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 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]

Financial Data and Key Metrics Changes - In Q2 2025, sales decreased by 6% due to 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][20] - Free cash flow generated was approximately $290 million, marking a strong performance [19][25] Business Line Data and Key Metrics Changes - Off-road sales declined by 8%, driven by lower whole goods volume and increased promotions [21] - Marine sales increased by 16%, supported by new boat shipments, particularly the entry-level Bennington pontoon [25] - On-road sales were down 1%, with Indian motorcycles showing mid-single-digit growth [24][25] Market Data and Key Metrics Changes - Retail was flat year over year, with growth in Ranger crossover and Indian motorcycles [11][12] - Dealer inventory levels improved, with Polaris maintaining DSOs around 110 days, below historical norms [23][24] - The company gained market share across all segments, including ORV, despite aggressive promotions from competitors [12][13] Company Strategy and Development Direction - The company is focused on innovation and operational efficiencies, targeting $40 million in operational efficiencies for 2025 [9][35] - A new product, the Polaris Ranger 500, is being launched to capture a significant portion of the utility vehicle market [31][32] - 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 expressed confidence in navigating current challenges and positioning for long-term success despite macroeconomic uncertainties [10][29] - The company is monitoring tariff developments closely and will reevaluate guidance once there is greater clarity [10][11] - Management noted that while the macroeconomic environment remains uncertain, disciplined execution and strong cash flow generation position the company well [29][30] Other Important Information - The company recognized a non-cash goodwill impairment charge related to the On Road segment due to ongoing industry conditions [22] - The company has approximately $1 billion of liquidity available through its revolving credit facility [27] Q&A Session All Questions and Answers Question: How is the company preparing for potential changes in USMCA? - The company is aware of potential renegotiations and is working to reduce sourcing from China while increasing manufacturing in the U.S. and Mexico to align with USMCA [38][40] Question: Can the company win at lower price points given current trade policies? - The company believes it can maintain margins on the new Ranger 500, which is priced competitively and expected to attract new customers [47][49] Question: What is the expected annualized tariff impact next year? - The company estimates an annualized tariff impact of around $230 million, which could be reduced further through ongoing mitigation efforts [56][58] 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 [70][72] Question: What factors are driving share gains in ORV? - Share gains are attributed to strong product offerings and improved inventory levels among competitors, allowing the company to capitalize on its innovative products [109]

Core Insights - Polaris Inc reported revenue of $1.85 billion for the quarter ended June 2025, a decrease of 5.5% year-over-year, but exceeded the Zacks Consensus Estimate of $1.74 billion by 6.39% [1] - The company's EPS was $0.40, significantly lower than $1.38 in the same quarter last year, but represented a surprise of 700% compared to the consensus estimate of $0.05 [1] Financial Performance Metrics - Polaris Inc's stock has returned +21.7% over the past month, outperforming the Zacks S&P 500 composite's +3.6% change, and currently holds a Zacks Rank 2 (Buy) [3] - Marine sales reached $155.3 million, exceeding the average estimate of $121.46 million by analysts, marking a year-over-year increase of 15.8% [4] - On-Road sales were reported at $289 million, slightly below the average estimate of $264.9 million, reflecting a year-over-year decline of 1.5% [4] - Off-Road sales totaled $1.41 billion, surpassing the average estimate of $1.35 billion, but showed a year-over-year decrease of 8.2% [4] - Gross profit for Marine was $26.6 million, significantly higher than the estimated $16.73 million [4] - Corporate gross profit was reported at -$11.6 million, falling short of the estimated $9.95 million [4] - Off-Road gross profit was $288.2 million, exceeding the average estimate of $266.84 million [4] - On-Road gross profit was $56 million, above the estimated $48.4 million [4]

Financial Performance - Adjusted sales were $1848 million, a 6% year-over-year increase[9] - Adjusted gross profit margin was 19.5%, up 232 bps year-over-year[9] - Adjusted EPS was $0.40, a 71% year-over-year increase[9] - The company generated approximately $290 million in free cash flow in Q2[52] Segment Performance - Off-Road Vehicle (ORV) North America retail sales increased by 1% year-over-year[33] - On Road North America Indian Motorcycle retail sales increased by low-double digits % year-over-year[40] - Marine sales increased by 16% year-over-year[42] Tariff Impact - The updated estimate for the 2025 tariff impact is $120-$130 million[19] - The company aims to reduce China spending to the U S by approximately 35% by year-end[22] Inventory and Outlook - Dealer inventory is down 13% year-over-year and down 16% excluding Snow and Youth[12] - Third quarter sales are expected to be between $16 billion to $18 billion[53]

