Slides
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March 12, 2025 CAPITAL MARKETS DAY
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WELCOME 2025 CAPITAL MARKETS DAY 2
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TIME (MT) TOPIC PRESENTER 4:00 – 4:05 Welcome J.C. Weigelt, Vice President of Investor Relations 4:05 – 4:30 Strategy Overview Mike Speetzen, Chief Executive Officer 4:30 – 4:45 Operations Lean Journey Marc Suarez, Vice President of Off Road Operations 4:45 – 5:00 Financial Review Bob Mack, Chief Financial Officer 5:00 – 5:45 Q&A AGENDA Polaris Capital Markets Day – March 12, 2025
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PII CMD 3/12/25 4 Safe Harbor & Non-GAAP Measures Except for historical information contained herein, the matters set forth in this presentation are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Potential risks and uncertainties include such factors as the Company’s ability to successfully implement its manufacturing operations strategy and supply chain initiatives; the Company’s ability to successfully source necessary parts and materials on a timely basis; the ability of the Company to manufacture and deliver products to dealers to meet demand, including as a result of supply chain disruptions; the Company’s ability to identify and meet optimal dealer inventory levels; the Company’s ability to accurately forecast and sustain consumer demand; the Company’s ability to mitigate increasing input costs through pricing or other measures; product offerings, promotional activities and pricing strategies by competitors that may make our products less attractive to consumers; the Company’s ability to strategically invest in innovation and new products, including as compared to our competitors; economic conditions that impact consumer spending or consumer credit, including recessionary conditions and changes in interest rates; disruptions in manufacturing facilities; product recalls and/or warranty expenses; product rework costs; impact of changes in Polaris stock price on incentive compensation plan costs; foreign currency exchange rate fluctuations; environmental and product safety regulatory activity; effects of weather on the Company’s supply chain, manufacturing operations and consumer demand; commodity costs; freight and tariff costs (tariff relief or ability to mitigate tariffs, particularly in light of the proposed policies of the new presidential administration); changes to international trade policies and agreements; uninsured product liability and class action claims (including claims seeking punitive damages) and other litigation expenses incurred due to the nature of the Company’s business; uncertainty in the consumer retail and wholesale credit markets; performance of affiliate partners; changes in tax policy; relationships with dealers and suppliers; and the general global economic, social and political environment. Investors are also directed to consider other risks and uncertainties discussed in documents filed by the Company with the Securities and Exchange Commission. The Company does not undertake any duty to any person to provide updates to its forward-looking statements except as otherwise may be required by law. The data source for retail sales figures included in this presentation is registration information provided by Polaris dealers in North America and Europe compiled by the Company or Company estimates and other industry data sources. The Company relies on information that its dealers or other third parties supply concerning retail sales, and other retail sales data sources related to Polaris and the powersports industry, and this information is subject to change. Retail sales references to total Company retail sales includes only off-road vehicles (ORV), snowmobiles, On Road and Marine in North America and International unless otherwise noted. This presentation contains certain non-GAAP financial measures, consisting of “adjusted" sales, gross profit, income before income taxes, net income attributed to Polaris Inc., diluted EPS attributed to Polaris Inc., EPS attributed to Polaris Inc., EBITDA, EBITDA Margin, and free cash flow as measures of our operating performance. Management believes these measures may be useful in performing meaningful comparisons of past and present operating results, and to understand the performance of its ongoing operations and how management views the business. Reconciliations of reported GAAP historic measures to adjusted non-GAAP measures are included in the financial schedules contained in this presentation. These measures, however, should not be construed as an alternative to any other measure of performance determined in accordance with GAAP.
