Polaris Inc.

Consolidated Results of Operations

The consolidated results of operations were as follows:

Sales:

The decrease in sales for the quarter was due to decreased shipments, lower net pricing driven by higher promotional costs, and unfavorable currency exchange rate movements, partially offset by product mix.

The components of the consolidated sales change were as follows:

The decrease in sales for the quarter was primarily due to decreased shipments in all segments, as well as lower net pricing driven by higher promotional costs.

Sales by geographic region were as follows:

Sales in the United States decreased during the quarter primarily as a result of lower shipments in all segments.

Sales in Canada decreased during the quarter primarily as a result of decreased ORV and motorcycle shipments, partially offset by higher snowmobile shipments. Currency rate movements had an unfavorable impact of six percentage points on quarter-to-date sales.

Sales in other countries decreased during the quarter primarily as a result of reduced On Road and ORV shipments, primarily in Europe. Currency rate movements had an unfavorable impact of four percentage points on quarter-to-date sales.

Cost of Sales:

The following table reflects our cost of sales in dollars and as a percentage of sales:

Cost of sales decreased during the quarter primarily as a result of reduced sales volumes driving lower purchased materials and decreased labor costs.

Gross Profit:

Gross profit for the quarter, as a percentage of sales, decreased primarily due to lower net pricing driven by higher promotional costs and unfavorable currency exchange rate movements, partially offset by favorable operational costs and reduced warranty expense.

Operating Expenses:

Operating expenses, in absolute dollars, decreased for the quarter due to reduced selling and marketing and research and development expenses, partially offset by increased general and administrative expenses. Operating expenses, as a percentage of sales, increased for the quarter primarily due to decreased leverage of fixed costs as a result of reduced sales volumes.

Income from Financial Services:

Income from financial services increased for the quarter, primarily as a result of higher retail credit income resulting from higher penetration rates. This increase was mostly offset by lower wholesale financing income from Polaris Acceptance due to reduced interest rates.

Interest Expense:

Interest expense increased for the quarter primarily due to higher debt levels.

Other expense (income), net:

Other expense (income) is primarily the result of currency exchange rate movements and the corresponding effects on currency transactions related to our international subsidiaries.

(Benefit) provision for income taxes:

The income tax benefit was $4.4 million or 6.1% of the loss before income tax expense, compared to income tax expense of $3.8 million or 49.3% of income before income tax expense for the first quarter of 2024. The tax provision benefit for the quarter was primarily due to the pretax loss generated, partially offset by unfavorable adjustments related to share-based compensation.

Adjusted EBITDA:

Adjusted EBITDA, in absolute dollars, decreased during the quarter primarily due to decreased shipments in all segments, lower net pricing driven by higher promotional costs, and unfavorable currency exchange rate movements, partially offset by favorable operating costs and reduced operating expenses.

Weighted average diluted shares outstanding:

Over the time period within and between the comparable quarterly periods, weighted average diluted shares outstanding decreased, primarily due to share repurchases and a reduction in the dilutive effect of share-based equity awards.

Cash Dividends:

We paid a regular cash dividend of $0.67 per common share on March 17, 2025 to holders of record at the close of business on March 3, 2025.

Segment Results of Operations

The summary that follows provides a discussion of the results of operations of each of our three reportable segments, Off Road, On Road, and Marine. Each of these segments is comprised of various product offerings that serve multiple end markets. We evaluate performance based on sales and gross profit. The Corporate amounts include costs that are not allocated to segments, including certain unallocated manufacturing costs, the impacts from certain foreign currency transactions, and certain unallocated incentive compensation costs.

Our sales and gross profit by reporting segment, which includes the respective PG&A, were as follows:

Off Road:

Off Road sales, inclusive of PG&A sales, decreased 10 percent for the quarter, primarily due to decreased ORV shipments. The average per unit sales price for the Off Road segment decreased approximately seven percent for the quarter primarily due to lower net pricing driven by higher promotional costs.

Sales to customers outside of North America decreased seven percent for the quarter primarily as a result of lower ORV shipments.

