Core Insights - Polaris Inc. released its 2024 Geared For Good Report, highlighting its commitment to being responsible stewards for employees, riders, communities, and the environment [1][2][3] THINK PRODUCT - Polaris introduced several new products, including the next generation of the Indian Scout, the 2025 RANGER lineup, and the Klim Freeride Helmet, while receiving multiple awards for innovation in 2024 [6] THINK PRODUCTION - The company achieved a 90% waste diversion rate from landfills at its Wyoming facility, meeting its 2035 goal ahead of schedule, and implemented a new liquid paint system that reduced natural gas usage significantly and avoided substantial CO2 emissions [6] THINK PLACES - Polaris awarded grants for trail enhancement projects in Texas and Arizona and donated $220,000 in TRAILS GRANTS to support trail stewardship and rider education across the U.S. and Canada [6] THINK PEOPLE - The company recorded its lowest Total Recordable Incident Rate (TRIR) in history at 0.30 for the second consecutive year and contributed over $6.4 million to local communities through various forms of donations in 2024 [6]

Group 1 - Polaris Inc. is initiated with a Strong Buy rating and a price target of $46.81, focusing on its design, engineering, and marketing of powersports vehicles and accessories globally across various segments [1] - The market is believed to be underestimating the impact and duration of the tariff shock, which is expected to affect Polaris significantly [1] - Moretus Research emphasizes a structured approach to equity research, identifying companies with durable business models and mispriced cash flow potential, particularly those undergoing structural changes or temporary dislocations [1] Group 2 - Moretus Research aims to provide professional-grade insights and actionable valuations, focusing on comparability, simplicity, and relevance in their analysis [1] - The research methodology is built on rigorous fundamental analysis combined with a judgment-driven process, avoiding noise and overly complex forecasting [1] - The emphasis is placed on long-term compounding and a deep respect for capital, aiming to raise the standard for independent investment research [1]

