Joseph Altobello • Raymond James Financial, Inc.

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CFO Mike McMullen confirmed encouraging Q3-to-date trends and stated that holding the 15-20% full-year international growth outlook implies a return to strong growth rates. He dismissed concerns about the 'Other' category, explaining that its fluctuations are due to minor factors like merchandising and freight accounting, not a reflection of overall brand health or engagement.

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CFO Michael McMullen attributed a 300 basis point impact on growth directly to supply disruption, with the guidance range accounting for potential consumer softness. Executive Matthew Reintjes did not comment on competitors but stressed that YETI's multi-year supply chain diversification project, initiated in 2018, positions the company strongly for 2026 and beyond.

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President & CEO Chip Brewer declined to provide new long-range margin guidance for the legacy business but emphasized its strong track record and recent margin initiatives. He clarified that the CEO's departure delays a potential spin-off, making it impractical for 2025, but does not make it less likely as a strategic option. He deferred updating on the potential post-spin balance sheet due to the timing shift.

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CFO Brian Lynch explained that significant incremental costs are not anticipated for a standalone Topgolf, allowing cost reductions to proceed. President and CEO Chip Brewer clarified that the company's guidance includes the net impact of tariffs but does not specify the exact portion that is mitigated versus absorbed.

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Oliver Brewer, President and CEO, responded that there have been no negative structural changes to the core business's profitability. He identified foreign exchange as the primary driver of the variance compared to 2019, stating that on an organic basis, excluding FX and other one-time headwinds, EBITDA margin is forecast to improve. He also clarified that while specific cash flow guidance was not provided by segment, the key components were available in the earnings presentation.

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President and CEO Chip Brewer stated the wide Q4 guidance range is primarily due to the potential for adverse weather in December, a critical month for the business. Regarding the separation, he confirmed the company is 'fully engaged' in evaluating both a spin and a sale, with a potential spin targeted for mid-next year as the earliest possible date.

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CEO Colleen Keating explained that churn generally moderates around 12 weeks post-rollout, but noted this was a unique nationwide launch. CFO Jay Stasz stated the Q2 comp was 70% rate-driven and would likely remain skewed toward rate in Q3, with long-term guidance to be provided at the upcoming Investor Day.

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CFO Jay Stasz responded that development doesn't turn 'on a dime' but franchisees are engaged with the new model. He explained the delta between total openings and franchisee placements is partly due to corporate-funded builds in Spain, which are not counted as placements. He also stated the vast majority of franchisees are on track with build obligations. CEO Colleen Keating added that tight real estate availability remains a factor, and the company is partnering with franchisees to find sites.

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CEO Colleen Keating noted that the new growth model and equipment mix shift have already reduced costs, and they continue to seek further savings, such as a smaller front desk design, without degrading the member experience. CFO Tom Fitzgerald added that the model's strength is evidenced by outside capital investing in the system. He declined to comment on the specific performance of the intra-quarter October sale.

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EVP & CFO Lillian Etzkorn stated the main reason for the increased tariff impact was the U.S. government finalizing China tariffs at 30%, higher than the 20% previously assumed. She affirmed that annualizing the current impact is a fair go-forward estimate and expressed confidence in mitigation plans. President and CEO Jason Lippert confirmed there was no material sales impact from the timing of the model year changeover in the quarter.

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Executive Lillian Etzkorn confirmed the 180 basis point impact is a partial-year figure and represents a scenario with no mitigation, meaning a full-year impact would be higher. CEO Jason Lippert added that the company believes it has already addressed most of this initial impact through mitigation efforts. He suggested that price increases passed to consumers could be in the 3% to 9% range, though this could be offset by OEM decontenting and other levers.

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CFO Lillian Etzkorn confirmed the margin drivers are 25% incremental margins on revenue and targeted cost reductions, while stating the team is working to mitigate the potential 50 basis point headwind from China tariffs. CEO Jason Lippert addressed the retail outlook, stating that while they have been conservative, they can make a case for the higher end of their guidance range ($3.45 to $3.60 million units) and feel bullish about landing in the mid-to-high end of that spectrum.

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President - RV, Jeffrey Rodino, explained the RV shipment slowdown is a typical seasonal pattern, whereas Marine has upside potential due to significant inventory destocking in the first half. CFO Andrew Roeder confirmed the operating cash flow guidance reduction was solely due to the legal settlement payment.

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CFO Andy Roeder confirmed the operating margin guidance change was primarily driven by reduced volume assumptions, particularly the removal of 30,000 RV units and 17,000 marine units from the forecast, with tariff impacts already baked in. CEO Andy L. Nemeth and President, RV, Jeff Rodino added that the Q1 RV inventory build was a modest and disciplined seasonal restock, with OEMs carefully managing production to align with retail trends.

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CEO Andy L. Nemeth explained that the company intentionally carried more inventory, primarily liquid raw materials in the RV sector, into Q1 as a slight pull-forward to support anticipated demand. President, RV, Jeffrey Rodino added that the RV mix in Q1 is expected to be similar to Q4, with potential for a shift back to higher-end products later in the year depending on retail trends.

