per share* increased 26% to a record $2.06
Operating income increased 23% to $222.6 million Net income margins* were up 21 bps to 10.8%
$1,102.6 $1,302.3
Q3 2013 Q3 2014
Another Strong Quarter
Q3 Net Income* Q3 Sales (in millions) (in millions)
+20% +18%
IR Nov-2014 5 * from continuing operations
Full Year 2014 Guidance
Record sales and earnings projected for 2014
North American retail sales growth and market share gains continue Industry trends expected to remain unchanged for balance of 2014
Improving operational and commercial execution drives profitable growth
6 IR Nov-2014
$3,777
2013 Actual FY 2014Guidance
$5.40
2013 Actual FY 2014Guidance
Increased Full Year 2014 EPS* Guidance
Diluted EPS* Total Company Sales
Up 17% to 18% $4,425 to $4,475
Up 21% to 23% $6.55 to $6.65
(in millions)
* from continuing operations
Business Unit Performance
7 IR Nov-2014
Snowmobiles Off-Road Vehicles
PG&A
SxS SxS SxS
ATV ATV
ATV
2012 2013 FY 2014Guidance
$283 $302
2012 2013 FY 2014Guidance
$196
2012 2013 FY 2014Guidance
$461
2012 2013 FY 2014Guidance
+13% $2,522
$2,226 +7%
*Includes Kolpin acquisition in April 2014
Motorcycles
Up mid-single
digits %
The All New
Platform
Up 13% to 14%
Up 65% to 75%
+12% $220
Up about 20%*
+33%* $611
LOCK & RIDE® PRO-FIT™ X CAB SYSTEM
Best in Powersports PLUS
MY’15 ACE 570 MY’15 600 Switchback PRO-S
MY’15 Indian Scout
Powersports Market Share
8 IR Nov-2014
#1 Share Position in Major Powersports Markets
EMEA Market Share
2006 2007 2008 2009 2010 2011 2012 2013
Consolidated Market Share in Units (Using Total Motorcycle Industry)
Honda Harley
Yamaha Kawasaki Can Am
Deere Arctic Cat Suzuki Kubota KTM BMW Triumph Piaggio Ducati
Best in Powersports Plus
North American Market Share
Off-Road Vehicles #1 Polaris #2 BRP #3 Kymco #4 Yamaha #5 CF Moto #6 Honda
Motorcycles #1 Harley #2 BMW #3 Victory/
Indian #4 Triumph #5 Honda #6 Suzuki
Snowmobiles #1 Ski-Doo/Lynx #2 Polaris #3 Yamaha #4 Arctic Cat
NOTE: EMEA market share data is YTD thru June 2014; Motorcycles is Heavyweight Cruiser/Touring only
Commercial Defense
Business Unit Performance
9 IR Nov-2014
Small Vehicles
$44
2012 2013 FY 2014Guidance
Sales
2012 2013 FY 2014Expectations
Sales
2012 2013 FY 2014Expectations
Sales Up
25% to 30%*
+177% $123
DAGOR™
MY’14 Aixam Vision GRAVELY© ATLAS
Adjacencies
*Aixam acquisition included
Motorcycles
Unveiled July 2014
2 models: Base & Premium (SL) $19,999 - $23,999 MSRP (U.S.)
