Investor Presentation
May, 2015
POLARIS INDUSTRIES INC.
Polaris Industries Inc. – A Global Corporation
~8,100 Employees Worldwide
15 Manufacturing Locations
5 Research & Development Centers of Excellence
~1,850 Dealers In North America
~1,400 Dealers Outside North America
>380,000 Units Shipped Worldwide in 2014
>100 Countries – Polaris Products Sold
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3
Corporate Overview: 2014 Sales
IR May 2015
Sales by Component*Sales by Geography
62%
17%
7%
8%
6%
75%15%
10%
BILLION UP
International
Canada
United States
PG&A
Snowmobiles
Global AdjacentMarkets
Motorcycles
Off-Road Vehicles
*Reclassified for new Global Adjacent Markets organizational structure
4
Polaris at a Glance – Key Financial Metrics
IR May 2015
$1,991
$2,657
$3,210
$3,777
+19%$4,480
$147$228
$312
$381
$454
NET INCOMEUP
9% TO 12%
2010 2011 2012 2013 2014 2015Guidance
Sales Guidance Net Income*
2014 - 5th Straight Year of Exceptional Financial Performance
SALES UP9% TO 12%
EPS* $2.14+40%
$7.27 TO $7.42UP 9% TO 12%
5-Year CAGRSales +23%EPS* +34%
$3.20+50%
$4.40+38%
$5.40+23%
$6.65+23%
*from continuing operations
Polaris Strategic Objectives
Vision & StrategyVISION STRATEGYFuel 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.
Strategic Objectives 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 growthNet 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
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Off-Road Vehicles
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#1 in Market Share – Double the Nearest Competitor
$2,226$2,522
$2,909
2012 2013 2014
$ in
Milli
ons
3-Yr CAGR +17%Sales
FY 2014(Reclassified)
FY 2015Guidance
Up mid-single digits %
(unchanged)+15%$2,793*
*2014 reclassified to exclude Defense and Commercial Sales
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Motorcycles
IR May 2015
Amazing Products & Launches – Big Opportunity!
$196 $220
$349
2012 2013 2014 FY 2015Guidance
$ in
Milli
ons
Est. 1998
Acquired 2011
Est. 2014
Up 55% to 70%(increased)
3-Yr CAGR +38%Sales
+59%
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Snowmobiles
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Solid #2 – Growing Market Share & Continuous Quality Improvement
$283 $302 $322
2012 2013 2014 FY 2015Guidance
$ in
Milli
ons
Down low-singledigits %
(increased)
3-Yr CAGR +5%Sales
+7%
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Global Adjacent Markets
IR May 2015
Growing Outside Powersports
Military
Work & Transportation*
*Small Vehicles + Commercial
$221$273
2013(Reclassified)
2014(Reclassified)
FY 2015Guidance
$ in
Milli
ons
**Beginning in 2015 the organization restructured by combining Small Vehicles, Commercial & Military into “Global Adjacent Markets”
Up 5% to 10%(decreased)
Total Sales**
+24%
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Parts, Garments & Accessories (PG&A)
IR May 2015
Growing Core Brands; Leveraging Aftermarket Opportunities
$461$611
$742
2012 2013 2014 FY 2015Guidance
$ in
Milli
ons
3-Yr CAGR +22%Sales
Accessories
MotorcyclesSmallVehicles
Other
GarmentsSnow
Parts
Off-RoadVehicles
FY 2014 FY 2014
+21%
Up high-teens %(unchanged)
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International
IR May 2015
Focused on Execution in Challenging Markets and F/X Pressures
2014 Sales by Geography2014 Sales by Product
ORV46%
Small Vehicles
19%
PG&A16%
Europe68%
Latin America
7%
Asia 4%
Aus / NZ12%
ME / Africa9%
$461$592
$685
2012 2013 2014
3-Yr CAGR +17%
Latin America
Asia/Pacific
Europe, Middle East& Africa
Motorcycles11%
Snow 8%
Total International Sales ($ in millions)
FY 2015Guidance
Down low-singledigits %
(decreased)+16%
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Appendices
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SlideConsistent Financial Performance 14Q1 2015 Sales and Income 15N.A. Retail Sales & Q1 2015 16Dealer Inventory – Q1 2015 172015 Full Year Detailed Guidance 182015 Gross Profit Margin Guidance 19Foreign Currencies Exposures for Polaris 20Balance Sheet and Liquidity Profile 21LEAN is a Competitive Advantage 22Customer Profiles 23Recent Acquisitions 24
Consistent Financial Performance
14IR May 2015
Return on Invested Capital (2010-2014)Return on Assets (2010-2014)
Dividends (Per Share)5+Year Total Return Dec. 31, 2009 – April 24, 2015
Polaris Peer Average (ACAT, BC, DE, HOG, WGO, TTC) S&P 500 Average
5-year dividend payout $457 million
Dividends increased 20% per year compounded annually for the past 5 years
Expectation
16%20%
23% 24% 24%
4%
7%9%
13%
9%9%
6% 6% 7% 6%
2010 2011 2012 2013 2014
33%
41% 42% 42% 42%
6%12%
15%
21%
14%11% 12%
7% 8% 6%
2010 2011 2012 2013 2014
$0.80 $0.90
$1.48$1.68
$1.92$2.12
2010 2011 2012 2013 2014 2015
617%
203%111% 90% 73%
Polaris PeerAvg.
