Company Overview - Proactive is a publisher that provides fast, accessible, informative, and actionable business and finance news content to a global investment audience [2] - The news team operates from key finance and investing hubs including London, New York, Toronto, Vancouver, Sydney, and Perth [2] Market Focus - The company specializes in medium and small-cap markets while also covering blue-chip companies, commodities, and broader investment stories [3] - Proactive delivers news and insights across various sectors including biotech and pharma, mining and natural resources, battery metals, oil and gas, crypto, and emerging digital and EV technologies [3] Technology Adoption - Proactive is recognized for being a forward-looking technology adopter, utilizing decades of expertise and experience among its content creators [4] - The company employs automation and software tools, including generative AI, while ensuring that all content is edited and authored by humans [5]

Core Insights - Polaris-supported racer Mitch Guthrie Jr. achieved victory in the UTV category at the 2025 Las Vegas to Reno race, finishing second overall among all four-wheeled vehicles, showcasing the performance of the RZR Pro R Factory [1][2][5] Performance Highlights - The race featured extreme conditions with temperatures exceeding 100°F and speeds over 110 mph across challenging terrains, including graded gravel roads and rugged mountains [2][3] - Guthrie's total race time was 8:19:14, narrowly defeating Can-Am's Cody Bradbury by a margin of 9 seconds, marking one of the closest finishes in recent history [2][4] Vehicle Performance - The RZR Pro R Factory demonstrated exceptional durability and performance, allowing Guthrie to navigate the demanding course confidently, which was highlighted by Polaris' Director of Off-Road Motorsports [3][5] - The vehicle effectively handled various challenging terrains, absorbing impacts while maintaining control, which contributed to Guthrie's ability to push through technical sections that hindered other competitors [5][6] Future Competitions - Following this victory, the Polaris RZR Factory Racing team is preparing for the Baja 400, aiming for a strong performance to secure a spot in the prestigious Baja 1000 [6]

Core Insights - Applied Digital Corporation plans to break ground on Polaris Forge 2, a $3 billion, 280-megawatt AI Factory in North Dakota, with initial capacity expected in 2026 and full capacity by early 2027 [2][3][4] - The project aims to meet the surging demand for AI computing capacity from hyperscalers, enterprises, and research organizations, building on the success of the existing Polaris Forge 1 campus [3][4] - The new facility will occupy over 900 acres and is expected to create more than 200 full-time jobs, contributing to the local economy and community development [4][5][6] Company Developments - Polaris Forge 2 is seen as a strategic move for Applied Digital to enhance its leadership in high-performance AI infrastructure [4][7] - The company has secured power through Cass County Electric Cooperative, ensuring reliable energy supply for the new facility [5][6] - The expansion into Harwood is part of a broader commitment to invest in local communities and create long-term economic opportunities [7][8] Industry Context - North Dakota is emerging as a key destination for AI infrastructure due to its abundant energy resources, available land, and supportive business environment [3][6][8] - The demand for AI capacity is accelerating, indicating a growing market for high-performance computing solutions [3][4] - The project aligns with the trend of technological progress and community investment, positioning North Dakota favorably in the AI infrastructure landscape [6][7]

Financial Performance - Polaris Inc reported adjusted earnings of 40 cents per share, exceeding market estimates of a loss of 4 cents per share [1] - The company's quarterly sales reached $1.852 billion, surpassing expectations of $1.720 billion [1] - For the third quarter, Polaris anticipates sales between $1.600 billion and $1.800 billion, compared to estimates of $1.671 billion [1] Stock Market Reaction - Following the earnings announcement, Polaris shares increased by 7.8%, trading at $53.32 [1] Analyst Ratings and Price Targets - Baird analyst Craig Kennison maintained a Neutral rating and raised the price target from $46 to $55 [4] - RBC Capital analyst Sabahat Khan maintained a Sector Perform rating and increased the price target from $34 to $56 [4] - MO Capital analyst Tristan Thomas-Martin maintained a Market Perform rating and raised the price target from $33 to $52 [4]

Core Viewpoint - Polaris Inc (PII) has received an upgrade to a Zacks Rank 1 (Strong Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling pressure that affects stock prices [4]. Recent Performance and Outlook - Polaris Inc is projected to earn -$0.97 per share for the fiscal year ending December 2025, with no year-over-year change expected [8]. - Over the past three months, the Zacks Consensus Estimate for Polaris Inc has increased by 3.7%, reflecting a positive trend in earnings outlook [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Only the top 5% of Zacks-covered stocks receive a "Strong Buy" rating, indicating superior earnings estimate revisions and potential for market-beating returns [9][10].

