Polaris(US:PII)2026-02-13 19:23Financial Performance - Total sales for 2025 were $7.2 billion, approximately flat compared to 2024, primarily due to decreased shipments and lower net pricing driven by higher promotional costs [155]. - Gross profit decreased by 7% to $1.4 billion in 2025, with gross profit as a percentage of sales dropping to 19.1% from 20.4% in 2024 [156]. - The full year net loss attributable to Polaris Inc. was $465.5 million, or $8.18 net loss per diluted share, compared to a net income of $110.8 million, or $1.95 per diluted share in 2024 [157]. - Adjusted EBITDA for 2025 was $410.2 million, a decrease of 35% from $635.4 million in 2024 [157]. - Operating expenses increased by 41% to $1.8 billion in 2025, primarily due to impairment charges related to the Indian Motorcycle business and increased general and administrative expenses [168]. - Total sales for 2025 were $7,152.0 million, a decrease of 0.3% compared to $7,175.4 million in 2024, and down 20% from $8,934.4 million in 2023 [176]. - Adjusted EBITDA for 2025 was $410.2 million, representing a margin of 5.7%, down from $635.4 million and 8.9% in 2024, and significantly lower than $1,020.9 million and 11.4% in 2023 [188]. - The company reported a net loss of $464.8 million in 2025, compared to a net income of $111.2 million in 2024 [188]. Sales and Segment Performance - Sales in the United States increased by 1% to $5.7 billion, accounting for 79% of total sales, while sales in Canada decreased by 6% [164]. - Off Road segment sales were approximately flat at $5,713.1 million in 2025, with a gross profit of $1,155.1 million, a decrease of 0.03% from 2024 [176][177]. - On Road segment sales decreased by 6% to $926.5 million in 2025, with a gross profit of $157.2 million, down 12% from 2024 [176][179]. - Marine segment sales increased by 7% to $512.4 million in 2025, with a gross profit of $72.5 million, a decrease of 10% from 2024 [176][180]. - Polaris North America utility unit retail sales were up mid-single digits percent, while recreation excluding youth unit retail sales were down high-single digits percent in 2025 [182]. Cash Flow and Financing - Cash provided by operating activities increased to $741.0 million in 2025, up $472.8 million from $268.2 million in 2024 [191][192]. - Cash used in investing activities decreased to $139.5 million in 2025, down from $270.9 million in 2024, due to reduced capital expenditures [191][193]. - Net cash used in financing activities increased to $693.0 million in 2025, primarily due to net repayments of $543.6 million compared to net borrowings of $165.8 million in 2024 [191][194]. - The company issued $500 million of 6.95% Senior Notes due 2029 in November 2023, receiving approximately $492 million in net proceeds [200]. - As of December 31, 2025, the company had $1.4 billion available on the Revolving Loan Facility, with $35.4 million in borrowings outstanding [196][197]. - The company’s debt to total capital ratio was 65% as of December 31, 2025, up from 62% in 2024 [202]. - Retail customer financing arrangements accounted for 30% of vehicles sold in the U.S. during 2025, with installment credit contracts totaling $1,436.3 million, a 3% decrease from 2024 [207]. - The company has outstanding letters of credit totaling $58.4 million as of December 31, 2025, primarily related to raw material purchase obligations [202]. Impairments and Liabilities - The company recorded a goodwill impairment charge of $52.6 million in Q2 2025 for the On Road reporting unit, leaving no remaining goodwill balance for that unit [219]. - Impairment charges of $17.5 million were recorded for an indefinite-lived brand/trade name in the On Road segment and $53.9 million in the Off Road segment due to changes in planned usage [223]. - The company recorded an accrued warranty liability of $135.5 million as of December 31, 2025, down from $162.8 million in 2024 [212]. Tax and Interest - The effective income tax rate for 2025 was 12.8%, down from 21.0% in 2024 [162]. - Interest expense decreased by 4% to $131.4 million in 2025, attributed to lower average debt levels [170]. - A 100 basis point change in interest rates would increase or decrease interest expense by approximately $1 million based on unhedged variable-rate debt [233]. Currency and Commodities - Total commodities had a neutral impact on gross profit margins for 2025 compared to 2024, but an unfavorable impact is expected for 2026 [225]. - A hypothetical 10% fluctuation of the U.S. dollar compared to the Euro impacts annual operating income by approximately $17 million, and a similar fluctuation with the Canadian dollar impacts it by approximately $41 million [229]. - The company expects foreign currencies to have a positive impact on net income in 2026 compared to 2025 [230]. - The company has entered into foreign currency hedging contracts to manage exposure, with notional amounts of $18.3 million for Australian Dollar and $127.6 million for Canadian Dollar [230]. Credit Facilities and Amendments - The company amended its credit facility in June 2025, modifying financial covenants during the Covenant Relief Period, including an interest coverage ratio of 2.50 to 1.00 for certain quarters [199]. - As of December 31, 2025, $35.4 million was outstanding on the Revolving Loan Facility and $475.0 million on the Term Loan Facility [233]. - In Q4 2025, goodwill was not impaired as the fair value of reporting units exceeded carrying value by over 10% [220].