>360 dealers signed & committed Shipping expected to begin in November 2014
Extremely high initial interest >1 billion media impressions in first 4 weeks
Assembly in Spirit Lake, Iowa
Adjacencies
IR Nov-2014 10
International
11 IR Nov-2014
2013 International Sales by Geography 2013 International Sales by Product
New Plant in Opole, Poland International Sales
Expanding EMEA, Asia Pacific and Latin America
2012 2013 FY 2014Guidance
ORV 47%
Small Vehicles
17%
PG&A 16%
*Includes Aixam Acquisition beginning 4/2013
Snow 13%
Motorcycles 7%
Up low-teens digits % +29%*
$592 $461
Europe 73%
Latin America
7%
Asia 3%
Aus / NZ 11%
ME / Africa 6%
2010 2011 2012 2013 2014Expectations
3-Year CAGR +10.7%
Operational Excellence
12 IR Nov-2014
QUALITY SAFETY
2010 2011 2012 2013 2014Expectations
Delivering Major Improvements Across All Operations
GROSS MARGINS DELIVERY
Polaris Total Recordable Injury Rate 86% Improvement in 48 Months
26.6% 27.9% 28.8% 29.7% Down
20–30 bps
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
1000
2000
3000
4000
5000
6000
7000
2010 2011 2012 2013 2014Guidance
Materials Labor & Overhead GM %
0.00%
0.02%
0.04%
0.06%
0.08%
0.10%
0.12%
0.14%
0.16%
0.18%
2010 2011 2012 2013 2014Expectations
Rework expected to be 21% from 2010
LEAN Enterprise is Competitive Advantage
Safe Harbor Except for historical information contained herein, the matters set forth in this document, including but not limited to management’s expectations regarding 2014 and 2015 sales, shipments, margins, net income and cash flow, the trend toward producing more of the Company’s own engines for its vehicles, the opportunities for expansion and diversification of the Company’s business, the impact of the repurchase of shares on the Company’s full year 2014 earnings per share and the Company’s guidance on earnings per share from continuing operations are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Potential risks and uncertainties include such factors as product offerings, promotional activities and pricing strategies by competitors; manufacturing operation initiatives; acquisition integration costs; warranty expenses; foreign currency exchange rate fluctuations; environmental and product safety regulatory activity; effects of weather; commodity costs; uninsured product liability claims; uncertainty in the retail and wholesale credit markets; performance of affiliate partners; changes in tax policy and overall economic conditions, including inflation, consumer confidence and spending and relationships with dealers and suppliers. Investors are also directed to consider other risks and uncertainties discussed in our 2013 annual report and Form 10-K filed by the Company with the Securities and Exchange Commission. The Company does not undertake any duty to any person to provide updates to its forward-looking statements. The data source for retail sales figures included in this presentation is registration information provided by Polaris dealers in North America and compiled by the Company or Company estimates. The Company must rely on information that its dealers supply concerning retail sales, and other retail sales data sources and this information is subject to revision.
IR Nov-2014 13
14
Appendices
IR Nov-2014
Slide Financial Performance 15 New MY 2015 Product Introductions 16 N.A. Retail Sales & Dealer Inventory – YTD Q3 2014 17 2014 Full Year Detailed Guidance 18 2014 Full Year Gross Margin Guidance 19 YTD Q3 2014 Balance Sheet and Liquidity Profile 20 Income from Financial Services 21 Global Manufacturing Operations 22 – 23 Polaris/Eicher Joint Venture (EPPL) 24 Customer Profiles 25
Return on Invested Capital Return on Assets
Consistent Financial Performance
15 IR Nov-2014
Sales & Net Income
Return on Shareholder Equity Dividends (per share) 5-Year Total Return
13% 16%
20% 23% 24%
0% 4% 7%
9% 13%
10%
9% 6%
6% 7%
2009 2010 2011 2012 2013
26% 32%
42% 44% 43%
0% 6% 12%
15% 21%
7% 11% 12%
7%
8%
2009 2010 2011 2012 2013
$1,566 $1,991
$2,657 $3,210
$3,777
$1.53 $2.14
$3.20 $4.40
$5.40
2009 2010 2011 2012 2013
Sales EPS
594%
212% 89% 84% 70%
Polaris PeerAvg.
