Polaris Inc. Liquidation Value

Polaris Inc. (PII) as of March 31, 2026 presents a deeply negative liquidation recovery posture, consistent with prior periods. Total assets of $5.24B must be haircut substantially before applying the standard liquidation lens: cash of $282M recovers at par; net AR of $249M recovers at roughly $224-237M (90-95%); inventory of $1.57B (net of $92.4M reserve) recovers at approximately $941M at a 60% rate; PP&E net of $996M recovers at 50-70%, yielding $498-697M; goodwill of $348.8M and other intangibles net of $446.2M recover at zero. Applying mid-range haircuts, total liquidation asset recovery approximates $2.1-2.3B. Against total liabilities of $4.48B carried at face value, equity recovery is deeply negative by approximately $2.2-2.4B. This is directionally consistent with MFFAIS CLV of -$1.94B and LLV of -$1.69B.

Several material developments in Q1 2026 worsen the liquidation posture relative to the prior 10-K (December 31, 2025). First, the divestiture of Indian Motorcycle on February 2, 2026 generated a $31.6M loss on disposal groups and eliminated Indian-related assets and revenues; goodwill dropped from $396.3M (December 31, 2025) to $348.8M, though this reflects segment reallocation, not impairment. Second, revolving credit facility draws surged by $551.9M net in Q1 2026, with $593.8M now outstanding under the revolver and $468.8M under the term loan, raising total debt to $2.09B. The company is in a Credit Facility Amendment Covenant Relief Period through June 30, 2026, during which leverage ratio tolerance is expanded to 5.50x and the interest coverage minimum is reduced to 2.00x. Third, the product liability accrual increased from $374.1M (December 31, 2025) to $442.3M, a $68.2M sequential jump, partially offset by insurance recoveries of $223.9M but net of recoveries still represents $218.4M of accrued claims. Fourth, operating cash flow swung from +$83.2M (Q1 2025) to -$320.2M (Q1 2026), largely driven by working capital build including a $173M inventory increase. Fifth, deferred tax assets of $521.1M carry zero recovery value in liquidation. The segment reorganization and goodwill reallocation (not recast in prior periods) limit direct comparability of segment-level intangibles. The Polaris Acceptance joint venture repurchase obligation of approximately $268.5M (15% of prior-year average month-end Polaris Acceptance receivables) and an additional ~$56.8M in other repurchase obligations represent contingent liabilities not fully reflected in the accrued liabilities balance, further pressuring liquidation recovery. Filing discusses the Polaris Acceptance repurchase obligation and $325.3M aggregate wholesale repurchase exposure in MD&A but does not separately XBRL-tag these contingent liabilities.