BRP Remains Dedicated to Its Innovation Pipeline, but Profitability Waylaid by Incremental Tariffs

Crimped by multiple headwinds, fiscal 2025 and 2026 dealer demand was muted. However, we contend this has been 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 demand, should ensure BRP stays on track. With manufacturing facilities located near demand (for example, personal watercraft in Mexico), BRP should benefit from plant efficiencies as demand growth resumes, although this has recently been a hindrance to profits due to increased tariff costs. Firmwide centers of expertise and excellence allow BRP to manufacture optimally, helping utilization, speed to market, and relevance in the 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 and small acquisitions, particularly in parts and accessories, could support growth when demand stabilizes.