Polaris Inc. Reports Quarterly Results for the Period Ended March 31, 2025

Polaris Navigates Challenging Quarter Amid Headwinds

Polaris Inc., a leading manufacturer of powersports vehicles and boats, has reported its financial results for the first quarter of 2025. The company faced a number of challenges during the period, leading to a decline in sales, profits, and overall performance compared to the same quarter a year earlier.

Consolidated Results Decline Polaris’ consolidated sales for the first quarter of 2025 were $1.54 billion, a 12% decrease from the $1.74 billion reported in the first quarter of 2024. This drop was primarily driven by lower shipment volumes across all of the company’s segments, as well as lower net pricing due to increased promotional costs and unfavorable currency exchange rate movements.

The company’s gross profit margin decreased to 16.0% in the first quarter of 2025, down from 19.0% in the same period of 2024. This was largely due to the lower net pricing, unfavorable currency impacts, and higher finance interest costs, partially offset by favorable operating costs and reduced warranty expenses.

Operating expenses, while decreasing in absolute dollars, increased as a percentage of sales, rising to 19.7% compared to 18.0% in the prior year quarter. This was a result of the lower sales volumes, which reduced the company’s ability to leverage its fixed costs.

The combination of these factors led to a net loss of $66.7 million for the first quarter of 2025, compared to net income of $3.9 million in the same period of 2024. Adjusted EBITDA, a non-GAAP measure of profitability, also declined significantly, falling 52% to $52.7 million.

Segment Performance Polaris’ results were impacted across all of its major business segments:

Off Road Off Road sales, which include all-terrain vehicles (ATVs) and snowmobiles, decreased 10% in the first quarter. This was primarily due to lower ATV shipments, as well as a 7% decrease in sales to customers outside of North America. Gross profit margin in the Off Road segment fell to 16.0%, down from 17.4% a year earlier, due to the lower net pricing, unfavorable currency movements, and higher finance costs, partially offset by favorable product mix and operating costs.

On Road The On Road segment, which includes Indian Motorcycle, saw sales decline 20% in the quarter. This was driven by reduced shipments, especially in Europe. Gross profit margin in the On Road segment fell to 16.1%, down from 21.8% in the prior year period, due to the lower net pricing and unfavorable product mix.

Marine Marine segment sales decreased 7% in the first quarter, also due to lower shipment volumes. Gross profit margin in the Marine segment fell to 12.4%, down from 15.5% a year earlier, as a result of the decreased sales and reduced leverage of fixed costs.

Liquidity and Capital Resources Polaris’ liquidity position remained strong, with $1.12 billion of available borrowing capacity under its revolving credit facility as of March 31, 2025. The company generated $83.2 million in cash from operating activities during the quarter, a significant improvement from the $105.4 million used in the prior year period.

However, the company did see a net cash outflow of $56.9 million from financing activities, primarily due to net repayments under its debt arrangements, compared to $115.7 million of net cash provided by financing activities in the first quarter of 2024.

Polaris continues to maintain a balanced capital allocation strategy, paying a regular cash dividend of $0.67 per share during the quarter. The company also has $1.11 billion remaining under its share repurchase authorization, though it did not repurchase any shares during the first three months of 2025.

Outlook and Challenges Looking ahead, Polaris faces a number of headwinds that could continue to impact its performance. These include:

• Ongoing supply chain disruptions and inflationary pressures on key raw materials and components
• Unfavorable currency exchange rate movements, particularly the strength of the U.S. dollar
• Softening consumer demand, especially in the powersports and marine markets
• Increased competition and promotional activity in the industry

To navigate these challenges, Polaris is focused on several key initiatives, including:

• Optimizing its manufacturing and supply chain operations to improve efficiency and responsiveness
• Investing in new product development to maintain its competitive edge
• Closely managing costs and pricing to protect profitability
• Diversifying its geographic footprint and end markets to reduce reliance on any single area

“The first quarter of 2025 was a difficult period for Polaris, as we faced a number of external headwinds that impacted our financial performance,” said the company’s CEO. “However, we remain confident in our ability to navigate these challenges and position the company for long-term success. We are taking decisive actions to strengthen our operations, innovate our product portfolio, and deliver value for our shareholders.”

Overall, Polaris’ first quarter results reflect the challenging environment facing the powersports and marine industries. While the company’s liquidity and financial position remain strong, it will need to continue executing on its strategic initiatives to overcome the current market pressures and return to profitable growth.