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STRATEGY OVERVIEW 2025 CAPITAL MARKETS DAY 5
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2024: Navigating Market Headwinds A Prolonged Downcycle in Powersports Marine Industry Consistent decline over last eight quarters On Road Industry Contraction in six of last seven quarters Off Road Industry Four consecutive quarters of contraction Consumer uncertainty Elevated promotional levels Dealer caution and inventory destocking Financial distress at multiple OEMs Category exits EV adoption far short of expectations Source: ROHVA, MIC, NMMA data. Segments in which Polaris brands participate PII CMD 3/12/25 6
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PII CMD 3/12/25 7 Strength Through the Cycle Evolved & simplified structure Unwavering support of dealers Sustained innovation investment Confidence in our mid-cycle financial targets
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Best Customer Experience: Delivered Safety & Quality Improvements Dealer Partnership Digital Experience Powersports Access New Customers Since Pre-COVID Initial Warranty Claim Rate on MY25 Products 1.1 Million Lowest in 10 Years ORV Ridership Versus Pre-COVID* 10%+ PII CMD 3/12/25 8*Polaris ORV data for vehicles 1-3 years old
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Inspirational Brands: Delivered Authentic Partnerships Exciting Activations Engaged Fans Racing Leadership PII CMD 3/12/25 9
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Rider-Driven Innovation: Delivered PII CMD 3/12/25 10 Invented New Product Classes & Offerings Redefined Categories Listened to Customers to Deliver on Their Needs
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Adds Confidence to Mid-cycle Adjusted EBITDA Margin Targets PII CMD 3/12/25 11 Agile & Efficient Operations: Delivered Lean Manufacturing Supply Chain Efficiency Post-Sales Surveillance Design for Manufacturing 2024 Structural Savings Raw Materials Inventory $200M+ 25%
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Long-Term Trends Favor a Return to Powersports Growth Over Time Powersports Market Outlook Short-Term Market Dynamics • Consumer spending fatigue / elevated debt levels • Higher interest rates for longer • Consumer sentiment wavering • Aggressive promotional environment • Dealer inventory continues to normalize • Labor constraints and rising costs • Tariff uncertainty Long-Term Trends • Continued interest in outdoor categories • Growing interest in rural living • Adoption of connected and digital • Software defined vehicles creating new markets • Increasing dealer sophistication and partnership • Gen Z and diverse powersports growth Market Share Growth Innovation Margin Expansion Cash Generation Our Focus PII CMD 3/12/25 12
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Profits & Efficiencies Enable Re-Investment into the Business 2025 Focus: Stabilize & Execute Challenging Macro Environment STABILIZE & EXECUTE Now REFOCUS Expanded Growth Opportunities DISRUPT & EXPAND Future REVOLUTIONIZE Recovery TRANSFORM & SCALE Next REINVENT PII CMD 3/12/25 13
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Driving Profitability Today, So We Run Faster and Stronger Tomorrow 2025 Focus: Stabilize & Execute Continued Challenging Macro Environment REFOCUS Expanded Growth Opportunity REVOLUTIONIZE Recovery REINVENT Drive Lean Through Build, Design and Sell Processes Continuous Improvement in Quality Strengthen Process & Tools Margin Expansion Grow Long- Term Share Enhanced Digital Experiences Ongoing Innovation Focus Deliver on New Products Unwavering Support of Dealers PII CMD 3/12/25 14
