BRP, Inc. Q1 FY2026 earnings call

• Financial Highlights: Ended Q1 with revenue $1.8 billion, normalized EBITDA $201 million, normalized EPS $0.47, and strong free cash flow generation of $162 million. - Business Developments: Announced sale of Telwater and closed sale of Alumacraft; process for Manitou ongoing. Design and innovation team named Red Dot Design Team of the Year 2025. - Inventory Management: Achieved 15% year-over-year network inventory reduction in North America, with spring pre-orders back to a normal rate of ~30% of production already sold. - Product Launches: First shipment of Can-Am Pulse and Origin motorcycles to North America and Europe; dealer event in August with model year '26 product news planned.

Powersport Retail: In North America, Powersport retail held steady with 21% growth in Canada (fueled by strong snowmobile end season) and 6% decline in the US. Internationally, EMEA retail down 22%, Asia Pacific down 13%, while Latin America up 18%. Year-Round Product: Revenue down 4% to $1.1B. Can-Am side-by-side down ~10%, ATV retail down low single-digit, three-wheel vehicle down high 20% early in season, and two-wheel started shipments of Can-Am Pulse and Origin motorcycles. Seasonal Product: Revenue down 22% to $419M. North American snowmobile retail down high-teen percentage but outperformed industry during the quarter, Scandinavia retail in line with industry, Sea-Doo products retail in line with expectation, Latin America growth. Powersport Parts, Accessories and Apparel and OEM Engine: Revenue up 5% to $322M driven by higher snowmobile parts volume.

• Tariff Impact: Estimates total gross tariff impact for FY '26 to be between $60 million and $70 million, manageable by offsetting with levers across the value chain. - H2 Outlook: Expect Q2 to be the last quarter of significant network inventory reduction. If Q2 goes as planned, network inventory reduction efforts should be mostly completed, positioning for double-digit top-line growth in H2 with new product launches and improved inventory alignment.

• Macroeconomic Uncertainty: Volatile tariff situation and significant macroeconomic uncertainty affecting consumer confidence. - Competitive Dynamics: Some OEMs still have significant inventory to address, with a promotional environment expected in Q2. - Tariff Uncertainty: Evolving tariff environment creates uncertainty in consumer confidence and makes forecasting difficult.

Q: Sabahat Khan with RBC Capital asks about the inventory situation in the channel and what's left to right size.

A: Sebastien Martel responds that they've reduced inventories by 21% across all product categories, still have work on seasonal products, with 70% of dealers' line of credit used, and competition still has aggressive promotion with excess inventory.

Q: Sabahat Khan follows up on H2 outlook and retail uptake.

A: Jose Boisjoli says non-current inventory will be normal by end of Q2, confident in H2 with new products and better inventory position.

Q: James Hardiman with Citi asks about tariff environment and competitive advantage.

A: Jose Boisjoli states they're working with suppliers to mitigate tariffs, but uncertainty in consumer confidence is a big risk.

Q: Benoit Poirier with Desjardins Capital Markets asks about EBITDA margin and working cap.

A: Sebastien Martel says EBITDA margin will improve with volume but still underutilizing assets, and working cap will be driven by H2 growth but prudent on capital deployment.

Q: Craig Kennison with Baird asks about unpacking tariff impact.

A: Sebastien Martel explains $60M-$70M gross tariff impact, working with suppliers to mitigate, and pricing increases for new model year 26.

Q: Robin Farley with UBS asks about retail assumption and price increases.

A: Jose Boisjoli says retail assumption is based on inventory alignment and new product launches, and they'll revisit pricing for new models.

Q: Xian Siew with BNP Paribas asks about non-current inventory mix and dealer feedback.

A: Jose Boisjoli says non-current inventory is being depleted, dealers are in a good position with BRP's inventory and product launches.

Q: Martin Landry with Stifel asks about new product introductions.

A: Jose Boisjoli says they have strong product introductions planned but can't disclose details, confident in H2 with new products.

Q: Mark Petrie with CIBC asks about consumer demand and guidance.

A: Sebastien Martel says consumer demand is softer and tariff impacts aren't factored into previous guidance, so waiting for clarity.

Q: Cameron Doerksen with National Bank Financial asks about CEO search and marine parts business.

A: Jose Boisjoli says Board has started CEO search, global process taking 3-9 months; Sebastien Martel explains keeping marine parts business due to good margins and low maintenance.

Q: Brian Morrison with TD Cowen asks about sales decline components and back half outlook.

A: Sebastien Martel breaks down Q1 margin drivers and expects margin improvement in H2 with new products and better inventory alignment.