Q3 2026 BRP Inc Earnings Call
Philippe Deschênes: Thank you, Joelle. Good morning and welcome to BRP's conference call for the third quarter of fiscal 26. Joining me this morning are José Boisjoli, President and Chief Executive Officer, and Sébastien 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.
[Company Representative] (BRP Inc.): The forward-looking information is based on certain assumptions and is subject to risks and uncertainties, and I invite you to consult BRP's MD&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. With that, I'll turn the call over to José. Thank you, Philippe. Good morning, everyone, and thank you for joining us. We are pleased with our third quarter financial results, which came in ahead of expectations. While we continue operating in a dynamic macroeconomic environment, our teams remain focused on disciplined execution and our hard work paid off. We also gained market share in ORV, fueled by the success of our newly introduced models, notably the Can-Am Defender HD11. Let's turn to slide 4 for key financial highlights.
The forward-looking information is based on certain assumptions and is subject to risks and uncertainties, and I invite you to consult BRP's MD&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. With that, I'll turn the call over to José.
José?Boisjoli: Thank you, Philippe. Good morning, everyone, and thank you for joining us. We are pleased with our third quarter financial results, which came in ahead of expectations. While we continue operating in a dynamic macroeconomic environment, our teams remain focused on disciplined execution and our hard work paid off. We also gained market share in ORV, fueled by the success of our newly introduced models, notably the Can-Am Defender HD11. Let's turn to slide 4 for key financial highlights.
[Company Representative] (BRP Inc.): We ended the quarter with revenue of CAD 2.3 billion, normalized EBITDA of CAD 326 million, normalized EPS of CAD 1.59, and free cash flow of CAD 320 million, all significant increases over last year. On the back of this solid performance, we are increasing our guidance and are now expecting to deliver approximately CAD 5 of normalized EPS for the year. Moving on to slide 5 for global industry trends. In North America, our retail sales decreased by 4%, or 1% excluding snowmobiles, in line with the market. Our retail in Canada was flat, excluding snowmobiles, with a solid performance in the side-by-side category. In the US, we were down 3% in line with our plan, and we expect the trend to improve in Q4.
We ended the quarter with revenue of CAD 2.3 billion, normalized EBITDA of CAD 326 million, normalized EPS of CAD 1.59, and free cash flow of CAD 320 million, all significant increases over last year. On the back of this solid performance, we are increasing our guidance and are now expecting to deliver approximately CAD 5 of normalized EPS for the year. Moving on to slide 5 for global industry trends. In North America, our retail sales decreased by 4%, or 1% excluding snowmobiles, in line with the market. Our retail in Canada was flat, excluding snowmobiles, with a solid performance in the side-by-side category. In the US, we were down 3% in line with our plan, and we expect the trend to improve in Q4.
[Company Representative] (BRP Inc.): In international markets, Latin America continued to experience solid momentum, with retail up 13%, led by a strong ORV performance in Mexico and by our highly engaged and growing dealer network. Demand remained generally soft in EMEA, with retail down 4%, while Asia-Pacific, our retail decreased 11%. Global industry trends have remained mostly consistent with previous quarters. In general, demand remained stronger for high-end products compared to entry-level. We view this favorably as we have introduced several new high-end models this year that are well received. Turning to slide 6 for a look at our retail performance by product line in North America. As anticipated, we have lost market share in all product lines except ORV due to the industry dynamic in the low volume period of the retail season.
In international markets, Latin America continued to experience solid momentum, with retail up 13%, led by a strong ORV performance in Mexico and by our highly engaged and growing dealer network. Demand remained generally soft in EMEA, with retail down 4%, while Asia-Pacific, our retail decreased 11%. Global industry trends have remained mostly consistent with previous quarters. In general, demand remained stronger for high-end products compared to entry-level. We view this favorably as we have introduced several new high-end models this year that are well received. Turning to slide 6 for a look at our retail performance by product line in North America. As anticipated, we have lost market share in all product lines except ORV due to the industry dynamic in the low volume period of the retail season.
[Company Representative] (BRP Inc.): That said, the highlight of the quarter was the strong reception of our 2026 ORV lineup, which drove market share gains for both side-by-side and ATV, despite continued promotional activity from other OEMs. As you can see on slide 7, the momentum created by the new generation of the Defender, the Outlander Backcountry 4x4 and 6x6, and enhancements to our Maverick lineup led to a record month of October at retail for both side-by-side and ATV. Our new models capture consumer attention and earned rave reviews from media representatives who tried them. The coverage highlighted our product as the market benchmark in the industry. Building on this momentum, we've launched additional ORV models at the end of November, namely the Defender Cab HD10, the most affordable HVAC-equipped side-by-side in the industry. Now, let's turn to slide 8 for a more detailed look at year-round products.
