Earnings call transcript: BRP Inc. beats Q2 2025 forecasts, stock surges

BRP Inc. (DOO) reported its second-quarter 2025 earnings on August 29, surpassing both earnings per share (EPS) and revenue forecasts. The company posted an EPS of $0.92, significantly higher than the forecasted $0.4613, marking a 99.44% surprise. Revenue reached $1.9 billion, exceeding expectations by 6.18%. Following the announcement, BRP’s stock price surged by 9.18%, reflecting strong investor confidence. According to InvestingPro analysis, BRP is currently trading near its Fair Value, with a P/E ratio of 34.7x. InvestingPro Tips highlight that BRP has maintained dividend payments for 9 consecutive years and is expected to remain profitable this year. Get access to 6 more exclusive ProTips and comprehensive analysis with an InvestingPro subscription.

Key Takeaways

• BRP Inc.’s EPS of $0.92 far exceeded forecasts, with a nearly 100% surprise.
• Revenue reached $1.9 billion, a 4% increase year-over-year.
• Stock price rose by 9.18% post-earnings announcement.
• The company launched new products, including electric ATVs.
• BRP anticipates 8-12% revenue growth in the second half of 2025.

Company Performance

BRP Inc. demonstrated robust performance in Q2 2025, driven by innovative product launches and strategic operational improvements. The company introduced new models, including the Can-Am Defender and the Outlander Electric ATV, enhancing its position in the powersports market. Despite a challenging retail environment, BRP managed to gain market share, particularly in the utility side-by-side segment. The company’s financial health score from InvestingPro is rated as FAIR, with particularly strong scores in profitability (3.01/5) and price momentum (2.49/5). Discover detailed financial health metrics and exclusive insights with an InvestingPro subscription.

Financial Highlights

• Revenue: $1.9 billion, up 4% year-over-year.
• Earnings per share: $0.92, significantly higher than the forecast.
• Normalized EBITDA: $213 million.
• Free Cash Flow: $100 million.
• Gross Profit Margin: 21.1%, down year-over-year.

Earnings vs. Forecast

BRP Inc. exceeded expectations with an EPS of $0.92 compared to the forecasted $0.4613, resulting in a 99.44% surprise. Revenue was also higher than anticipated, at $1.9 billion versus the forecast of $1.78 billion. This marks a strong performance relative to previous quarters, showcasing the company’s ability to outperform market predictions.

Market Reaction

Following the earnings announcement, BRP’s stock price increased by 9.18%, closing at $86.25 from a previous close of $79. This movement places the stock near its 52-week high of $97.74, indicating positive investor sentiment and confidence in the company’s future prospects.

Outlook & Guidance

Looking ahead, BRP Inc. projects revenue growth of 8-12% in the second half of 2025. The company provided guidance for fiscal year 2026, forecasting revenue between $8.15 billion and $8.3 billion and normalized EPS in the range of $4.25 to $4.75. These projections reflect BRP’s strategic focus on innovation and market expansion. InvestingPro data shows analyst consensus is moderately bullish, with price targets ranging from $36.36 to $70.54. The company’s strong 38.75% price return over the past six months and beta of 1.09 suggest significant momentum. Access comprehensive forecasting tools and expert analysis through InvestingPro’s Research Reports, available for 1,400+ top stocks including BRP.

Executive Commentary

CEO Jose Borjade emphasized BRP’s commitment to innovation, stating, "We are the OEM with the most product news." CFO Sebastien Martel highlighted the company’s dual focus, noting, "We are an innovation machine and a profitability machine." These statements underscore BRP’s strategic priorities and confidence in its growth trajectory.

Risks and Challenges

• Supply Chain Disruptions: Potential supply chain issues could impact production and delivery timelines.
• Market Saturation: Increasing competition in the powersports market may affect market share.
• Macroeconomic Pressures: Economic downturns or fluctuations could influence consumer spending.
• Tariff Impacts: Ongoing tariffs may affect cost structures and pricing strategies.
• Retail Environment: Declines in retail sales, particularly in North America, could pose challenges.

Q&A

During the earnings call, analysts inquired about BRP’s strategies to mitigate tariff impacts and manage inventory levels. The company addressed these concerns, highlighting its focus on operational efficiency and market positioning to navigate the challenging retail landscape.

Full transcript - BRP Inc (DOO) Q2 2026:

Conference Operator: Good morning, ladies and gentlemen. Welcome to the BRP Inc. FY twenty twenty six Second Quarter Results Conference Call. I would now like to turn the meeting over to Mr. Philippe Deschaine.

Please go ahead, Mr. Deschaine.

Philippe Deschaine, Investor Relations, BRP Inc.: Thank you, Joelle. Good morning, and welcome to BRP’s conference call for the 2026. Joining me this morning are Jose Borjade, President and Chief Executive Officer and Sebastien 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 BRT’s MD and A for a complete list of these.

Also during the call, reference will be made to supporting slides, and you can find the presentation on our website at brp.com under the Investor Relations section. So with that, I’ll turn the call over to Jose. Thank you, Philippe. Good morning, everyone,

Jose Borjade, President and Chief Executive Officer, BRP Inc.: and thank you for joining us. We’ve delivered better than expected results in our second quarter in an operating environment that remained challenging. At retail in North America, we have gained further market share with our current CANA models. But as expected, we’ve lost market share in the noncurrent due to our low inventory. With a 20% year over year reduction in network inventory, we have reached proper level across all our product lines except snowmobile.

From this healthier base, we are well positioned to benefit from our newly introduced product to gain additional market share. During the quarter, we also announced a definitive agreement for the sales of Manitou, which is expected to close in the coming weeks. Now let’s turn to Slide four for key financial highlights. We ended the quarter with revenue of $1,900,000,000 normalized EBITDA of $213,000,000 normalized EPS of $0.92 and solid free cash flow of almost $100,000,000 We are pleased with our results considering that Q2 is usually a transition quarter as we start introducing product for a new model year. Looking at Slide five.

Our North American powersports retail decreased 11%. Canada continued to perform better than The U. S. With a 4% growth, driven by ORV as Can Am side by side had a record quarter. This growth was offset by a 15% decline in The U.

S. In international market, Latin America continued to stand out through rapid and sustained growth. Retail was up 22, led by a solid performance in ORV. In Asia Pacific, our retail grew 5%, representing our first increase in about two years, fueled by momentum in China. Meanwhile, demand remained generally soft in EMEA, with retail down 13%, in line with the industry.

Overall, we are encouraged to see that global industry trend have slightly improved from previous quarters. Turning to Slide six for a look at our retail performance by product line in North America. Our powersports retail declined 11%. As in previous quarter, Can Am ORV market share was affected by a leaner level of noncurrent unit and high promotional activity by others OEM. In three wheeled vehicle, personal watercraft and switch pontoon, retail was weak early in the quarter due to soft trend and unfavorable weather, but condition improved in July and early August.

