Company Reports

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.

BRP's second quarter saw sales growth of 18% to CAD 2.2 billion and a normalized EPS loss of CAD 0.18. The firm raised its full-year outlook to include CAD 9.225 billion-CAD 9.475 billion in sales and CAD 4.00-CAD 4.50 in EPS, up from CAD 9.125 billion-CAD 9.375 billion and CAD 3.00-CAD 3.50 prior.

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 headwind 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.

BRP's first quarter included sales that rose 29.5%, to $2.4 billion, bolstered by year-round sales growth of 31% and seasonal growth of 36%, leading to normalized EPS of $1.83 (up from $0.47). However, higher tariff expectations led BRP to lower its 2027 EPS outlook to $3.00-$3.50 from $5.50-$6.50.

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. 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 and small acquisitions, particularly in parts and accessories, could support growth when demand stabilizes.

BRP's fourth-quarter sales rose 16%, helped by 17% year-round and 18% seasonal growth. The firm saw a 13.1% normalized EBITDA margin, down just 30 basis points despite tariffs, aided by better pricing and lower promotions leading to normalized EPS of $2.21, ahead of the $2 implied guidance.

On Dec. 16, BRP announced Denis Le Vot was in line to become the firm's next president and chief executive officer on Feb. 1, 2026. With José Boisjoli's retirement, Pierre Beaudoin will step in as the new chairman of the board of directors and Barbara Samardzich will be lead independent director.

Crimped by multiple headwinds, fiscal 2025 dealer demand was tepid, a pattern that has persisted throughout fiscal 2026. 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. 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.

In BRP's fiscal 2026 third quarter, sales grew 14% to CAD 2.25 billion and normalized earnings per share rose 33% to CAD 1.59. Higher volume and pricing, improved mix, and efficiency gains brought improved profitability, including 21% normalized EBITDA growth to CAD 326 million.

BRP has launched Mission 28, its inaugural goals for fiscal 2028, including targets of CAD 9.5 billion in sales and CAD 8 in earnings per share. The primary drivers of the expected improvement are market share gains, international growth, speed to market, and lean initiatives.

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.

BRP's second quarter included sales of CAD 1.9 billion, up 4%, and normalized EPS of CAD 0.92. A return to growth in the key year-round segment, which rose 13%, gave BRP confidence to reinstate guidance for fiscal 2026, including sales of around CAD 8.2 billion and EPS of CAD 4.25-CAD 4.75.

Crimped by dual headwinds, fiscal 2025 dealer demand has remained tepid, a pattern we expect will persist throughout fiscal 2026. However, we contend this is a function of higher borrowing costs and cyclical pressure that will be 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 focused on 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 be able to 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.

First-quarter sales at BRP fell 8% to CAD 1.8 billion, with year-round 4.5% lower and seasonal 22% down. Lower volume crushed profitability, resulting in normalized EPS of CAD 0.47, a 70% decline. The second outlook indicates a similar performance, suggesting demand remains under pressure.

Crimped by macroeconomic headwinds, fiscal 2025 dealer demand remained depressed, a pattern we expect will persist well into fiscal 2026. However, we contend this is a function of higher borrowing costs and expect that BRP's continued focus on its long-term product innovation and operational priorities will allow it to maintain strong competitive positioning in the long-run. Strategic priorities focused on 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 be able to capture efficiencies from its plants as demand growth resumes. 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 product lineup. 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 (recently, motorcycles) and small acquisitions, particularly in parts and accessories, could support growth when demand stabilizes.

BRP's fiscal 2025 fourth-quarter results included sales of CAD 2.1 billion, down 19.7%, and normalized earnings per share of CAD 4.68. The firm didn't offer fiscal 2026 guidance, given the wide range of potential outcomes due to evolving tariff risks and languishing consumer demand.

Crimped by macroeconomic headwinds, fiscal 2025 dealer demand has remained depressed, a pattern we expect will persist over the next few quarters. However, we contend this is a function of higher borrowing costs and expect that BRP's continued focus on its long-term product innovation and operational priorities will allow it to maintain strong competitive positioning in the long-run. Strategic priorities focused on market share growth, lean operations, and cultivating an engaged workforce, while honing in on evolving customer demands should ensure BRP is on track. With manufacturing facilities located near demand (for example, personal watercraft in Mexico), BRP should be able to capture efficiencies from its plants as demand growth resumes. 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 product lineup. 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 (recently, motorcycles) and small acquisitions, particularly in parts and accessories, are possible and could support growth.

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).

Wide-moat BRP announced it would be placing its marine business up for sale, given the cyclical pressure the segment has recently encountered. Marine sales are projected to tumble by more than 50% since fiscal 2022, to just CAD 245 million in fiscal 2025, representing a mere 3% of firm’s total revenue base. Moreover, with a second year of negative gross margin performance anticipated at the segment in fiscal 2025, marine has acted as an unnecessary drag on earnings power, causing an EPS headwind of CAD 1.50. Given the lagging performance of the boat market over the last year, we don’t think this is the most opportune time to find a buyer. However, we surmise selling now may be a better choice than waiting for a return to positive margin performance in a market that could be very slow to recover. We wouldn’t expect this sale to fetch more than 1 times sales and as such the cash from the sale would not alter our CAD 101 ($75) fair value estimates.

Crimped by macroeconomic headwinds, fiscal 2025 dealer demand has remained depressed, a pattern we expect will persist over the next few quarters. However, we contend this is a function of higher borrowing costs and expect that BRP's continued focus on its long-term product and operational priorities will allow it to maintain strong competitive positioning in the long-run. Strategic priorities focused on market share growth, lean operations, and cultivating an engaged workforce, while honing in on evolving customer demands should ensure BRP is on track. With manufacturing facilities located near demand (for example, personal watercraft in Mexico) and tactical spending on capacity, BRP should be able 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 product lineup. 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 (recently, motorcycles) and small acquisitions, particularly in parts and accessories or marine, are possible and could support growth.