S&PMidcap
400
S&P500
DJIA
Record 1st quarter sales, operating income and net incomeSales of Motorcycles +74%; PG&A +12%; ORV +11%Sales in EMEA -15%; Asia Pacific +6%; Latin America +75%
Earnings per share increased 9% to a record $1.30Gross profit margin down 66 bps, primarily currency and mix pressuresOperating income margin up 28 bpsPretax profit impacted by $16 million currency hit in Q1
15IR May 2015
$888.3
Q1 2014 Q1 2015
Q1 Net IncomeQ1 Sales
Record Results In-spite of Stiff Currency Pressures
Q1 2015 Sales and Income ($ in millions)
Q1 Operating Income
$126.7$150.3
Q1 2014 Q1 2015
$80.9$88.6
Q1 2014 Q1 2015
$1,033.3
16IR May 2015
Polaris Retail Sales
Solid Retail Quarter for Most Businesses; Slingshot Strong
7%
15%12% 13%
8%
Q1-14 Q2-14 Q3-14 Q4-14 Q1-15
Polaris N.A. retail 8% for Q1 2015 vs. Q1 2014Gained share in powersports driven by motorcyclesORV market share flat in Q1 – Intense competitive promotional pressure
Motorcycle Q1 retail strong; double last yearIndian and Victory and gaining share; Slingshot stronger than expectations
Polaris N.A. Snow retail high-single digits for season driving increased market share, but Q1 low-double digits %
N.A. Snowmobile industry ended the season mid-single digits %, strongest year since ’08/’09
N.A. Powersports Retail Sales – Q1 2015Industry Retail Sales
+4% +4%
IndustryQ1 2014
IndustryQ1 2015
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2015
2014
2013
2012
17IR May 2015
N.A. Dealer Inventory
ORV Dealer Inventory High, but Expect to Improve by Year-end
Dealer Inventory – Q1 2015
4% Existing ORV Models 3% New ORV Models3% ACE / New Segments2% Snowmobiles1% Slingshot4% New Dealers
17% Total Increase
Polaris Q1 2015 N.A. dealer inventory 17% vs. 2014ORV mid-teens % driven primarily by more new models & market categories & RFM ATV segment stockingMotorcycles about 20%; Indian motorcycles and Slingshots , Victory low double-digits %Snowmobiles mid-twenties % due to lower snowfall levels in key regions
Continue to optimize RFM business model in ATVsImproving model to be more flexible/nimble going forwardCurrent ORV capacity limitations requiring level-loaded production ahead of key spring and fall seasonalityTargeting year-over-year unit and percent decreases throughout 2015 through improved turns
METRIC GUIDANCESales Components
Off-Road Vehicles Up mid-single digits % (reclassified 2014 actuals)
Snowmobiles Down low-single digits %
Motorcycles Up 55% to 70%
Global Adjacent Markets Up 5% to 10% (reclassified 2014 actuals)
PG&A Up high-teens %
International Down low-single digits %
Total Company sales Up 9% to 12%
Gross profit margin Flat to Up 20 bps
Operating expenses (% of sales) About flatIncome from financial services Up mid-single digits %Income taxes 34.75% to 35.25% of pretax income
Net income Up 9% to 12%
EPS, diluted $7.27 to $7.42 (+9% to +12%)
Solid Growth Expectations
2015 Full Year Guidance
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Change in GuidanceIncreased/ favorable
Decreased/unfavorable
Unchanged
Narrowed
METRICActual
Q1 2014Actual
Q1 2015GuidanceFY 2015
Prior period 29.0% 29.1% 29.4%
Production volume/capacity
Product cost reduction efforts
Commodity costs
Currency rates
Higher selling prices
Product mix
New plant start-up costs
Warranty costs
Depreciation/Tooling amortization
Sales promotional costs
Current period 29.1% 28.4% 29.4% to 29.6%
Change +10 bps -66 bps Flat to Up +20 bps
2015 Gross Profit Margin Guidance
Improvement to gross profit margin % Impairment to gross profit margin % Neutral to gross profit margin %
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Significant Impact in Q1 2015, Expected to Persist for Remainder of 201520
Foreign Currency Exposures for Polaris
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Foreign Currency Hedging Contracts Currency Impact on Net Income% of Remaining Notional Avg. Exchange Compared to Prior Year Period
Foreign CurrencyCurrencyPosition
2015 Cash FlowExposure
Amounts(US $ in Thousands)
Rate of OpenContracts
Q1 2015 Est. Remainderof 2015
Canadian Dollar (CAD) Long 75% $205,200 $0.79 to 1 CAD Negative Negative
Australian Dollar (AUD) Long 30% $10,700 $0.81 to 1 AUD Negative Negative
Euro (EUR) Long 0% - - Negative Negative
Japanese Yen (JPY) Short 70% $16,900 110 Yen to $1 Positive Positive
Mexican Peso (MXN) Short 70% $28,000 14.3 Peso to $1 Positive Positive
F/X Impacts vs. 2014($ in millions)
ActualQ1 2015
FY 2015 Expectations*(Included in Guidance)
Sales ($32) ($140 - $160)
Gross Profit ($12) ($65 - $75)Operating Expenses $5 $15 - $17Other Expense ($9) ($15 - $17)Pretax Income ($16) ($65 - $75)
*Assumes exchange rates remain in about same range as of the end of Q1. Net income expectations for 2015 include the impact of existing F/X hedging contracts below.
