Polaris Inc. Q1 FY2026 earnings call

• Strong first quarter with sales up 8% or 14% organically excluding Indian Motorcycle, adjusted EPS 13 cents. • Power sports segment led by utility ranger line, commercial business, and snowmobiles; PG&A bolstered by strong performance. • North American retail grew 1%, ORV up 3% excluding youth vehicles. • Dealer inventory healthy. Margins improved despite tariff headwind. • Product portfolio strong with innovation in various lines. • New segment structure with Polaris Power Sports, Marine, XM & Goupil

Polaris Power Sports: Sales up 14% year-over-year. Ranger and commercial shipments surged with utility demand growth. PG&A up 14% due to parts and oil sales. Gross margin rose 422 basis points. Marine: Driven by premium pontoon line launches, had modest net pricing benefit. Gross margin improved 64 basis points year over year. Ex-Im and Goupil: Sales up 9% with higher Goupil shipments and Ex-Im pricing. Gross margin improved 294 basis points

• Second quarter sales expected to grow 5%-7% year-over-year driven by utility, adjusted EPS $0.70-$0.80. • Negative year-over-year impact from tariffs expected between 30-35 million assuming no change in current tariff policy. • Indian motorcycle separation expected to be accreted by ~50 million to adjusted EBITDA, more weighted to back half of year and into Jan 2027. • Expecting financial results to return to historic seasonal patterns with Q2 and Q3 being highest revenue and EPS quarters. • Tariff mitigation strategy to reduce China-sourced material cost of goods sold from 14% last year to below 5% by end of 2027. • Total tariff costs expected to be ~$215 million this year excluding potential refunds related to IEPA tariffs paid in 2025 and 2026

• Uncertainty around consumer driven by higher energy prices and ongoing geopolitical conflicts. • Evolving tariff environment with potential changes in trade agreements like USMCA and uncertainty around 232 and other tariff policies. • Commodity price headwinds such as steel and diesel impacting margins. • Supply chain and inventory management challenges related to tariff changes and timing of shipments and inventory replenishment

Q: Craig Kennison with Baird inquired about tariff exposure in guidance after IEPA ruling and Section 232 changes.

A: Mike and Bob explained tariff impact details including IEPA ruling offset by 232 changes, complexity of 232 rules, and efforts to mitigate China-sourced content.

Q: James Hardiman with Citi asked about competitive environment and impact on pricing and share gain.

A: Mike and Bob discussed competitive focus on products, limited price elasticity, and strength of product portfolio.

Q: Joe Altabella with Raymond James asked about tariff commentary, OPEX spending pulled forward.

A: Bob explained OPEX spending details and its spread through the year.

Q: Noah Zaskin with KeyBank asked about ORV gross margin and ops improvement, distressed supplier.

A: Bob and Mike discussed margin drivers, ops improvement, and details on distressed supplier impact.

Q: Tristan Thomas Martin with BMO asked about TSA impact and margin seasonality.

A: Mike explained TSA impact and margin seasonality.

Q: Garrick Johnson with Seaport asked about TSA impact on buckets and ORV youth impact.

A: Mike explained TSA impact and ORV youth impact details