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Efficient, Focused Operations to Accelerate Through Recovery Next: Accelerate through Recovery Continued Challenging Macro Environment REFOCUS Expanded Growth Opportunity REVOLUTIONIZE Recovery REINVENT End-to-End Lean Sustained Quality Delivery Modern Tools & AI Applications Margin Expansion Grow Long- Term Share Deeper Customer Relationships Next Gen Product Technology Portfolio Breadth Deeper Dealer Partnerships PII CMD 3/12/25 15
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Maintaining Investment for Game Changing Products in the Future Future: New Frontiers for Growth Continued Challenging Macro Environment REFOCUS Expanded Growth Opportunity REVOLUTIONIZE Recovery REINVENT World-Class Global Operations Non-Product Revenue Streams Modern Tools & AI Applications Margin Expansion Grow Long- Term Share Expanding Access to Powersports Innovation Advantage New Markets & New Customers Optimized Dealer Ecosystem PII CMD 3/12/25 16
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Sales Team Service Team #1 #1 Winning with Dealers Investing in Front- and Back-end Dealer Operations Data-Driven Network Plan + Active Engagement in Buy/Sells Disciplined Inventory & Promotions Management Proactive Partnership & Tools to Drive Retail and Dealer Profitability Net Promoter Score 70+ PII CMD 3/12/25 17 Strength Through the Cycle Allows Greater Investment in Dealer Success Dealer Techs Trained 7,500
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Off Road • Softness in Recreation mitigated by stable Utility sales • Continued success within new categories • Performance leadership demonstrated in racing dominance • Significant gains from lean focus • Driving innovation towards lower priced segments • Slow, stable growth from competitor exits and improved reliability • Managed 2024-2025 ship to keep channel clean for next year • Lack of snow negatively impacted last two seasons • Improving margin picture • R&D focused on new segments and increased platforming • Derivative ORV business with attractive market dynamics and solid profitability • Long-term customer partnerships mitigate cyclical effects • R&D portfolio highly relevant to consumer applications PII CMD 3/12/25 18 2024 Off Road Financial Highlights ORV Recreation RZR, GENERAL & XPEDITION ORV Utility RANGER & SPORTSMAN SnowmobilesPG&A Other Commercial, Gov’t/Defense, Adventures, Hammerhead 79% of Total Company Sales $5.7B in Sales 20.3% Gross Profit Margin #1 Market Share in ORV #2 Market Share in Snowmobiles Off-Road Vehicles (ORV) Snowmobiles Gov’t, Defense & Commercial
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On Road • Highly desirable brand with loyal, growing customer community • Product performance showcased in racing wins • Steady share growth for 10+years; mid-size leading in key markets • Focused portfolio supports margin potential as market dynamics improve • Most diverse, highly passionate customer / enthusiast base • Growing desirability of side-by-side format for on-road use • Strong innovation pipeline and potential to expand addressable market • Stand-alone, niche businesses serving unique auto markets in Europe • Strong moat and differentiation due to scale of markets • Stable growth with attractive margin and cash flow delivery PII CMD 3/12/25 19 2024 On Road Financial Highlights 14% of Total Company Sales $988M in Sales 19.3% *Adj. Gross Profit Margin #2 Market Share in Motorcycles Slingshot Indian Motorcycle Other Goupil, Aixam, Adventures PG&A Add Pic Add Pic Add Pic Slingshot Indian Motorcycle Aixam & Goupil *Please refer to the supporting schedules entitled "Non-GAAP Reconciliation" for reconciliations of adjusted or non-GAAP measures to the most directly comparable GAAP financial measures, which can be found in the appendix of this presentation and on our website at www.ir.polaris.com.
