Polaris (PII) Q1 2026 earnings summary

Executive summary

• Q1 2026 sales reached $1.66 billion, up 8% year-over-year, driven by higher shipments, positive pricing, and lower promotions, with all major segments showing growth.

• Adjusted EPS was $0.13, exceeding expectations, while reported diluted loss per share was $0.83 due to significant non-recurring charges.

• Gross profit increased 37% to $334.8 million, with margin up 423 basis points to 20.2% due to favorable product mix, pricing, and operational costs.

• Market share gains were achieved in ORV and snowmobiles, with ORV retail sales up 3% year-over-year and healthy dealer inventory.

• Segment reorganization and Indian Motorcycle divestiture completed, resulting in a $13.4 million loss and asset impairment charges.

Financial highlights

• Quarterly sales of $1.66–$1.7 billion, up 8% year-over-year; organic sales growth was 14% excluding Indian Motorcycle.

• Adjusted gross profit margin expanded by 389 bps to 20.5%; adjusted EBITDA margin rose to 6.2%, nearly doubling year-over-year.

• Operating expenses rose to $390 million, mainly due to higher G&A, divestiture losses, and asset impairments.

• Free cash flow was negative $320–$342.5 million, primarily due to working capital additions, but better than planned.

• Net interest expense was $16.1–$30 million; average diluted shares outstanding ~57 million.

Outlook and guidance

• Full-year 2026 adjusted sales guidance: $7.15–$7.30 billion; adjusted EPS forecasted at $1.60–$1.70.

• Adjusted EBITDA margin expected to improve by 100–140 bps; guidance reaffirmed, with no reconciliation to GAAP EPS due to unpredictability of certain costs.

• Tariff costs expected at ~$215 million for 2026; mitigation efforts ongoing to reduce China-sourced material below 5% by end of 2027.

• Guidance remains conservative due to consumer, supply chain, and tariff uncertainties.

• Existing cash, operating cash flows, and credit capacity expected to fund operations and capital needs for at least the next 12 months.