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This article first appeared on GuruFocus.

• Sales: $1.8 billion, up 7% year-over-year.

• North American Retail Growth: 9% increase, led by strong Off-Road performance.

• Dealer Inventory: Down 21% year-over-year.

• Adjusted EBITDA Margin: Under pressure due to increased tariffs and normalized incentive compensation.

• Adjusted EPS: $0.41, driven by strong mix and operational efficiencies.

• Operating Cash Flow: $159 million for the quarter.

• Free Cash Flow: Approximately $485 million year-to-date.

• Off-Road Sales Growth: 8%, supported by a richer mix of vehicles.

• Marine Sales Growth: 20%, driven by positive shipments of new boats.

• Gross Profit Margin: Impacted by $35 million in new tariffs.

• Full Year Sales Guidance: $6.9 billion to $7.1 billion.

• Full Year Adjusted EPS Guidance: Expected to be a loss of approximately $0.05.

Release Date: October 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

• Polaris Inc (NYSE:PII) reported strong third quarter results with sales reaching $1.8 billion, driven by improved retail and a solid mix of Off-Road vehicles.

• The company gained approximately 3 points of market share in the Off-Road Vehicle (ORV) segment, led by strong performance in the Polaris RANGER and crossover vehicles.

• Dealer inventory levels have improved significantly, with a 21% year-over-year reduction, leading to healthier inventory and lower flooring expenses for dealers.

• Polaris Inc (NYSE:PII) successfully executed operational efficiencies, exceeding their goal of $40 million in structural operational efficiencies for the year.

• The sale of a majority stake in Indian Motorcycle is expected to be accretive to adjusted EBITDA by approximately $50 million and to adjusted EPS by approximately $1, allowing Polaris to focus on high-margin growth opportunities.

• Adjusted EBITDA margin was under pressure due to increased tariffs and normalized incentive compensation.

• The company faced headwinds in the Youth segment due to a shift in production out of China, which is expected to continue into early Q4.

• Tariffs are expected to have a significant impact, with an anticipated $90 million hit in 2025, increasing to over $200 million in 2026.

• The On-Road segment experienced a decline in sales, driven by softness in the broader motorcycle market and within the Slingshot business.

• Fourth quarter adjusted EPS is expected to be lower than the third quarter due to increased tariffs, negative mix, and higher operating expenses.

Q: What drove the 9% growth in ORV retail and share gains in the quarter? A: Michael Speetzen, CEO, explained that the growth was due to right-sized inventory, a broad RANGER lineup, and significant quality improvements. The RANGER 500 attracted new customers, and the NorthStar rewards program enhanced dealer performance, contributing to the share gains.

Q: What are the expectations for fiscal 2026, considering the Indian Motorcycle deal and tariffs? A: Michael Speetzen, CEO, noted that the Indian Motorcycle deal will significantly impact revenue but add $50 million in EBITDA and $1 in EPS. Tariffs are expected to be just over $200 million, but mitigation efforts are underway. The company anticipates a flat industry with potential growth from shipping aligning with retail demand.

Q: Can you provide insights into the consumer profile for the RANGER 500? A: Michael Speetzen, CEO, stated that the RANGER 500 attracts new customers who previously couldn’t find an entry point into Polaris products. These customers often have small properties and are new to powersports, transitioning from alternatives like golf carts.

Q: How did the Factory Authorized Clearance (FAC) program impact demand, and what are the expectations for Q4? A: Michael Speetzen, CEO, mentioned that the FAC program successfully generated excitement without significant cost increases. It helped reduce noncurrent inventory, and October trends indicate continued strength in key areas like RANGER XD and XPEDITION, with Q4 retail expected to rise in low single digits.

Q: What are the key takeaways from 2025, excluding tariffs, and what lessons have been learned? A: Robert Mack, CFO, highlighted that promotions were heavier than expected, but mix and plant performance exceeded expectations. Operational execution improved significantly, with plants outperforming targets, indicating strong future potential for operational improvements.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.