BRP Earnings: Sales Growth Remains Elusive for Leisure Durables, but Profitability Up on Marine Sale

With the languishing marine business up for sale, wide-moat BRP was able to post fiscal 2025 third-quarter profits that were ahead of our expectations. Liberated from the drag of its pontoon line, its third-quarter adjusted operating margin of 8% was 130 basis points better than we had forecast, leading to adjusted EPS of CAD 1.16 that was nearly double our CAD 0.65 estimate. Much of this upside was from one-time factors, including earlier timing of snowmobile shipments and the elimination of the marine segment (previously estimated as a CAD 1.50 EPS headwind in fiscal 2025). Adjusting for this change, BRP lifted its net income outlook to CAD 1.02 billion-CAD 1.07 billion (from CAD 890 million-CAD 940 million) and EPS to CAD 4.25-CAD 4.75 (from CAD 2.75-CAD 3.75), and its shares rose about 7% on Dec. 6 (intraday).