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Marine • Significant product refreshes and continued innovation • Strongest dealer network in the segment • Expanding price points to attract new customers while protecting premium positioning • Vertical integration within marine to enhance margin, quality and protect supply chain • Increasing pace of new product introductions • Expanding upscale features to drive margin expansion • Complementary dealer network to Bennington creates excellent coverage of Pontoon segments and geographies • Leveraging manufacturing centers of excellence for components • Leading share in Deck Boat category • Strong, healthy dealer network navigating market conditions • 32’ Sundeck and 24’ Center Console create new growth categories PII CMD 3/12/25 20 2024 Marine Financial Highlights 7% of Total Company Sales $481M in Sales 16.8% Gross Profit Margin #1 Market Share in Pontoons & Deck Boats Deck Boats Hurricane Pontoons Bennington, Godfrey Add Pic Add Pic Hurricane Godfrey Bennington
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PG&A By the Numbers $1.7 Billion Global Revenue >100K Polaris Engineered + Aftermarket Products >$300 Million Inventory >2M FT2 Distribution + Mfg Capacity 12 Sites Shipping to 120 Countries >700 Product Suppliers + Technology & Service Providers 6 Aftermarket Brands >80% Vehicles Retail with Accessories ~30% Parts ~60% Accessories ~10% Garments/ Apparel PII CMD 3/12/25 21
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PII CMD 3/12/25 22 Strength Through the Cycle Focused Execution Margin Expansion Long-term Share Growth
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OPERATIONS LEAN JOURNEY 2025 CAPITAL MARKETS DAY 23
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Focus on Agile and Efficient Operations 24 Key Focus Areas Streamlining Lean product launch Improving processes for complexity Supply chain efficiency Implementation of Lean culture PII CMD 3/12/25
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25 2024 Off Road Transformational Journey Employee Skill DevelopmentAlign operations Treat our Operators as Most Valuable Asset Improved Pilot area Product Development Process rigor alignment Non-Negotiable Quality Culture Inventory optimization module Inventory improvement plan Drive SiOP Maturity Strategic supply risk and Total Cost plan Tactical supply risk management Operator Focused Supply Certainty First Model Lines completed Launch Lean Model Lines True Lean Implementation 2024 Structural Cost Savings $30M in hourly labor productivity $30M in SiOP and expedited logistical costs Delivered Over $200 Million in Structural Savings $60M in direct material cost $20M in logistics optimization Plants variable costs down 15% YoY SiOP = Sales, Inventory, and Operations Planning PII CMD 3/12/25
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Transformational Journey Examples Dedicated Pilot Build Areas Shift for static modular pilot build to fully emulate process and line stations Cycle time validation Improved design for manufacturing Early detection of required changes Sequenced build representing station by station Safety Quality Standard Work Time Trials Mentorship & shadow training Training Employee Skills Lean at the Plants Drastically eliminate waste & reduce variation to drive incremental output with same resources Treat Our Operators as Most Valuable Asset Non-Negotiable Quality Culture True Lean Implementation • Elimination of waste • Reduced variation risk • Space reduction • Improved material flow • Reduce periodic work Before After Key Results
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Continuously Raising the Bar 27 Ways We Measure Progress Safety From World class safety culture and performance To Remains a top priority Quality From Best clean build ever achieved 80% To Rolled first pass yield (Leading indicator of quality) Delivery Cost From Build Attainment at any cost To Efficient Build Attainment SiOP: Actively Managed Inventory 20 21 22 23 24 TRIR World Class 20 21 22 23 24 Clean Build (%) RFPY % 20 21 22 23 24 Attainment (%) $- $100 $200 $300 $400 $500 $600 $700 50 60 70 80 90 100 110 20 21 22 23 24 Inventory Cost per Hour Raw Inventory 25% Down Plant Variable Cost Down 15% World-Class Performance Deployed Rolled First Pass Yield 40% Reduction in OSHA Rate PII CMD 3/12/25
