Polaris (PII) Q4 2025 earnings summary

Executive summary

• Achieved 9% sales growth in Q4 2025, with market share gains across all major segments, including Off Road, On Road, and Marine, despite significant tariff headwinds and a challenging macro environment.

• Successfully executed strategic initiatives such as innovation, operational improvements, and portfolio realignment, including the planned separation of Indian Motorcycle, which is on track to close by end of Q1 2026.

• Year-end financial results exceeded original 2025 guidance excluding tariffs, with over $60 million in operational benefits from lean initiatives and $240 million+ in structural savings over two years.

• Dealer inventory levels are healthy across ORV and Marine, supporting channel health and future growth.

• Continued progress on reducing China-based material spend, targeting less than 5% by 2027, down from 18% in 2024.

Financial highlights

• Q4 adjusted sales were $1.9 billion, up 9% year-over-year; full year adjusted sales were $7.1 billion, flat year-over-year.

• Q4 adjusted EBITDA margin was 5.1%, down 448 bps; full year adjusted EBITDA margin was 5.7%, down 311 bps.

• Q4 adjusted EPS was $0.08, down 91% year-over-year; full year adjusted EPS was ($0.01), down $3.26 year-over-year.

• Generated $180 million in operating cash flow and $120 million in free cash flow in Q4; $605 million free cash flow for the year.

• Paid down approximately $530 million in debt during 2025.

Outlook and guidance

• 2026 sales expected to grow 1%-3% to $7.2B–$7.4B, with organic growth of 7%-9% excluding Indian Motorcycle.

• Adjusted EBITDA margin projected to expand 80-120 basis points, despite ~$90 million in incremental tariffs.

• Adjusted EPS guidance for 2026 is $1.50-$1.60, up from ($0.01) in 2025.

• Q1 2026 sales expected to grow over 10%, but tariffs will be a significant headwind; Adjusted EPS for Q1 expected to be approximately -$0.45.

• 2026 adjusted guidance excludes $32 million in restructuring and integration costs, $33 million in class action litigation expenses, and $18 million in intangible amortization.