Garrick Johnson

Gerrick Johnson asked about the strong growth in Brunswick's propulsion segment, particularly the 26% increase in outboard sales compared to the 11% growth in the boat business, and sought clarification on the drivers of OEM sales, distinguishing between growth from existing customers and new wins.

Answer

Chairman and CEO David Foulkes explained that Mercury is gaining share in Europe, signing multi-year (some five-year) exclusive agreements with large and fast-growing OEMs, indicating trust in Mercury's leadership and product plans. He mentioned hiring 60 new Mercury engineers in 2025 and having 5 new outboard programs. CFO Ryan Gwillim added that engine pipelines are at historical lean levels, with mid-20,000 engines taken out in the US in 2024, leading to strong OEM demand.

Garrick Johnson requested explicit 2026 top-line guidance for the Off-Road, On-Road, and Marine segments. He also asked about the anticipated impact of small business incentives, such as Bonus Depreciation, on the utility segment.

Answer

Bob Mack (CFO, Polaris Inc.) stated that segment-specific guidance would not be provided yet due to the complexity of Indian's exit and potential segment reevaluation in Q1 2026, with updates expected later. Michael Speetzen (CEO, Polaris Inc.) added that updates would follow the Indian transaction's closing. Speetzen believes small business incentives are largely factored into the expected strength of the utility segment. He has not assumed a significant uptick in the recreational side from higher tax returns, as consumers might prioritize deleveraging. Mack reiterated a cautious view on recreation, despite potential for COVID-era buyers to re-enter the market.

Gerrick Johnson requested explicit top-line guidance for Polaris's three segments (off-road, on-road, marine) for 2026, similar to past disclosures. He also asked about the anticipated impact on the utility segment from various incentives for small businesses, construction, farmers, and ranchers, such as Bonus Depreciation, in 2026.

Answer

CFO Bob Mack stated that segment-specific guidance would not be provided immediately due to the complexity of the Indian Motorcycle separation and ongoing segment reevaluation. He indicated updates would be shared on the Q1 call or at a future conference. CEO Mike Speetzen added that guidance would be updated once the Indian transaction closes, along with new segmentation details. Speetzen explained that these incentives are expected to sustain the strength of the utility segment, alongside product innovation. However, Polaris has not assumed a significant uptick in the recreational segment from higher tax returns, as consumer spending on discretionary items remains uncertain. Mack reiterated that they are not baking in a significant rebound from COVID-era buyers for recreational products.