Polaris (PII) investor relations material

Executive summary

• Q3 2025 sales rose 7% to $1.84B, driven by strong ORV shipments, favorable product mix, and improved retail demand.

• Adjusted EPS was $0.41, but net loss attributable to shareholders was $15.8M due to $42.3M impairment in the On Road segment.

• Dealer inventory was reduced by 21% year-over-year, with aged units down 60% from six months ago, supporting healthier channel and future margin expansion.

• Announced sale of majority stake in Indian Motorcycle to Carolwood, expected to close Q1 2026, aiming to sharpen focus on core, high-margin growth areas and improve profitability.

• Strong operating cash flow of $562M year-to-date, supporting balanced capital allocation.

Financial highlights

• Adjusted sales up 7% year-over-year to $1.84B; international sales up 2%, PG&A sales up 20%.

• Adjusted gross profit margin was 20.7%, up 8 bps year-over-year; adjusted EBITDA margin was 7.6%, down 160 bps due to tariffs and incentive compensation.

• Adjusted EBITDA for Q3 was $140.4M, down 12% year-over-year.

• Operating expenses rose 21% in Q3, mainly from $42.3M in impairment and higher G&A costs.

• Free cash flow for Q3 was $142M, with $485M in free cash flow year-to-date.

Outlook and guidance

• Full-year 2025 adjusted sales guidance reintroduced at $6.9B–$7.1B, with marine and PG&A growth offset by on-road declines; off-road sales expected to be flat.

• Adjusted gross profit margin expected around 19%, with tariffs as a one-point headwind; excluding tariffs, margin would be 20.1%-20.4%.

• Adjusted EPS for 2025 expected to be approximately ($0.05); excluding tariffs, would be ~$1.10.

• Q4 GAAP impairments expected due to the Indian Motorcycle sale, with pre-tax charges of $275–$325M.

• Management expects continued headwinds from tariffs, supply chain challenges, and economic uncertainty.