Polaris 2013 Annual Report Download - page 7

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TOTAL RETURN TO SHAREHOLDERS
76%
YEAR
2013 HIGHLIGHTS
BASIS POINTS
40
UP
10.1%
*from continuing operations
TO
BASIS POINTS
GROSS MARGIN
90
UP
29.7%
TO
EARNINGS PER SHARE*
UP
23 5.40
%$
TO
NET INCOME MARGIN*
POLARIS
33%
S&P MIDCAP 400
55%
MORNINGSTAR RECREATIONAL VEHICLES INDUSTRY GROUP INDEX
30%
S&P 500
1
TOTAL RETURN TO SHAREHOLDERS YEAR
POLARIS
S&P MIDCAP 400
MORNINGSTAR RECREATIONAL VEHICLES INDUSTRY GROUP INDEX
S&P 500
5
1057%
169%
459%
105%
manufacturer Aixam Mega. This was our third
and largest deal in the Small Vehicles space,
adding scale and significant capability to this
growingbusiness, and providing an excellent
illustration of how our Growth through Adjacencies
objective will contribute to our growth. We will also
create organic adjacency growth, as evidenced
by our investment in the BRUTUS™ commercial
vehicles launch and the introduction of Dagor™
, the
largest vehicles platform in our Polaris Defense
businesstodate.
From a financial perspective, our Lean Enterprise
objective did not match those investments, but in
terms of sweat equity, the input was considerable.
Its potential impact on our company cannot be
overstated. We accelerated our kaizen activity,
created a Chief Lean Officer role to champion our
efforts, and used our Victory® business to reduce
lead times and create a model program we can
emulate. (See Victory success story on Page 7.)
Lean is all about eliminating waste and adding
value for customers, and to address the latter,
we brought on Tim Larson to lead Customer
Excellence. This is a perfect example of what we
see as the most important investment: human
capital. We have a constant focus on “Best People,
Best Team” and believe that is a critical element of
our sustainable competitive advantage.
Our final strategic objective is to deliver Strong
Financial Performance, which we certainly did
in 2013. With sales increasing 18percent from
2012, net income from continuing operations
growing 22 percent, earnings per share increasing
We certainly expect to achieve our goal of
$8billion in sales, and more than $800million in
net income by 2020. That’s why our strategy drives
each investment that wemake.
Strategic value is not an alternative to our long
history of outstanding, shareholder-friendly capital
stewardship: despite historically high levels of
investment, our return on invested capital (ROIC)
was a robust 42percent, and due to our strong
balance sheet and excellent cash conversion, our
debt-to-total-capital ratio is 35percent, even as
we paid out more than $100million in dividends
and completed share repurchases of more than
$500million.
Our commitment to be The Best in PowersportsPlus
showed in our continued market share gains from
ongoing investment in research and development,
and in the launch of a record 26new vehicles,
enabled by nearly $200million of capital expenditures
for tooling and manufacturing facility enhancements.
Our progress towards Global Market Leadership
gained momentum as we began to make
investments in new factories in Poland and India,
while also completing the acquisition of French
IN 2013, OUR TOTAL INVESTMENTS
WERE MORE THAN DOUBLE ANY
PRIOR YEAR, AND THEIR POSITIVE
IMPACT ON OUR STRATEGIC
OBJECTIVES WAS CLEARLYEVIDENT.
03
SHAREHOLDER LETTER