Polaris Inc.

Consolidated Results of Operations

The consolidated results of operations were as follows:

Sales:

The decrease in sales for the quarter and year-to-date periods was primarily due to decreased shipments, product mix and lower net pricing driven by higher promotional costs.

The components of the consolidated sales change were as follows:

The volume decrease for the quarter and year-to-date periods was primarily due to decreased ORV shipments. Product mix and price for the quarter and year-to-date periods were unfavorable due to a lower sales mix of ORVs and lower net pricing driven by higher promotional costs.

Sales by geographic region were as follows:

Sales in the United States decreased during the quarter and year-to date periods primarily as a result of decreased ORV shipments, partially offset by increased pontoon shipments.

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

Sales in other countries decreased during the quarter primarily as a result of reduced On Road and ORV shipments. Sales in other countries decreased during the year-to-date period primarily as a result of reduced ORV and On Road shipments, primarily in Europe. Currency rate movements had a favorable impact of one percentage point on quarter sales and an unfavorable impact of one percentage point on year-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 and year-to-date periods primarily as a result of reduced sales volumes driving lower purchased materials and decreased labor costs, as well as reduced warranty expense.

Gross Profit:

Gross profit for the quarter and year-to-date periods, as a percentage of sales, decreased primarily due to unfavorable product mix, lower net pricing driven by higher promotional costs and increased incentive compensation costs, partially offset by favorable operational costs and lower warranty expense.

Operating Expenses:

Operating expenses, in absolute dollars, increased for the quarter and year-to-date periods primarily due to the impairment of goodwill associated with the Company’s On Road segment and higher general and administrative expenses, partially offset by reduced selling and marketing expenses. Operating expenses, as a percentage of sales, increased for the quarter and year-to-date periods primarily due to the impairment of goodwill associated with the Company’s On Road segment and decreased leverage of fixed costs as a result of reduced sales volumes.

Income from Financial Services:

Income from financial services decreased for the quarter and year-to-date periods, primarily as a result of lower wholesale financing income from Polaris Acceptance due to reduced interest rates.

Interest Expense:

Interest expense decreased for the quarter as a result lower debt levels, and increased for the year-to-date period primarily due to higher average debt levels for the six months ended June 30, 2025 compared to the comparable period in 2024.

Other expense (income), net:

The increase in other expense (income) for the quarter and year-to-date periods was primarily attributable to an impairment charge related to a strategic investment held by the Company. Other expense (income) is also 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 $13.5 million or 14.6% of the loss before income taxes, compared to income tax expense of $17.0 million or 19.9% of income before income tax expense for the second 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 non-deductible impairment charges.

The income tax benefit was $17.9 million or 10.9% of the loss before income taxes, compared to income tax expense of $20.8 million or 22.3% of income before income tax expense for the six months ended June 30, 2024. The tax provision benefit for the year-to-date period was primarily due to the pretax loss generated, partially offset by unfavorable adjustments related to non-deductible impairment charges and share-based compensation.

Adjusted EBITDA:

Adjusted EBITDA, in absolute dollars and as a percentage of sales, decreased during the quarter primarily due to unfavorable product mix, increased incentive compensation costs and reduced shipments, partially offset by favorable operating costs. Adjusted EBITDA, in absolute dollars and as a percentage of sales, decreased during the year-to-date period primarily due to unfavorable product mix, reduced shipments, increased incentive compensation costs and lower net pricing driven by higher promotional costs, partially offset by favorable operating costs.

Weighted average diluted shares outstanding:

Weighted average diluted shares outstanding increased for the quarter, primarily due to reduced share repurchases over the time period within and between the comparable quarterly periods, partially offset by a reduction in the dilutive effect of share-based equity awards. Weighted average diluted share outstanding decreased for the year-to-date period, primarily due to share repurchases over the time period within and between the comparable year-to-date periods 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 June 16, 2025 to holders of record at the close of business on June 2, 2025. We paid aggregate cash dividends of $1.34 per common share for the six months ended June 30, 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 for the quarter and year-to-date periods, primarily due to decreased ORV shipments. The average per unit sales price for the Off Road segment decreased approximately seven percent for both the quarter and year-to-date periods primarily due to lower net pricing driven by higher promotional costs and product mix.

Sales to customers outside of North America decreased six percent for the quarter and year-to-date periods primarily as a result of lower ORV shipments.

Gross profit, as a percentage of sales, decreased during the quarter and year-to-date periods primarily due to unfavorable product mix and lower net pricing driven by higher promotional costs, partially offset favorable operating costs and lower warranty expense.

•Polaris North America utility unit retail sales up low-single digits percent

•Polaris North America recreation unit retail sales down mid-single digits percent

•Total Polaris North America ORV unit retail sales up low-single digits percent

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

•Total Polaris North America ORV dealer inventories down 18 percent

On Road:

On Road sales, inclusive of PG&A sales, decreased for the quarter and year-to-date periods, primarily due to decreased shipments in Europe. The average per unit sales price for the On Road segment increased approximately seven percent and two percent for the quarter and year-to-date periods, respectively, primarily due to product mix and higher net pricing.

Sales to customers outside of North America decreased five percent and 16 percent for the quarter and year-to-date periods, respectively, primarily as a result of reduced shipments in Europe.

Gross profit, as a percentage of sales, decreased for the quarter primarily due to unfavorable product mix, partially offset by higher net pricing. Gross profit, as a percentage of sales, decreased for the year-to-date period primarily due to unfavorable product mix, partially offset by favorable operating costs.

•Indian Motorcycle North America unit retail sales up low-double digits percent

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

•Polaris North America motorcycle dealer inventories up eight percent

Marine:

Marine sales increased during the quarter and year-to-date periods, primarily due to increased shipments. The average per unit sales price for the Marine segment decreased approximately one percent for the quarter, primarily due to product mix. The average per unit sales price for the Marine segment was flat for the year-to-date period.

Gross profit, as a percentage of sales, decreased for the quarter and year-to-date periods, primarily due to unfavorable product mix and higher operational costs.

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

•Estimated U.S. industry pontoon unit retail sales down mid-teens percent

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

•Estimated U.S. industry deck boat unit retail sales down low-twenties 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 (loss) income, excluding interest expense, income tax expense, depreciation and amortization, and certain other non-cash, non-recurring, or non-operating items impacting net (loss) 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 (loss) 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 (loss) 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

(6) Represents goodwill impairment charges associated with the Company’s On Road segment

(7) Represents impairment charges related to a strategic investment held by the Company