BRP Inc. Q4 FY2026 earnings call

• Denis joined BRP two months ago, spent time diving into business, met employees, visited sites, engaged with dealers. • Company managed volatile tariff environment and challenging competitive landscape, delivered financial results above initial expectation. • Introduced new key models, divested two marine businesses, and M28 strategic plan. • Ended fiscal 26 with healthy network inventory position, North American dealer's inventory down. • North American power support retail increased 12% in Q4, with market share gains. • EMEA markets relatively muted but some growth in ORV and PwC offset by snowmobile trends. • Latin America and Asia Pacific retail up 1% in Q4. • New RV models had strong impact on retail momentum. • Sébastien discussed revenue growth, profitability metrics, impairment charge on EV and light mobility assets, gross profit, normalized EBITDA, cash generation, balance sheet, dividend increase, and buybacks. • Team progressed on M28 strategic initiatives like gaining market share, growing dealer network, expanding international business, and improving efficiency.

Fiscal 26 highlights: Revenues of $8.4 billion, normalized EBITDA of $1.1 billion, normalized EPS of $521, solid free cash flow of more than $900 million. North American dealer's inventory down 17% from a year ago and down 28% over two years. North American power support retail increasing 12% in Q4, with side-by-side industry up low single digits, ATV industry down mid-single digits but Canon outpacing, snowmobiles outpacing industry despite competition, Q4 off-season for some products. Revenue in Q4 was $2.5 billion, up 16% across all product categories. Gross profit $582 million, margin 23.7% (380 basis points improvement from last year). Normalized EBITDA increased 47% to $364 million, normalized EPS more than doubled to $2.21.

• Entered fiscal 27 with strong momentum, well positioned to benefit from improved alignment between wholesale and retail. • Expect revenues to grow between 5% and 8% or normalize EBITDA between 6% and 16%, and normalized EPS to end between $5.50 and $6.50. • Retail and fiscal 27 continues to perform well, tracking in line with initial plan for the year. • Assuming demand continues to track with plan and incorporating impact of recent oil, energy, and commodity prices, expect results in upper half of guidance range. • In alternative scenario where demand gradually softens, impact on first-half results would be limited, adjustment would occur primarily in second half. • Trending towards strong first half of the year, including normalized dividend growth in the 40% range for Q1.

• Volatile tariff environment and challenging competitive landscape. • Uncertainty around broader economic environment due to recent events. • Elevated levels of non-current inventory from competitors in some product lines (e.g., small OEMs in ORV, some OEMs in personal watercraft). • Impact of higher oil, energy, and commodity prices on the business. • Uncertainty regarding the refund request process for tariffs.

Q: Benoit Poirier from Desjardins asked about Denis's first impression and opportunities to bring value.

A: Denis mentioned similarities with auto industry in volume, brand, network, product quality, and differences in motorsports products.

Q: Benoit Poirier followed up on fiscal year 27 assumptions on tariffs, promotional activities, and market share gain.

A: Denis said it's too early to call exceeding M28 target, expected EBITDA margin expansion from gross margin, baked in oil barrel increase impact.

Q: Robin Farley from UBS clarified guidance, fuel price baking, ORV retail expectation, and restocking comping.

A: Baked in higher fuel price impact, expecting flat industry for power sports, market share gains, and $350 to $450 million positive tailwind from destocking.

Q: Sabahat Khan from RBC Capital Markets asked about EPS guidance bottom end and inventory mix.

A: Mid-single-digit decline outlook due to potential volume reduction, inventory in good spot, competition's non-current inventory situation.

Q: Sabahat Khan followed up on retail sales share gains and new product uptake.

A: New products driving growth, Ski-Doo and Defender HD11 having good order trends.

Q: Joe Altobello from Raymond James asked about changes at BRP and M28 targets.

A: Denis said no quick changes, M28 plan solid, product lineup solid.

Q: Joe Altobello followed up on EPS growth and tariffs.

A: EPS growth from volume, market share gains, dealer network expansion, flattish tariff impact.

Q: Mark Petrie from CIBC asked about dealer network growth and feedback.

A: Grew North American dealers, dealer sentiment increasing, growth potential in ORV in North America.

Q: Mark Petrie followed up on macro uncertainties impact.

A: No reaction seen from dealers or consumers yet.

Q: Anthony Bonadio from Wells Fargo asked about lean value initiative and tariffs refund.

A: Expecting 100 basis point value from lean initiative, monitoring tariff refund process.

Q: Martin Landry from Stifel asked about correlation between industry demand and oil prices.

A: Impact depends on oil price extent, duration, and overall economy.

Q: Martin Landry followed up on regional assumptions in guidance.

A: Applied similar assumptions globally, growth in North America from ORV market share.

Q: Shiansu from BNP Paribas asked about first quarter guidance and utility segment customer base.

A: First quarter revenue growth from HD11, side-by-side, and Oregon, utility segment attracting new customers and having product hit.

Q: Luke Annan from Canaccord Generity asked about guidance tailwinds and Telwater.

A: Lower guidance implies loss of sales program tailwind, Telwater still classified as discontinued operation.

Q: Tristan Thomas Martin from BMO Capital Market asked about HD11 production ramp and utility demand in high oil prices.

A: HD11 production ramp finished, no high correlation between utility demand and high oil prices.

Q: Jamie Katz from Morningstar asked about demand trends on premium and value-seeking behavior.

A: No changes in demand trends, affluent customer trend continues, financing mix unchanged.

Q: Cameron Darkson from National Bank asked about free cash flow and capital allocation.

A: Expect strong free cash flow in fiscal 27, plan to be active on buybacks.

Q: Alice Wickland from Baird asked about utility side-by-side segment and cab category momentum.

A: Cab category has momentum due to consumer demand for automotive features, expect continued growth.

Q: Catherine Song from TD Cowan asked about margin guidance and EV rightsizing.

A: EV rightsizing is a tailwind but offset by investments in M28 plan.

Q: Garrick Johnson from Seaport Research asked about oil impact on costs and utility demand from bonus depreciation.

A: Hedged on commodities, benefit from bonus depreciation in utility.

Q: Jonathan Goldman from Scotiabank asked about margin expansion drivers and industry inventory.

A: Margin expansion drivers include volume, mix, sales programs, lean cost improvements; industry inventory in good shape overall with some OEMs having more non-current inventory.