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28 2025 Transformational Journey Continued higher production efficiency Assembler centric culture Treat our Operators like our most Valuable Asset Employee Skill Training Enhancements Continued focus on Rolled First Pass Yield Non-Negotiable Culture of Quality SiOP: Actively managed inventory Demand driven SiOP Leverage SiOP Further improved Pilot Area Stable New Product DFAM (Design for Lean Assembly & Manufacturing) Drive NPI Maturity Expanding Lean Model Lines to Roseau and Opole True Lean proliferation True Lean Implementation Expecting to Achieve ~$40 Million in Structural Cost Savings 28 Increase labor productivity Lower working capital: Optimized Inventory Localization boost Improved cost of poor quality Variable costs in plants down ~10% Operations Business Process Excellence Drive reliable process excellenceProcess Excellence Training Process Excellence Maturity improvement 2025 Targets PII CMD 3/12/25
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Confident We Can Emerge Stronger PII CMD 3/12/25 29 Evidence of Lean Results are real Teams aligned on 2025 priorities Building a Lean culture Made progress on our goals in 2024
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FINANCIAL REVIEW 2025 CAPITAL MARKETS DAY 30
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Near-Term Focus on Stabilizing Businesses, Driving Efficiencies & Strengthening How We Operate Our Takeaways From 2024 Tough year all around, but we did the right things that will make Polaris stronger in the long run Protected dealers - Pulled inventory down in the channel Optimized cost structure for current and future state Continued improving processes Invested in innovation PII CMD 3/12/25 31
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939K 1,151K 1,030K 940K 932K 872K ~860K 2017 - 2019 Avg 2020 2021 2022 2023 2024 2025 Estimate Off Road Industry Units On Road Industry Units Marine Industry Units ~160K ~655K 63K 219K ~50K 658K Industry Context *On Road Industry includes FTR segment for comparable purposes +23% -11% -9% -1% -6% -1% **Historical industry shown as ROHVA (ORV), ISMA (Snow), MIC (ATV / Motorcycle), SSI (Boats) 5 Straight Years of Industry Declines; 2025 Remains Below Pre-Pandemic Average Industry expected to be ~8% lower than Pre-Covid averages: Utility growth with pressure in Recreation, Snow, On Road & Marine PII CMD 3/12/25 32
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With Industry Challenged, Increased Focus on Dealer Health Recalibrated Dealer Inventory in 2024 in Challenging Macro Environment PII CMD 3/12/25 2022 2023 2024 Retail Ship Ending Dealer Inv Ship > Retail Refill Channel Post-Covid and Supply Chain Disruptions Retail > Ship Recalibrate Channel for Softer Macro 33
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What Happened in 2024: EBITDA Financial Impact $1,021 $635 2023 Volume Mix/Net Price/ Costs Operating Expenses FX 2024 Retail 8% Lower & Dealer Inventory Recalibration Continued US Dollar StrengthLower Incentive Compensation & Cost Controls Higher Promotional Environment & Flooring, Partially Offset by Operational Efficiencies Margin 11.4% Margin 8.9% PII CMD 3/12/25 34
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Shifting Gears to 2025 and Beyond PII CMD 3/12/25 35
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Focusing on Margins Focus areas include Operations, Platforming, Productivity and Lean Agile & Efficient Operations key to Margin Expansion Over time we are expecting a recovery in Volume PII CMD 3/12/25 36
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Multiple Drivers Lead to Margin Expansion PII CMD 3/12/25 Margin Improvement Drivers • Optimize plants with Lean • Minimal rework • Increase output with same footprint and employee base • Reduce unabsorbed overhead Lean Operations • Modest relief on promotions with healthier dealer inventory • Achieve higher price with innovation • Finance promo dollars reduced given lower average rates versus 2024 • Lower flooring interest with lower rates and balances Net Pricing (MSRP & Promotions) • A return to more normal volume levels • Entering value tier segments • New innovation leads to market share gains • Platforming equates to higher incremental margins Volume Normalization 37
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Adjusted EBITDA % Progression Margin Improvement Drivers Adjusted* EBITDA Growth Continue to Drive Towards Mid-Teens Adjusted EBITDA Margin in Mid-Cycle Backdrop 2024 Adj. EBITDA 8.9% Volume Normalization ++++ Lean (MFG Optimization/ Modular Design) ++++ Operating Expense Leverage +++ Net Pricing +++ Flooring Normalization ++ Tariffs ? Foreign Currency ? Mid-Cycle Adj. EBITDA Target Mid-Teens + Progress against goal + / - Impact yet to materialize 8.9% 2024 Market Normalization Mid-Cycle Low- Teens Mid- Teens PII CMD 3/12/25 38*Please refer to the supporting schedules entitled "Non-GAAP Reconciliation" for reconciliations of adjusted or non-GAAP measures to the most directly comparable GAAP financial measures, which can be found in the appendix of this presentation and on our website at www.ir.polaris.com.
