Investor Presentation May, 2015 Polaris Industries Inc. A Global - PowerPoint PPT Presentation

POLARIS INDUSTRIES INC. Investor Presentation May, 2015

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 IR May 2015 2

Corporate Overview: 2014 Sales Sales by Geography Sales by Component* PG&A 17% United Off-Road States Snowmobiles 15% International 7% Vehicles 75% 62% 8% Motorcycles 10% 6% Canada Global Adjacent Markets BILLION UP *Reclassified for new Global Adjacent Markets organizational structure IR May 2015 3

Polaris at a Glance – Key Financial Metrics Sales Guidance Net Income* SALES UP 9% TO 12% 5-Year CAGR +19% Sales +23% $4,480 EPS* +34% $3,777 NET INCOME UP $454 9% TO 12% $3,210 $381 $2,657 $312 $1,991 $228 $147 2010 2011 2012 2013 2014 2015 Guidance $2.14 $3.20 $4.40 $5.40 $6.65 $7.27 TO $7.42 EPS* +40% +50% +38% +23% +23% UP 9% TO 12% 2014 - 5th Straight Year of Exceptional Financial Performance *from continuing operations IR May 2015 4

Polaris Strategic Objectives Vision & Strategy Guiding Principles VISION STRATEGY Fuel the passion of riders, Polaris will be a highly profitable, customer centric, Best People, Best Team workers and outdoor enthusiasts $8B global enterprise by 2020. We will make the best around the world by delivering off-road and on-road vehicles and products for recreation, Safety & Ethics Always innovative, high quality vehicles, transportation and work supporting consumer, commercial products, services and and military applications. Our winning advantage is our Customer Loyalty experiences that enrich their innovative culture, operational speed and flexibility, and lives. passion to make quality products that deliver value to our customers. Strategic Objectives Performance Priorities Best in Powersports PLUS Global Market Leadership Strong Financial Growth Performance 5-8% annual organic growth >33% of Polaris revenue Sustainable, profitable growth Margin Expansion Net Income Margin >10% Growth Through Adjacencies LEAN Enterprise is Product & Quality Leadership Competitive Advantage >$2B from acquisitions & new markets Significant Quality, LEAN Enterprise Delivery & Cost Improvement GROW S GROW SALES LES >$8 Billion by 2020 INCREASE NET INCREASE NET INCOME INCOME >10% of Sales by 2020 13% CAGR 12% CAGR IR May 2015 5

Off-Road Vehicles 3-Yr CAGR +17% Sales ($ in millions) Up mid-single digits % +15% (unchanged) $2,909 $2,793* $2,522 $2,226 2012 2013 2014 FY 2014 FY 2015 (Reclassified) Guidance #1 in Market Share – Double the Nearest Competitor * 2014 reclassified to exclude Defense and Commercial Sales IR May 2015 6

Motorcycles Est. 2011 Est. 1998 Est. 2014 3-Yr CAGR +38% Up 55% to 70% (increased) Sales ($ in millions) +59% $349 $220 $196 2012 2013 2014 FY 2015 Guidance Growing Core Brands; Leveraging Aftermarket Opportunities IR May 2015 7

Snowmobiles 3-Yr CAGR +5% Sales ($ in millions) Down low-single +7% digits % $322 (increased) $302 $283 2012 2013 2014 FY 2015 Guidance Solid #2 – Growing Market Share & Continuous Quality Improvement IR May 2015 8

Global Adjacent Markets Total Sales** Work & Transportation* Up 5% to 10% (decreased) +24% $273 $221 $ in Millions *Small Vehicles + Commercial Military 2013 2014 FY 2015 (Reclassified) (Reclassified) Guidance **Beginning in 2015 the organization restructured by combining Small Vehicles, Commercial & Military into “Global Adjacent Markets” Growing Outside Powersports IR May 2015 9

Parts, Garments & Accessories (PG&A) 3-Yr CAGR +22% Sales ($ in millions) Up high-teens % (unchanged) +21% Motorcycles $742 Parts Small Vehicles $611 Off-Road Vehicles Garments $461 Snow Accessories Other FY 2014 FY 2014 2012 2013 2014 FY 2015 Guidance Amazing Products & Launches – Big Opportunity! IR May 2015 10