Gross profit, as a percentage of sales, decreased during the quarter primarily due to lower net pricing driven by higher promotional costs, unfavorable foreign currency exchange rate movements, and higher finance interest, partially offset by product mix, lower warranty expense and favorable operating costs.

Additional information on our end markets for the quarter:

•Polaris North America utility unit retail sales down high-single digits percent

•Polaris North America recreation unit retail sales down high-teens percent

•Total Polaris North America ORV unit retail sales down low-double digits percent

•Estimated North America industry ORV unit retail sales down low-single digits percent

•Total Polaris North America ORV dealer inventories down approximately 15 percent

•Polaris North America snowmobile unit retail sales for the 2024-2025 season ending March 31, 2025 down low-twenties percent

•Estimated North America industry snowmobile unit retail sales for the 2024-2025 season ending March 31, 2025 down mid-teens percent

•Total Polaris North America snowmobile dealer inventories up approximately 5 percent

On Road:

On Road sales, inclusive of PG&A sales, decreased 20 percent for the quarter, primarily due to decreased shipments in Europe. The average per unit sales price for the On Road segment decreased approximately four percent for the quarter primarily due to lower net pricing driven by higher promotional costs and product mix.

Sales to customers outside of North America decreased 27 percent for the quarter primarily as a result of reduced shipments in Europe.

Gross profit, as a percentage of sales, decreased for the quarter primarily due to lower net pricing driven by higher promotional costs and product mix, partially offset by favorable operating costs.

Additional information on our end markets for the quarter:

•Indian Motorcycle North America unit retail sales down low-teens percent

•Estimated North America industry 900cc cruiser, touring, and standard motorcycles unit retail sales down mid-twenties percent

•Polaris North America motorcycle dealer inventories up approximately 15 percent

Marine:

Marine sales decreased seven percent for the quarter, primarily due to decreased shipments. The average per unit sales price for the Marine segment was flat for the quarter.

Gross profit, as a percentage of sales, decreased for the quarter due to decreased shipments, reduced leverage of fixed costs as a result of reduced sales volumes, and product mix.

Additional information on our end markets for the three-month period ended March 2025:

•Polaris U.S pontoon unit retail sales down high-single digits percent

•Estimated U.S. industry pontoon unit retail sales down low-double digits percent

•Polaris U.S deck boat unit retail sales down low-twenties percent

•Estimated U.S. industry deck boat unit retail sales down low-teens percent

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance. These non-GAAP financial measures, which may be different than similarly titled measures used by other companies, are presented to enhance investors’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

We use the non-GAAP financial measure of Adjusted EBITDA, which is defined as net income, excluding interest expense, income tax expense, depreciation and amortization, and certain other non-cash, non-recurring, or non-operating items impacting net income from time to time. For example, costs associated with certain corporate restructuring activities, such as acquisitions and divestitures, are included as non-GAAP adjustments. We use the non-GAAP financial measure of Adjusted EBITDA Margin, which is defined as Adjusted EBITDA divided by adjusted net sales. We believe that Adjusted EBITDA and Adjusted EBITDA Margin help identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude from Adjusted EBITDA and Adjusted EBITDA Margin.

We believe that these measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects, and allow for greater transparency with respect to key metrics used by our management for financial and operational decision making. We are presenting these non-GAAP measures to assist investors in seeing our financial performance through the eyes of management, and because we believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry.

Adjusted EBITDA has limitations and should not be considered in isolation from, as a substitute for, or more meaningful than, net income as determined in accordance with GAAP. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance. Our presentation of Adjusted EBITDA and Adjusted EBITDA Margin should not be construed as an inference that our results will be unaffected by unusual or non-recurring items.

The following table presents a reconciliation of net income, the most comparable GAAP financial measure, to Adjusted EBITDA for each of the periods presented:

(1)Represents adjustments related to product wind downs, including the FTR product line within the Company’s On Road segment and the Timbersled product line within the Company’s Off Road segment

(2)Represents amortization expense for intangible assets acquired through business combinations and asset acquisitions

(3) Represents adjustments for integration and acquisition-related expenses

(4) Represents adjustments for corporate restructuring

(5) Represents adjustments for certain class action litigation-related expenses