Polaris (PII) Raymond James & Associates’ 46th Annual Institutional Investors Conference 2025 summary

Industry and Market Outlook

• Powersports and marine sectors face post-COVID demand softness, elevated dealer inventories, and ongoing uncertainties from tariffs, inflation, and consumer confidence.

• Management expects the first half of 2025 to remain challenging, with possible stabilization in the second half if tariffs do not escalate.

• Tariffs from China, Mexico, and Canada are expected to increase costs, potentially requiring surcharges or production shifts.

• Consumer health is pressured by high debt, persistent inflation, and low confidence.

• Risks include supply chain, dealer inventory, consumer demand, and competitive pressures.

Strategic Priorities and Operational Focus

• Innovation remains a core focus, with 4.5–5% of revenue invested in R&D and new category launches like XPEDITION and Ranger Extreme Duty.

• Dealer inventory was proactively reduced to around 100 days of supply, below pre-pandemic levels, to manage market softness.

• Capital deployment prioritizes internal investment, a growing dividend, and share repurchases, with M&A activity paused.

• Workforce was reduced by 10% to streamline operations and prepare for future growth.

• Emphasizes working capital improvements and strong cash generation.

Financial Performance and Margin Management

• 2024 sales reached $7.2B, with adjusted EPS of $3.25; sales declined 20% year-over-year due to market slowdown and inventory right-sizing.

• Off-road vehicles accounted for 79% of 2024 sales, with on-road and marine segments at 14% and 7% respectively.

• Despite volume declines, EBITDA drop was limited to about 30%, reflecting strong cost control.

• $280 million in cost reductions were achieved in 2024, with another $40 million targeted for 2025.

• Working capital improvements and inventory reduction are expected to generate $300 million in cash.