Turning to Slide seven for highlights from Club BRP held in Boston earlier this month. The event was a success with close to 4,100 participants in person and virtual. We introduced several new model and upgrade across our lineups, including many industry first. Once again, we stayed true to our commitment of pushing technology and innovation to wow consumers. The highlight was the launch of the new generation of the Can Am Defender.

This vehicle received a ground up overhaul, further solidifying its position as the most capable, versatile and reliable utility side by side on the market. The new Defender remained best in class in terms of technology, towing and cargo capacity, while also offering riders the largest cab in its category. The Defender was already the best product out there, even with its original ten year old platform. Now with this new generation outfitted with the most advanced technology, we are setting an entirely new standard in the industry. We are in excellent position to continue gaining further market share in that segment that represent over twothree of the side by side industry.

Reaction to the new Defender were extremely positive. Dealer sentiment for the product was very good, while media who had the chance to test it were impressed and issued very positive reviews. I encourage you to read them. But that’s not all. Let’s turn to Slide eight to look at some of other product news.

We expanded our electric vehicle offering by launching the Outlander Electric, featuring industry leading towing capacity, impressive off road performance and a very quiet riding experience. It used our e power unit, which also propel our electric motorcycle and snowmobiles. This is another demonstration of how we leverage our modular design approach to optimize development costs across many product lines. In addition, we further surprised our dealers by introducing multiple model upgrades and enhancement. We’ve launched the Outlander MAX66 designed to be the hardest working ATV in the lineup under extreme conditions.

We added rock crawling capabilities to the Mavic R lineup with the XRC package and updated our Mavic X3. In three wheel, we continue the evolution of our lineup with new modern coloration. As for Sea Doo, we introduced new connectivity features and improvement to the entire lineup. We also ramped up the Switch Pontoon experience with a highly anticipated 300 horsepower engine on some models. We have also announced the repricing of some underperforming model, which was very well received by our dealers.

As you see, we are the OEM who introduced the most product news for model year 2026. Now let’s turn to Slide nine for a more detailed look at year round product. Revenue were up 13 to $1,100,000,000 driven by higher ORV shipments following last year’s inventory reduction plan. At retail, side by side was down mid single digit. We underperformed due to high level of discounting of on noncurrent unit by other OEMs.

We continue to outperform in current unit, ending the ’25 season with more than three points of market share gain, driven by our Mavic R Max. In ATV, retail was down low single digit in the quarter, in line with the industry. That said, we gained over three points of market share in current units for the season, fueled by our new Offender platform. As for three wheel, retail was down mid-twenty percent as entry level consumers are struggling to get approved for financing. A few words on our electric motorcycle sorry.

The ramp up of our retail sales is not as expected in the context of a slowdown in global EV adoption. However, it’s still early. We are proud to have set the bar high and put our electric motorcycle at the forefront. The excitement around these new EV has been felt in North America and Europe as a result of our efforts to generate media and consumer awareness. In addition, to further build the demand and drive traffic in dealerships, we have announced price reduction in response to market feedback.

We aim to leverage our past investment to grow this industry, make our motorcycle accessible to more riders and position ourselves as leaders. Turning to seasonal product on Slide 10. Revenues were down 13% to $470,000,000 mainly due to a planned reduction of personal watercraft shipment. Our inventory is trending in line with pre COVID level, which is creating a more favorable environment for the arrival of our model year 2026. Looking at retail, trend remained weak for marine product in North America.

Personal watercraft sales were down mid teen percent, slightly lagging the industry. Switch pontoon retail was down mid-twenty percent as the industry is still going through a correction period. Sea Doo had a better performance in international market, with sales holding steady in Asia Pacific and growing low single digit in Latin America. Moving to Slide 11 with parts, accessories and apparel and OEM engine. Revenue were up 7% to $3.00 5,000,000 as dealer replenished their parts and accessories inventories.

Finally, we continue to bring new parts and accessories through our LINK system for customization, which would further stimulate this business. With that, I turn the call over to Sebastien. Thank you, Jose,

Sebastien Martel, Chief Financial Officer, BRP Inc.: and good morning, everyone. Once again, our team did an exceptional job navigating a dynamic and volatile environment. We remain focused on our plan, continuing to be disciplined in managing shipments to further improve our network inventory position while maintaining a strong emphasis on operational efficiency. As a result, we closed the second quarter with a financial performance, a free cash flow generation and a network inventory position all ahead of our expectations, positioning us well as we enter the second half of the year. Now looking at the numbers.

Revenues were up 4% to $1,900,000,000 primarily driven by stronger ORV shipments and offset by lower PwC deliveries. Gross profit came in at three ninety eight million dollars representing a margin of 21.1%, down year over year, mainly due to lower capacity utilization and unfavorable product mix and the impact of tariffs. These headwinds were partly offset by cost inefficiencies in our manufacturing operations, favorable pricing and lower floorplan costs resulting from our leaner network inventory. Normalized EBITDA ended at $213,000,000 and our normalized earnings per share at $0.92 which includes roughly $0.35 coming from tax credits recorded in the quarter. Free cash flow from continuing operations reached $100,000,000 and we ended the quarter with over $270,000,000 in cash, maintaining a solid balance sheet and strong financial flexibility.

Turning to Slide 14 for an update on the network inventory. As mentioned last quarter, our plan was to further rightsize our network inventory in Q2, and we delivered on that objective. In fact, our dealers’ inventory ended the quarter down 20% year over year and 13% sequentially from Q1. Our product lines for which we had inventory in the network last year saw double digit declines compared to the prior year. Also to put things in perspective, on a comparable product line basis, our dealers’ inventory is down 1% versus pre COVID levels, including a 5% decline in ORV, even as our ORV retail is up about 50% over the same period.

With these leaner inventory levels, our dealers’ credit line usage ended the quarter at just above 60%. This is an excellent position to be in as it not only reduces floorplan financing costs for both us and our dealers, but it also provides significant capacity for dealers to take on new products, particularly with the introduction of the all new Can Am Defender, which addresses the largest segment in the side by side industry and is a key driver of dealer profitability. Looking ahead, aside from snowmobiles, where some work remains, the rightsizing of our network inventory is largely complete. This positions us to better align our wholesale with retail as we move into the second half of the year. More importantly, these leaner inventory levels help protect the value of our brand, strengthen the dealers’ financial health and enhance the competitiveness by enabling the rapid distribution of new products across the network and by ensuring that we are best positioned to capture demand upside when market conditions improve.