分组1 - Polaris Inc reported quarterly earnings of $0.4 per share, exceeding the Zacks Consensus Estimate of $0.05 per share, but down from $1.38 per share a year ago, representing an earnings surprise of +700.00% [1] - The company posted revenues of $1.85 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 6.39%, although this is a decrease from year-ago revenues of $1.96 billion [2] - Polaris Inc has surpassed consensus EPS estimates three times over the last four quarters and has topped consensus revenue estimates three times as well [2] 分组2 - The stock has underperformed the market, losing about 14.1% since the beginning of the year compared to the S&P 500's gain of 8.6% [3] - The company's earnings outlook, including current consensus earnings expectations for upcoming quarters, will be crucial for investors [4] - The estimate revisions trend for Polaris Inc was favorable ahead of the earnings release, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] 分组3 - Current consensus EPS estimate for the coming quarter is -$0.20 on revenues of $1.66 billion, and -$0.97 on revenues of $6.75 billion for the current fiscal year [7] - The Automotive - Domestic industry, to which Polaris Inc belongs, is currently in the bottom 32% of Zacks industries, which may impact stock performance [8]

Core Insights - Polaris reported Q2 fiscal 2025 non-GAAP revenue of $1,847.9 million, exceeding analyst estimates of $1,710.2 million, while non-GAAP EPS was $0.40, significantly higher than the consensus of close to zero but down 71% year-over-year [1][2] - The company faced weaker profitability with shrinking margins attributed to higher promotional costs and a challenging product mix, despite management's claims of operational discipline and market share gains [1][5] Financial Performance - Non-GAAP EPS for Q2 2025 was $0.40, compared to an estimate of $0.00 and $1.38 in Q2 2024, reflecting a 71% decline [2] - Non-GAAP revenue decreased by 5.8% year-over-year from $1,961.2 million in Q2 2024 [2] - Adjusted EBITDA margin fell to 6.4% from 10.1% in Q2 2024, a decline of 3.7 percentage points [2][8] - Off Road revenue was $1,408.4 million, down 8.2% from the previous year, while On Road revenue decreased by 1.5% to $289.0 million; Marine revenue grew by 15.8% to $155.3 million [2][6] Business Overview - Polaris specializes in powersports equipment, including off-road vehicles, motorcycles, and marine products, supported by a distribution network of over 2,500 dealers in North America and more than 1,500 internationally [3] Strategic Focus - The company's strategy emphasizes continuous product innovation, maintaining market share leadership, leveraging its distribution network, and diversifying revenue streams across its segments [4] Market Dynamics - Polaris achieved better-than-expected revenue and earnings despite a 6% decline in total sales year-over-year, with retail market share gains reported in core categories [5] - The Off Road segment contributed 76% of revenue but experienced an 8% decline due to reduced volumes and increased promotional activity [6] Operational Challenges - The Marine segment was the only major segment to post revenue growth, increasing by 16%, although profitability decreased due to a less favorable mix of boat types sold and rising operational costs [7] - The adjusted EBITDA margin dropped significantly, and the company recorded a GAAP net loss of $79.3 million compared to a net income of $68.7 million in Q2 2024 [8] Regulatory Environment - Ongoing challenges from tariffs and trade policies are significant, with expected tariff costs for 2025 projected to be less than $225 million, primarily deferred until late 2025 or into 2026 [9] - The company is diversifying its supplier base, aiming to shift approximately 30% of parts sourcing out of China by the end of 2025 to mitigate tariff impacts [9] Future Outlook - Polaris has withheld full fiscal 2025 revenue and earnings guidance due to uncertainties related to tariffs and demand shifts, but has provided a Q3 2025 sales outlook of $1.6 billion to $1.8 billion [10] - The company reported year-to-date operating cash flow of $403.5 million and adjusted free cash flow of $343.8 million for the first half of 2025, ending the quarter with $324.3 million in cash [11]

Core Viewpoint - Polaris Inc. reported its second quarter 2025 financial results, highlighting its ongoing leadership in the powersports industry and commitment to product innovation and customer experience [1]. Financial Results - The financial results for the second quarter of 2025 were released and are available on the Company's Investor Relations website [1]. - The earnings release will be furnished with the Securities and Exchange Commission on a Form 8-K [1]. Conference Call and Webcast - A conference call with analysts and investors is scheduled for today at 9:00 a.m. CT, providing an opportunity for further discussion on the financial results [2]. - Access to the call and webcast can be made through the Webcast link on the Company's website or by dialing specific numbers for U.S. and international participants [2]. Company Overview - Polaris Inc. is recognized as a global leader in the powersports sector, with a history dating back to 1954 [3]. - The Company offers a diverse range of high-quality products, including off-road vehicles, snowmobiles, motorcycles, and boats, serving nearly 100 countries worldwide [3].

Second Quarter 2025 Earnings Results July 29, 2025 FINANCIAL AND OPERATIONAL HIGHLIGHTS KEY FINANCIAL DATA | (in millions, except per share data) | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | Quarter ended June 30, 2025 | | Reported | YOY % Chg. | | Adjusted* | YOY % Chg. | | Sales | $ | 1,852.7 | (6)% | $ | 1,847.9 | (6)% | | Gross profit margin | | 19.4 % | -223 bps | | 19.5 % | -232 bps | | Total operating expenses | $ | 394.9 | 20% | | | | | Net (loss) income attributable to Polaris | $ | ...