Release Date: March 26, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- BRP Inc (DOOO, Financial) achieved over $200 million in lean savings for the year, improving operational efficiency.
- The company ended the year with $7.8 billion in revenue, normalized EBITDA of $1 billion, and a normalized EPS of $4.68, all within their revised guidance range.
- BRP Inc (DOOO) significantly reduced network inventory levels, achieving an 18% reduction in North American powersport inventory, aligning with their objective of 15% to 20%.
- The company maintained strong demand for high-end products, such as the Defender cab, gaining about 2 points of market share in the utility segment.
- BRP Inc (DOOO) introduced several new models and expanded into new segments, including the launch of the Can-Am electric motorcycle, positioning the business for long-term success.
Negative Points
- BRP Inc (DOOO) experienced a 20% decline in Q4 revenues to $2.1 billion, primarily due to lower shipments and higher sales programs.
- The company faced a challenging macroeconomic environment with softer industry demand and continued pressure on consumer demand.
- BRP Inc (DOOO) saw a 21% decline in North American powersports retail in Q4, with a notable 30% drop in 3-wheel vehicle retail.
- The ongoing tariff disputes and changing geopolitical dynamics have created an unpredictable operating and demand environment, impacting consumer confidence.
- The company refrained from issuing guidance for fiscal '26 due to the uncertainty surrounding tariffs and consumer demand, making it difficult to forecast with confidence.
Q & A Highlights
Q: How do you view the industry inventory backdrop and competitive pricing when contemplating revenue and margin growth?
A: Sebastien Martel, CFO, explained that BRP proactively reduced production and shipments to manage inventory levels, starting the year in a better position than some competitors. However, other OEMs have higher noncurrent inventory, which may lead to more incentives in the second quarter. BRP expects more normalized inventory levels by the back half of Q2 and into the second half of the year.
Q: What are your expectations for production, CapEx, and cash flow for the year?
A: Sebastien Martel, CFO, stated that BRP expects solid free cash flow generation, with working capital as a potential minor tailwind. CapEx is expected to be slightly higher than last year, mainly due to foreign exchange rates. BRP remains flexible and will adapt plans if challenges arise.
Q: Will the non-current inventory situation be an overhang in fiscal '26, and do you expect to lose market share until it's resolved?
A: Jose Boisjoli, CEO, noted that some OEMs still have high non-current inventory, particularly in ORV. BRP expects market share challenges in the first half of the year but is confident about the second half once inventory levels normalize.
Q: How do you view retail demand in North America, and what trends are you seeing?
A: Jose Boisjoli, CEO, mentioned that high-end products are selling well, while entry-level products are softer due to inflation and high interest rates. BRP is losing some share in non-current categories but is gaining momentum in current categories.
Q: Can you provide an update on the Marine sale and any other potential divestitures?
A: Jose Boisjoli, CEO, stated that the Marine sale process is ongoing and on plan, targeting completion by the end of Q1 or beginning of Q2. No additional divestitures were mentioned.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