With this, let’s turn to Slide 15 for an update on fiscal twenty twenty six. We are pleased with our execution so far this year. Quarterly results came in ahead of expectations, network inventory levels have been diligently reduced, and we continue to drive efficiency gains across the organization. Combined with the significant innovations we have introduced to the market, these achievements position us well for a strong second half. While the macroeconomic environment remains uncertain and the industry dynamics continue to be volatile, we now have better visibility on expected deliveries for the remainder of the year versus what we had in previous quarters, given that the rightsizing of our network inventory is mostly complete and these leaner levels provide us with more flexibility in managing our shipments based on retail trends.

We have snowmobile orders on hand following our spring booking. And we will be fueling the initial demand of our new introduced products with the reception from the dealers was very positive. These factors give us the confidence in our volume outlook for H2. And consequently, we are comfortable issuing a guidance at this time. Obviously, this assumes that the tariff situation remains as is for the rest of the year.

Note that based on the information we have today, we have factored in our guidance about $90,000,000 of gross tariff impact. This is up from the previous estimate of 60,000,000 to $70,000,000 reflecting the increase in steel and aluminum tariffs to 50%, new tariffs on copper and the expansion of steel and aluminum tariffs to additional products, including some of our vehicles. All in all, our guidance calls for revenues of $8,150,000,000 to $8,300,000,000 normalized EBITDA of $1,040,000,000 to 1,090,000,000.00 and normalized EPS of $4.25

Speaker 4: to $4.75 More importantly, it calls for solid growth across the board in the second half, as highlighted on Slide 16. From a top line perspective, our guidance implies growth of 8%

Sebastien Martel, Chief Financial Officer, BRP Inc.: to 12% in the second half, driven by the elements I previously mentioned. Benefiting from the stronger revenues and the ongoing focus on operational efficiency, we expect to be able to more than offset the impact of higher sales program, tariff costs and the return on variable compensation to deliver significantly improved profitability. In fact, our guidance calls for H2 normalized EBITDA to be up between 2231% over last year, resulting in a normalized EBITDA margin in excess of 14%, well above H1 levels. And this all results in normalized EPS that is expected to grow between 2851%. From a cadence perspective, given the lower shipments planned for snowmobiles and the lower RV shipments in August ahead of the new product launches, Q3 normalized EPS is expected to be roughly stable versus last year with the bulk of the H2 growth coming in Q4.

On that, I will turn the call over to Jose. Thank you, Sebastien.

Jose Borjade, President and Chief Executive Officer, BRP Inc.: I am proud of our accomplishments so far this year. Despite macroeconomic environment, we’ve delivered results ahead of expectation through solid execution and operational excellence. The timing of our model year 2026 launches could not be better. We are the OEM with the most product news, which we are bringing to market as our network inventory is healthy and dealer sentiment is improving. When I was in Boston for Club BRP, I felt a significant upswing versus last year.

Many dealers appreciated that we were the OEM who supported them the most from day one during these challenging times. Since we are starting to see the benefit of our action and despite ongoing volatility, we are comfortable in showing guidance. We are confident that the momentum generated by our new product introduction will allow us to deliver a stronger second half of the year. With the most complete product offering, strong brands and a solid dealer network, we are uniquely positioned to come out on top when the industry fully recover. As I said many times in the past, our goal is to consistently wow consumers with market shaping product.

Over the long term, we remain committed to pushing technology and innovation to capitalize on market opportunities and sustain profitable growth. On that note, I turn the call over to the operator for questions.

Conference Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer now question we Your first question and comes from Craig Kennison with Baird. Your line is now open.

Craig Kennison, Analyst, Baird: Hey, thanks for taking my question and for the updated guidance. I wanted to ask about trade policy. What are the tariff scenarios that you’re contemplating? I know we have USMCA that is subject to renegotiation and Mexico has suggested plans to raise tariffs on Asian imports. So I think you’re well positioned for the current landscape, but what are the scenarios you’re thinking about down the road?

Jose Borjade, President and Chief Executive Officer, BRP Inc.: Yes. Craig, obviously, over the years, and you know that we optimize our manufacturing footprint and our supply chain and all our products made in Canada and Mexico meet the USMCA. Today, about twothree of our content come from North America. I won’t give you the detail between Canada, U. S.

And Mexico for competitive reasons, but twothree of our content comes from North America. Obviously, we are in constant dialogue with Canadian and Mexican government and authorities to try to follow very closely what’s going on. And I believe that beyond VRP, the USMCA agreement is critical for North American company to be able to compete worldwide. Then to be honest, we’re not working right now on any scenarios. Like I said many times, we always found ways to adapt to any regulation.

If the norm or the new USMCA rules are clear and we have lead time, I’m very confident we will adapt to any situation. But we’re following that closely, and we’re ready to fire up when we know better.

Craig Kennison, Analyst, Baird: Thanks. And could you shed any light on your plans to mitigate the tariff exposure you forecast in your guidance?

Jose Borjade, President and Chief Executive Officer, BRP Inc.: Again, the $90,000,000 is the growth. And basically, it’s sourcing. Move depending of the regulation and where the goods are coming. Sometime we move the production or the supplier from one country to the others. I saw some idea from our team where a supplier were doing an assembly from part coming from Asia, and now we’re doing it ourselves in our factory, then there is many, many things that we do to be able to minimize the impact of those tariffs.

And to be honest, I’m impressed how fast we react and how good we are, but we’re learning everything.

Craig Kennison, Analyst, Baird: Thank you.

Conference Operator: Your next question comes from James Hardiman with Citi. Your line is now open.

James Hardiman, Analyst, Citi: Hey, good morning. So would love to sort of have a conversation about the current versus non current setup in the industry right now. Obviously, that was worth calling out, right, that your overall retail, particularly in ORV, was down. But if we split it up into current versus non current, it tells a very different story. I guess as we roll that forward, what does that look like in the third quarter?

And I think a lot of the answer comes down to when we think your peers will if they haven’t already worked down their non current and ultimately sort of ease up from a promotional perspective. But curious how you see sort of

Sebastien Martel, Chief Financial Officer, BRP Inc.: your

James Hardiman, Analyst, Citi: retail rolling forward in that context.

Jose Borjade, President and Chief Executive Officer, BRP Inc.: Dan, obviously, we are in the quarter Q2 is the quarter where many OEM transitions from model year ’25 to ’26. Then there is some estimation in our forecast. But basically, saw in Q2 that most of the OEMs are more cautious versus shipment. And we saw inventory in our case, we are happy where we are versus except snowmobile that we intend to deplete in the upcoming season. But we saw positive signs like in the ORV.

The ATV inventory was down by 20% in Q2, side by side 10%, the industry, not us. Watercraft is a bit on the high side. One OEM have shipped quite a lot of 25 late into the season. But overall, the noncurrent versus current inventory ratio have improved over the quarters. Then this is our situation.