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CFO Jonathan Root attributed the improved HDFS profitability to stabilized used vehicle values, strong dealer auction participation, and favorable repossession rates. CEO Jochen Zeitz added that growth in the used motorcycle business was also a factor. Root projected normalized annual HDFS operating income to be approximately $240 million to $250 million.

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CFO Jonathan Root agreed that unlocking shareholder value is a fair assessment of the motivation. CEO Jochen Zeitz added that evaluating HDFS has been part of the Hardwire strategy for years and is not a new initiative. Regarding his retirement, Zeitz stated the process is ongoing but could not provide a specific timeline, as it is at the discretion of the Board.

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Chief Financial Officer Jonathan Root attributed the Q4 margin pressure to production down days for inventory management, retooling costs for the new Softail models, and volume deleverage. Chief Executive Officer Jochen Zeitz addressed the retail outlook, explaining that the market slowdown in H2 2024 is expected to create a more favorable comparison in H2 2025. He also emphasized the multi-year sales potential of the new Touring platform, noting that 95% of the existing Touring customer base has yet to upgrade.

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CFO Jonathan Root reiterated the goal of aligning full-year wholesale and retail units to position dealers for 2025. CEO Jochen Zeitz provided a key clarification, noting that the quality of the year-end inventory is much higher as it features the new touring platform, unlike the prior year which carried over an older platform. He declined to comment on October's intra-quarter performance.

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CEO Michael Speetzen stated that retail has begun to stabilize, with the ORV business (excluding youth and snow) showing growth through Q2 and into July, led by the utility segment. He noted that while promotions have eased slightly, he does not expect a significant reduction as consumers still seek deals, and one competitor continues to have high inventory levels.

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CEO Mike Speetzen stated that pricing is not an immediate relief valve due to the inelastic buyer and recessionary powersports environment. He emphasized internal mitigation through supply chain adjustments, noting a plan to increase non-Chinese sourced parts from 15% to 30% in 2025. Speetzen believes the inventory cleanup is in the "later innings," with some competitors still holding 2x Polaris's days sales outstanding (DSO). He expressed confidence in regaining share once inventory normalizes, citing strong new products and customer loyalty, though repurchase is currently deferred due to economic uncertainty.

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CEO Mike Speetzen stated that Polaris expects the overall industry to be down low-single digits in 2025, driven by weakness in motorcycles, marine, and snow, with hopes for improvement in the back half. Regarding tariffs, he noted the current impact is $60-$70 million and detailed the company's exposure and ongoing supply chain diversification efforts away from China, while avoiding speculation on future policy changes.

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CEO Mike Speetzen confirmed that market share was impacted by competitors, primarily Japanese OEMs, offering deep discounts (up to $5,000) to clear aged, noncurrent inventory, a promotional level Polaris chose not to match. CFO Robert Mack explained that Q4 gross margin is supported by a favorable product mix, including snowmobiles and higher-optioned boats, and a significant year-over-year benefit from a non-repeating $20+ million warranty expense that occurred in Q4 2023.

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CEO Brett McGill and CFO Mike McLamb stated that while they are actively promotional, there was no material increase in promotions in July that would account for the sales improvement. McGill explained that the current environment is a 'buyer's market' driven by broad economic uncertainty affecting customers, which makes promotional activity necessary to motivate purchases.

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Executive Michael McLamb noted that the industry is making progress on aged inventory due to reduced builder production and expects levels to normalize by summer. Executive William McGill added that future promotions will aim to stimulate demand amid uncertainty. Regarding April, McGill described a consumer pause early in the month due to tariff news, with a slight pickup in traffic later. McLamb highlighted that online engagement remains very high.

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Executive Michael McLamb stated that the company still aims for SG&A as a percentage of revenue to approximate 2023 levels, despite inflationary pressures. He noted that while they are mindful of potential future insurance rate hikes due to recent storms, they have not yet seen material increases for boat purchasers or the company's own properties. McLamb also confirmed the full-year tax rate guidance remains at 26.5%, as the Q1 benefit of approximately $0.12 per share was not deemed material enough to adjust the annual outlook at this time.

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CEO Bill McGill and CFO Michael McLamb confirmed that while all segments are under pressure, new products and premium brands are performing better. McLamb projected consolidated margins in the low 30s for fiscal 2025, potentially slightly below 2024, with pressure lasting through the winter. He also stated that with flattish comps, inventory dollars are expected to be lower year-over-year by the end of fiscal 2025.

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CEO Michael Happe confirmed that improving the product value proposition is a key long-term goal for the Winnebago Motorhome brand, though he noted that competitive discounting remains necessary in the current market. Regarding recent demand, Happe stated that while June retail sales were still down year-over-year, the trend was stable to slightly better than what the company experienced in May.

