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- **Revenue Growth**: Q3 2025 sales $1.8 billion (+7% YoY), driven by ORV and Marine. North American retail up 9%.
- **Inventory Turnaround**: Dealer ORV inventory down 21% YoY, aged units reduced 60%.
- **Tariff Mitigation**: 2026 China-sourced COGS <5%, with $200 million tariff impact.
- **Strategic Sale**: Indian Motorcycle sale to generate $50M EBITDA and $1 EPS accretion.
- **Operational Efficiency**: $40M+ savings from lean manufacturing, $159M operating cash flow.
- **2026 Outlook**: Focus on inventory alignment, innovation, and tariff reduction.

**【CEO Summary Section】**
- Q3 2025 revenue reached $1.8 billion, up 7% YoY, driven by a richer mix of Off-Road Vehicles (ORV) and higher Marine shipments. North American retail sales rose 9%, with a 3-point market share gain in ORV.
- Dealer inventory improved significantly: ORV inventory down 21% YoY, with aged units reduced by 60% over 6 months. Dealer flooring expenses decreased by over 50% in some cases.
- Adjusted EBITDA margin under pressure due to tariffs and normalized incentive compensation, but operational efficiencies (e.g., lean manufacturing) contributed $40 million in savings.
- Announced sale of majority stake in Indian Motorcycle, expected to close in Q1 2026, with $50 million EBITDA accretion and $1 EPS benefit post-separation.
- Tariff mitigation efforts aim to reduce China-sourced COGS to <5% by 2027, down from 2024 levels.

**【CFO Financial Commentary】**
- Q3 2025 adjusted sales $1.8 billion (+7% YoY), driven by 8% growth in Off-Road segment and 20% PG&A sales. Marine sales surged 20% YoY.
- Gross profit margin benefited from mix and operational efficiencies, but $35 million in new tariffs and higher incentive comp weighed on EBITDA margin.
- Operating cash flow $159 million, free cash flow $142 million, reflecting strong cash generation and lean operations.
- Full year 2025 guidance: adjusted sales $6.9-7.1 billion, adjusted EPS loss of $0.05 (excluding tariffs, ~$1.10 EPS).
- Q4 2025 adjusted EPS expected at $0.05, with headwinds from tariffs (+$5 million vs. Q3), negative mix, and OpEx timing.

**【Q&A Key Highlights】**
- **ORV Performance**: 9% retail growth vs. industry low single digits, driven by RANGER 500 (80% new Polaris customers) and improved dealer inventory health. FAC program reduced non-current inventory without heavy promotions.
- **Tariff Outlook**: 2026 tariffs ~$200 million (vs. 2025 $90 million), with 80% China-sourced COGS reduction by 2027.
- **2026 Outlook**: Focus on dealer inventory alignment (build=ship=retail), innovation pipeline (e.g., RZR XP S, QX Bennington pontoon), and tariff mitigation.
- **Credit Trends**: Stable consumer credit quality, with FICO scores improving and subprime auto sector not impacting Polaris' subprime lending.
- **Indian Motorcycle Transaction**: Expected to unlock $50 million EBITDA and $1 EPS accretion, freeing resources for higher-margin growth opportunities.


Polaris Inc. (PII) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

PII

PII fundamentals

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