Why we are encouraged for H2 and we are comfortable to issue the guidance is we have a good visibility on what we will be shipping. And also, see that we are in a position where our inventory is low. We have very good product news. The reception of the dealer were very upbeat at club. And we were the first one, like I said in my script, to take the bullet and support them in the last eighteen months.

And now it’s time that we take advantage of this. Then this is why we are in a unique situation, and we’re comfortable and we believe we can grow market share in the H2, and we’re comfortable with our guidance.

James Hardiman, Analyst, Citi: Got it. And just to clarify, it sounds like you’re saying you think retail is going to be up in the second half. Maybe just confirm or deny that. And then, just early thoughts on 2026. Obviously, as I think about puts and takes, there was some inventory drawdown this year.

Assuming we’re back to sort of one to one wholesale to retail, what does that get you? And then the tariff piece, right? I think you’ve said in the past that we shouldn’t think about next year being double this year. But with the new $90,000,000 number, any sort of initial thought on what that might look like for 2026?

Jose Borjade, President and Chief Executive Officer, BRP Inc.: Thanks. I will give you color on our forecast for the industry in H2 and Sebastien will talk about fiscal year 2026. Then obviously, there is a lot of volatility in the macroeconomic. But basically, we’re planning for the industry H2 similar to Q2. And just to give you a sense by key countries, U.

S. Was down mid single digit in Q2. Obviously, we believe tariff uncertainty and the inflation still affect consumer confidence. Canada have done well with low up low single digit. I’m talking the industry.

LATAM is doing very strong with over 20% growth in Q2 drive by the ORV momentum in Brazil and Mexico, and we believe this will continue. And EMEA was down in Q2 by mid teen, but is improved versus previous quarter. Then when this is basically our planning for the industry. And again, our position, we believe we are in a good position versus the others.

Sebastien Martel, Chief Financial Officer, BRP Inc.: On tariffs, as I mentioned in the prepared remarks, this year is a headwind of gross headwind of $90,000,000 There are some onetime elements that we’ve incurred this year that will not come back next year, probably in the range of about $10,000,000 If we do nothing, and obviously, that’s not how we operate, the teams are always there to optimize and minimize the impact. You could see, again, with the same tariff base that we have, maybe a headwind of $120,000,000 $130,000,000 But obviously, we’re going to keep working on optimizing and working with our suppliers to reduce as much as possible the tariff risk. But that would be the, let’s say, run rate on a steady basis.

James Hardiman, Analyst, Citi: Got it. That’s helpful. Thanks guys. Your

Conference Operator: next question comes from Brian Morrison with G. D. Cowen. Your line is now open.

Brian Morrison, Analyst, G.D. Cowen: Good morning. A question for Syb or Jose. You have called the $1,300,000,000 revenue headwind or so a big number from the destock over the past year with the industry inventory being closer to rightsize now. How do we think about the revenue profile outlook of this alignment of wholesale and retail? Should it be straight line recovery over the next twelve months?

How do you think about that?

Sebastien Martel, Chief Financial Officer, BRP Inc.: Well, obviously, it’s Brian, probably a bit early to call what next year is going to be like as we just issued guidance for the next six months of the year. But if you look at the pluses and minus for next year versus this year, I think the big one is going to be the retail equal wholesale. And when you look at the number this year and the destocking we did, it’s between a 400,000,000 to $500,000,000 revenue impact that we’ve had, and it’s well above $1 of EPS impact, obviously. So once and hopefully, we’re going be there at the end of the year. We’re there already where inventory is rightsized.

We need a bit more work to do on snowmobile. And so that headwind should be gone next year. Obviously, there are some volume opportunities as well for next year. We’ve been losing market share in ORV now for the past year or so, mainly due to the noncurrent dynamic in the industry. Now the inventories are cleaner.

There’s a bit of more work to be done for a few OEMs. But my call is that they should be done by the end of the year. We’re back from club. Jose mentioned that in his remarks as well. A lot of excitement.

You were there as well, Brian, last week and you saw the dealer engagement. You saw the great products we have. And so that obviously helps next year. And from the market share perspective, I trust that Sandy and his team will be working on turning the tide and we should see market share improve next year. So that obviously will be a plus.

So that’s from a more top line perspective. And then when you look at the profitability, obviously, we continue to drive efficiencies. That’s for sure. The teams are always working on optimizing the bill of material, the operations on our plant. We might decide to invest in other in certain sectors.

We even though there’s a slowdown, you saw that we continued investing in innovation. We’re going to continue doing that next year. So maybe that’s a wash. And then in terms of other minuses, I talked about the tariffs. So they’re going to be higher next year.

That’s if we don’t do anything. Depreciation could be, let’s say, 30,000,000 higher next year. Financing costs as well. And the tax rate probably closer to where we were historically at the 25%, 26% range. So again, here are some of the plus high level of pluses and minuses, but obviously too early to call.

We’ll enjoy the guidance that we just issued today. Still hot, it’s still warm. We look forward to provide you with details on ’27 in the next few quarters.

Brian Morrison, Analyst, G.D. Cowen: I appreciate those details. I think the message though is that alignment, 400 to $500,000,000 of that is incurred in the second half of this year. And then in a flat environment, we should see the remainder of that next year. Is that correct? And then my second question is really just on your margin, which you said.

Can you maybe just frame the impact from promo activity this year? Because obviously, it’s material. And with the noncurrent inventory in the industry starting to ease, maybe just frame how we should think about the margin impact that should have going forward.

Sebastien Martel, Chief Financial Officer, BRP Inc.: Yes. Last year was a big year in terms of promotion. So this year, we’re getting a benefit probably in the range of, let’s say, 75 to 100 basis points versus pre COVID or even 50 basis points better. Could we further optimize next year? For sure, as we did a big well, the commercial environment was tougher this year, so more promotions.

We had to compete against other OEMs that had noncurrent. So could there be another 50 basis point tailwind next year? Most certainly, that’s something that is plausible. Obviously, there are a lot of variables that need to fall into place, but it is one possible scenario.

Brian Morrison, Analyst, G.D. Cowen: Thanks very much for the color.

Conference Operator: Your next question comes from Robin Fairley with UBS. Your line is now open.

Robin Fairley, Analyst, UBS: Great. Thanks. Just two things. One is a follow-up to your comments about expectations for second half retail. You said kind of similar to what we saw in Q2, but you mentioned U.

S. Down mid single, kind of up low single. If we were talking about just your ORV expectations because I understand there’s some seasonal things that for your product lines that may be different. But if we were looking at just North American ORV retail in the second half, would you say that you’re expecting North America to be up low single digit as you saw in Q2? In other words, some of the numbers you were giving, I assume, were impacted by those other product lines.