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President and CEO Michael Happe explained that the potential impact of tariffs is already incorporated into the new guidance range. He noted that the effect in fiscal 2025 would be relatively limited due to timing, existing inventory, and ongoing supplier negotiations. Happe declined to specify future pricing actions for competitive reasons, stating they would be handled on a brand-by-brand basis.

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CFO Bryan Hughes acknowledged that retail lending rates have not yet declined but noted that recent positive retail trends are occurring within this environment. He confirmed hearing anecdotal evidence of negative equity on trade-ins but stated that dealers and OEMs are finding ways to help facilitate those transactions, so it is not a prohibitive factor.

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President and CEO Michael Happe explained the decision to provide guidance was a deliberate move to offer investors better clarity. SVP and CFO Bryan Hughes detailed that the EPS range is primarily driven by the RV wholesale shipment forecast ($320k at the low end, $350k at the high end) and incorporates various scenarios for margin, inflation, and market share, including the new Grand Design motorhome.

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CFO Sean Sullivan explained that since over 70% of the $75 million tariff impact is from China, a rate reduction to 50% would decrease that portion to roughly one-third of its current estimate. President and CEO David Maher added that the slow start in Asia was weather-related, with a recovery in March and April. He noted the ongoing, expected correction in Korea's 'super-premium' apparel market, while equipment and gear trends remain positive.

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CEO David Maher and CFO Sean Sullivan explained that the margin improvement was driven by strong performance in the Golf Equipment segment and a more normalized supply chain. Regarding 2025 investments, they noted some are outsized for the year, like the multi-year global ERP implementation and the build-out of the digital and fitting networks, which should normalize in future years. They expect these investments to lead to expanding gross margins in 2025.

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CEO Philip Singleton noted that April results were positive, with unit and dollar sales up slightly year-over-year, and early May trends were also encouraging. Regarding used boat margins, Singleton and executive Jack Ezzell attributed the softness to a shift in model mix, including more brokerage and consignment sales, and a strategic decision to be more aggressive on pricing to encourage trade-ins, which they view as a positive long-term tailwind.

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An executive, Jack Ezzell, estimated the revenue impact was in the "$30 million plus range." He explained that it is difficult to predict the timing of sales recovery, as customers focus on rebuilding homes and businesses first. Ezzell noted that while some recovery is expected in the back half of fiscal 2025, a full rebound can sometimes take up to 18 months post-hurricane.

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CFO Mark Scheiwer and CEO James Hagedorn responded. They did not quantify the sales shift but noted that with daily shipments of $30-$35 million, a few days of delay can easily move sales between quarters, and emphasized that strong POS momentum continued into Q3. On elasticity, Hagedorn argued that the company is now more effectively driving the category through a rebuilt, more aggressive marketing and promotional model. This strategy, funded by the 'Transformation' cost-out program, makes the business more resilient and better able to stimulate demand than in the past.

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CEO James Hagedorn clarified he is not abandoning future pricing as a lever but that it is not viable 'at this time.' CFO Matt Garth detailed the margin recovery path, noting 650 of 900 basis points will be recovered by FY25, with the rest coming from supply chain savings and other optimizations. Regarding capital allocation, he stated that as the company approaches a low-3x leverage ratio, it can pivot from debt paydown to share repurchases, potentially within 18 months.

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CEO Jose Boisjoli confirmed that ORV inventory is at a comfortable level, while Watercraft is on plan. Snowmobile inventory remains too high, and production will be managed cautiously to correct it. CFO Sebastien Martel clarified that the initial $4.50-$5.00 EPS outlook did not include the subsequent $40 million tariff headwind or the recent softening in consumer demand.

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CFO Sebastien Martel stated that the overall retail outlook was largely unchanged, with tweaks primarily on the seasonal side (Sea-Doo), and noted the P&A guidance remains the same, which is tied to retail. He confirmed promotional activity is up across the industry, including for snowmobiles and ORVs, and highlighted that some OEMs have also introduced new models with price reductions. He characterized the traditional marine business as significantly more promotional than powersports.

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CFO Bruce Beckman addressed the guidance, noting good visibility for Q3 from existing orders, with H2 growth heavily influenced by easing year-over-year comparisons. CEO Steven Menneto explained the G&A increase was driven by a difficult comparison to a low prior-year quarter, elevated legal fees detailed in SEC filings, and the inclusion of incentive compensation that was absent in the comparison period. He expects these expenses to moderate going forward.

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CEO Steven Menneto credited the strong performance of new, innovative products in the Malibu and Pursuit lines for the positive results. He agreed the easing promotional environment is partly seasonal but also reflects the company's healthy inventory position, while noting they will continue to monitor competitive activity.

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An executive, likely CFO Bruce Beckman, stated that growth is primarily due to easier comps, with Q1 facing the most difficult comparison. The company is keeping production low to avoid refilling the channel but has reactive capacity. CEO Steve Menneto confirmed the company's interest in the pontoon sector and other categories that fit its portfolio, noting they will entertain opportunities as they arise.

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