Executive Summary

Q3 2025 delivered sales of $1.842B (+7% y/y) and adjusted EPS of $0.41, with strength in Off Road mix and higher-than-expected shipments; adjusted EBITDA margin was 7.6% despite tariff and incentive comp headwinds .
Management reintroduced FY 2025 guidance: adjusted sales $6.9B–$7.1B and adjusted EPS ≈ -$0.05, and guided Q4 2025 adjusted EPS ≈ $0.05; FY adjusted gross margin ~19% with tariffs a ~100 bps headwind .
Operational execution and dealer inventory alignment were notable positives: ORV retail +9%, ORV share +~3 pts; dealer inventory down ~21% y/y and aged units down ~60% vs six months ago .
Strategic catalyst: announced sale of a majority stake in Indian Motorcycle (expected close Q1 2026), accretive by ~$50M to adjusted EBITDA and ~$1.00 to adjusted EPS post-separation .

What Went Well and What Went Wrong

What Went Well

Off Road mix and innovation drove gains: ORV sales +8% y/y to $1.510B and gross margin +104 bps; North America ORV retail +9% vs industry up low-single digits . “We achieved meaningful market share gains in Off Road in the quarter” — CEO Mike Speetzen .
Execution and cash generation: Operating cash flow of $159M in Q3 and $562M YTD, supported by lean and working capital improvements; adjusted free cash flow YTD $485.5M .
Dealer channel health: Inventory down ~21% y/y; aged units down ~60% vs six months ago; alignment of build/ship/retail supports margin recovery when volumes normalize .

What Went Wrong

Tariff/incentive compensation pressure compressed profitability: adjusted gross margin -8 bps y/y to 20.7% and adjusted EBITDA margin -160 bps y/y; ~$35M Q3 tariff hit; sequential Q4 tariffs expected +$5M .
On Road softness and impairments: On Road sales -3% y/y and gross margin -83 bps; recorded a $42.3M property & equipment impairment in On Road (non-cash) .
Youth production transition and seasonal mix headwinds: Youth production shift out of China creates near-term headwinds; Q4 mix skew to snow/marine/youth expected to weigh on EPS vs Q3 .

Financial Results

Consolidated Performance vs Prior Quarters and Consensus

Metric	Q1 2025	Q2 2025	Q3 2025 Actual	Q3 2025 Consensus
Sales ($USD Billions)	$1.536	$1.853	$1.842	$1.794*
Adjusted EPS ($)	-$0.90	$0.40	$0.41	$0.23*
Gross Profit Margin (%)	16.0%	19.4%	20.6%	—
Adjusted EBITDA ($USD Millions)	$52.7	$119.0	$140.4	$113.4*
Adjusted EBITDA Margin (%)	3.4%	6.4%	7.6%	—

Values with asterisk (*) retrieved from S&P Global.

Key comparative notes:

Revenue beat: +$48M vs consensus; adjusted EPS beat: +$0.18; adjusted EBITDA beat: +$27M (driven by richer ORV mix and operational efficiencies; offset by tariffs and normalized incentive comp) . Values vs consensus from S&P Global.

Segment Breakdown (Q3 2025 vs Q3 2024)

Segment	Sales Q3 2025 ($MM)	Sales Q3 2024 ($MM)	YoY Change	Gross Margin Q3 2025	Gross Margin Q3 2024	YoY Change
Off Road	$1,509.7	$1,400.0	+8%	22.3%	21.2%	+104 bps
On Road	$228.5	$236.5	-3%	16.0%	16.9%	-83 bps
Marine	$103.4	$85.9	+20%	11.4%	12.2%	-81 bps

