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]