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2025 Expectations For Cash ROIC Net Debt to EBITDA Key Drivers Cash Flow Generation and Balance Sheet Disciplined Capital Deployment & Earnings Growth Allows ROIC Recovery to Historical Levels PII CMD 3/12/25 39 Cash From Earnings Working Capital Cash From Operations CapEx Free Cash Flow Dividend Debt Pay Down 25% 22% 18% 9% 2021 2022 2023 2024 Future State • Maintain investment grade metrics • Cash builds as volume recovers • Strong working capital metrics • Earnings recovery • Leverage and operational efficiencies • Working capital normalization • Assumes no M&A Projected 20%+ 2024 2025 Future State Leverage 2.8x ~3.0x 1.0x - 2.0x ~$350M ~$500M Reduce Finished Goods Inventory Continue to Invest in Business Maintain Aristocrat Status Healthier Debt Leverage
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Disciplined and Focused Priorities Focused Capital Deployment Strategy 1 2 3 Invest in Business Debt Pay Down Maintain Dividend Aristocrat Status • Tooling for innovative new products • Technology enablers • New or improved manufacturing capabilities • 2025 marks the 30th straight year increasing the dividend • Maintain investment grade metrics PII CMD 3/12/25 40
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Ability to Remain Agile & Focused on Proper Channels PII CMD 3/12/25 Tariff Impact and Potential Mitigation Efforts • $2 billion sales from Mexico manufacturing, most is USMCA compliant • $500 million in components from China: 50% to U.S. & 50% to Mexico • < $500 million to Canada; import < $50 million from Canada • Original guidance was for $60-$70 million in tariffs; now likely higher Dollar Breakdown • Methodical production location decisions • Forward deployment of inventory • Lobbying efforts on regulatory policy • Pricing actions (both consumers and vendors) Potential Mitigation Efforts • Situation remains extremely fluid • Additional Chinese tariffs add pressure • ~100 days inventory at dealers and additional inventory at U.S. facility • Hedges and contractual terms limit price volatility for ~60% of our aluminum and steel purchases Current Situation 41
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Growing Profit + Higher Cash Flow + Capital Allocation = Compounding Shareholder Returns PII CMD 3/12/25 42 Our Focus Agile & efficient operations Improving cash generation capabilities Focused capital allocation strategy Expanding margins Positioned for volume recovery
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43 Capital Markets Day – March 12, 2025 Q & A TIME (MT) TOPIC PRESENTER 4:00 – 4:05 Welcome J.C. Weigelt, Vice President of Investor Relations 4:05 – 4:30 Strategy Overview Mike Speetzen, Chief Executive Officer 4:30 – 4:45 Operations Lean Journey Marc Suarez, Vice President of Off Road Operations 4:45 – 5:00 Financial Review Bob Mack, Chief Financial Officer 5:00 – 5:45 Q&A
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PII CMD 3/12/25 44 Appendix • FY 2024 Financial Results • Non-GAAP Reconciliations – Total Company • Non-GAAP Reconciliations – Net Income to Adjusted EBITDA • Non-GAAP Reconciliations – Segments / Cash Flow • 2025 Guidance Adjustments
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PII CMD 3/12/25 45 Non-GAAP Reconciliations – Total Company Reconciliation of GAAP "Reported" Results to Non-GAAP "Adjusted" Results (In Millions, Except Per Share Data; Unaudited) Three months ended December 31, Twelve months ended December 31, 2024 2023 2024 2023 Sales $ 1,755.4 $ 2,289.2 $ 7,175.4 $ 8,934.4 Restructuring (3) (0.7) — (0.7) — Adjusted sales 1,754.7 2,289.2 7,174.7 8,934.4 Gross profit 357.9 476.9 1,466.8 1,959.9 Restructuring (3) 11.6 3.0 18.7 3.0 Adjusted gross profit 369.5 479.9 1,485.5 1,962.9 