BRP Suffers From Cyclical Pressures but Is Fundamentally Positioned Well for Long-Term Success

Fiscal 2024 (ending January) is set to show another year of positive sales growth, although demand could close with a whimper, crimped by macroeconomic headwinds. We contend this is a function of the cycle and expect that BRP's continued focus on its long-term product and operational priorities will allow it to maintain strong competitive positioning. BRP's strategic priorities focus on market share growth, lean operations, and cultivating an engaged workforce, all while honing in on evolving customer demands. With manufacturing facilities located near demand (for example, personal watercraft in Mexico) and timely spend to increase facility capacity as needed, BRP should continue to capture efficiencies from its plants. Firmwide centers of expertise and excellence allow BRP to manufacture optimally, improving utilization and allowing it to bring products to market quickly, ensuring a continually relevant and in-demand product lineup (with electric vehicle offerings expected in all segments by 2026). Because BRP is exposed to many customer segments, we don’t believe acquisitions are required for expansion. However, we think entry into white-space categories (like motorcycles) and small acquisitions, particularly in parts and accessories or marine, are possible and could support growth.