With Dealer Inventory Levels Nearly Normal, BRP Stands to Benefit From Industry Demand Growth

Crimped by multiple headwinds, fiscal 2025 dealer demand was tepid, a pattern will persist throughout fiscal 2026. However, we contend this is a function of higher borrowing costs and cyclical pressure that will prove transitory, and that BRP's focus on its long-term product innovation and operational priorities will allow it to maintain strong competitive positioning in the long-run. Strategic priorities around market share growth, lean operations, and cultivating an engaged workforce, while honing in on evolving customer demands should ensure BRP stays on track. With manufacturing facilities located near demand (for example, personal watercraft in Mexico), BRP should capture efficiencies from its plants as demand growth resumes. Firmwide centers of expertise and excellence allow BRP to manufacture optimally, benefiting utilization, allowing for better speed to market, and ensuring a continually relevant product lineup. Because BRP is exposed to many customer segments, we don’t believe acquisitions are required for expansion. However, entry into white-space categories (recently, motorcycles) and small acquisitions, particularly in parts and accessories, could support growth when demand stabilizes.