Financial Data and Key Metrics Changes - Sales for the third quarter were $1.8 billion, representing a 7% increase driven by stronger shipments and a solid mix of off-road vehicles [4][21] - Adjusted EBITDA margin was under pressure compared to last year due to increased tariffs and normalized incentive compensation [7][22] - Adjusted EPS came in at $0.41, influenced by a strong mix and operational efficiencies, partially offset by tariffs [8][22] - Operating cash flow for the quarter was $159 million, with year-to-date cash flow exceeding $560 million [22][25] Business Line Data and Key Metrics Changes - Off-road vehicle (ORV) sales rose 8%, supported by a richer mix of vehicles and strong commercial volume [22] - Marine sales increased by 20%, driven by positive shipments of new boats, including the new entry-level Bennington pontoon [24] - On-road sales were down 3%, impacted by ongoing softness in the motorcycle market [24] Market Data and Key Metrics Changes - North American retail rose 9%, leading to approximately 3 points of market share gain in ORV [5][22] - Dealer inventory decreased by 21% year over year, with aged units down approximately 60% relative to six months ago [6][23] - International sales grew by 2%, led by strength in Europe [21] Company Strategy and Development Direction - The company announced the sale of a majority stake in Indian Motorcycle to focus on core business areas with the greatest potential for profitable growth [4][16] - The strategy includes enhancing customer experience through rider-driven innovation and maintaining a strong dealer network [13][17] - The company is committed to reducing reliance on China for parts, aiming for an 80% reduction in China spend by 2027 [20][43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current economic environment and achieving strong earnings and returns for shareholders [4][8] - The company is closely monitoring consumer health indicators and expects sales to grow sequentially in Q4, despite anticipated headwinds from mix and operating expenses [8][28] - Management highlighted the importance of innovation and dealer engagement in maintaining market share and driving future growth [79][81] Other Important Information - The company expects the Indian Motorcycle transaction to be accretive to adjusted EBITDA by approximately $50 million and adjusted EPS by approximately $1 post-separation [18] - The gross tariff impacts for the year rose by $10 million since July, with an expected total impact of approximately $90 million [19][28] Q&A Session Summary Question: What drove ORV retail strength and share gains in the quarter? - Management attributed the strength to right-sized inventory, a broad product lineup, and improved quality leading to lower warranty costs [36][38] Question: Any early thoughts on fiscal 2026? - The Indian Motorcycle deal is expected to significantly impact revenue and EBITDA, with tariffs anticipated to increase costs in 2026 [40][42] Question: What is the consumer profile for the Ranger 500? - The Ranger 500 appeals to new customers, including those transitioning from other brands or looking for entry-level options [46][48] Question: Concerns about demand pull-forward from the FAC program? - Management indicated that the FAC program did not drive significant incremental spend and that retail trends remain strong [54][56] Question: What are the expectations for tariffs in 2026? - Tariffs are expected to exceed $200 million in 2026, with ongoing efforts to mitigate their impact [57][59]

Financial Data and Key Metrics Changes - Sales for the third quarter were $1.8 billion, representing a 7% increase driven by stronger shipments and a solid mix of off-road vehicles [4][18] - Adjusted EBITDA margin was under pressure compared to last year due to increased tariffs and normalized incentive compensation [6][20] - Adjusted EPS came in at $0.41, influenced by a strong mix and operational efficiencies, partially offset by tariffs [7][20] - Operating cash flow for the quarter was $159 million, with year-to-date cash flow exceeding $560 million [20][24] Business Line Data and Key Metrics Changes - Off-road vehicle (ORV) sales rose approximately 8%, supported by a richer mix of vehicles and strong commercial volume [20] - Marine sales increased by 20%, driven by positive shipments of new boats, including the new entry-level Bennington pontoon [22] - On-road sales were down 3%, impacted by ongoing softness in the motorcycle market [22] Market Data and Key Metrics Changes - North American retail rose 9%, led by strong off-road performance, resulting in a 3-point market share gain in ORV [5][21] - International sales grew by 2%, primarily driven by strength in Europe [18] Company Strategy and Development Direction - The company announced the sale of a majority stake in Indian Motorcycle to focus on core business areas with the greatest potential for profitable growth [4][14] - The company is committed to enhancing customer experience through rider-driven innovation and plans to invest in high-return opportunities [15][29] - The company aims to reduce its reliance on China for parts and components, targeting an 80% reduction in China spend by 2027 [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to navigate the current economic environment and deliver strong earnings and returns for shareholders [4][6] - The company is closely monitoring consumer health indicators and expects sales to grow sequentially in Q4, despite anticipated headwinds from mix and operating expenses [7][25] - Management indicated that the expected sale of Indian Motorcycle will free up resources for higher growth and margin opportunities [15][29] Other Important Information - Dealer inventory is down 21% year-over-year, with aged units in dealer inventory reduced by approximately 60% relative to six months ago [5][21] - The Polaris Factory Authorized Clearance program successfully engaged customers and drove increased dealership visits [8][49] Q&A Session Summary Question: What drove ORV retail strength and share gains in the quarter? - Management attributed the strength to right-sized inventory, a broad product lineup, and improved quality leading to lower warranty costs [32][33] Question: Any early thoughts on fiscal 2026? - The Indian Motorcycle deal is expected to have a significant impact, adding approximately $50 million in EBITDA and $1 in EPS, while tariffs are projected to increase costs [36][39] Question: What is the consumer profile for the Ranger 500? - The Ranger 500 appeals to new customers, including those who previously used golf carts or other brands, providing an entry point into the Polaris product line [41][43] Question: Concerns about demand pull-forward from the FAC program? - Management indicated that the FAC program did not drive significant incremental spend and that retail trends remain strong [48][50] Question: What are the margin drivers for Q4 and 2026? - Warranty costs are expected to remain favorable, while operational efficiencies and product mix will continue to be key drivers [69][71]