KPIs and Operating Metrics

KPI	Q1 2025	Q2 2025	Q3 2025
Powersports Retail Growth (Total Co.)	-7% y/y	Flat y/y	+9% y/y
North America ORV Retail	-11% y/y	+1% y/y	+9% y/y
ORV Market Share Gain	—	Gains across segments	~3 pts ORV share; 10 pts crossover segment
Dealer Inventory (YoY)	—	Down 17% (industry)	Down ~21% (Polaris)
Aged Units (180+ days)	—	—	Down ~60% vs six months ago
Operating Cash Flow ($MM)	$83	~$320	$159
YTD Operating Cash Flow ($MM)	$83	$404	$562
YTD Adjusted Free Cash Flow ($MM)	$54.9	$343.8	$485.5

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted Sales ($B)	FY 2025	Withheld (Q1/Q2)	$6.9–$7.1	Reintroduced; new range
Adjusted EPS ($)	FY 2025	Withheld (Q1/Q2)	≈ -$0.05	Reintroduced; negative EPS due to tariffs
Adjusted Gross Margin (%)	FY 2025	—	~19%, tariffs ~100 bps headwind	New disclosure
Off Road Sales	FY 2025	—	Flat y/y	New disclosure
On Road Sales	FY 2025	—	Decline y/y	New disclosure
Marine & PG&A Sales	FY 2025	—	Growth y/y	New disclosure
Adjusted EPS ($)	Q4 2025	—	≈ $0.05	New sequential guide; lower than Q3 on mix/tariffs/Opex
Tariff Impact ($MM)	FY 2025	—	New tariffs ≈ $90 incremental P&L impact; gross tariff costs $180–$200	Material cost headwind
Dividend ($/share)	Q4 2025	Prior regular dividend	$0.67 payable Dec 15, 2025 (record Dec 1)	Maintained dividend policy

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2025)	Trend
Tariffs / Trade	FY gross tariff costs $180–$200; incremental 2025 P&L < $100 after mitigation; working to cut China content 35% by year-end	New tariffs impact ~+$10M since July; 2025 new tariffs ~$90; 2026 all-in tariffs just north of $200; aggressive China spend reduction to <5% of COGS by 2027	Persistent headwind; mitigation accelerating
Dealer Inventory / Channel Health	Inventory down 17% y/y (industry); DSOs around 110 days; targeted ship reductions in snow	Dealer inventory down ~21% y/y; aged units down ~60%; build=ship=retail alignment (ORV)	Improving; supports future margin leverage
Product Performance (ORV)	Launch of Ranger 500 at $9,999; strong XPEDITION, XD 1500 performance; share gains	ORV retail +9%; ~3 pts share; +10 pts in crossover; Ranger 500 brings 80% new-to-Polaris customers	Leadership at high end and entry points
Youth / Supply Chain Shift	Youth volatility due to production in high-tariff markets; moving production	Youth headwinds continue near-term; rebuild inventory in Q4; production moved to Mexico	Transitional; expected normalization
Marine	Entry-level pontoon strategy; share gains amid macro pressure	Marine sales +20% y/y; mix headwind to margin; SSI share steady	Stabilizing; rate-sensitive
Indian Motorcycle / On Road	On Road softness; goodwill impairment ($52.6M)	Majority stake sale to Carolwood; accretive ~$50M EBITDA and ~$1 EPS post-close; On Road sales -3% y/y	Portfolio reshaping; margin accretive
Promotions / Macro	Elevated promotions; uncertainty; guidance withheld	Promo flattish into 2026; macro sensitive; interest rate cuts could normalize promo	Normalizing over time

Management Commentary

“Polaris delivered strong third quarter results with $1.8 billion in sales… we achieved meaningful market share gains in Off Road in the quarter. Our operational discipline, dealer inventory alignment, and innovation pipeline have us positioned to deliver… and create greater value for our shareholders.” — Mike Speetzen, CEO .
“Adjusted EBITDA margin was under pressure… driven by increased tariffs and normalized incentive compensation… we continue to drive lean and operational efficiencies… exceed our goal of $40 million in structural operational efficiencies this year.” — Mike Spezten .
“We are reintroducing full-year guidance… adjusted sales between $6.9–$7.1 billion… adjusted EPS to be a loss of approximately $0.05… For the fourth quarter, we expect adjusted EPS of approximately $0.05.” — Bob Mack, CFO .
“Post-separation, we expect the [Indian Motorcycle] transaction to be accretive to adjusted EBITDA by approximately $50 million and to adjusted EPS by approximately $1.” — Mike Speetzen .