Russell2000
S&P500
DJIA
49% 40%
46% 45%
71%
2009 2010 2011 2012 2013
5-Year CAGR Sales = 14% Net Income* = 27%
Polaris Peer Average (ACAT, BC, DE, HOG, WGO, TTC) S&P 500 Average
$0.78 $0.80 $0.90
$1.48 $1.68
$1.92
2009 2010 2011 2012 2013 2014
5-year dividend payout $380 million
Dividends increased 18% per year compounded annually for the past 5 years
Expectation
Oct. 26, 2009 – Oct. 24, 2014
* From Continuing Operations
18 N
EW O
ff-R
oad
Vehi
cles
5
NEW
Mot
orcy
cles
16 IR Nov-2014
NEW Model Year 2015 Product Introductions
Industry-Leading Products in All Categories
PG&
A
Over 300 NEW MY’15 Accessories
XP 1000 High Lifter Edition
900 TRAIL, 50”
S 900, 60”
900 XC EDITION XP 4 1000
XP 1000 XP 1000
ACE 570
ETX
X2 570
TOURING 570 SP
TOURING XP 1000
ETX 570 570 FULL SIZE
CREW 570 CREW 570 FULL SIZE XP900
MAGNUM ROADMASTER SLINGSHOT SL Two-tone Paint
SCOUT
Q3 2013 Q3 2014
3% Existing Models
9% New models/ categories
3% New Dealers
15% Total Increase
PolarisQ3 2014
IndustryQ3 2014
N.A. Retail Sales & Dealer Inventory – Q3 2014
Dealer Inventory Adequate – Some 2015 High-demand Models Limited
N.A. Dealer Inventory N.A. Powersports Retail Sales
Best in Powersports Plus
Polaris N.A. retail up 12% for Q3 2014 vs. Q3 2013 Gained share in all businesses - ORV, motorcycles and snowmobiles
Polaris Q3 2014 N.A. dealer inventory up 15% vs. Q3 2013 ORV up mid-teens % - new models and market segments Motorcycles up low-double digits; Indian distribution and expanded product line; Victory down Snowmobiles up mid-teens percent – timing of shipments; new models
+5%
+12%
IR Nov-2014 17
+15%
Improved Earnings Expectations
2014 Full Year Guidance METRIC GUIDANCE Product line sales
Off-Road Vehicles Up 13% to 14%
Snowmobiles Up mid-single digits %
Motorcycles Up 65% to 75%
Small Vehicles Up 25% to 30%
PG&A Up about 20%
International Up low-teens %
Total Company sales Up 17% to 18%
Gross profit margin Down 20 to 30 bps
Operating expenses Down 50 to 70 bps Income from financial services Up about 25% Income taxes 34.5% to 35.5% of pretax income Net income from continuing operations Up 17% to 19%
EPS, diluted from continuing operations $6.55 - $6.65 (+21% to 23%)
Share count Down about 3%
Change in Guidance Increased/ favorable Decreased/ unfavorable Unchanged Narrowed
IR Nov-2014 18
METRIC Actual
Q3 2013 Actual
Q3 2014 Guidance FY 2014
Prior period 29.5% 30.4% 29.7%
Production volume adjustments
Product cost reduction efforts
Commodity costs
Currency rates
Higher selling prices
Product mix
New plant start-up costs
Warranty costs
Tooling amortization
Sales promotional costs
Contract dispute charge in 2013
Current period 30.4% 29.8% 29.4% to 29.5% Change +84 bps -55 bps -20 to -30 bps
2014 Gross Profit Margin Guidance
Improvement to gross profit margin % Impairment to gross profit margin % Neutral to gross profit margin %
IR Nov-2014 19
Balance Sheet and Liquidity Profile $ In millions
(except per share and rate data)
YTD 2014 Fav / (UnFav)
YTD 2013 2014 Full Year Guidance vs. 2013
Cash $169.0 ($218.8) Increase
Debt / Capital lease obligations $228.0 ($120.8) Decrease
Credit facility $350.0 Flat Unchanged
Factory inventory $582.2 ($121.6) Increase faster than sales %
Capital expenditures $146.5 $45.9 Lower, but > $200M