That said, the highlight of the quarter was the strong reception of our 2026 ORV lineup, which drove market share gains for both side-by-side and ATV, despite continued promotional activity from other OEMs. As you can see on slide 7, the momentum created by the new generation of the Defender, the Outlander Backcountry 4x4 and 6x6, and enhancements to our Maverick lineup led to a record month of October at retail for both side-by-side and ATV. Our new models capture consumer attention and earned rave reviews from media representatives who tried them. The coverage highlighted our product as the market benchmark in the industry. Building on this momentum, we've launched additional ORV models at the end of November, namely the Defender Cab HD10, the most affordable HVAC-equipped side-by-side in the industry. Now, let's turn to slide 8 for a more detailed look at year-round products.
Building on this momentum, we've launched additional RV models at the end of November, namely the Defender Cab HD10, the most affordable HVAC-equipped side-by-side in the industry.
[Company Representative] (BRP Inc.): Revenue was up 22% to CAD 1.3 billion, driven by higher ORV shipments following new product launches. At retail, side-by-side was up high single digits, outpacing the industry. In fact, we delivered our strongest third quarter ever at retail for side-by-side. We continue to strongly outperform in current units, gaining four points of market share in the utility category. In ATV, retail was down mid-single digits, outperforming the industry, which was down high single digits. In current units, we gained double-digit market share points, driven by our Outlander platform and newly introduced models. As for three-wheel vehicles, we closed the 2025 season lagging the industry. We continue to experience softer retail for our entry-level Ryker lineup, which is consistent with overall market trends. This said, our high-end Spyder lineup performed better, allowing us to remain number one in the three-wheel vehicle business with a market share over 50%.
Revenue was up 22% to CAD 1.3 billion, driven by higher ORV shipments following new product launches. At retail, side-by-side was up high single digits, outpacing the industry. In fact, we delivered our strongest third quarter ever at retail for side-by-side. We continue to strongly outperform in current units, gaining four points of market share in the utility category. In ATV, retail was down mid-single digits, outperforming the industry, which was down high single digits. In current units, we gained double-digit market share points, driven by our Outlander platform and newly introduced models. As for three-wheel vehicles, we closed the 2025 season lagging the industry. We continue to experience softer retail for our entry-level Ryker lineup, which is consistent with overall market trends. This said, our high-end Spyder lineup performed better, allowing us to remain number one in the three-wheel vehicle business with a market share over 50%.
Now, let's turn to slide 8 for a more detailed look at year-round products.
Revenue was up 22% to $1.3 billion, driven by higher RV shipments following new product launches.
WhatsApp High single digit outpacing the industry.
in fact, we delivered our strongest third third quarter, ever at retail for a side-by-side
we continue to strongly outperformed in current unit. Gaining 4 point of market share in the utility category.
In ATV retail was down mid, single digit, outperforming the industry which was down high single digit.
And current unit, we gained double digit market share, point, driven by our Outlander platform and newly introduced models.
As for the free will vehicle, we closed the 2025 season lagging the industry.
We continue to experience software retail for our entry-level Riker lined up, which is consistent with overall market trends.
[Company Representative] (BRP Inc.): Turning to seasonal products on slide 9, revenues were down 2% to CAD 606 million, mainly due to a planned reduction of snowmobile shipments to right-sized network inventory. Looking at retail, the snowmobile industry saw a very high level of discounted non-current units from other OEMs. In fact, about 2/3 of units retailed during the quarter were non-current, a level we had not seen for many years. As expected, we lagged the industry given our lower non-current inventory and strong retail performance at the end of last season. This dynamic should continue throughout the winter. However, we outperform in current units as a result of the overall strength of our lineup and elevated level of pre-sold units. Turning to on-water product trends, we remained relatively soft in North America.
Turning to seasonal products on slide 9, revenues were down 2% to CAD 606 million, mainly due to a planned reduction of snowmobile shipments to right-sized network inventory. Looking at retail, the snowmobile industry saw a very high level of discounted non-current units from other OEMs. In fact, about 2/3 of units retailed during the quarter were non-current, a level we had not seen for many years. As expected, we lagged the industry given our lower non-current inventory and strong retail performance at the end of last season. This dynamic should continue throughout the winter. However, we outperform in current units as a result of the overall strength of our lineup and elevated level of pre-sold units. Turning to on-water product trends, we remained relatively soft in North America.
