Polaris Inc.

Consolidated Results of Operations

The consolidated results of operations were as follows:

Sales:

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

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 youth ORV and snowmobile shipments. Product mix and price were favorable for the quarter due to a higher sales mix of ORVs. Product mix and price were favorable for the year-to-date period due to a higher sales mix of ORVs, partially offset by lower net pricing driven by higher promotional costs.

Sales by geographic region were as follows:

Sales in the United States increased during the quarter primarily as a result of increased PG&A sales in all segments and favorable product mix. Sales in the United States decreased during the year-to-date period primarily as a result of decreased ORV shipments, partially offset by increased PG&A sales in all segments.

Sales in Canada decreased during the quarter primarily as a result of decreased snowmobile shipments, and decreased during the year-to-date period primarily as a result of decreases in both ORV and snowmobile shipments. Currency rate movements had an unfavorable impact of one percentage point on quarter sales and an unfavorable impact of two percentage points on year-to-date sales.

Sales in other countries increased during the quarter primarily as a result of increased PG&A sales. Sales in other countries decreased during the year-to-date period primarily as a result of reduced On Road and ORV shipments. Currency rate movements had a favorable impact of four percentage points on quarter sales and a neutral impact 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 increased during the quarter due to higher materials and labor costs. Cost of sales decreased during the year-to-date period 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, as a percentage of sales, increased slightly primarily as a result of favorable operational costs, favorable product mix and lower warranty expense, partially offset by incremental tariff charges and increased incentive compensation costs. Gross profit for the year-to-date period, as a percentage of sales, decreased primarily as a result of incremental tariff charges, unfavorable product mix, lower net price driven by higher promotional costs and increased incentive compensation costs, partially offset by favorable operational costs.

Operating Expenses:

Operating expenses, in absolute dollars and as a percentage of sales, increased for the quarter primarily due to the impairment of certain property and equipment assets in our On Road segment and higher general and administrative expenses. Operating expenses, in absolute dollars and as a percentage of sales, increased for the year-to-date period primarily due to the impairments of goodwill and certain property and equipment assets associated with the Company’s On Road segment, as well as 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 and dealer inventory levels.

Interest Expense:

Interest expense decreased for the quarter and year-to-date periods primarily as a result lower average debt levels.

Other (income) expense, net:

Other (income) expense is primarily the result of currency exchange rate movements and the corresponding effects on currency transactions related to our international subsidiaries. The fluctuation in other (income) expense for the year-to-date periods was primarily attributable to an impairment charge related to a strategic investment held by the Company.

(Benefit) provision for income taxes:

Income tax expense for the quarter was $3.6 million or 28.6% of the loss before income taxes, compared to income tax expense of $7.4 million or 20.9% of income before income tax expense for the third quarter of 2024. Income tax expense on the pre-tax loss for the quarter was primarily due to the application of the annual effective tax rate to quarter-to-date results before impairment charges, partially offset by the tax effect of discretely recorded impairment charges. The effective tax rate for the quarter is not indicative of the expected annual rate.

The income tax benefit for the year-to-date period was $14.3 million or 8.2% of the loss before income taxes, compared to income tax expense of $28.2 million or 21.9% of income before income tax expense for the nine months ended September 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. The effective tax rate for the year-to-date period is not indicative of the expected annual rate.

Adjusted EBITDA:

Adjusted EBITDA, in absolute dollars and as a percentage of sales, decreased during the quarter primarily due to increased incentive compensation costs, incremental tariff charges and reduced shipments, partially offset by favorable product mix and operating costs. Adjusted EBITDA, in absolute dollars and as a percentage of sales, decreased during the year-to-date period primarily due to increased incentive compensation costs, reduced shipments, incremental tariff charges 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 as a result of the net loss incurred during the quarter. Weighted average diluted share outstanding were flat for the year-to-date period.

Cash Dividends:

We paid a regular cash dividend of $0.67 per common share on September 15, 2025 to holders of record at the close of business on September 2, 2025. We paid aggregate cash dividends of $2.01 per common share for the nine months ended September 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 manufacturing costs, the impacts from certain foreign currency transactions, and certain incentive compensation costs and related adjustments.

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, increased for the quarter, primarily due to product mix. Off Road sales, inclusive of PG&A sales, decreased for the year-to-date period, primarily due to decreased ORV shipments. The average per unit sales price for the Off Road segment increased approximately nine percent for the quarter primarily as a result of product mix. The average per unit sales price for the Off Road segment decreased approximately two percent for the year-to-date period primarily as a result of lower net pricing driven by higher promotional costs.

Sales to customers outside of North America increased three percent for the quarter primarily as a result of higher ORV shipments, and decreased three percent for the year-to-date period primarily as a result of lower ORV shipments.

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

•Polaris North America utility unit retail sales up high-teens percent

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

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

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

•Total Polaris North America ORV dealer inventories down 26 percent

On Road:

On Road sales, inclusive of PG&A sales, decreased for the quarter, primarily due to decreased motorcycle shipments. The decrease for the year-to-date period was due to decreased shipments across the product portfolio. The average per unit sales price for the On Road segment increased approximately five percent and three percent for the quarter and year-to-date periods, respectively, primarily due to product mix.

Sales to customers outside of North America increased two percent for the quarter primarily as a result of increased sales in Europe. Sales to customers outside of North America decreased 11 percent for the year-to-date period primarily as a result of reduced shipments in Europe.

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

•Indian Motorcycle North America unit retail sales down mid-single digits percent

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

•Polaris North America motorcycle dealer inventories down two 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 six percent and two percent for the quarter and year-to-date periods, respectively, primarily due to product mix.

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

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

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

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

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

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with U.S. 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 amortization expense for intangible assets acquired through business combinations and asset acquisitions

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

(3) Represents adjustments for corporate restructuring

(4)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

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

(6) Represents impairment charges related to certain property and equipment assets in the Company’s On Road segment

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

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