Open F/X Hedging Contracts as of April 23, 2015
Balance Sheet and Liquidity Profile $ In millions
(except per share and rate data) Q1 2015Fav / (UnFav)
Q1 2014 2015 Full Year Guidance
Cash $111.0 9% Increase from 2014
Debt / Capital lease obligations $329.1 1% Similar to 2014
Credit facility $500.0 43% Increased $150M from 2014
Factory inventory $629.3 (30%) Improved Turns
Capital expenditures $30.8 (22%) >$250M
Depreciation and amortization $37.1 (32%) Increase about 20% from 2014
Operating cash flowfrom continuing operations $4.2 ($40.5) Increase at higher % than net
income
Dividend (per share) $0.53 10% Increase 10% over 2014
Polaris Acceptance receivables $1,221.9 28% About flat with 2014
Retail credit – Approval rate– Penetration rate
56%32%
+4%+2% Rates stable
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Production delays in motorcycles – paint system, new product readinessBegan shipping Indian Scouts very late in Q1
New paint system ramped-up throughout Q1; progress acceleratingGross Profit Margin in Q1 due to currency and product mix pressures
New LEAN Value Improvement Process (VIP) implemented to improve quality, delivery & cost
Factory inventory up 30% vs. 2014; PG&A, raw materials, mix and acquisitionsPolaris product quality good and improving; #1 in NPS for motorcycles, SxS & ATVs
22IR May 2015
Q1 2014 Q1 2015 FY 2015Guidance
Gross Profit Margin
Challenging Circumstances in Q1
LEAN is a Competitive Advantage
29.1% -66 bps28.4%
Up to +20 bps29.4% to 29.6%
Future Plant Rendering – 600,000 sq ft
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Customer Profiles
IR May 2015
OFF-ROAD VEHICLES MOTORCYCLES SNOWMOBILES
Avg.Age 49 43 44 47 52 25 to 55 42
Income ~$100k ~$100k ~$90k ~$90k ~$100-$125k ~$150k ~$90k
Male / Female 95% / 5% 90% / 10% 90% / 10% 75% / 25% 90% / 10% 90% / 10% 90% / 10%
Primary Usage
Mostly WorkFarming/Ranchi
ngProperty Maint.
Rec/TrailHunt
Mostly PlayRec/TrailDunes
Property
Work & PlayRec/Trail
Property Maint.Hunt
Rec/TrailHuntUtility
CruisingDay trips
Around townCommute
CruisingDay trips
Around townCommute
Recreationon & off trail
24IR May 2015
Hammerhead AcquisitionTimbersled Acquisition
Complementary to Snow Business
Recent Acquisitions
Builds on Growing Asian Business
Light Utility Vehicles
(Gas/Electric)MSRP-US
$3,499 - $5,499
Adult go-kartsMSRP-US
$1,999-$2,799
Youth go-kartsMSRP-US
$1,099 - $1,699
Leverage low-cost supplier/manufacturing baseExpand entry level go-kart / ORV business Increase emerging market access Cultural fit - western educated, ORV background
New snow category complements mountain businessFast growing and profitableNew customer base – off-road motorcyclists in snowbelt
Mountain Horse Conversion KitMSRP-US $5,300 - $6,500
Safe HarborExcept for historical information contained herein, the matters set forth in this document, including but not limited to management’s expectations regarding 2015 sales, shipments, margins, currencies, net income and cash flow, the opportunities for expansion and diversification of the Company’s business 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 expansion 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 2014 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.
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