This said our high-end spider lineup performed better allowing us to to remain number 1 in the 3-wheel vehicle business with a market, share over 50%.
Turning to seasonal products on slide 9.
Revenues were down 2% to $606 million, mainly due to a planned reduction of snowmobile shipments. The right size, network inventory.
looking at retail, the snowmobile industry saw a very high level of discounted non-current unit from other oems
In fact about 2/3 of unit retail, during the quarter were non-current a level we had not seen for many years.
As expected, we left the industry, given our lower non-current, inventory and strong retail performance at the end of last season.
This Dynamic should continue throughout the winter.
However, we are performing current units as a result of the overall strength of our lineup and elevated level of pre-sold units.
Turning to unwatered product trends.
[Company Representative] (BRP Inc.): For the season ended in September, personal watercraft sales were down 14%, slightly lagging the industry, but we maintained our number one position in North America. As for pontoons, retail was down mid-20% as the industry is still going through a correction period. We had a better quarter in counter-seasonal markets, which are entering their peak retail season, with Sea-Doo retail up mid-single digits in both Asia-Pacific and Latin America. Moving to slide 10 for parts, accessories, and apparel and OEM engines, revenues were up 18% to CAD 379 million due to a higher volume of parts and accessory sales as dealers replenished their inventory. The increase in parts and accessory sales shows that consumers are riding our product, which is positive, while higher accessory sales reflect the success of our new product introduction. The revenue increase is also due to a more favorable mix of OEM engine sales.
For the season ended in September, personal watercraft sales were down 14%, slightly lagging the industry, but we maintained our number one position in North America. As for pontoons, retail was down mid-20% as the industry is still going through a correction period. We had a better quarter in counter-seasonal markets, which are entering their peak retail season, with Sea-Doo retail up mid-single digits in both Asia-Pacific and Latin America. Moving to slide 10 for parts, accessories, and apparel and OEM engines, revenues were up 18% to CAD 379 million due to a higher volume of parts and accessory sales as dealers replenished their inventory. The increase in parts and accessory sales shows that consumers are riding our product, which is positive, while higher accessory sales reflect the success of our new product introduction. The revenue increase is also due to a more favorable mix of OEM engine sales.
Remain relatively soft in North America.
For the season ended in September, personal watercraft sales were down, loading percent slightly lagging the industry. But we remain our we maintain the our number 1 position in North America.
As for Quantum, retail was down mid 20% as the industry is still going through a correction period.
We had a better quarter in counter-seasonal markets, which are entering their peak retail season, which led retail up mid-single digits in both Asia Pacific and Latin America.
Moving to slide 10 for part accessories and apparel and OEM engine.
Revenue were up 18% to 379 million due to a higher volume of part and accessory sales.
As dealer replenished, their inventory.
The increase in parts and oil sales shows that consumers are riding our product, which is positive.
While higher accessory sales, reflect the success of our new product introduction.
[Company Representative] (BRP Inc.): Before turning the call over to Sébastien, I want to give you an update on the sales of our marine business. In Q3, we've closed the sales of Manitou. As for Telwater, in Australia, the transaction remains subject to regulatory approvals. The process is taking longer than initially anticipated, and we expect a decision over the coming weeks. With that, I turn the call over to Sébastien. Thank you, José. Good morning, everyone. Thanks to our team's disciplined execution, continued focus on operational efficiency, and the strong reception of our newly introduced models, we delivered a solid Q3 with retail and financial results above expectations. Now, looking at the numbers, revenues increased 14% to CAD 2.3 billion, driven by stronger ORV shipments, partly offset by lower snowmobile deliveries.
Before turning the call over to Sébastien, I want to give you an update on the sales of our marine business. In Q3, we've closed the sales of Manitou. As for Telwater, in Australia, the transaction remains subject to regulatory approvals. The process is taking longer than initially anticipated, and we expect a decision over the coming weeks. With that, I turn the call over to Sébastien.
The revenue increase is also due to a more favorable mix of OEM engine cells.
Before turning the call over to Sebastian, I want to give you an update on the sales of our marine business.
In Q3, we've closed the sales of many to
As for tailwater in Australia, the transaction remains subject to regulatory approvals.
The process is taking longer than initially anticipated, and we expect a decision over the coming weeks.