Financial Performance - Polaris Inc. reported Q2 results on July 29, showcasing resilient financials despite a challenging macroeconomic environment [1] - The company's performance has raised confidence in a potential rebound in the recreational vehicle market [1] Market Context - The macroeconomic backdrop remains highly uncertain, contributing to ongoing challenges for the industry [1] - Despite the uncertainties, the financial results indicate a level of stability that could attract investor interest [1]

Part I FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201%20%E2%80%93%20Financial%20Statements) Polaris reported a significant net loss of $145.8 million for H1 2025, driven by lower sales and impairment charges Consolidated Financial Highlights (Six Months Ended June 30) | Financial Metric | 2025 (In millions) | 2024 (In millions) | Change | | :--- | :--- | :--- | :--- | | **Income Statement** | | | | | Sales | $3,388.5 | $3,697.6 | -8.4% | | Gross Profit | $604.2 | $754.3 | -19.9% | | Operating (Loss) Income | $(49.0) | $158.7 | NM | | Net (Loss) Income | $(145.8) | $72.8 | NM | | Diluted (Loss) Income Per Share | $(2.57) | $1.27 | NM | | **Balance Sheet (as of June 30)** | | | | | Total Assets | $5,388.0 | $5,525.2 (as of Dec 31, 2024) | -2.5% | | Total Liabilities | $4,194.1 | $4,224.7 (as of Dec 31, 2024) | -0.7% | | Total Equity | $1,189.4 | $1,294.1 (as of Dec 31, 2024) | -8.1% | | **Cash Flow Statement** | | | | | Net Cash from Operating Activities | $403.5 | $40.9 | +886.5% | | Net Cash Used for Investing Activities | $(59.7) | $(165.8) | -64.0% | | Net Cash Used for Financing Activities | $(328.9) | $87.4 (Provided) | NM | - The company recorded a **goodwill impairment charge of $52.6 million** related to the On Road reporting unit during Q2 2025, eliminating the entire goodwill balance for that segment[55](index=55&type=chunk)[58](index=58&type=chunk) - An **impairment of $49.4 million** was recorded on a strategic investment in a nonmarketable security, which was included in 'other expense (income), net'[28](index=28&type=chunk) - The company paid **dividends of $0.67 per share in Q2 2025**, an increase from $0.66 in Q2 2024, for a six-month total of $1.34 per share[17](index=17&type=chunk)[18](index=18&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202%20%E2%80%93%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the sales decline, impairment charges, and a recent credit facility amendment to gain covenant relief [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Q2 sales fell 6% and gross margin contracted, leading to a net loss driven by significant impairment charges Q2 2025 vs Q2 2024 Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Sales | $1,852.7M | $1,961.2M | -6% | | Gross Profit | $359.2M | $424.0M | -15% | | Gross Margin | 19.4% | 21.6% | -223 bps | | Operating (Loss) Income | $(12.9)M | $119.7M | NM | | Net (Loss) Income | $(79.3)M | $68.7M | NM | | Diluted EPS | $(1.39) | $1.21 | NM | - The sales decrease was composed of a **4% decline in volume and a 2% decline from product mix and price**, primarily due to lower ORV shipments and higher promotional costs[94](index=94&type=chunk) - A **goodwill impairment of $52.6M** and an **investment impairment of $49.4M** were the primary drivers of the operating loss and net loss for the quarter[90](index=90&type=chunk)[100](index=100&type=chunk)[103](index=103&type=chunk) [Segment Results](index=27&type=section&id=Segment%20Results) The Off Road and On Road segments saw sales declines, while the Marine segment grew, though margins fell across all segments Q2 2025 Segment Sales Performance | Segment | Q2 2025 Sales (M) | Q2 2024 Sales (M) | % Change | | :--- | :--- | :--- | :--- | | Off Road | $1,408.4 | $1,533.8 | -8% | | On Road | $289.0 | $293.3 | -1% | | Marine | $155.3 | $134.1 | +16% | | **Total** | **$1,852.7** | **$1,961.2** | **-6%** | - **Off Road**: Sales and gross profit decreased due to lower ORV shipments and higher promotional costs; **North America ORV dealer inventories were down 18%**[112](index=112&type=chunk)[117](index=117&type=chunk) - **On Road**: Sales decreased due to lower shipments in Europe, though **Indian Motorcycle retail sales in North America were up low-double digits**, outperforming the industry[114](index=114&type=chunk)[118](index=118&type=chunk) - **Marine**: Sales increased due to higher shipments, but gross profit margin decreased due to unfavorable product mix and higher operational costs[116](index=116&type=chunk)[119](index=119&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) Operating cash flow improved significantly due to working capital management, and a credit facility amendment provides covenant relief Cash Flow Summary (Six Months Ended June 30) | Activity | 2025 (In millions) | 2024 (In millions) | | :--- | :--- | :--- | | Operating | $403.5 | $40.9 | | Investing | $(59.7) | $(165.8) | | Financing | $(328.9) | $87.4 | - In June 2025, the company amended its credit facility to modify financial covenants for a **'Covenant Relief Period' lasting until June 30, 2026**, providing flexibility but limiting share repurchases[49](index=49&type=chunk)[52](index=52&type=chunk)[132](index=132&type=chunk) - The company **did not repurchase any shares** during the first six months of 2025; the remaining authorization under the share repurchase program is approximately **$1.11 billion**[61](index=61&type=chunk)[138](index=138&type=chunk) - As of June 30, 2025, **total financing obligations were $1.83 billion**, down from $2.07 billion at year-end 2024, after prepaying $350.0 million of senior notes[46](index=46&type=chunk)[131](index=131&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203%20%E2%80%93%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from inflation, foreign currency, and interest rates, with hedging strategies in place - The company is exposed to fluctuating commodity prices and expects a **neutral impact on gross profit margins for full-year 2025**, excluding tariffs[149](index=149&type=chunk) - Foreign exchange rate movements are expected to have a **negative impact on full-year net income in 2025**, though the company uses hedging contracts to mitigate risk[154](index=154&type=chunk) - The company manages interest rate risk on its **$1.2875 billion of variable-rate debt** through interest rate swaps[156](index=156&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204%20%E2%80%93%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and internal controls over financial reporting were effective as of June 30, 2025 - Management, including the CEO and CFO, concluded that the company's **disclosure controls and procedures were effective** as of the end of the quarter[158](index=158&type=chunk) - **No material changes** in internal control over financial reporting occurred during the quarter[159](index=159&type=chunk) Part II OTHER INFORMATION [Legal Proceedings](index=36&type=section&id=Item%201%20%E2%80%93%20Legal%20Proceedings) The company is involved in ongoing class action lawsuits regarding off-road vehicle safety features with an unknown potential loss - Polaris is a party to several **class action lawsuits** related to rollover protection structures on its off-road vehicles[161](index=161&type=chunk) - The company **cannot reasonably evaluate the likelihood of a loss** or estimate the range of possible loss from these legal proceedings[162](index=162&type=chunk) [Risk Factors](index=37&type=section&id=Item%201A%20%E2%80%93%20Risk%20Factors) A supplemental risk factor highlights the potential material negative impact of trade tariffs on profitability for fiscal 2025 - A supplemental risk factor was provided regarding the **adverse effects of trade matters and tariffs** on the company's business[163](index=163&type=chunk)[164](index=164&type=chunk) - The company is vulnerable to **increased costs and supply chain challenges** from tariffs on components and manufacturing in Mexico[164](index=164&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202%20%E2%80%93%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No common stock was repurchased in Q2 2025, with approximately $1.11 billion remaining under the share repurchase authorization Share Repurchases (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 1 – 30, 2025 | — | $ — | | May 1 – 31, 2025 | — | $ — | | June 1 – 30, 2025 | — | $ — | | **Total** | **—** | **$ —** | - As of June 30, 2025, the company was authorized to repurchase up to an additional **$1,109.3 million** of its common stock[166](index=166&type=chunk) [Other Information](index=37&type=section&id=Item%205%20%E2%80%93%20Other%20Information) No directors or officers adopted, modified, or terminated any Rule 10b5-1 trading arrangements during the quarter - **No directors or officers** adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter[167](index=167&type=chunk) [Exhibits](index=38&type=section&id=Item%206%20%E2%80%93%20Exhibits) Filed exhibits include an amendment to the credit agreement, amended joint venture agreements, and executive certifications - Key exhibits filed include **Amendment No. 9 to the Credit Agreement**, providing for the covenant relief[168](index=168&type=chunk) - **Certifications from the CEO and CFO** as required by the Sarbanes-Oxley Act were also filed[168](index=168&type=chunk)

