Polaris Inc. (NYSE: PII) unveiled its fourth-quarter financial results, revealing revenue performance that exceeded market expectations owing primarily to increased shipment activity across its major business units. The company reported adjusted earnings per share (EPS) of $0.08, outperforming the consensus estimate of $0.06 attributed to stronger-than-anticipated sales volumes. Total quarterly revenue reached $1.922 billion, representing a 9% increase year-over-year and surpassing analyst estimates of approximately $1.807 billion.
An overview of segment-wise performance shows that the Off Road division led revenue expansion, registering an 11% increase to $1.596 billion. The On Road segment experienced a 4% revenue rise, generating $187.2 million, while the Marine segment had a modest 1% sales uptick, totaling $138.3 million. Geographically, Polaris’s North American business, which comprised 84% of total revenue, contributed $1.623 billion – a 10% increase compared to the same period last year. International markets accounted for 16% of sales, amounting to $299 million, marking a 9% year-over-year increase.
The company’s profit metrics, however, signaled underlying margin stress. While gross profit expanded to $384.2 million from $357.9 million previously and adjusted gross profit was $389.5 million compared to $369.5 million, the adjusted gross profit margin declined by 77 basis points to 20.3%. Management attributed this contraction primarily to tariff pressures and reduced net pricing, somewhat offset by favorable product mix within the Off Road Vehicle (ORV) category as well as increased sales volumes.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) totaled $98.1 million, a notable drop from $168.2 million in the prior-year quarter, and the adjusted EBITDA margin decreased from 9.6% down to 5.1%. These declines reflect higher costs and impairment charges impacting operating profitability.
Notably, the quarter included significant noncash impairment and other charges aggregating $288 million, primarily related to the reclassification of the Indian Motorcycle business as held for sale. Additionally, an extra impairment of $54 million was recorded against intangible assets associated with the Off Road segment.
Polaris ended the quarter with a cash and cash equivalents balance of $138 million, providing liquidity to support ongoing operational needs and strategic initiatives.
Looking ahead to fiscal 2026, Polaris anticipates completing the separation of its Indian Motorcycle brand by the end of the first quarter. The company cautioned about the challenges posed by tariff-related headwinds, which are expected to exert a heavier impact during the first half of the year.
Financial guidance for fiscal 2026 projects adjusted earnings per share in a range of $1.50 to $1.60, notably below analysts’ consensus forecast of $1.74. Meanwhile, revenue is expected to grow, with sales estimates between $7.224 billion and $7.367 billion, exceeding the Street's projection of approximately $7.035 billion.
Following the earnings release and guidance revision, Polaris’s shares declined 6.66% to $64.51 during premarket trading, reflecting investor reservations amid the cautious outlook.