Q2 2027 BRP Inc. Earnings Call Transcript
Key Points
- BRP Inc. (DOO) delivered second-quarter results ahead of expectations, with revenues growing 18% to CAD2.2 billion.
- Sustained ORV retail momentum drove further market share gains, with Can-Am achieving an all-time high in SSV market share at nearly one-third of units sold.
- The company increased its full-year normalized EPS guidance by CAD1 to a range of CAD4 to CAD4.50, reflecting improved net tariff exposure and strong ORV demand.
- BRP Inc. (DOO) generated strong free cash flow of CAD193 million in the quarter and CAD560 million year-to-date, strengthening its balance sheet with a net leverage ratio of 1.6 times.
- The launch of BRP Financial Services, a new U.S. retail financing program, aims to enhance dealer and consumer experiences, with 90% of dealers already signed up within two weeks.
- The company is expanding capacity for utility SSV cabs, a segment that has quadrupled over six years and now represents nearly half of the utility side-by-side industry.
- BRP Inc. (DOO) faced an incremental net tariff impact of about CAD145 million in the second quarter compared to the prior year, pressuring profitability.
- Gross margin declined year-over-year due to tariff headwinds of approximately 740 basis points and a one-time impact from a supplier financial restructuring of about 330 basis points.
- The company experienced softer PWC industry conditions, leading to a proactive decision to further reduce shipments for the balance of the year.
- Inflationary pressures, including higher commodity and freight costs, are expected to impact gross margin by 100-125 basis points this year, up from prior expectations.
- Three-wheel vehicle retail declined mid-single digits, and two-wheel (marine) retail declined almost 30% due to softness in the marine industry.
- The company expects third-quarter normalized EPS to be down 50%-60% year-over-year, mainly due to incremental tariff impacts, implying a much stronger Q4.
Good morning, ladies and gentlemen. Welcome to BRP Inc.'s FY 2027 Q2 conference call. For participants who use the telephone line, it is recommended to turn off the sound on your device. I would now like to turn the meeting over to Mr. Philippe DeschĂÂȘnes. Please go ahead, Mr. DeschĂÂȘnes.
Thank you. Good morning, and welcome to BRP's conference call for the second quarter of fiscal year 2027. Joining me this morning are Denis Le Vot, President and Chief Executive Officer, and SĂ©bastien Martel, Chief Financial Officer. Before we move to the prepared remarks, I would like to remind everyone that certain forward-looking statements will be made during the call and that the actual results could differ from those implied in these statements. The forward-looking information is based on certain assumptions and is subject to risks and uncertainties, and I invite you to consult BRP's MD&A for a complete list of these. Also, during the call, reference will be made to supporting slides, and you can find the presentation
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