Polaris Raises 2026 Guidance as Q3 Sales Rise 11%

Polaris Inc. raised its full-year 2026 guidance for the third time after third-quarter sales and margins increased, supported by broad-based powersports growth, favorable pricing and operating efficiencies. The company also recorded $10 million of tariff refunds and related interest, which added $0.13 to adjusted earnings per share.

For the three months ended September 30, adjusted sales rose 11% year over year to $2.042 billion. Excluding the impact of the Indian Motorcycle separation, organic sales increased 17%. Adjusted EBITDA climbed to $180.0 million from $140.4 million, while adjusted EBITDA margin expanded 118 basis points to 8.8%.

Adjusted EPS increased to $1.08 from $0.41 a year earlier. Excluding the tariff refunds, operational adjusted EPS was $0.95, operational adjusted EBITDA margin was 8.5%, and operational adjusted gross margin was 20.9%. On a GAAP basis, Polaris reported net income of $38.6 million, compared with a net loss of $15.7 million in the prior-year quarter.

The margin improvement reflected higher volume, positive net pricing—including higher prices and lower promotions—and operational efficiencies, which more than offset increased commodity costs. Operating expenses rose, partly because of higher parts, garments and accessories activity.

Powersports leads growth

Polaris Powersports sales increased 18% to $1.822 billion, with growth across off-road vehicles, Seasonal, Commercial, and Government and Defense products. Utility vehicles accounted for about 60% of segment sales, and the RANGER lineup performed across both premium and value tiers. Cabbed models represented more than half of RANGER retail sales.

Seasonal sales benefited from increased year-over-year snowmobile shipments ahead of the season, while strong parts demand lifted PG&A sales. Powersports international sales grew 10%. The segment’s operational adjusted gross margin was 22.0%, with operational efficiencies offsetting part of the pressure from higher commodity costs. Most of the quarter’s tariff refunds were recorded in this segment.

North American utility off-road vehicle retail sales rose 6%, while total ORV retail increased 2%. Polaris said it gained ORV market share for a sixth consecutive quarter and recorded its highest third-quarter ORV share since 2019. Year-to-date ORV retail was up 3%, including high-single-digit growth in utility vehicles.

Recreational ORV demand remained under pressure from elevated interest rates and weak consumer confidence, with both Polaris and industry retail declining by mid-teen percentages during the quarter. Total North American dealer inventory was 3% higher year over year, but the company described inventory levels and mix as healthy, with a low proportion of non-current models.

Premium pontoons support Marine results

Marine sales rose 29% to $133 million, driven by a greater mix of new premium Bennington and Godfrey pontoon lines. Gross margin increased 43 basis points to 11.9%, reflecting the more favorable product mix.

The broader pontoon industry declined by a low-teen percentage in the quarter and was down by a mid-single-digit percentage year to date. Polaris reported positive retail performance for its premium pontoons, although it said dealers and consumers remained cautious amid the macroeconomic environment. Marine dealer inventory declined 3% from a year earlier.

Aixam & Goupil sales fell 12% to $68 million after Polaris reduced Aixam shipments to better align dealer inventory with retail demand heading into the new year. Lower volume also weighed on profitability, with segment gross margin declining 47 basis points to 27.5%.

Full-year outlook increased

Polaris now expects 2026 adjusted sales of $7.55 billion to $7.60 billion, representing growth of about 6% from 2025. Its previous range was $7.30 billion to $7.50 billion, or growth of 2% to 5%.

The company forecast adjusted EPS of $3.50 to $3.60, up from its prior projection of $3.00 to $3.10. Adjusted EBITDA margin is expected to expand by 270 to 275 basis points from the 2025 level of 5.7%. Excluding tariff refunds, Polaris expects operational adjusted EPS of $2.40 to $2.50 and operational adjusted EBITDA margin expansion of 165 to 170 basis points. The guidance excludes any additional tariff refunds.

Management expects modest retail growth and plans to keep production and shipments aligned with retail demand. Priorities include launching new products, maintaining positive net pricing through model-year pricing and lower promotions, completing transition service and supply agreements related to the Indian Motorcycle separation, and continuing lean manufacturing and tariff-mitigation initiatives. The company said the Indian Motorcycle transition agreements were about 40% complete.

As of September 30, Polaris had $302 million in cash and $1.628 billion in total debt, with a net leverage ratio of 2.0 times. Year-to-date adjusted free cash flow was $219.3 million, compared with $485.5 million a year earlier. Capital spending totaled $140 million through the first nine months, and full-year capital expenditure guidance remained about $220 million.

For 2027, Polaris said it is monitoring a volatile retail environment, preparing new products, shifting its mix toward cabbed units and planning for higher commodity costs. The company intends to pursue further operational efficiencies, reduce tariff exposure to China and manage net leverage between 1.0 and 2.0 times. Key uncertainties include consumer demand, interest rates, commodity and tariff costs, supply-chain execution, dealer inventory management, and the timing and benefits of the Indian Motorcycle separation.