BRP Inc. Balances Achievements and Challenges in Earnings Call

Brp Inc ((TSE:DOO)) has held its Q1 earnings call. Read on for the main highlights of the call.

BRP Inc.’s recent earnings call presented a balanced sentiment, highlighting both achievements and challenges. The company reported strong sales performance in certain regions and product lines, robust cash flow, and industry recognition for design excellence. However, it also faced challenges with revenue and EBITDA declines, soft demand in non-North American markets, significant tariff impacts, and declines in certain product lines.

Strong Snowmobile Sales

Snowmobile retail sales were notably strong, increasing by over 80%, thanks to favorable snow conditions. This surge contributed to a robust end-of-season pre-order performance, showcasing the product line’s resilience and popularity.

Retail Growth in Canada and Latin America

BRP Inc. experienced significant retail growth in Canada and Latin America, with increases of 21% and 18% respectively. This growth was driven by strong momentum in off-road vehicles (ORV) and personal watercraft, highlighting the company’s successful market strategies in these regions.

Snowmobile Inventory Reduction

The company achieved a year-over-year network inventory reduction of 15%, leading to healthier inventory levels. This, combined with a strong lineup, resulted in robust spring pre-orders, indicating effective inventory management.

Record Retail Sales in Several Regions

BRP Inc. reported record retail sales for the first quarter in multiple regions, including Canada, Brazil, Mexico, China, and EMEA distributor markets. This achievement underscores the company’s strong market presence and consumer demand across diverse geographical areas.

Strong Free Cash Flow Generation

The company generated a strong free cash flow of $162 million, reflecting its solid financial management and operational efficiency.

Red Dot Design Team of the Year 2025

BRP’s design and innovation team received the prestigious Red Dot Design Team of the Year 2025 title, highlighting the company’s commitment to design excellence and innovation.

Revenue and EBITDA Decline

Despite the positive aspects, BRP Inc. faced an 8% decline in revenue to $1.8 billion and a reduction in normalized EBITDA to $201 million. These declines were primarily due to lower shipments and higher sales programs.

Challenges in Non-North American Markets

Demand in EMEA and Asia Pacific remained soft, with retail sales down 22% and 13% respectively. These challenges highlight the difficulties faced in expanding market presence outside North America.

Tariff Impact

The company estimated a total gross tariff impact for fiscal ’26 to be between $60 million and $70 million. This creates uncertainty and weighs on consumer confidence, posing a significant challenge for BRP Inc.

Decline in Certain Product Lines

There was a notable decline in the retail of three-wheel vehicles, down by high 20%, and Can-Am side-by-side vehicles, down about 10%. These declines indicate challenges within specific product lines.

Seasonal Product Revenue Decline

Revenue for seasonal products declined by 22% to $419 million, reflecting reduced shipments and highlighting the impact of market fluctuations on seasonal offerings.

Forward-Looking Guidance

Looking ahead, BRP Inc. is optimistic about a stronger second half of the fiscal year. Despite an 8% decline in revenue and a reduction in normalized EBITDA, the company expects double-digit top-line growth in the latter half of the year, contingent on consistent retail trends. The company is also focused on aligning wholesale with retail and anticipates a significant reduction in network inventory by the end of the second quarter, positioning itself to capitalize on market opportunities and anticipated demand rebound.

In summary, BRP Inc.’s earnings call reflected a balanced sentiment with strong sales and cash flow achievements, alongside challenges in revenue, EBITDA, and certain product lines. The company remains optimistic about future growth, driven by strategic inventory management and upcoming product launches.