BRP Inc (DOOO) Q1 2026 Earnings Call Highlights: Navigating Challenges with Strategic Moves

Despite an 8% revenue decline, BRP Inc (DOOO) showcases resilience with strong free cash flow and strategic inventory management.

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May 30, 2025
Summary
  • Revenue: $1.8 billion, down 8% from the previous year.
  • Normalized EBITDA: $201 million.
  • Normalized EPS: $0.47.
  • Free Cash Flow: $162 million.
  • Gross Profit Margin: 21.4%, down from the previous year.
  • North America Powersports Retail Growth: 21% in Canada, decline of 6% in the United States.
  • International Retail Performance: Down 22% in EMEA, down 13% in Asia Pacific, up 18% in Latin America.
  • Year-Round Products Revenue: Down 4% to $1.1 billion.
  • Seasonal Products Revenue: Down 22% to $419 million.
  • Powersports Parts, Accessories, and Apparel Revenue: Up 5% to $322 million.
  • Network Inventory Reduction: Down 21% compared to last year.
  • Dealer Credit Line Usage: Just above 70%, lowest level in over 2 years.
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Release Date: May 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • BRP Inc (DOOO, Financial) delivered a sound performance in the first quarter, with results in line with expectations.
  • The company achieved strong free cash flow generation of $162 million.
  • BRP Inc (DOOO) outperformed the North American Powersports industry at retail, particularly in snowmobile sales.
  • The company made progress in its Marine Group by announcing a definitive agreement for the sale of Telwater and closing the sale of Alumacraft.
  • BRP Inc (DOOO) reported a 21% growth in Powersports retail in Canada, driven by strong snowmobile sales.

Negative Points

  • The operating environment remains challenging with significant macroeconomic uncertainty and a volatile tariff situation affecting consumer confidence.
  • Revenue was down 8% to $1.8 billion, primarily due to lower shipments and higher sales programs.
  • Demand remains soft in EMEA and Asia Pacific, with retail down 22% and 13%, respectively.
  • The company experienced a decline in retail for 3-wheel vehicles, personal watercraft, and switch pontoon early in the season.
  • BRP Inc (DOOO) faced a 4% decline in Year-Round Products revenue, driven by softer industry trends and higher sales programs.

Q & A Highlights

Q: Can you provide more details on the inventory situation and the competitive landscape?
A: Sebastien Martel, CFO, explained that BRP has been focusing on rightsizing network inventory over the past 12 months, achieving a 21% reduction. Seasonal products still require some work, but the expectation is to have most inventory adjustments completed by the end of Q2. The competitive landscape remains aggressive, with some OEMs still needing to address high inventory levels.

Q: What are your expectations for retail performance in the second half of the year?
A: Philippe Deschaine, Investor Relations, stated that BRP expects a better setup for H2 due to a strong lineup to be announced in August, improved dealer inventory positions, and momentum from current units. The company is confident in its ability to outperform in the second half.

Q: How is the current macroeconomic environment affecting consumer demand and retail trends?
A: Jose Boisjoli, CEO, noted that the macroeconomic environment is volatile, with no significant change in trends. Higher-income customers continue to purchase premium products, while lower-income customers face challenges due to inflation and high interest rates, impacting entry-level product sales.

Q: Can you elaborate on the impact of tariffs and how BRP plans to mitigate them?
A: Sebastien Martel, CFO, mentioned that the gross tariff impact for fiscal '26 is estimated at $60 million to $70 million. BRP is working with suppliers to change the origin of components and adjust pricing strategies to offset these costs. The company remains focused on minimizing the impact on its financials.

Q: What is the outlook for new product introductions, and how will they impact the business?
A: Philippe Deschaine, Investor Relations, highlighted that BRP has a strong product introduction planned for Can-Am and watercraft in August. The company expects these new products, combined with a strong dealer value proposition and lean inventory, to drive growth and market share gains in the second half of the year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.