Financial Performance - Total sales for Q1 2025 were $1,535.8 million, a decrease of 11.5% compared to $1,736.4 million in Q1 2024[12] - Gross profit for Q1 2025 was $245.0 million, down 25.8% from $330.3 million in Q1 2024[12] - Net loss attributable to Polaris Inc. for Q1 2025 was $66.8 million, compared to a net income of $3.8 million in Q1 2024[12] - Basic and diluted net loss per share for Q1 2025 was $(1.17), compared to earnings of $0.07 per share in Q1 2024[12] - Operating loss for Q1 2025 was $(36.1) million, compared to an operating income of $39.0 million in Q1 2024[12] - Comprehensive loss for Q1 2025 was $(39.5) million, compared to a comprehensive loss of $(2.3) million in Q1 2024[15] - Total operating expenses for the three months ended March 31, 2025, were $303.2 million, slightly lower than $313.2 million in the same period of 2024[12] - The net loss attributable to Polaris Inc. for the three months ended March 31, 2025, was $66.8 million, compared to a net income of $3.8 million in the prior year[12] Assets and Liabilities - Total current assets decreased to $2,593.7 million as of March 31, 2025, from $2,632.4 million at the end of 2024[10] - Total liabilities decreased slightly to $4,215.3 million as of March 31, 2025, from $4,224.7 million at the end of 2024[10] - Shareholders' equity decreased to $1,230.6 million as of March 31, 2025, down from $1,294.1 million at the end of 2024[10] - As of March 31, 2025, total assets were $5,450.4 million, a decrease from $5,525.2 million as of December 31, 2024[10] - Current liabilities increased to $2,311.5 million as of March 31, 2025, compared to $2,293.2 million at the end of 2024[10] Cash Flow and Investments - Cash and cash equivalents increased to $291.7 million as of March 31, 2025, from $287.8 million at the end of 2024[10] - Net cash provided by operating activities was $83.2 million for the three months ended March 31, 2025, compared to a net cash used of $105.4 million in the same period of 2024[20] - The company reported a net cash used for investing activities of $28.3 million in Q1 2025, compared to $56.7 million in Q1 2024[20] - Financing activities resulted in a net cash outflow of $56.9 million in Q1 2025, compared to a net cash inflow of $115.7 million in Q1 2024[20] Revenue Breakdown - Revenue from Wholegoods was $1,125.4 million in Q1 2025, down from $1,325.3 million in Q1 2024, representing a decline of 15.1%[34] - The United States accounted for $1,192.7 million of total revenue in Q1 2025, compared to $1,342.8 million in Q1 2024, reflecting a decrease of 11.2%[34] - The Off Road segment generated sales of $1,198.6 million, while the On Road and Marine segments contributed $221.8 million and $115.4 million, respectively[75] Depreciation and Amortization - Depreciation and amortization increased to $73.4 million in Q1 2025 from $62.9 million in Q1 2024, reflecting a year-over-year increase of approximately 16.0%[20] - The company recorded $67.4 million in depreciation expense for the three months ended March 31, 2025, compared to $58.4 million in the same period of 2024[27] - The amortization expense for other intangible assets was $6.0 million for the three months ended March 31, 2025, compared to $4.5 million for the same period in 2024, representing a year-over-year increase of 33.3%[51] Shareholder Information - Cash dividends declared and paid per common share increased to $0.67 for the three months ended March 31, 2025, compared to $0.66 for the same period in 2024, marking a 1.5% increase[52] - The Company did not repurchase any shares under its share repurchase program during the three months ended March 31, 2025, but has authorization to repurchase up to an additional $1,109.3 million of common stock[52] Regulatory and Compliance - The Company is subject to extensive laws and regulations, and failure to comply could result in fines or penalties, impacting financial performance[66] Other Financial Metrics - The fair value of financing obligations was approximately $2,097.2 million as of March 31, 2025, compared to $2,103.5 million at the end of 2024[26] - The Company had an accrual of $290.3 million for probable payments related to product liability claims as of March 31, 2025, with $155.9 million recorded for probable insurance recoveries[63] - The notional value of the Company's derivative financial instruments designated as cash flow hedges was $683.4 million as of March 31, 2025, with total fair value assets of $5.1 million and liabilities of $2.5 million[70]

Financial Data and Key Metrics Changes - In Q1 2025, sales decreased by 12% due to reduced shipments aimed at managing dealer inventory amidst a downturn in the powersports market [5][6] - Adjusted EPS was negative $0.90, aligning with the midpoint of the guidance range provided earlier [6] - Gross profit margin declined by 147 basis points, primarily due to increased promotions and a prolonged downturn in the powersports sector [32] Business Line Data and Key Metrics Changes - Off-Road sales were down 10%, influenced by lower volume and higher promotions, although a favorable mix partially offset this decline [31] - On-Road sales decreased by 20%, driven by challenges in the motorcycle market and timing issues with engine deliveries [34] - Marine sales fell by 7%, consistent with planned reductions in shipments, while the pontoon industry experienced an 11% decline year-to-date [36] Market Data and Key Metrics Changes - North American retail sales were down 7%, with better performance in the utility segment compared to recreational products [6] - International business sales dropped 16% due to weak markets in both off-road and on-road segments [30] - Retail trends showed volatility, with significant month-to-month swings, attributed to high inflation and economic uncertainty [85] Company Strategy and Development Direction - The company has withdrawn its full-year guidance due to the fluid tariff environment and its potential impact on consumer spending [9] - A four-pronged tariff mitigation strategy has been implemented, focusing on supply chain adjustments, cost control, market reprioritization, and government advocacy [21] - The company aims to emerge stronger by maintaining close relationships with dealers and focusing on cash preservation [9][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging operating environment, emphasizing the importance of navigating through tariffs and economic uncertainty [5][9] - There is optimism regarding the potential for retail demand recovery, contingent on inventory levels stabilizing and consumer confidence improving [56] - The leadership remains committed to long-term strategies that prioritize innovation and operational efficiency [30][46] Other Important Information - The company reported its highest Q1 operating free cash flow in nine years, reflecting effective working capital management [28] - Warranty expenses have improved significantly, contributing positively to customer satisfaction and expected future margins [33][89] - The company is actively engaging with government officials to address tariff-related challenges and advocate for U.S. manufacturing interests [15][24] Q&A Session Summary Question: What role will pricing play in tariff mitigation efforts? - Management indicated that pricing will remain stable through May, as raising prices in a recessionary environment is challenging due to inelastic demand [49][50] Question: Where does the company stand in terms of inventory cleanup among competitors? - Management believes they are in the later innings of the inventory cleanup process, with some competitors still facing significant excess inventory [54][55] Question: What is the expected annualized impact from tariffs in 2026? - Management refrained from providing a specific number, emphasizing ongoing mitigation efforts and the complexity of the tariff environment [62][63] Question: How is the company planning shipment levels in light of retail demand? - The company plans to ship fewer units than retail to manage dealer inventory effectively, adjusting based on future retail strength [95][96] Question: What does the recession playbook entail? - The recession playbook focuses on cash preservation, working capital management, and deferring non-critical CapEx projects [100][101]