Depreciation and amortization $91.0 $26.7 Increase about 40% from 2013
Operating cash flow from continuing operations $380.4 ($1.4) Increase at slightly higher % than
net income
Dividend (per share) $1.44 $0.18 Increase 14% over 2013
Polaris Acceptance receivables $1,072.4 ($220.6) Increase at slightly lower % than sales
Retail credit – Approval rate – Penetration rate
57% 32%
(1%) (2%)
Approval rates stable; aggressive financing from other banks
IR Nov-2014 20
Retail Credit Approval Rate Wholesale Credit PA Receivables ($M)
Income from Financial Services
21 IR Nov-2014
Income from Financial Services ($M)
Ample Wholesale and Retail Credit Availability
Retail Credit Penetration Rate
Full Year income from financial services expected to increase about 25%
Increased dealer inventories
Higher retail credit income
Polaris Acceptance 50/50 joint venture with GE for U.S. Dealer Financing 19-year joint venture contract for renewal in 2017 Three-year Avg. ROI = 29%
Third party arrangements: Capital One – 2014, Synchrony Bank (formerly GE) – 2016 and Sheffield – 2016 No Credit or funding risk to Polaris Approval and penetration rates at acceptable levels
Other Other
Wholesale Credit
Wholesale Credit
Retail Financing
Retail Financing
2012 2013 2014Expectations
$34
$46
Up about 25%
$767 $928
$1,072
2012 2013 YTDQ3 2014
60% 58% 57%
2012 2013 YTDQ3 2014
34% 32% 32%
2012 2013 YTDQ3 2014
Global Manufacturing Operations
22 IR Nov-2014
Expanding into Europe and Asia
Current Polaris MFG Locations
Future Polaris MFG Locations
Monterrey MEXICO
SxS, Engines
Spirit Lake/Milford IOWA
SxS, Motorcycles, GEM, Commercial
Roseau MINNESOTA
Snow, ATV, SxS Osceola
WISCONSIN Engines
Bourran FRANCE Goupil
Chanas, Aix-les-Bains
FRANCE Aixam Mega
Opole POLAND ATV, SxS
Jaipur INDIA
Eicher JV
23
NEW European Manufacturing in Opole, Poland
IR Nov-2014
Grand Opening September 23, 2014
First Polaris plant dedicated to manufacturing Off-Road Vehicles outside of North America
345,000 square-foot facility
300+ Employees
Shipments expected to begin in Q1 2015
Anticipated annualized savings $20+ million at maturity
Next Steps JV Overview
Polaris/Eicher Joint Venture (EPPL)
24 IR Nov-2014
Partner Overview
$1.3 Billion Revenue Established in 1959 Commercial Vehicles JV w/ Volvo Top 3 Market Share Iconic Brand Market Leader 300CC+ 178,000 Sold in 2013 50% growth
50/50 JV, $50M Investment Signed July 2012
New Operating Team New Product Development New Operational Footprint New Distribution Channel Global Emerging Market Focus
Building a Partnership and Foundation in a Critical Long Term Growth Market
Q3 ‘14 Dealer Recruitment
Q4 ‘14 New Factory Complete
Q1 ‘15 Market Launch
Q2 ‘15 Start of production
NEW Manufacturing Plant in Jaipur, India (180,000 sq. ft.)
Customer Profiles
OFF-ROAD VEHICLES MOTORCYCLES SNOWMOBILES
Average Age 49 43 44 47 52 42
Income ~$100k ~$100k ~$90k ~$90K ~$100k - $125k ~$90K
Male / Female 95% / 5% 90% / 10% 90% / 10% 75% / 25% 90% / 10% 90% / 10%
Primary Usage
Mostly Work Farming/Ranching
Property Maint. Rec/Trail
Hunt
Mostly Play Rec/Trail Dunes
Property
Work & Play Rec/Trail
Property Maint. Hunt
Rec/Trail Hunt Utility
Cruising Day trips
Around town Commute
Recreation on & off trail
IR Nov-2014 25
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