BRP Inc. (DOOO) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals several negative indicators: a 20% YoY revenue decline, competitive pressures, and tariff impacts. Despite inventory reduction efforts, excess non-current inventory and a challenging market environment are concerns. The Q&A highlighted uncertainties in demand, tariffs, and market share. Although there are share repurchases and dividends, the negative financial performance and cautious outlook outweigh these positives. With a market cap of $4.7 billion, the stock is likely to see a negative reaction of -2% to -8% over the next two weeks.
Key Financial Performance
Revenue $7.8 billion, down 20% year-over-year primarily due to lower shipments and higher sales programs.
Normalized EBITDA $1 billion, down from the previous year, attributed to lower production volumes and higher sales programs.
Normalized EPS $4.68, reflecting a decrease from the previous year due to challenging market conditions.
Gross Profit $429 million, with a margin of 20.5%, down from last year due to less efficient asset use and unfavorable model mix.
Free Cash Flow Over $450 million from continuing operations, allowing for $62 million in dividends and $215 million in share repurchases.
Cash $180 million at the end of fiscal '25.
Net Leverage Ratio 2.6 times, indicating comfortable balance sheet flexibility.
Inventory Reduction 13% overall, or 18% excluding Snowmobile, aligning with the objective of 15% to 20%.
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Operating Highlights
New Models Introduced: Introduced several new models, including the Can-Am electric motorcycle and new high-cc ATV platform.
Market Share Gains: Gained 11 points in side by side and 4 points in ATV market share.
Design Awards: Recognized with 17 design awards for innovation and performance.
Market Positioning: Positioned to double down on Powersports leadership and focus on core activities.
Sales Process for Marine Business: Initiated sales process for Marine businesses, now presented as discontinued operations.
Retail Performance: North American Powersports retail down 21%, but Latin America retail up 16%.
Operational Efficiency: Achieved over $200 million in lean savings for the year.
Inventory Reduction: Reduced network inventory by 13%, achieving a total North American Powersports inventory reduction of 18%.
Strategic Focus: Focus on core Powersports business and capitalize on long-term growth opportunities.
Tariff Impact: Estimated impact of $40 million from current tariffs, with ongoing assessment of potential changes.
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Risk or Challenges
Macroeconomic Environment: The company faced a difficult macroeconomic environment, which contributed to softer industry demand and continued pressure on consumer demand.
Inventory Management: Proactive reduction of production and shipments led to short-term market share losses, indicating a risk in maintaining competitive positioning.
Tariff Impact: Ongoing tariff disputes are impacting the business, with an estimated potential cost of $40 million if current tariffs remain in effect throughout the year.
Consumer Confidence: Uncertainty from tariff situations is affecting consumer confidence, making it difficult to forecast industry demand accurately.
Regulatory Changes: Potential changes in trade regulations could significantly impact operations, requiring time to adjust plans accordingly.
Supply Chain Challenges: The company has limited exposure to imports from China but is still affected by US tariffs on steel and aluminum, impacting the P&A business.
Market Competition: The company experienced competitive pressures due to reduced availability of non-current units, affecting its market share.
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Guidance & Outlook
Inventory Reduction Plan: BRP executed a disciplined inventory reduction plan, achieving an 18% reduction in North American Powersports inventory, aligning with their objective of 15% to 20%.
Focus on Core Activities: The company has decided to sell its Marine business to concentrate on its Powersports leadership position and capitalize on long-term growth opportunities.
Operational Efficiency: Achieved over $200 million in lean savings for the year, enhancing operational efficiency.
New Product Introductions: BRP introduced several new models and expanded its product lineup, including the Can-Am electric motorcycle and new high-cc ATV platform.
Market Share Gains: BRP gained market share in several segments, including an 11-point gain in side-by-side and a 4-point gain in ATV.
Fiscal 2026 Revenue Expectations: BRP expects top-line growth driven by improved ORV shipments and new product introductions, despite lower shipments of Personal Watercraft and Snowmobiles.
Normalized EPS Guidance: For fiscal 2026, BRP anticipates a normalized EPS of approximately $4.50 to $5.00, with Q1 EPS expected to be down about 70% on a continuing operation basis.
Impact of Tariffs: Current tariffs could have an estimated impact of about $40 million on BRP's business if they remain unchanged throughout the year.
No Formal Guidance Issued: Due to uncertainty from ongoing tariff disputes and changing geopolitical dynamics, BRP refrained from issuing formal guidance for fiscal 2026.
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Shareholder Return Plan
Dividend Payments: $62 million in dividend payments for fiscal '25.
Share Repurchases: $215 million in share repurchases for fiscal '25.
