BRP Inc. (NASDAQ:DOOO) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Revenue $1.8 billion, down 8% year-over-year primarily due to lower shipments and higher sales programs.
Normalized EBITDA $201 million, with no year-over-year change mentioned.
Normalized EPS $0.47, up from $0.29 year-over-year, exceeding expectations.
Gross Profit Margin 21.4%, down from last year primarily due to less efficient use of assets, lower production volumes, higher sales programs, unfavorable model mix, and foreign exchange headwinds.
Free Cash Flow $162 million, with no year-over-year change mentioned.
Cash Position Over $300 million, reinforcing solid balance sheet and financial flexibility.
Network Inventory Down 21% year-over-year, with double-digit declines in all product lines.
Powersport Parts, Accessories and Apparel Revenue $322 million, up 5% year-over-year driven by higher volume of snowmobile parts.
Seasonal Product Revenue $419 million, down 22% year-over-year primarily reflecting reduced shipments.
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Operating Highlights
New Product Launches: First shipment of Can-Am Pulse and Origin motorcycle to North America and Europe in Q1, with plans for media tours and demo rides.
Market Expansion: Highest retail sales ever for Q1 in Canada, Brazil, Mexico, China, and EMEA distributor markets.
Operational Efficiencies: Network inventory down 21% compared to last year, with a focus on rightsizing inventory levels.
Financial Performance: Generated $162 million in free cash flow and ended the quarter with over $300 million in cash.
Strategic Shifts: CEO Jose Boisjoli announced intention to retire by the end of the fiscal year after 36 years at BRP.
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Risk or Challenges
Macroeconomic Uncertainty: The operating environment remains challenging with significant macroeconomic uncertainty affecting consumer confidence.
Tariff Situation: A volatile tariff situation is impacting the business, with an estimated total gross tariff impact for fiscal ’26 between $60 million and $70 million, primarily affecting the P&A business and some U.S. suppliers.
Supply Chain Challenges: Incremental tariffs stemming from U.S. tariff rate increases on China and new tariffs on other countries are impacting supply chain costs.
Retail Demand Fluctuations: Demand remains soft in EMEA and Asia Pacific, with retail down 22% and 13% respectively, while the U.S. market shows generally weaker industry trends.
Inventory Management: The company is focused on rightsizing network inventory levels, which is down 21% compared to last year, but still faces challenges in aligning wholesale with retail.
Economic Forecasting: The evolving tariff environment and economic conditions create uncertainty, making it difficult to forecast industry demand and product sales.
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Guidance & Outlook
Sales of Telwater and Alumacraft: Announced a definitive agreement for the sales of Telwater and closed the sales of Alumacraft.
Network Inventory Reduction: Achieved a year-over-year network inventory reduction of 15%, with expectations to complete most inventory reduction efforts by the end of summer.
New Product Launches: Planning for initial shipments of new products in H2 to support volume growth and favorable product mix.
Design Recognition: Received Red Dot Design Team of the Year 2025 award, reflecting innovation and product excellence.
Fiscal 2026 Tariff Impact: Estimated total gross tariff impact for fiscal ’26 to be between $60 million and $70 million, manageable through various levers.
Q2 Financial Performance: Expect Q2 financial performance to be similar to Q1, with significant network inventory reduction.
H2 Revenue Growth: Potential for double-digit top-line growth in H2 if retail environment remains consistent with Q1.
Long-term Outlook: Committed to technology and innovation to capitalize on market opportunities and sustain profitable growth.
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Shareholder Return Plan
Free Cash Flow: $162 million generated from continued operations.
Cash Position: Ended the quarter with over $300 million in cash.
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Key Q&A
Q:Can you give us more color on the inventory situation in the channel?
A:We started right-sizing network inventory 12 months ago, and inventories were down 21% at the end of Q1. We expect to have most of the work done on the ORV business and year-round product business by the end of Q2, with seasonal products expected to be down about 20% by year-end.
Q:What gives you confidence on the better setup at retail for H2?
A:We believe non-current inventory will be at a more normal level by the end of Q2, and we have a strong lineup of new products to be announced in August, which will help drive retail momentum.
Q:What trends did you see at retail over the course of the quarter?
A:Retail was flat year-over-year in North America, with premium vehicles selling better than entry-level products. Higher-income customers are still buying, while lower-income customers are hesitant due to inflation and high interest rates.
Q:Can you talk about the competitive environment regarding tariffs?
A:Every OEM faces different situations regarding tariffs. We are working with suppliers to mitigate the impact, and we believe every OEM will find ways to reduce costs. The biggest risk is the uncertainty affecting customer confidence.
Q:What should we expect in terms of EBITDA margin?
A:EBITDA margin is expected to improve, but we will still be underutilizing our assets. The added volume will bring some tailwind on the margin side.
Q:What is your outlook for working capital and capital deployment?
A:We are not providing guidance but expect good free cash flow generation in the second half. We will focus on organic growth and be prudent with capital deployment.
Q:Can you provide more details on the gross tariff impact?
A:The gross tariff impact is estimated at $60 million to $70 million for the full year, with efforts underway to mitigate this impact through supplier negotiations and pricing adjustments.
Q:What is the current inventory mix and how does it compare to the industry?
A:In Q1, the industry was down 26% for ATVs and 15% for side-by-sides. We are well-positioned with a third of non-current inventory compared to two-thirds market share.
Q:What are dealers saying about inventory and ordering?
A:Dealers are focused on reducing inventory and will likely wait for consumer demand to stabilize before ordering more.
Q:What is the timeline for finding a new CEO?
A:The search process has started and could take anywhere from three to nine months.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer regarding the specific impact of tariffs on competitive dynamics and consumer demand, using vague language about the uncertainty affecting customer confidence. Additionally, there was insufficient detail on the expected EBITDA margin improvement and the specific timeline for capital deployment.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Alumacraft process
America Europe
America Powersport
America demand
America network
Canada end
China tariff
Doo Lynx
Doo product
Europe tour
FY Results
Group progress
Inc FY
Inc expectation
Joelle BRP
Lynx end
Manitou course
Marine Group
Powersport retail
Transcript BRP
condition winter
consumer confidence
digit line
end season
engine
environment uncertainty
expectation lady
expectation network
industry digit
line industry
momentum
retail industry
season retail
spring
tariff country
unit inventory
usage
watercraft
wheel vehicle
wholesale retail
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.