Income before income taxes 12.2 120.8 140.8 620.4 Distributions from other affiliates (1) — (1.4) — (1.4) Acquisition-related costs (2) 0.2 0.6 1.4 1.3 Restructuring (3) 12.7 6.8 35.2 8.2 Intangible amortization (4) 4.4 4.4 17.7 17.7 Class action litigation expenses (5) 1.6 3.1 7.0 8.5 Intangible asset and investment impairment (7) 29.5 — 29.5 — Adjusted income before income taxes 60.6 134.3 231.6 654.7 Net income attributable to Polaris Inc. 10.6 103.4 110.8 502.8 Distributions from other affiliates (1) — (1.4) — (1.4) Acquisition-related costs (2) 0.1 0.5 1.0 1.0 Restructuring (3) 9.7 5.2 26.8 6.3 Intangible amortization (4) 3.4 3.4 13.5 13.5 Class action litigation expenses (5) 1.2 2.3 5.4 6.4 Intangible asset and investment impairment (7) 27.3 — 27.3 — Adjusted net income attributable to Polaris Inc.(6) $ 52.3 $ 113.4 $ 184.8 $ 528.6 Diluted EPS attributable to Polaris Inc. $ 0.19 $ 1.81 $ 1.95 $ 8.71 Distributions from other affiliates (1) — (0.02) — (0.02) Acquisition-related costs (2) — 0.01 0.02 0.02 Restructuring (3) 0.17 0.09 0.47 0.11 Intangible amortization (4) 0.06 0.05 0.24 0.23 Class action litigation expenses (5) 0.02 0.04 0.09 0.11 Intangible asset and investment impairment (7) 0.48 — 0.48 — Adjusted EPS attributable to Polaris Inc. (6) $ 0.92 $ 1.98 $ 3.25 $ 9.16 Adjustments: (1) Represents distributions received related to an impaired investment held by the Company (2) Represents adjustments for integration and acquisition-related expenses (3) Represents adjustments for corporate restructuring and the wind down of the FTR product line within the Company's On Road segment (4) Represents amortization expense for intangible assets acquired through business combinations (5) Represents adjustments for certain class action litigation-related expenses (6) The Company used its estimated statutory tax rate of 23.8% for the non-GAAP adjustments in 2024 and 2023, except for non-deductible items (7) Represents impairment charges related to other intangible assets associated with the Company's Off Road segment and an impairment charge related to an investment held by the Company
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PII CMD 3/12/25 46 Non-GAAP Reconciliations – Net Income to Adjusted EBITDA Reconciliation of Net Income to Adjusted EBITDA (In Millions, Unaudited) Three months ended December 31, Twelve months ended December 31, 2024 2023 2024 2023 Adjusted sales 1,754.7 2,289.2 7,174.7 8,934.4 Net income 10.8 103.3 111.2 502.7 Provision for income taxes 1.4 17.5 29.6 117.7 Interest expense 34.3 32.8 137.0 125.0 Depreciation 73.5 67.6 264.4 241.2 Intangible amortization (4) 6.0 4.4 21.9 17.7 Distributions from other affiliates (1) — (1.4) — (1.4) Acquisition-related costs (2) 0.2 0.6 1.4 1.3 Restructuring (3) 10.9 6.8 33.4 8.2 Class action litigation expenses (5) 1.6 3.1 7.0 8.5 Intangible asset and investment impairment (6) 29.5 — 29.5 — Adjusted EBITDA $ 168.2 $ 234.7 $ 635.4 $ 1,020.9 Adjusted EBITDA Margin 9.6 % 10.3 % 8.9 % 11.4 % Adjustments: (1) Represents distributions received related to an impaired investment held by the Company (2) Represents adjustments for integration and acquisition-related expenses (3) Represents adjustments for corporate restructuring and the wind down of the FTR product line within the Company's On Road segment (4) Represents amortization expense for intangible assets acquired through business combinations and asset acquisitions (5) Represents adjustments for certain class action litigation-related expenses (6) Represents impairment charges related to other intangible assets associated with the Company's Off Road segment and an impairment charge related to an investment held by the Company