Core Insights - Polaris Off Road has announced its 2026 off-road vehicle lineup, celebrating the 40th anniversary of its all-terrain vehicles (ATVs) and emphasizing its commitment to innovation and American engineering [1][3][34] - The new lineup includes various models designed to enhance rider experience and performance, catering to both work and recreational needs [1][3] Product Highlights - The 2026 RANGER 500 is introduced as a new utility vehicle starting at a U.S. MSRP of $9,999, aimed at a broader consumer base with its compact and practical design [2][17] - The Sportsman 570 Premium 40th Anniversary Edition is a limited release that features nostalgic design elements and modern performance enhancements [3][5] - The GENERAL lineup is recognized as the best-selling crossover side-by-side, featuring a 999cc engine and a 600-pound capacity dump box, with refreshed colors based on consumer feedback [7][8][10] - The Polaris XPEDITION offers adventure-ready features with a 114 HP engine and a refined interior experience, catering to riders seeking rugged versatility [11][12][15] - The RZR lineup continues to dominate the sport side-by-side market with advanced suspension technology and customizable features for enhanced performance [21][23][27] Youth Lineup - Polaris is committed to fostering the next generation of riders with its 2026 Youth lineup, which includes safety features like Helmet Aware Technology and customizable speed limits [28][29] - The lineup features vehicles tailored for young riders, such as the Outlaw 70 EFI and RZR 200 EFI, designed to provide a safe and empowering riding experience [30][31][32] Pricing and Availability - The 2026 Polaris vehicle lineup will begin shipping to dealers in August, with various models starting at different price points, including the RANGER lineup starting at $9,999 and the XPEDITION at $39,499 [6][10][16][20][27][32]

