Polaris Inc.PII
Polaris Inc. Debt Disclosure
Financing Agreements
The carrying value of financing obligations and the average related interest rates were as follows (in millions):
| Average interest rate as of December 31, 2025 | Maturity | December 31, 2025 | December 31, 2024 | ||||||||||||||||||||
| Incremental term loan facility | — | — | $ | — | $ | 400.0 | |||||||||||||||||
| Private senior notes | — | — | — | 350.0 | |||||||||||||||||||
| Senior notes due 2029 | 6.95% | March 2029 | 500.0 | 500.0 | |||||||||||||||||||
| Revolving loan facility | 2.23% | December 2029 | 35.4 | 282.0 | |||||||||||||||||||
| Term loan facility | 5.82% | December 2029 | 475.0 | 500.0 | |||||||||||||||||||
| Senior notes due 2031 | 5.60% | March 2031 | 500.0 | — | |||||||||||||||||||
| Finance lease obligations | 5.24% | Various through 2029 | 7.3 | 8.1 | |||||||||||||||||||
| Notes payable and other | 4.28% | Various through 2030 | 39.2 | 47.1 | |||||||||||||||||||
| Unamortized debt issuance costs and discounts | (17.4) | (14.8) | |||||||||||||||||||||
| Total financing obligations | $ | 1,539.5 | $ | 2,072.4 | |||||||||||||||||||
| Less: Current financing obligations | 34.8 | 434.3 | |||||||||||||||||||||
| Total long-term financing obligations | $ | 1,504.7 | $ | 1,638.1 | |||||||||||||||||||
The following summarizes activity under the Company’s credit arrangements (in millions):
| 2025 | 2024 | 2023 | |||||||||||||||
Total borrowings as of December 31 | $ | 1,510.4 | $ | 2,032.0 | $ | 1,858.2 | |||||||||||
Average outstanding borrowings during year | $ | 1,987.2 | $ | 2,175.5 | $ | 2,159.3 | |||||||||||
Maximum outstanding borrowings during year | $ | 2,241.6 | $ | 2,329.3 | $ | 2,386.6 | |||||||||||
Weighted-average interest rate as of December 31 | 5.82% | 5.77% | 5.67% | ||||||||||||||
Debt issuance costs and discounts are recognized as a reduction in the carrying value of the related long-term debt in the consolidated balance sheets and are amortized to interest expense in the consolidated statements of (loss) income over the expected remaining terms of the related debt.
As of December 31, 2025, the Company had open letters of credit totaling $58.4 million. The amounts are primarily related to inventory purchases and are reduced as the purchases are received.
Private senior notes. In December 2010, the Company entered into an unsecured Master Note Purchase Agreement. In July 2018, the Company issued $350 million of unsecured senior notes due in July 2028 pursuant to the Master Note Purchase Agreement. All outstanding unsecured senior notes were prepaid in full in June 2025 using proceeds of revolving loans under the Company’s unsecured credit facility.
Unsecured credit facility. The Company maintains an unsecured credit facility which consists of a term loan facility (the “Term Loan Facility”) and a revolving loan facility (the “Revolving Loan Facility”). In July 2018, the Company amended the credit facility to increase its Term Loan Facility to $1,180 million. An amendment was also completed in December 2024 that reduced the Term Loan Facility to $500.0 million, of which $475.0 million was outstanding as of December 31, 2025, and extend the maturity date of the Term Loan Facility to December 2029. The Company is required to make principal payments under the Term Loan Facility totaling $25.0 million over the next 12 months. The amendment, completed in December 2024, also increased the Revolving Loan Facility to $1.4 billion, of which $35.4 million was outstanding as of December 31, 2025, and extended the maturity date to December 2029. In June 2025, the Company further amended the credit facility (the “Credit Facility Amendment”) to modify the financial covenants in the existing credit agreement for each quarter ending June 30, 2025 through and including June 30, 2026 (the “Covenant Relief Period”). During the Covenant Relief Period, the Credit Facility Amendment limits the Company from repurchasing shares and paying dividends other than regular quarterly dividends and certain other exceptions, and limits the amount of debt certain subsidiaries of the Company may incur. Interest under the Term Loan Facility and Revolving Loan Facility is charged at rates based on adjusted Term SOFR plus the applicable add-on percentage, as defined in the credit agreement.
In July 2024, the Company amended the credit facility to provide for a new incremental 364-day term loan in the amount of $400 million (the “Incremental Term Loan Facility”). At the time of issuance, the Incremental Term Loan Facility had a term ending in July 2025. The Credit Facility Amendment extended the maturity date of the Incremental Term Loan Facility to June 26, 2026. The Incremental Term Loan Facility was prepaid in full in November 2025 using proceeds from the Company’s Senior Notes due 2031 issued in November 2025 in an underwritten public offering.
The credit agreement contains covenants that require the Company to maintain certain financial ratios, including minimum interest coverage and maximum leverage ratios. The agreements require the Company to maintain an interest coverage ratio of not less than 3.00 to 1.00 and a leverage ratio of not more than 3.50 to 1.00 on a rolling four quarter basis. The interest coverage ratio is calculated as Adjusted EBITDA to interest expense for the then most-recently ended four fiscal quarters. The leverage ratio is calculated as consolidated funded indebtedness less cash and cash equivalents, capped at $300 million, to Adjusted EBITDA for the then most-recently ended four fiscal quarters. The Credit Facility Amendment completed in June 2025 modified the requirements related to the interest coverage ratio and leverage ratio during the Covenant Relief Period. During the Covenant Relief Period, the interest coverage ratio is 2.50 to 1.00 for the quarters ending June 30, 2025, September 30, 2025 and December 31, 2025, and 2.00 to 1.00 for the quarters ending March 31, 2026 and June 30, 2026. During the Covenant Relief Period, the leverage ratio is 4.00 to 1.00 for the quarter ending June 30, 2025, 4.50 to 1.00 for the quarter ending September 30, 2025, and 5.50 to 1.00 for the quarters ending December 31, 2025, March 31, 2026 and June 30, 2026. The Company was in compliance with all such covenants as of December 31, 2025.
Senior notes. In November 2023, the Company issued $500 million aggregate principal amount of 6.95% Senior Notes due 2029 in an underwritten public offering. The Company received approximately $492 million in net proceeds from the offering after deducting the underwriting discount and other fees and expenses. The 6.95% Senior Note bear interest at a rate of 6.95% and mature in March 2029. In November 2025, the Company issued $500 million aggregate principal amount of 5.60% Senior Notes due 2031 in an underwritten public offering. The Company received approximately $497 million in net proceeds from the offering after deducting the underwriting discount and other fees and expenses. The 5.60% Senior Notes bear interest at a rate of 5.60% and mature in March 2031. All of the Company’s senior notes are governed by an indenture and are subject to customary covenants and make-whole provisions upon early redemption.
Acquisition-related deferred payments. On July 2, 2018, pursuant to the Agreement and Plan of Merger dated May 29, 2018, the Company completed the acquisition of Boat Holdings, LLC, a privately held Delaware limited liability company, headquartered in Elkhart, Indiana that manufactures boats (“Boat Holdings”). As a component of the Boat Holdings merger agreement, the Company has committed to make a series of deferred payments to the former owners following the closing date of the merger through July 2030. The original discounted payable was for $76.7 million, of which $36.8 million was outstanding as of December 31, 2025. The outstanding balance is included in long-term financing obligations and current financing obligations in the consolidated balance sheets.
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.