Sébastien?Martel: Thank you, José. Good morning, everyone. Thanks to our team's disciplined execution, continued focus on operational efficiency, and the strong reception of our newly introduced models, we delivered a solid Q3 with retail and financial results above expectations. Now, looking at the numbers, revenues increased 14% to CAD 2.3 billion, driven by stronger ORV shipments, partly offset by lower snowmobile deliveries.
With that, I turn the call over to Sébastien Martel.
Thank you, Josie. Good morning, everyone.
Thanks to our team's disciplined execution, continued, focus on operational efficiency and the strong reception of our newly introduced models. We delivered a solid Q3 with retail and financial results above expectations.
[Company Representative] (BRP Inc.): Gross profit reached CAD 541 million, representing a margin of 24.1%, up 210 basis points, mainly driven by better capacity utilization, cost improvement initiatives, lower sales programs, and favorable pricing. These gains were partly offset by the impact of tariffs, the return of variable compensation, and unfavorable foreign exchange rate variations. Normalized EBITDA grew 21% to CAD 326 million, and our normalized earnings per share rose 33% to CAD 1.59. Free cash flow from continuing operations was CAD 320 million, and we closed the quarter with CAD 250 million of cash on hand. Also, during the quarter, we seized the opportunity to further strengthen our balance sheet by extending the maturity of a portion of our long-term debt, lowering the average interest rate of our term facility, and repaying about CAD 200 million of debt.
Gross profit reached CAD 541 million, representing a margin of 24.1%, up 210 basis points, mainly driven by better capacity utilization, cost improvement initiatives, lower sales programs, and favorable pricing. These gains were partly offset by the impact of tariffs, the return of variable compensation, and unfavorable foreign exchange rate variations. Normalized EBITDA grew 21% to CAD 326 million, and our normalized earnings per share rose 33% to CAD 1.59. Free cash flow from continuing operations was CAD 320 million, and we closed the quarter with CAD 250 million of cash on hand. Also, during the quarter, we seized the opportunity to further strengthen our balance sheet by extending the maturity of a portion of our long-term debt, lowering the average interest rate of our term facility, and repaying about CAD 200 million of debt.
Now looking at the numbers revenue is increased 14% to 2.3 billion driven by stronger or re shipments partly offset by lower snowmobile deliveries.
Gross profit. Reached 541. Million representing a margin of 24.1% up 210 basis points, mainly driven by better capacity. Utilization cost Improvement initiatives, lower sales programs. And favorable pricing
These gains were partly offset by the impact of tariffs, the return of variable compensation and unfavorable foreign exchange rate variations.
Normalized dividends grew 21% to 326 million, and our normalized earnings per share Rose 33% to a dollar and 59 cents.
120 million and we closed the quarter with 250 million of cash on hand.
[Company Representative] (BRP Inc.): These actions are expected to generate financing cost savings of about CAD 10 million in fiscal 26 and CAD 30 million annually from fiscal 27 onward. Given our solid balance sheet and robust free cash flow generation, we are well positioned to enhance the return of capital to shareholders by reactivating our share buyback program. Accordingly, we have renewed our NCIB, allowing us to repurchase up to 3.1 million shares over the next 12 months. Now, turning to slide 13 for an update on our network inventory. We maintained a disciplined approach to network inventory management throughout the quarter, ending Q3 with inventory down 17% versus last year and down 6% below pre-COVID levels. Importantly, we have made strong progress in key areas of focus, with three-wheel, personal watercraft, switch, and snowmobile all showing strong double-digit reductions.
These actions are expected to generate financing cost savings of about CAD 10 million in fiscal 26 and CAD 30 million annually from fiscal 27 onward. Given our solid balance sheet and robust free cash flow generation, we are well positioned to enhance the return of capital to shareholders by reactivating our share buyback program. Accordingly, we have renewed our NCIB, allowing us to repurchase up to 3.1 million shares over the next 12 months. Now, turning to slide 13 for an update on our network inventory. We maintained a disciplined approach to network inventory management throughout the quarter, ending Q3 with inventory down 17% versus last year and down 6% below pre-COVID levels. Importantly, we have made strong progress in key areas of focus, with three-wheel, personal watercraft, switch, and snowmobile all showing strong double-digit reductions.
Also, during the quarter, we seize the opportunity to further strengthen our balance sheet by extending the maturity of a portion of our long-term debt lowering, the average interest rate of our term facility, and repaying about 200 US million dollars of debt.
These actions are expected to generate financing cost Savings of about 10 million in fiscal 26, and 30 million annually from fiscal, 27 onwards.
Given our solid balance sheet and robust free cash flow generation, we are well positioned to enhance the return of capital to shareholders by reactivating our share buyback program.
