Polaris Raises Outlook as Margins Rebound
Second-quarter sales climbed 9% to $2.023 billion as shipment volumes and pricing improved.
Polaris Inc. (PII), the powersports maker, raised its full-year earnings outlook after tariff refunds helped the company return to profit in the second quarter.
The results extended a recovery that began early this year. Adjusted gross margin expanded 446 basis points to 23.9%, accelerating from a 389-basis-point expansion in the first quarter after contracting during the second half of 2024.
Sales growth accelerated from 8% in the first quarter, supported by higher shipment volumes, positive net price and lower promotions. North American sales rose 11%, while international sales declined less than 1%, an improvement from a 5% drop in the prior quarter.
Polaris earned $106.4 million, or $1.82 a diluted share, compared with a year-earlier loss of $79.3 million, or $1.39 a share. Adjusted earnings rose 393% to $1.97 a share, including a $0.96 benefit from tariff refunds.
Polaris Powersports sales grew 17% to $1.715 billion, led by a 21% increase in parts, garments and accessories. The segment's gross margin widened to 25.1% from 20.9% in the first quarter. Marine sales increased 16% as higher pontoon shipments and a more favorable product mix lifted its gross margin.
The company received $74 million in tariff refunds during the quarter, including about $66 million within Polaris Powersports. Higher net price and product mix also offset continuing tariff costs.
Polaris now expects full-year adjusted sales of $7.30 billion to $7.50 billion, up from its previous range of $7.15 billion to $7.30 billion. Adjusted earnings are expected at $3.00 to $3.10 a share, an increase of $1.40 at both ends of the prior forecast; about $0.96 of the updated outlook reflects the second-quarter refunds.
Cash generation remained a constraint on the recovery. First-half operating cash flow fell to negative $90.0 million from positive $403.5 million a year earlier, as inventory consumed $169.8 million of cash after providing a source of cash in the prior-year period.