PII

The 2025 print is a structural break, not a blip. Revenue was flat at $7.15B but the P&L collapsed below it: operating income swung to -$349M from +$291M, and net income to -$466M from +$111M. MD&A attributes this to a 130bp gross-margin compression (19.1% vs 20.4%) from 'incremental tariff charges' and 'higher promotional costs,' plus $383M of one-time charges ($330M loss on the Indian Motorcycle held-for-sale group and $53M goodwill impairment). Strip those and the underlying business is still only mid-single-digit EBITDA margin — Adjusted EBITDA fell to $410M from $635M, a 35% YoY drop on flat revenue, which is operating deleverage you cannot tariff-explain away.

The balance sheet is weakening in lockstep. Equity fell 36% to $828M, retained earnings flipped to -$469M, and cash collapsed 52% to $138M against $554M of current debt and $1.51B long-term debt — liabilities/equity is now 4.89x. Yet management raised the dividend for the 31st consecutive year ($150M paid in 2025, ~20% of operating cash flow) while equity is being impaired. The $741M operating cash flow looks reassuring but is inflated by working-capital release on shrinking inventory; sustained at trough demand it is not a free pass.