BRP (NASDAQ:DOOO) reported fiscal 2027 second-quarter results that exceeded its expectations, supported by continued off-road vehicle demand, market-share gains and a lower expected tariff burden. The company raised its full-year normalized earnings outlook while outlining plans to expand capacity for utility side-by-side vehicles.
Revenue for the quarter rose 18% year over year to CAD 2.2 billion. BRP posted normalized EBITDA of CAD 139 million and a normalized loss per share of CAD 0.18. The results included an incremental net tariff impact of approximately CAD 145 million compared with the prior-year quarter, Chief Executive Officer Denis Le Vot said.
Off-Road Strength Offsets Softer Watercraft Trends
Le Vot said BRP’s off-road vehicle, or ORV, business continued to show strong momentum, particularly in North American side-by-side and all-terrain vehicle categories. North American side-by-side retail increased by mid-single digits in the quarter, outpacing the industry, while utility-cab retail rose more than 30% on demand for the Can-Am Defender HD11.
For the season ending in June, BRP’s side-by-side retail grew by high single digits, compared with mid-single-digit industry growth. The company gained more than three percentage points of market share in current-model-year side-by-side units, with Can-Am accounting for nearly one-third of units sold, according to Le Vot.
ATV retail rose by mid-single digits during the quarter while the industry declined by low single digits. BRP said retail of current-model-year ATV units increased nearly 20%, enabling Can-Am to finish the season as the top brand in the category.
BRP plans to expand capacity within its existing manufacturing footprint to address demand for cab-equipped utility side-by-sides. Le Vot said the utility-cab segment has more than quadrupled over the past six years and now represents nearly half of the utility side-by-side industry. He said the company is increasing throughput for cab units by roughly 33%, primarily through changes to manufacturing-line organization and an extension of a building.
Personal watercraft conditions were softer. BRP’s PWC retail declined by low single digits during the season’s key quarter, in line with the broader industry. The company said discounted carryover inventory from other manufacturers continued to pressure non-current units, although its current-model-year PWC share rose by more than six points to above 60%.
BRP is reducing PWC shipments and increasing sales programs for the balance of the year to manage inventory and prepare for the next season. Three-wheel retail declined by mid-single digits, while retail in the company’s “twos” category fell nearly 30%, reflecting marine-industry softness. Snowmobile retail rose more than 20% on low off-season volume.
Tariff Outlook Improves, but Costs Remain Elevated
Martel said BRP now expects Section 232 and Section 338 net tariff exposure of CAD 200 million for fiscal 2027, or about CAD 225 million on an annualized basis. The updated outlook reflects a reduction in the Section 232 tariff rate on ATVs to 15% from 25%, as well as demand shifting toward certain newly introduced utility models that are not subject to Section 232 tariffs.
Those benefits are partly offset by a new Section 338 tariff affecting Spyder imports from Canada into the U.S. Martel said the tariff rate is 50% for the affected products. The impact is limited this year because most annual Spyder deliveries occurred in the first half, but he said it is expected to create a CAD 60 million to CAD 65 million headwind next year.
Gross profit was CAD 263 million, representing an 11.7% margin. Martel said tariffs reduced gross margin by about 740 basis points, while a one-time supplier financial restructuring reduced it by about 330 basis points. The supplier support was intended to ensure continued parts supply, and Martel said the bulk of the related impact was recorded during the quarter.
Excluding tariffs and the supplier restructuring, BRP’s gross margin would have increased by approximately 140 basis points year over year. The company continues to face inflation in commodities, freight and transportation, with higher costs for plastics, steel, copper and land transportation. Martel said the company now expects inflation to create a 100- to 125-basis-point headwind for the year, compared with its prior expectation of 70 to 75 basis points.
Full-Year Guidance Raised
BRP raised its fiscal 2027 normalized EPS guidance by CAD 1 to a range of CAD 4 to CAD 4.50 per share. It now expects:
- Revenue of CAD 9.225 billion to CAD 9.475 billion;
- Normalized EBITDA of CAD 1.025 billion to CAD 1.075 billion;
- Normalized EPS of CAD 4 to CAD 4.50; and
- More than CAD 800 million in free cash flow.
Martel said the guidance incorporates stronger ORV deliveries, partially offset by reduced PWC volumes, higher inflationary costs, revised tax-rate assumptions and a lower share count following completion of BRP’s normal course issuer bid program. The company expects third-quarter normalized EPS to decline 50% to 60% year over year, largely due to tariff impacts, followed by a stronger fourth quarter.
Management maintained its assumption that North American powersports industry retail will be broadly flat overall, though it expects low-single-digit growth in the North American ORV market during the second half and next year.
Product Plans, Financing Program and CFO Transition
At its Club BRP dealer event, the company introduced new Sea-Doo, Can-Am Ryker and ORV products, including a new Defender HD10 platform and the Defender XU utility offering. BRP also committed to introducing major off-road product news every six months for the next four years.
The company launched BRP Financial Services, a U.S. retail financing program intended to provide customers with a more streamlined financing experience and give BRP closer relationships with consumers. Martel said 90% of the dealer network had signed up within two weeks of the announcement and that the company had begun originating loans.
BRP also announced that Martel will retire after 22 years with the company. Effective Oct. 1, Minh Thanh Tran, currently executive vice president of global corporate and product strategy, will become CFO. Martel will remain as an executive adviser during the transition and is expected to officially retire in April 2027.
About BRP (NASDAQ:DOOO)
BRP Inc, operating under the brand name Bombardier Recreational Products, is a leader in designing, manufacturing and distributing recreational vehicles and propulsion systems for winter, on-road, off-road and water lifestyles. The company’s diversified portfolio includes snowmobiles, personal watercraft, all-terrain vehicles and roadsters, all powered by in-house Rotax engines. With a focus on innovation and performance, BRP has positioned itself at the forefront of the powersports industry.
At the heart of BRP’s product lineup are its flagship Ski-Doo snowmobiles and Sea-Doo personal watercraft, which serve both recreational and professional segments.