First Quarter 2025 Earnings Presentation Q1'25 Earnings 4/29/25 2 First Quarter 2025 Overview April 29, 2025 Safe Harbor & Non-GAAP Measures Except for historical information contained herein, the matters set forth in this presentation are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Potential risks and uncertainties include such factors as the Company's ability to successfully implement it ...

Financial Data and Key Metrics Changes - In Q1 2025, sales decreased by 12% due to reduced shipments to manage dealer inventory amidst a downturn in powersports [7][9] - Adjusted EPS was negative $0.90, aligning with the guidance range provided in January [9] - North American retail sales were down 7%, with better performance in the utility business compared to recreational products [9][10] - Gross profit margin decreased by 147 basis points, primarily due to promotions and economic downturn [38] Business Line Data and Key Metrics Changes - Off Road sales declined by 10% due to lower volume and higher promotions, although a favorable mix partially offset this [36][38] - On Road sales fell by 20%, impacted by a challenging motorcycle market and engine delivery timing issues [39] - Marine sales decreased by 7%, consistent with planned reductions in shipments, while the pontoon industry saw an 11% decline year-to-date [41] Market Data and Key Metrics Changes - International business sales dropped by 16% due to weak markets in both off-road and on-road segments [36] - Retail trends showed volatility, with significant month-to-month swings attributed to high inflation and interest rates [92] Company Strategy and Development Direction - The company has withdrawn its full-year guidance due to the fluid tariff environment and its impact on consumer spending [12] - A four-pronged tariff mitigation strategy has been implemented, focusing on supply chain adjustments, cost control, market reprioritization, and government advocacy [26] - The company aims to emerge stronger by maintaining close relationships with dealers and focusing on cash preservation [12][34] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging environment but expressed confidence in the company's ability to navigate through it [6][34] - The CEO emphasized the importance of innovation and dealer partnerships in overcoming current market challenges [17][34] - Management noted that consumer reluctance to spend on discretionary items is affecting retail performance, with expectations for modestly lower retail demand [92] Other Important Information - The company has seen improvements in warranty claims, indicating better product quality and customer satisfaction [39][98] - The company is focused on reducing working capital and has achieved the highest Q1 operating free cash flow in nine years [32] Q&A Session Summary Question: What role will pricing play in tariff mitigation efforts? - Management indicated that pricing will remain stable through May, as raising prices in a recessionary environment is challenging [56] Question: Where does the company stand in terms of inventory cleanup? - Management believes they are in the later innings of the inventory cleanup process, with improvements noted across the industry [61] Question: What is the expected annualized impact from tariffs in 2026? - Management refrained from providing specific estimates for 2026, focusing instead on current year impacts and mitigation efforts [70] Question: How is the company planning shipment levels in light of retail demand? - The company plans to ship lower than retail to continue reducing dealer inventory, adjusting as market conditions evolve [102][104] Question: What actions are being taken to preserve cash? - Management is focused on cash preservation, reviewing CapEx budgets, and maintaining liquidity through discussions with lending partners [78][84]