International 2014 Sales by Product 2014 Sales by Geography Latin Snow America Motorcycles 7% 8% 11% Asia 4% ORV Europe Small 46% Vehicles 68% Aus / NZ 19% 12% PG&A 16% ME / Africa 9% Total International Sales ($ in millions) 3-Yr CAGR +17% Down low-single +16% digits % $685 (decreased) $592 $461 Latin America Asia/Pacific Europe, Middle East & Africa 2012 2013 2014 FY 2015 Guidance Focused on Execution in Challenging Markets and Fx Pressures IR May 2015 11

Appendices Slide Consistent Financial Performance 14 Q1 2015 Sales and Income 15 N.A. Retail Sales & Q1 2015 16 Dealer Inventory – Q1 2015 17 2015 Full Year Detailed Guidance 18 2015 Gross Profit Margin Guidance 19 Foreign Currencies Exposures for Polaris 20 Balance Sheet and Liquidity Profile 21 LEAN is a Competitive Advantage 22 Customer Profiles 23 Recent Acquisitions 24 IR May 2015 13

Consistent Financial Performance 5+Year Total Return Dec. 31, 2009 – April 24, 2015 Dividends (Per Share) 5-year dividend payout $457 million Dividends increased 20% per year compounded 617% annually for the past 5 years $2.12 $1.92 $1.68 $1.48 $0.90 $0.80 203% 111% 90% 73% Polaris Peer S&P S&P DJIA 2010 2011 2012 2013 2014 2015 Avg. Midcap 500 Expectation 400 Return on Assets (2010-2014) Return on Invested Capital (2010-2014) 42% 42% 42% 41% 24% 24% 23% 20% 33% 16% 13% 21% 9% 9% 15% 9% 14% 12% 7% 11% 12% 6% 6% 7% 6% 8% 7% 4% 6% 6% 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Polaris Peer Average (ACAT, BC, DE, HOG, WGO, TTC) S&P 500 Average IR May 2015 14

Q1 2015 Sales and Income ($ in millions) Q1 Sales Q1 Operating Income Q1 Net Income $150.3 $88.6 $1,033.3 $80.9 $126.7 $888.3 Q1 2014 Q1 2015 Q1 2014 Q1 2015 Q1 2014 Q1 2015 Record 1 st quarter sales, operating income and net income Sales 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 $1.30 Gross profit margin down 66 bps, primarily currency and mix pressures Operating income margin up 28 bps Pretax profit impacted by $16 million currency hit in Q1 Record Results In-spite of Stiff Currency Pressures IR May 2015 15

N.A. Powersports Retail Sales – Q1 2015 Polaris Retail Sales Industry Retail Sales 15% 13% 12% 8% 7% +4% +4% Industry Industry Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q1 2014 Q1 2015 Polaris N.A. retail 8% for Q1 2015 vs. Q1 2014 Gained share in powersports driven by motorcycles ORV market share flat in Q1 – Intense competitive promotional pressure Motorcycle Q1 retail strong; double last year Indian 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 Solid Retail Quarter for Most Businesses; Slingshot Strong IR May 2015 16

Dealer Inventory – Q1 2015 N.A. Dealer Inventory 4% Existing ORV Models 3% New ORV Models 3% ACE / New Segments 2015 2% Snowmobiles 2014 1% Slingshot 2013 4% New Dealers 2012 17% Total Increase Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Polaris Q1 2015 N.A. dealer inventory 17% vs. 2014 ORV mid-teens % driven primarily by more new models & market categories & RFM ATV segment stocking Motorcycles 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 ATVs Improving model to be more flexible/nimble going forward Current ORV capacity limitations requiring level-loaded production ahead of key spring and fall seasonality Targeting year-over-year unit and percent decreases throughout 2015 through improved turns ORV Dealer Inventory High, but Expect to Improve by Year-end IR May 2015 17

2015 Full Year Guidance METRIC GUIDANCE Sales 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 Change in Guidance Operating expenses (% of sales) About flat Increased/ Income from financial services Up mid-single digits % favorable Income taxes 34.75% to 35.25% of pretax income Decreased/ unfavorable Net income Up 9% to 12% Unchanged Narrowed EPS, diluted $7.27 to $7.42 (+9% to +12%) Solid Growth Expectations IR May 2015 18

2015 Gross Profit Margin Guidance Actual Actual Guidance METRIC Q1 2014 Q1 2015 FY 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 Improvement to gross profit margin % Impairment to gross profit margin % Neutral to gross profit margin % IR May 2015 19