But is it fair to say that your comment about expecting second half trends similar to Q2 would be also the case just for ORV specifically? Thanks.

Sebastien Martel, Chief Financial Officer, BRP Inc.: Well, we when I look at Q2, every month sequentially, ORV retail improved. And so from May to June to July. And sequentially, we’re seeing improvements as well happening in August. As Jose mentioned, the industry is cleaner in terms of current, non current. Yes, some OEMs have higher non current than where they were historically.

But I think we’ll be competing in a better environment. Obviously, yes, we’re transitioning to a new model year. So I’m hoping to see better numbers than what we saw in Q2. And early in August, the trend is in the right direction. And so obviously, we’re working to make sure that, that continues.

Robin Fairley, Analyst, UBS: Okay, great. Thank you. And then my other question is when we look at your inventory compared to pre COVID levels being up only 2%, down 1%, including new product lines or excluding new product lines. And I guess specifically for ORV down 5%. With your retail volume so much higher than pre COVID levels, how is that down 5% the right number?

And especially because I’m assuming that’s an aggregate and your dealer base has probably grown, so that would suggest that like on a per dealer level, your RV inventory is even further below. Just wondering why that is the right number for you? Thanks.

Sebastien Martel, Chief Financial Officer, BRP Inc.: Well, one, the dealer count is fairly stable versus we were pre COVID. And so it’s on a, let’s say, same store basis. And were we too a bit too high during pre COVID? Some could say yes. Obviously, it’s a question of dollars as well.

The dollar value of units is significantly higher. And so dealers are more cautious in taking inventory when the dollar value is almost up 50%, I. E, MSRP increase, but also a combination of better mix. And also, there is a benefit where demand for cab units is still very strong and supply is slightly lower than where we were in historical level for our other product lines. So that’s one of the reasons that’s driving lower ORV inventory for us, but also other OEM.

And there’s always going to be variation in our inventory levels. It’s never going to be fixed ninety day every month, every quarter. It will move. But generally, we’re happy with where the inventory stands. It provides us with flexibility, proactivity if there were to be an economic slowdown.

And I think given where the uncertainty in the state of the economy, I think it’s at the right level, and we’ll adjust our inventories accordingly as the business continues to evolve.

Robin Fairley, Analyst, UBS: Okay, great. Thank you very much.

Conference Operator: Your next question comes from Subbaha Khan with RBC Capital Markets. Your line is now open.

Subbaha Khan, Analyst, RBC Capital Markets: Great. Thanks and good morning. Just in light of some of the comments around the inventory position and sort of the outlook, can you get a little bit deeper into sort of the retail evolution you expect into sort of the back half of this year and into next year? Is it sort of just sequential improvement in the retail uptake on the consumer side? And sort of how are you factoring into your outlook some of the macro factors that you talked about and how they might impact consumer uptake?

And if there’s any color across categories on the retail uptake outlook? Thanks.

Sebastien Martel, Chief Financial Officer, BRP Inc.: Yes. Again, we don’t have, let’s say, a black box that gives us the full industry and retail trends. But obviously, there’s we need to appreciate that there are many variables such as tariff, interest rate, consumer sentiment. So it’s difficult to forecast industry at the moment. But all in all, despite all the noise that we’ve seen in the industry and market, the industries have held up so far decently this year being down low single digit percentage overall.

Yes, some of that was helped by the non current and promotions. That’s fair. And but we’re transitioning now to a model year. So now we’re there’s going to be non current. The model year 2025 will be non current.

And the other big question is how interest rates will behave, how interest rates will move. So our base case there for the rest of the year is a continuation of the trend we are seeing because we’re transitioning to a new model year. But despite this, even though there’s volatility, we’re confident in the guidance we have today because, again, even if there’s slight movement in industry and retail, our inventories are low, dealers want our new units, the new innovation. We have orders for snowmobile. And so we’re confident in the guidance we’ve issued today based on all of these factors.

Subbaha Khan, Analyst, RBC Capital Markets: Great. And then as we look at sort of the balance sheet in the call it 2.5 times range, is it a bit of a wait and see on the balance sheet and capital allocation as you look ahead? And presumably production probably picks up might be some need investment there as units start to improve. Maybe just walk us through your views on sort of capital allocation, balance sheet and maybe reinvestment into the business as we potentially move toward an up cycle here? Thanks.

Sebastien Martel, Chief Financial Officer, BRP Inc.: Yes. Well, our priority in terms of capital allocation has always been investing in the business, growing the dividend and also doing buybacks. But we’ve given the context, the uncertainty around tariffs, the economy, we’ve been on the sideline on buybacks and we’ll probably continue being on the sideline as well until we see that clarity and when we see the cash flow come in. The priority has always been protecting the financial flexibility of the company, and we are fortunate we are in a good position. We’ve got debts with no covenants.

And so we don’t need to worry about financial meeting our financial covenants. We’ve got ample flexibility on the revolver as well.

Philippe Deschaine, Investor Relations, BRP Inc.0: But

Sebastien Martel, Chief Financial Officer, BRP Inc.: currently, being prudent has been the name of the game, and we’re going to continue managing our balance sheet that way.

Jose Borjade, President and Chief Executive Officer, BRP Inc.: Great. Thanks very much.

Conference Operator: Your next question comes from Joe Altobello with Raymond James. Your line is now open.

Philippe Deschaine, Investor Relations, BRP Inc.1: Thanks. Hey, guys. Good morning. So just want to go back to the guidance for a second. And I think, Seth, you mentioned this earlier.

If I look at first half versus second half, it’s quite striking. Revenue midpoint, I guess, is up 10% or around 400,000,000 So I’m just trying understand how much of that is simply lapping last year’s undershipping demand? And how much is innovation like Defender, for example? I’m just trying to assess the risk of that outlook.

Sebastien Martel, Chief Financial Officer, BRP Inc.: Well, for sure, I mean, last year was an easy H2 was an easy second half to lap. And most of the focus last year was on reducing seasonal product inventory in the network. And so our shipments were actually down for the seasonal product business. This year, when you look at our H2 guidance or outlook, Seasonal revenue is relatively flat versus last year as there’s still work to be done on snowmobile. But we’re planning to increase year round products.

Last year was decent, but this year, H2 was going to be more in line with what we did in 2023 and 2024. In terms of delivery, obviously, we have the new products that’s driving some of the volume, but we believe that’s going to be also going to be driving retail. And also mix is also going to be beneficial in the second half of this year, where mix was more challenged last year as we undershipped seasonal business with a very rich mix. And we also have, obviously, cost efficiencies that we’re factoring in the second half and also lower sales program. So all in all, I would say that, yes, it was an easy comp last year.