Core Insights - Polaris Off Road has launched the 2026 RANGER 500, a mid-size utility side-by-side vehicle designed to enhance outdoor chores and provide versatility for users [1][2] - The vehicle is positioned in the value segment, starting at a U.S. MSRP of $9,999, and aims to cater to the growing demand for outdoor tools as more people move to suburban and rural areas [2][6] Product Features - The RANGER 500 includes user-friendly controls, a powerful 28-horsepower engine, and a compact design that allows for easy navigation in tight spaces [5] - It features a dump box with a capacity to haul up to 300 pounds and a towing capacity of 1,500 pounds, making it suitable for various landscaping tasks [5] - The vehicle comes with 30 accessories for customization, enhancing its practicality for managing small properties [4][5] Market Positioning - The RANGER brand has been the top-selling utility side-by-side brand for 27 years, indicating strong market presence and consumer trust [2] - The introduction of the RANGER 500 is seen as an opportunity to expand the product lineup and meet the needs of first-time side-by-side owners [3][2] Company Background - Polaris Inc. has a long history in the powersports industry, founded in 1954, and offers a diverse range of products including off-road vehicles, motorcycles, and boats [7] - The company emphasizes innovation and customer service, providing a nationwide dealer network and comprehensive online resources for maintenance and support [5][7]

Financial Data and Key Metrics Changes - In Q2, sales decreased by 6%, reflecting the ongoing downturn in the power sports industry and increased promotions [7][20] - Adjusted EPS was $0.40, down year over year but above consensus expectations [9][21] - Free cash flow generated was approximately $290 million, marking a strong performance in cash generation [19][26] Business Line Data and Key Metrics Changes - Off-road sales declined by 8%, driven by lower whole goods volume and increased promotions [20][21] - Marine sales increased by 16%, supported by positive shipments of new boats, particularly the entry-level Bennington pontoon [25][100] - On-road sales were down 1%, with Indian motorcycles showing mid-single-digit growth [24][108] Market Data and Key Metrics Changes - Retail was flat year over year in Q2, with growth in Ranger crossover and Indian motorcycle segments [10][11] - Dealer inventory levels improved, with Polaris maintaining a DSO of around 110 days, well below historical norms [23][24] - The broader marine industry continues to face pressure from elevated interest rates and macroeconomic uncertainty [26][100] Company Strategy and Development Direction - The company is focused on innovation and operational efficiency, targeting $40 million in operational efficiencies for 2025 [9][38] - A new product, the Polaris Ranger 500, is being launched to capture a segment of customers looking for quality at a lower price point [33][34] - The company is actively working on a four-pronged tariff mitigation strategy to reduce exposure and maintain competitiveness [15][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertainty surrounding tariffs and consumer spending, which has led to the decision not to reinstate full-year guidance [9][10] - The company remains committed to navigating challenges and positioning itself for long-term success despite the macroeconomic environment [30][39] - There is optimism about emerging stronger from the current downturn, with a focus on cash preservation and operational efficiency [19][28] Other Important Information - The company has seen a significant reduction in expected tariff impacts, with gross tariff costs now estimated between $180 million to $200 million for the full year [15][29] - The company is targeting a 35% reduction in parts sourced from China by year-end, with nearly half of that already achieved [16][18] Q&A Session Summary Question: How is the company preparing for potential changes in USMCA? - Management is aware of the potential renegotiation of USMCA and is working to reduce sourcing from China while optimizing supply chains in the U.S. and Mexico [41][43] Question: Can the company win at lower price points given current trade policies? - The Ranger 500 is expected to have a better margin profile than its predecessor, and the company is confident in its ability to compete at lower price points [51][52] Question: What is the expected annualized tariff impact next year? - The company estimates an annualized tariff impact of around $230 million, with ongoing efforts to reduce this figure [61][62] Question: How is retail performing month to month? - Retail performance was stable throughout the quarter, with the utility segment holding up well, and management is optimistic about future sales as economic conditions stabilize [76][78] Question: What are the dynamics affecting promotional spending? - Promotional spending is expected to ease as inventory levels improve, but consumers are still looking for deals due to high interest rates [82][90]