DOOO — BRP Inc.

Summary of BRP Inc. Q2 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: $1.9 billion, up 4% year-over-year.
• Normalized EBITDA: $213 million.
• Normalized EPS: $0.92, including approximately $0.35 from tax credits.
• Free Cash Flow: Nearly $100 million.
• Gross Profit Margin: 21.1%, down year-over-year due to lower capacity utilization and unfavorable product mix.
• Network Inventory: Reduced by 20% year-over-year, with a healthier inventory position across most product lines.

2. Strategic Updates and Business Highlights

• Market Share: Gained market share in Can-Am models; however, lost share in noncurrent units due to low inventory.
• Product Launches: Successful introduction of new models at Club BRP, including the revamped Can-Am Defender and expanded electric vehicle offerings.
• International Performance: Strong growth in Latin America (22% retail increase) and a 5% increase in Asia Pacific, while EMEA saw a 13% decline.
• Divestiture: Announced the sale of Manitou, expected to close soon.

3. Forward Guidance and Outlook

• Fiscal Year 2026 Guidance:
  • Revenue expected between $8.15 billion and $8.3 billion.
  • Normalized EBITDA forecasted between $1.04 billion and $1.09 billion.
  • Normalized EPS projected to range from $4.25 to $4.75.
• Second Half Expectations: Anticipated growth of 8% to 12% in revenues, with normalized EBITDA expected to increase by 22% to 31% year-over-year.

4. Bad News, Challenges, or Points of Concern

• Tariff Headwinds: Estimated gross tariff impact increased to $90 million due to rising steel and aluminum tariffs, with potential net impacts of $0.25 to $0.30 on EPS.
• Retail Performance: North American Powersport retail down 11%, with a 15% decline in the U.S. market offset by growth in Canada (4%).
• Electric Vehicle Sales: Slower-than-expected ramp-up in electric motorcycle sales amid a general slowdown in global EV adoption.
• Competitive Pressures: High promotional activity from competitors affecting market share in noncurrent units.

5. Notable Q&A Insights

• Tariff Mitigation Strategies: Management is actively working to optimize sourcing and production to mitigate tariff impacts.
• Retail Expectations: Retail is expected to improve in the second half, particularly for ORVs, as inventory levels normalize and new products are introduced.
• Market Dynamics: The company is optimistic about gaining market share in the utility segment, particularly with the new Defender model.
• Future Earnings Power: Management expressed confidence in the company's ability to grow earnings, contingent on favorable industry dynamics and macroeconomic conditions.

This summary encapsulates the key points from BRP's Q2 2026 earnings call, highlighting financial performance, strategic initiatives, future outlook, and challenges faced by the company.