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PII CMD 3/12/25 47 Non-GAAP Reconciliations – Segments / Cash Flow Reconciliation of GAAP Operating Cash Flow to Non-GAAP Adjusted Free Cash Flow (In Millions, Unaudited) Reconciliation of GAAP Segment Gross Profit to Non-GAAP Segment Gross Profit (In Millions, Unaudited) Twelve months ended December 31, 2024 2023 Net cash provided by operating activities 268.2 925.8 Purchase of property and equipment (261.7) (412.6) Distributions from (investment in) finance affiliate, net 58.2 (6.5) Adjusted free cash flow $ 64.7 $ 506.7 Adjustments: (1) Represents adjustments for corporate restructuring (2) Represents adjustments for corporate restructuring and the wind down of the FTR product line within the Company's On Road segment Three months ended December 31, Twelve months ended December 31, 2024 2023 2024 2023 Off Road segment gross profit $ 307.9 $ 409.0 $ 1,160.5 $ 1,531.6 Restructuring (1) 0.2 — 4.3 — Adjusted Off Road segment gross profit 308.1 409.0 1,164.8 1,531.6 On Road segment gross profit 18.0 31.7 179.4 240.4 Restructuring (2) 11.2 — 11.2 — Adjusted On Road segment gross profit 29.2 31.7 190.6 240.4 Marine segment gross profit 23.7 25.7 80.6 169.0 Restructuring (1) 0.1 0.3 0.1 0.3 Adjusted Marine segment gross profit 23.8 26.0 80.7 169.3 Corporate segment gross profit 8.3 10.5 46.3 18.9 Restructuring (1) 0.1 2.7 3.1 2.7 Adjusted Corporate segment gross profit 8.4 13.2 49.4 21.6 Total gross profit 357.9 476.9 1,466.8 1,959.9 Total adjustments 11.6 3.0 18.7 3.0 Adjusted total gross profit $ 369.5 $ 479.9 $ 1,485.5 $ 1,962.9
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PII CMD 3/12/25 48 Non-GAAP Reconciliations – Segments Adjustments: (1) Represents adjustments for the wind down of the FTR product line within the Company's On Road segment. All of the sales adjustments for the periods presented relate to the Company's On Road segment Three months ended December 31, Twelve months ended December 31, 2024 2023 2024 2023 On Road segment sales 180.8 229.2 987.8 1,184.6 Restructuring (1) (0.7) — (0.7) — Adjusted On Road segment sales 180.1 229.2 987.1 1,184.6 Reconciliation of GAAP Segment Sales to Non-GAAP Segment Sales (In Millions, Unaudited) Key Definitions: This presentation contains certain GAAP financial measures which have been "adjusted" for certain revenues, expenses, gains and losses and include “adjusted” sales, “adjusted" gross profit, income before taxes, net income, EBITDA, EBITDA margin, and net income per diluted share (non-GAAP measures) as measures of our operating performance. Management believes these measures may be useful in performing meaningful comparisons of past and present operating results, to understand the performance of its ongoing operations and how management views the business. These measures, however, should not be construed as an alternative to any other measure of performance determined in accordance with GAAP.
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PII CMD 3/12/25 49 2025 Guidance Adjustments 2025 adjusted guidance excludes the pre-tax effect of restructuring costs of approximately $10 million, and approximately $20 million for class action litigation-related expenses. Intangible amortization of approximately $18 million related to all acquisitions has also been excluded. The Company has not provided reconciliations of guidance for adjusted earnings per share, adjusted EBITDA margin, adjusted gross profit margin and adjusted free cash flow, in reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K. The Company is unable, without unreasonable efforts, to forecast certain items required to develop meaningful comparable GAAP financial measures. These items include restructuring and acquisition integration costs that are difficult to predict in advance in order to include in a GAAP estimate.