And last year was well below what we believe the earnings power of the company is. And this year is more indication of what the true earnings power of ERP is when the inventory is when we’re shipping more wholesale equal retail.

Philippe Deschaine, Investor Relations, BRP Inc.1: Okay. Got it. And on the tariff front, you mentioned the $90,000,000 this morning. I think somebody else asked this, but I’m not sure if you answered it. What’s the net number post mitigation?

I’m just trying to tie back to your original EPS outlook for this year, which I think was $4.5 to $5 Just curious if that’s now actually higher if we exclude the tariffs?

Sebastien Martel, Chief Financial Officer, BRP Inc.: Yes. Net of the mitigation efforts we’ve put in, we’re probably ending at a, let’s, $0.02 5 to $0.3 negative impact on the P and L. Most of the mitigation efforts have been that we’ve taken higher pricing. Usually, we do A1 percent, 1.5%, but we’ve taken pricing hires mainly on the parts and accessories business. But that’s how we’ve mitigated the impact.

Okay, great. Thank you.

Conference Operator: Next question comes from Martin Landry with Stifel. Your line is now open.

Speaker 4: Hi, good morning, guys. Sebastien, speaking about earnings power, I would like to just have a little

Subbaha Khan, Analyst, RBC Capital Markets: bit of a

Speaker 4: discussion. A couple of years ago, the company was guiding for an EPS of all the way up to $14 And now you’re guiding for an EPS of 4.7 yes, around $4.5 So how long and what kind of earnings power could we expect from the company in the coming years? I understand that going back to $14 is probably unrealistic in the near term. But I’d love to hear you talk a little bit about what kind of earnings power can the company have in the next two, three, four years?

Sebastien Martel, Chief Financial Officer, BRP Inc.: Well, I mean, I like where BRP is sitting today. I’ve been with the company for twenty years. I’ve seen how the company has grown and evolved. And obviously, we are today a must in the powersport industry from the breadth of our product portfolio, from the quality of the products we offer, from the dealer network we’ve built over the years, not only in North America, but around the world. And so do I believe that BRP can continue growing in this industry?

Absolutely. We’ve talked about the ORV market share, able to grow it. And obviously, not only the side by side, but ATV. It all obviously depends on the industry. So DRP has the resources, the capacity to continue growing.

We need to drive industry as well. But the industry is based on the macro environment, interest rates, consumer confidence, unemployment rates, etcetera. So there are many variables. So it’s very dependent on how the industry behaves, Marcin. So do I believe that if the industry grows and the economy is robust that we can get to the numbers that we talked about in the past?

Absolutely. Because BRP has become an innovation machine and a profitability machine as well for the dealers. And that’s sort of these are the key factors that are going to drive growth in the future.

Speaker 4: Okay. And could we is it fair to say that there’s a realistic scenario where your EPS could double from current level in the next two, three years?

Sebastien Martel, Chief Financial Officer, BRP Inc.: Again, it’s very do we have the backbone to do it? Yes. Do we have the manufacturing capacity to do it? Yes. Do we have the product lines to do it?

Yes. The network? Yes. It will be very dependent on industry dynamics.

Philippe Deschaine, Investor Relations, BRP Inc.2: Okay. Thank you.

Conference Operator: Your next question comes from Mark Petrie with CIBC. Line is now open.

Philippe Deschaine, Investor Relations, BRP Inc.3: Morning, Mark Petrie.

Philippe Deschaine, Investor Relations, BRP Inc.4: Sorry about that. Thanks for the question and good morning. I just want

Philippe Deschaine, Investor Relations, BRP Inc.5: to clarify maybe a couple

Philippe Deschaine, Investor Relations, BRP Inc.4: of things. You talked about two figures from the destock headwind, the

Sebastien Martel, Chief Financial Officer, BRP Inc.: $1,300,000,000 and then the 400

Philippe Deschaine, Investor Relations, BRP Inc.4: to $500,000,000 Could you just square up exactly what those are referring to? I think the 400,000,000 to 500,000,000 is the potential tailwind into next year, but could you just be clear on that?

Sebastien Martel, Chief Financial Officer, BRP Inc.: Yes. The overall impact, if you do the accumulation there, when we talked about destocking in twenty fiscal I don’t want to make the fiscal year fiscal year 2025 and now we’re destocking in fiscal year 2026, the combined effect probably adds up to $1,000,000,000 close. The number I referred to in my question to Brian was 300,000,000 a 400 to $500,000,000 impact. When I compare the destocking we did in the current fiscal year. The impact of that destocking is about 400,000,000 to $500,000,000 of revenue just for this year.

Philippe Deschaine, Investor Relations, BRP Inc.4: Okay. Understood. And then you were talking about or highlighting the 14% to 15% EBITDA margin level implied for the second half in your outlook. Could you just sort of walk through kind of the biggest factors bridging that from last year? And then how to shape those into fiscal twenty twenty seven?

I think you’ve already touched on the programs, which I think you said could be a 50 basis point tailwind. But could you just give a little bit more color there, please?

Sebastien Martel, Chief Financial Officer, BRP Inc.: Yes. And I’ll I’ll probably refrain from making any estimates on 2027 too early. But I gave you some color as to what I believe the pluses and minuses are for next year. But when I look at this year, just for H2, we’ll look at gross profit. Obviously, the second half of the year, I’m expecting gross profit to increase probably 300 basis points easily versus where we were last year.

So let’s say, low 300 basis points to probably whatever two fifty, 300. From an OpEx, it will be higher in the second half of the year versus last year, probably 500 basis points, mainly coming from variable compensation. And from an EBITDA margin, second half of the year, you’re probably going to see 150 basis point net net there when you do the pluses and minuses on the EBITDA, a positive growth. So well above 14% EBITDA margin in the second half of the year.

Philippe Deschaine, Investor Relations, BRP Inc.4: Yes. Okay. Understood. Appreciate that. All the best.

Philippe Deschaine, Investor Relations, BRP Inc.: Thank you. Thank you.

Conference Operator: Your next question comes from Benoit Poirier with Desjardins. Your line is now open.

Philippe Deschaine, Investor Relations, BRP Inc.2: Yes. Good morning. Jose, just in terms of retail sales between Canada and U. S, there has been a discrepancy. Canada was up low single digit, U.

S. Was down low single digit. So I was wondering if you have any thoughts on what’s driving this? I’ve seen some comments from dealers in Canada pointing to greater interest for BRP products given the geopolitical issues or I’m just wondering if it’s a matter of having a much lower of noncurrent units in Canada. So any color on the discrepancy between both countries would be great.

