Polaris (PII) Morgan Stanley Global Consumer & Retail Conference summary

Market and demand environment

• Retail trends remain soft, with off-road vehicle (ORV) sales down high single digits year-to-date; slight improvement in October and November, but overall demand remains challenged into 2025.

• Dealer inventory for ORV is down 12-13%, with expectations to end the year down 15-20%, positioning for better channel health.

• Snowmobile market faces continued headwinds due to poor snow conditions, likely resulting in flat to down performance in 2025.

• Consumer confidence is impacted by high debt levels, inflation, and employment concerns, with more interest rate cuts needed to stimulate demand.

• Promotional activity is subsiding slightly, with major competitors managing inventory better, though some smaller players still drive fringe promotions.

Strategic initiatives and product positioning

• Focus on innovation and first-mover advantage in new segments, such as Ranger XD and XPEDITION, to reduce reliance on promotions.

• Strategic emphasis on value and entry-level products across segments, including refreshed pontoon and motorcycle lines, to address affordability and broaden customer base.

• Value products are not margin dilutive and serve as a gateway for long-term customer retention and potential margin expansion.

• Expanded financial partnerships provide more consumer financing options and targeted promotions to improve affordability.

Operations, margin, and cost management

• Lean manufacturing initiatives underway in multiple factories, targeting improved efficiency and cost reduction over a two- to three-year period.

• Organizational structure streamlined to enable faster decision-making and preserve R&D investment at 4.5% of revenue.

• Expectation that margin improvement will materialize with sustained volume growth, requiring about six months of positive retail trends before ramping up production.