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Key Q&A
Q:What sort of industry inventory backdrop and competitive pricing are you taking into account when contemplating a situation where you could grow revenue potentially and margins?
A:The industry expected a better outlook last year, leading to some OEMs having more inventory than we do. We proactively reduced production and shipments to manage inventory levels, starting the year in a better position. However, not all OEMs are in a similar situation, and we expect non-current inventory to be a factor in Q1. We anticipate more normalized inventory levels in the second half of Q2 and into the second half of next year.
Q:Is your expectations for production, CapEx, etc. more fluid at this point in the year?
A:We expect solid free cash flow generation, with working capital being a minor tailwind. CapEx should be slightly higher than last year, mainly due to foreign exchange rates. We remain flexible and will adapt our plans if challenges arise.
Q:Would you still expect to take inventory out of the channel?
A:We are comfortable with ORV inventory levels, and Watercraft is on plan. However, Snowmobile inventory is still too high, and we are cautious about production to ensure good inventory levels next year.
Q:Is the $4.50 to $5 outlook for '26 still valid given the tariff situation and demand impact?
A:Yes, the outlook is impacted by the tariff situation and softened consumer demand, which was not included in the initial guidance.
Q:Will the non-current inventory situation be an overhang in fiscal '26?
A:Yes, we expect market share challenges in the first half of the year due to excess inventory from some OEMs.
Q:How will the $200 million in cost savings impact the income statement?
A:We aim to protect profitability and free cash flow, and the cost savings may not automatically lead to price reductions.
Q:How do you view the industry at retail in North America evolving this year?
A:Retail demand is mixed; high-end products are performing well, while entry-level products are down significantly. The inflation and high interest rates are affecting entry-level demand.
Q:What is your current versus non-current inventory mix?
A:Currently, about one-third of our ORV inventory is non-current, which is better than pre-COVID levels.
Q:What are your capital allocation priorities this year?
A:Our priority is product innovation, followed by modestly increasing dividends and potentially share buybacks, depending on economic conditions.
Q:What is the impact of the $40 million tariff on your COGS?
A:The $40 million tariff impact will be reflected in COGS.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer regarding the specific quantification of the $4.50 to $5 outlook and how it would have assumed industry retail overall. They also did not provide clarity on the exact impact of the $200 million cost savings on the income statement, stating it would depend on industry dynamics.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
America retail
Boisjoli
Mexico
PA
Personal Watercraft
Slide
Snowmobile retail
Tier
United States
Wheel
balance sheet
business
cc
chain
condition Snowmobile
confidence
core
country
design
digit percentage
dynamic industry
effort
environment industry
exposure
fact
gain point
import
industry unit
inventory reduction
line ORV
momentum
offseason
operation
perspective cash
point market
retail season
return
share loss
supplier
tariff dispute
trade
DOOO Transcript
BRP Inc. (DOOO) Q2 2026 Earnings Call Transcript
Unknown8-29
Despite strong financial metrics and optimistic guidance for H2, the lack of visibility to issue guidance, potential tariff impacts, and cautious buybacks due to economic uncertainty balance the positives. The market cap suggests a moderate reaction, aligning with a neutral sentiment.
BRP Inc. (NASDAQ:DOOO) Q1 2026 Earnings Call Transcript
Unknown5-30
The earnings call reveals several negative aspects: a revenue decline, soft demand in EMEA and Asia Pacific, and significant tariff impacts. Despite positive EPS and inventory management, the lack of formal guidance, declining margins, and retail demand fluctuations are concerning. The Q&A highlighted risks with tariffs and inventory, and management's vague responses further add uncertainty. The market cap suggests moderate sensitivity to these factors, leading to a predicted stock price movement of -2% to -8% over the next two weeks.
BRP Inc. (DOOO) Q1 2026 Earnings Call Transcript
Unknown5-29
The earnings call reveals several negative factors: declining revenue, gross profit margin, and soft consumer demand in key regions. Tariffs and competitive pressures add further challenges. Despite some positives like inventory reduction and confidence in H2 retail, the lack of formal guidance and unclear management responses contribute to uncertainty. The company's market cap suggests moderate sensitivity to these issues, leading to a negative sentiment prediction for the stock price movement.
BRP Inc. (DOOO) Q4 2025 Earnings Call Transcript
Unknown3-26
The earnings call summary indicates declining financial metrics with a 20% revenue drop and decreased margins. Tariff impacts and consumer confidence issues present risks. The Q&A reveals concerns about inventory overhang, mixed retail demand, and unclear management responses. Despite share repurchases, the negative financial performance and market challenges outweigh positives. Given the company's market cap of approximately $4.7 billion, the stock is likely to react within the 'Negative' range of -2% to -8% over the next two weeks.
DOOO Report
Frequently Asked Questions
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Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