Jose Borjade, President and Chief Executive Officer, BRP Inc.: Well, I think there is this is my belief. In U. S, there is still the tariff uncertainty and the thing, the price change very often. Also, the inflation is still high on the high side, and there was no interest rate reduction so far. The U.

S. Consumers, think, is more uncertain about the overall economy. And we see that in the lower income customers. A lot of our rejection rate for people who are asking to buy a Ryker is very high in U. S.

In Canada, it’s a bit different dynamic. The dealer are first, the dealer in Canada are very loyal to BRP. And the economy is overall good. I didn’t heard personally dealers saying that because of the tariff situation, there is more interest for BRP product. I believe maybe some U.

S. Companies have more difficulty because of the exchange rate between Canada and U. S. To come to Canada. But I think the dynamic is more caused by the macroeconomic environment in The U.

S. Than anything else.

Philippe Deschaine, Investor Relations, BRP Inc.2: Okay. That’s interesting. And with respect to the pricing adjustment that we you just announced at the club, we’ve seen some of your peers that were able to drive stronger sales on the back of lower pricing. So I was wondering whether you’re seeing positive impact following price adjustment made at the club, Jose?

Jose Borjade, President and Chief Executive Officer, BRP Inc.: I mean it’s too early call because right now, Benoit, we have order on hand for all the ORV product for deliveries in August, September. We’re doing next week the booking for deliveries in October. But what I can tell you, it’s not it’s normal that from time to time, you readjust your pricing. And what happened during the COVID, a lot of OEM have increased more the pricing than others. And we were somewhat not competitive in six category.

And we thought the timing right now that our inventory is low, situation seems to be more stable to readjust our pricing in six category because we drive to continue to gain market share in the off road business, and every category need to grow. And this is the timing was perfect for us. Then it’s too early to tell you, but in our internal planning, we’re definitely planning to grow volume in those categories for product.

Philippe Deschaine, Investor Relations, BRP Inc.2: Okay. And maybe last one for me. You’ve been quite successful ramping up the fishing offering in the Sea Doo category. We’ve seen Yamaha that came with the new fishing PWC called the Cross Wave. So I was wondering, Jose, if you have any thoughts on this new product from Yama and whether you’ve seen some impact on the SeaDew Fish Pro offering so far.

Jose Borjade, President and Chief Executive Officer, BRP Inc.: First, the product, nobody saw it physically yet. It’s scheduled to be delivered next spring, then we’ll see how it goes. But definitely, in the watercraft industry, recreational product for recreational only activity is still good, but we’ve been very good to have specialized vehicle. And that’s what we’ve done with the WakePro. That’s what we’ve done with the Explorer.

That’s what we’ve done with the FishPro. And this is tailored to activity, which bring new customer to the industry. Then obviously, Yamaha took a different approach, but it will be interesting to see how it grow. And at the same time, it’s pushing us to be better and to be more competitive. We like competition.

And if they can accelerate the development of people who fish into the watercraft category, I welcome the initiative. I mean if we could continue because we are the two main players to grow the industry, I think it will be better for both of us, and we’re not afraid of the competition.

Philippe Deschaine, Investor Relations, BRP Inc.2: Perfect. Thank you very much for the color, Jose. Thank you.

Conference Operator: Your next question comes from Luke Hannan with Canaccord. Your line is now open.

Philippe Deschaine, Investor Relations, BRP Inc.0: Thanks. Good morning, everyone. Most of my questions have been answered, so it’s just a clarification on some earlier lines of questioning. On the topic of the normalized earnings power, I know you’ve referenced it as far as EPS in the past, but I know that you’ve also discussed a normalized EBITDA margin of in and around 17% as sort of being the structural mid cycle target that you guys have had. What does that number look like or has it changed at all post marine divestments?

What should we be thinking about as sort of the longer term margin potential here?

Sebastien Martel, Chief Financial Officer, BRP Inc.: If there’s anything, it’s probably even more achievable. I mean we’ve delivered high EBITDA margin percentages in the past with the Marine business up to 19%. I think when you exclude Marine pro form a, you would be at 21%. So is the 17% still achievable? To the earlier question from Martin Andre, again, as the business grows, as we get to these as the industry grows, as we get to these higher revenue numbers, for sure, EBITDA margin will grow as we leverage the investments we’ve made in the past and as we leverage the existing manufacturing capacity.

So I do believe that it’s a number that’s still very much achievable.

Philippe Deschaine, Investor Relations, BRP Inc.0: Great. Thanks. And then you also touched on the dealers utilization of their line of credit. It was 50% this quarter and it’s down from 70% last quarter. How has that fluctuated over the course of, let’s say, last few years?

And I mean, like, is it at a point now where it’s basically troughed and that we continue we should see that expand given the retail environment? Or just how roughly, I guess, should we be thinking about that over the course of the near to medium term?

Sebastien Martel, Chief Financial Officer, BRP Inc.: It is very healthy. Dealers see it as well in their monthly financing costs or floorplan costs. So it is very healthy. As I said, it will move, yes, because there’s seasonality in our business. There is inventory buildups before a retail season.

Sometimes retail does not go according to plan. Sometimes it’s better. So we are expecting it to move. It did go up quite significantly in the last twenty four months. But we also did rightsizing of line of credits.

We talked about this as well. Our business has grown significantly. MSRPs have grown as well. And so we needed to bring dealers along to acknowledge that their lines of credit also needed to be tailored to the new reality of the powersports industry and of BRPs business. So that’s another factor.

Philippe Deschaine, Investor Relations, BRP Inc.0: Okay. And then last one for me, then I’ll pass the line. Utility SSDs represent about two thirds of the overall industry. Can you share what it represents as far as your SSDs mix today? And then when we think about the longer term market share opportunity for you in SSDs, how much of that is utility market share capture versus other, we’ll say, capture in recreational versus other drivers?

Jose Borjade, President and Chief Executive Officer, BRP Inc.: Yes. The same ratio for us, twothree of our volume is utility. And obviously, we always been stronger in the REX port. And obviously, there is more opportunity in the utility, and that’s why we’re so optimistic with the new Defender. Because like I said, we have the best ATV with all technology.

Now we stand we established a new standard with the new technology.

Philippe Deschaine, Investor Relations, BRP Inc.0: Okay. Thank you very much.

James Hardiman, Analyst, Citi: Your

Conference Operator: next question comes from Cameron Doerksen with National Bank Financial. Your line is now open.

Philippe Deschaine, Investor Relations, BRP Inc.5: Thanks. Good morning. I guess a question on the tariffs. You mentioned that the new tariff estimate for the year includes the recent announcement of the expansion of products on steel and aluminum tariffs. It doesn’t sound like that affects all of your products.

Can you just maybe detail that a bit more and whether there’s any risk that there could be, I guess, further tariff impact if there’s, I guess, another expansion of that steel and aluminum to more products?