Q&A Highlights

ORV outperformance drivers: breadth of Ranger lineup (500 to XD 1500), quality improvements lowering warranty costs, stronger dealer network engagement via North Star program; resulted in ~3 pts ORV share gain in Q3 .
Q4 earnings cadence: sequential EPS lower vs Q3 due to higher tariffs, seasonal mix (snow/marine/youth), and timing of engineering/legal/IT spend .
Tariff path: 2025 new tariffs ~+$90M P&L; 2026 all-in just north of $200M; mitigation through supplier moves, USMCA content, and China spend reductions .
Credit environment: FICO metrics modestly lower, but 12‑month losses improved y/y; subprime availability “decent” relative to auto; finance penetration stable .
Retail/promo: FAC program succeeded without heavier promo; promo environment flattish into 2026; competitors’ outsized promo easing as inventories normalize .

Estimates Context

Q3 2025 actuals vs consensus: revenue $1.842B vs $1.794B*, adjusted EPS $0.41 vs $0.23*, adjusted EBITDA $140.4M vs $113.4M*. Beat driven by richer ORV mix, operational efficiencies and PG&A strength; headwinds from tariffs and normalized incentive comp .
FY 2025 consensus: revenue ~$7.04B*, EPS ~-0.05*; FY 2026 consensus: revenue ~$7.06B*, EPS ~$1.69* (pre-separation effects). Values retrieved from S&P Global.

Financial Results Detail

Consolidated Statements (GAAP)

Metric	Q3 2025	Q3 2024
Sales ($MM)	$1,841.6	$1,722.4
Gross Profit ($MM)	$380.3	$354.6
Operating Income ($MM)	$20.4	$66.1
Net (Loss) Income ($MM)	-$15.8	$27.7
Diluted EPS ($)	-$0.28	$0.49
Gross Margin (%)	20.6%	20.6%

Non-GAAP Reconciliations (Q3 2025)

Metric	Q3 2025
Adjusted Sales ($MM)	$1,838.0
Adjusted Gross Margin (%)	20.7%
Adjusted Income Before Taxes ($MM)	$39.1
Adjusted Net Income ($MM)	$23.3
Adjusted EPS ($)	$0.41
Adjusted EBITDA ($MM)	$140.4
Adjusted EBITDA Margin (%)	7.6%

Notable non-GAAP adjustments: Long‑lived asset impairment ($42.3M), intangible amortization ($4.4M), restructuring and product wind downs ($3.0M combined) .

Key Takeaways for Investors

Mix-led beat with ORV innovation and dealer channel health offsetting tariff headwinds; structural efficiency work (> $40M) should expand margins as volumes normalize .
Reintroduced FY guidance de-risks near-term outlook; sequential Q4 EPS softness is well-explained (tariffs, mix, Opex timing), limiting negative surprise risk .
Strategic separation of Indian Motorcycle is accretive and sharpens focus on higher-margin ORV/snow/marine/Slingshot; potential multiple support for “core Polaris” post-close .
Tariffs remain the swing factor; mitigation trajectory (supplier moves, USMCA content, China spend reduction) is credible but timing-dependent; watch policy developments .
Cash generation is robust (YTD CFO $562M; YTD FCF $485.5M) enabling balanced debt reduction and growth investments while maintaining the $0.67 dividend .
Near-term trading setup: Q3 beat and guidance reinstatement are positive; Q4 EPS guide ($0.05) tempers expectations; stock likely to trade on tariff headlines and Indian transaction milestones .
Medium-term thesis: Innovation-driven share gains, lean/quality tailwinds, and portfolio focus point to earnings power recovery as macro/tariff pressures abate; monitor dealer health, promo, and rates .