Financial Data and Key Metrics Changes - Net sales increased by 12.4% to $228.7 million, with unit volume rising by 12.8% to 1,431 units, driven primarily by increased unit volumes in the Malibu segment and favorable model mix across all segments [15][16] - Gross profit rose by 13.4% to $45.7 million, with gross margin as a percentage of sales increasing by 20 basis points to 20% [16] - Q3 GAAP net income surged by 119.4% to $13.2 million, while adjusted EBITDA increased by 16% to $28.3 million, with adjusted EBITDA margin rising by 40 basis points to 12.4% [17][18] - Non-GAAP adjusted fully distributed net income per share increased by 14.3% to $0.72 [18] Business Line Data and Key Metrics Changes - The Malibu and Axis brands accounted for approximately 52% of unit sales, while saltwater fishing represented 22.8%, and Cobalt made up the remaining 25.2% [15] - Consolidated net sales per unit decreased by 0.3% to $159,792, primarily due to an unfavorable segment mix [16] Market Data and Key Metrics Changes - Dealer inventories entering the selling season are healthy and well below last year's levels, with expectations to bring dealer inventories down to the mid-teens percentage [7][24] - Retail environment remains challenging due to elevated interest rates and macroeconomic uncertainty, affecting consumer sentiment and discretionary spending [7][20] Company Strategy and Development Direction - The company emphasizes innovation as a cornerstone of its long-term strategy, with nearly 40% of Malibu boat show unit sales driven by two premium models introduced this year [10] - The company is committed to maintaining dealer health and operational excellence while navigating current market conditions [12][19] - A balanced approach is maintained, focusing on dealer health, operational excellence, and continued innovation [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating current market conditions, highlighting a strong balance sheet and robust cash flow generation [13][19] - The company has recalibrated expectations for the upcoming selling season, now expecting retail markets to be down double digits for the full fiscal year [20] - Management does not expect tariffs to have a material impact on the cost structure for the remainder of fiscal 2025 [21] Other Important Information - Capital expenditures are expected to be tightened to $25 million to $30 million, with a modest reduction in share repurchases planned [19] - The company generated over $15 million in cash from operations during the quarter and finished Q3 with over $39 million in cash on hand [18][19] Q&A Session Summary Question: What would the goal be by June with respect to dealer inventory? - The company expects to bring dealer inventories down to the mid-teens percentage, below last year's levels [24][25] Question: Insights into customer behavior, particularly repeat buyers and first-time buyers? - Retail trends show repeat buyers, especially cash buyers, returning, while new buyers remain a small percentage of overall retail [28][29] Question: What are the observations regarding competitor promotional activity? - The company has maintained consistent promotional levels and has not had to elevate them significantly due to strong new product performance [33][34] Question: How is the saltwater segment performing? - There was an improvement in the saltwater segment, particularly in Florida, but it did not bounce back to growth [56][57] Question: What has changed in the cost structure leading to adjusted EBITDA pressure? - Adjustments were made to production expectations based on market conditions, impacting overall financial projections [63]

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]