Sebastien Martel, Chief Financial Officer, BRP Inc.: There’s good morning, Cam. Yes, there’s always a possibility of the rules changing. This came into effect on August 18, where steel and aluminum now at 50%. The vehicles that are impacted is mainly ATV side by side. And however, some models of side by side are excluded.

And it’s really on the steel content that are in the vehicles. So the secret is obviously providing what the weighted pack is. And steel is obviously a big part of the vehicle, but it’s a low cost in the vehicle. And so it is a we prefer not to have it. It is an impact, but it’s certainly something that we can absorb.

And if the rules change, we’ll adapt as we always do. But difficult for me to call what could be the impact if I were to apply X percentage tariff on X and Y products.

Philippe Deschaine, Investor Relations, BRP Inc.5: Okay. That’s helpful. And maybe, I guess, second question, not that you’re rushing to see Jose accelerate his retirement, but just wondering if there’s any update on the new CEO search at this point.

Jose Borjade, President and Chief Executive Officer, BRP Inc.: No update. The search is ongoing. And I was with the HR committee this week and the transition should be by the end of the year. No change.

Philippe Deschaine, Investor Relations, BRP Inc.3: Okay, perfect. I’ll pass the line. Thanks very much. Thank you.

Conference Operator: Your next question comes from Tristan Thomas Martin with BMO Capital Markets. Your line is now open.

Philippe Deschaine, Investor Relations, BRP Inc.6: Hey, good morning. I don’t know if I missed this, but did you guys disclose where you expect your channel inventory levels to be at the end of the year? And then also anecdotally, I’m curious if you’ve heard anything about how dealers are planning on ordering the new product. Understand the reception has been very positive, but just curious how dealers are kind of thinking about the back half and then early next year in terms of planning their order?

Sebastien Martel, Chief Financial Officer, BRP Inc.: From an inventory perspective, no big changes versus where we stand. Obviously, there’s as we’ve mentioned, there’s a bit of work to do on snowmobile. And so that’s going to be the focus in the second half of the year. But generally, where we are in Q2 for the various product lines is where we expect to be at the end of Q4. And for your second question, sorry, I missed the I think Jose is going to take it.

Jose Borjade, President and Chief Executive Officer, BRP Inc.: On the other front, like Sebastien mentioned, we have the order on hand for snowmobile for the delivery for fiscal year twenty twenty six. Now on Watercraft, we’re just finalizing the booking. Dealers saw the product at Club. They look, they do their model mix, but basically, we are on plan. And off road, we have dealer on hand for the deliveries in August and September.

We’re taking the delivery we’re taking an order every month for delivery in two months. Then we’ll be taking deliveries in the next two weeks for delivery in October, but we’re very confident with the Afro lineup that we have and the novelty that we will meet our numbers.

Philippe Deschaine, Investor Relations, BRP Inc.6: Okay. Great. And if I could just sneak one more in there. I believe in your prepared comments, you said investing in other sectors. Is that investing in product lines with an end market you’re already in or possibly expanding into other end markets?

Thanks.

Sebastien Martel, Chief Financial Officer, BRP Inc.: It’s still centered around the powersport industry. Okay,

Philippe Deschaine, Investor Relations, BRP Inc.6: great. Thank you.

James Hardiman, Analyst, Citi: Thank you.

Conference Operator: Your next question comes from Jonathan Goldman with Scotiabank. Your line is now open.

Philippe Deschaine, Investor Relations, BRP Inc.3: Hi, good morning team and thanks for taking my questions. I apologize if I missed this, but just going back to the guidance for the second half implying plus 10% at the midpoint. I think you called out retail being aligned with wholesale and retail kind of being similar in the second half to Q2, which was down low single digits. So to bridge the delta, is it pricing, share gains, new product launches, any other elements in there?

Sebastien Martel, Chief Financial Officer, BRP Inc.: Well, it’s a combination of factors. As I mentioned, the favorable product mix is going to be a factor, the less programs as well as another factor helping revenue. These would be the two big items that are, let’s say, not volume related.

Philippe Deschaine, Investor Relations, BRP Inc.3: Okay. Thanks for that. And maybe Jose, could you comment on the level of new entrants in the industry now versus 2019, how elevated it is? And I guess this ties into the broader question of the earnings power of the business. If you look at the industry data, calendar 2024 units are kind of exactly where they were in 2019.

So do we have more room to grow unit wise in the industry? Or is it kind of stabilized in terms of volume? And then obviously this year would be lower and it’s just getting back to the $1,200,000,000 level.

Jose Borjade, President and Chief Executive Officer, BRP Inc.: And new entrant numbers in Q2 were at twenty three percent, same level than pre COVID. And it seems that we’re back to where we were before the COVID bubble. I think in terms of industry, I answered the what the planning for the industry. I think what maybe additional for you is the trend that we saw

Subbaha Khan, Analyst, RBC Capital Markets: in the last

Jose Borjade, President and Chief Executive Officer, BRP Inc.: two quarters is continuing. Obviously, the inflation, the high financing rate, the uncertainty put some pressure on the lower income customers, and we see the premium selling well versus the value product. Then Spark and Ryker are below traditional watercraft and below traditional fuel vehicle. And in the side by side, the premium sell well, the value is down. Utilities sell well and direct export is down.

Then the same trend that we saw in the last two quarters. But we are well positioned because, as you know, we’re better to in the high end product than the entry level. And with the new Defender and the utility going up, we are timing could not be better.

Philippe Deschaine, Investor Relations, BRP Inc.3: Okay. That makes sense. And I guess just following up on that. Do you think the industry is larger today in terms of units than it was in 2019? If you exclude motorcycles, I guess there was about 1,200,000,000 units sold in 2019.

In a normalized environment, do you think we can exceed that volume in the industry totally in North America? The

Jose Borjade, President and Chief Executive Officer, BRP Inc.: side by side have grown over the last few years and it continued to grow. And what is interesting, it’s growing in North America, but it’s growing even more in some international market. The number are still obviously lower than North America, but the growth is very good. And I think there is place to continue to grow or the industry will continue to grow in the side by side business.

Philippe Deschaine, Investor Relations, BRP Inc.3: Okay. Thank you very much for the color.

Philippe Deschaine, Investor Relations, BRP Inc.: Thank you.

Conference Operator: There are no further questions at this time. I will now turn the call over to Mr. Deschaine for closing remarks.

Philippe Deschaine, Investor Relations, BRP Inc.: Thank you, Joelle, and thanks, everyone, for joining us this morning and for your interest in BRT. Before we go, note that we will be hosting an Analyst and Investor Day on October in Valcour. Stay on the lookout for more detail. Thanks again, everyone, and have a good day.

Conference Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

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