Core Insights - Polaris Inc reported a revenue of $1.54 billion for the quarter ended March 2025, reflecting a year-over-year decline of 11.6% and an EPS of -$0.90 compared to $0.23 a year ago, with a revenue surprise of +1.67% and an EPS surprise of +1.10% [1] Financial Performance - Revenue breakdown includes Marine sales of $115.40 million, down 6.6% year-over-year, On-Road sales of $221.80 million, down 20%, and Off-Road sales of $1.20 billion, down 10.3% [4] - Gross profit for Marine was $14.30 million, below the estimate of $19.15 million, Corporate gross profit was $3.60 million versus an estimate of $14.05 million, Off-Road gross profit was $191.40 million, exceeding the estimate of $183.52 million, and On-Road gross profit was $35.70 million, below the estimate of $52.73 million [4] Stock Performance - Shares of Polaris Inc have returned -17.6% over the past month, compared to the Zacks S&P 500 composite's -0.8% change, with a current Zacks Rank of 3 (Hold), indicating potential performance in line with the broader market [3]

Company Performance - Polaris Inc reported a quarterly loss of $0.90 per share, slightly better than the Zacks Consensus Estimate of a loss of $0.91, compared to earnings of $0.23 per share a year ago, indicating an earnings surprise of 1.10% [1] - The company posted revenues of $1.54 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.67%, but down from $1.74 billion in the same quarter last year [2] - Over the last four quarters, Polaris has exceeded consensus EPS estimates two times and topped revenue estimates twice [2] Stock Performance - Polaris Inc shares have declined approximately 41.4% since the beginning of the year, contrasting with the S&P 500's decline of 6% [3] - The current Zacks Rank for Polaris Inc is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The consensus EPS estimate for the upcoming quarter is $0.63 on revenues of $1.83 billion, and for the current fiscal year, it is also $0.63 on revenues of $6.83 billion [7] - The outlook for the Automotive - Domestic industry, to which Polaris belongs, is currently in the bottom 19% of over 250 Zacks industries, suggesting potential challenges ahead [8]

Group 1 - United Airlines has reopened its Polaris lounge in Chicago, which is now 50% larger than before, featuring Crate & Barrel furnishings [1] - The lounge spans 25,000 square feet, located in Terminal 1 at Chicago O'Hare International Airport, with seating for 350 passengers and additional amenities [1] - The lounge includes six additional bathrooms, a second "speakeasy-style" bar, and 50 seats designated for sit-down dining [1] Group 2 - The first Polaris lounge was opened by United in 2016, coinciding with the launch of its long-haul, business-class cabin of the same name [2] - The Polaris lounge is exclusive to customers flying internationally in the Polaris cabin, establishing a two-tiered lounge system that has been adopted by other airlines like American Airlines and Delta Air Lines [2]

First Quarter 2025 Earnings Results April 29, 2025 FINANCIAL AND OPERATIONAL HIGHLIGHTS | (in millions, except per share data) | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | Quarter ended March 31, 2025 | | Reported | YOY % Chg. | | Adjusted* | YOY % Chg. | | Sales | $ | 1,535.8 | (12)% | $ | 1,536.3 | (12)% | | Gross profit margin | | 16.0 % | -307 bps | | 16.6 % | -242 bps | | Total operating expenses | $ | 303.2 | (3)% | | | | | Net loss attributable to Polaris | $ | (66.8) | NM | $ | (51.1) ...