Accordingly. We have renewed, our NIV allowing us to repurchase up to 3.1 million shares over the next 12 months.
Now, turning to slide 13 for an update on our Network inventory.
We maintain a distant approach to network inventory management. Throughout the quarter ending Q3, inventory is down 17% versus last year and down 6% below pre-COVID levels.
[Company Representative] (BRP Inc.): Meanwhile, our ORV network inventory remains healthy, down 8% year over year, with SSV sequentially declining from Q2 levels, notably driven by our solid retail performance. This positions our dealers with significant capacity to take on our newly introduced products as we ramp up production. Looking ahead, aside from snowmobiles, for which the season is still unfolding, the right-sizing of our network inventory is largely complete. This will allow us to better align wholesale with retail moving forward. With our robust product lineup and healthy network inventory levels, we believe we are best positioned in the industry to capture demand upside while market conditions improve. With this, let's turn to slide 14 for an update on fiscal 26. As I mentioned earlier, we are pleased with our execution and results so far this year.
Meanwhile, our ORV network inventory remains healthy, down 8% year over year, with SSV sequentially declining from Q2 levels, notably driven by our solid retail performance. This positions our dealers with significant capacity to take on our newly introduced products as we ramp up production. Looking ahead, aside from snowmobiles, for which the season is still unfolding, the right-sizing of our network inventory is largely complete. This will allow us to better align wholesale with retail moving forward. With our robust product lineup and healthy network inventory levels, we believe we are best positioned in the industry to capture demand upside while market conditions improve. With this, let's turn to slide 14 for an update on fiscal 26. As I mentioned earlier, we are pleased with our execution and results so far this year.
Importantly, we have made strong progress in our areas of focus, with 3-wheel personal vehicles, watercraft, switch, and snowmobiles, all showing strong double-digit reductions.
Meanwhile, our ORV Network inventory. Remains healthy down, 8% year-over-year with SSV sequentially. Declining from Q2 levels, notably driven by our solid retail performance.
This positions our dealers with significant capacity to take on our newly introduced products as we ramp up production.
Looking ahead aside from snowmobiles for which the season is still unfolding. The right sizing of our Network inventory is largely complete
This will allow us to better align wholesale with retail moving forward.
with our robust product lineup and healthy Network inventory levels, we believe we are best positioned in the industry to capture demand upside while market conditions improve
[Company Representative] (BRP Inc.): Assuming macroeconomic conditions and tariffs remain stable, we have good visibility on dealer orders for the rest of the year, positioning us to deliver revenues at the higher end of our initial guidance ranges. Additionally, with the continued tight management of our expenses, efficiency gains we are generating across the organization, and the benefits of our recent debt transaction, we now expect to deliver better normalized EBITDA and normalized DPS than previously anticipated. As such, we now expect to deliver about CAD 8.3 billion of revenue, CAD 1.1 billion of normalized EBITDA, and about CAD 5 of normalized DPS for the year. Looking ahead, with our successful product introductions, lean network inventory levels, and improving dealer sentiment, we expect to carry our strong momentum into fiscal 27, positioning us to deliver double-digit normalized DPS growth while having the financial flexibility to enhance return of capital to shareholders.
Assuming macroeconomic conditions and tariffs remain stable, we have good visibility on dealer orders for the rest of the year, positioning us to deliver revenues at the higher end of our initial guidance ranges. Additionally, with the continued tight management of our expenses, efficiency gains we are generating across the organization, and the benefits of our recent debt transaction, we now expect to deliver better normalized EBITDA and normalized DPS than previously anticipated. As such, we now expect to deliver about CAD 8.3 billion of revenue, CAD 1.1 billion of normalized EBITDA, and about CAD 5 of normalized DPS for the year. Looking ahead, with our successful product introductions, lean network inventory levels, and improving dealer sentiment, we expect to carry our strong momentum into fiscal 27, positioning us to deliver double-digit normalized DPS growth while having the financial flexibility to enhance return of capital to shareholders.
With this, let's turn to slide 14 for an update on fiscal 26. As I mentioned earlier, we are pleased with our execution and results so far this year,
Assuming macroeconomic conditions and tariff remains stable. We have good visibility on dealer orders for the rest of the year. Positioning us to deliver revenues at the higher end of our initial guidance ranges.
Additionally with the continued tight management of our expenses efficiency gains, we are generating across the organization and the benefits of our recent debt transaction. We now expect to deliver better normalized debt. And normalize DPS than previously, anticipated.
as such, we now expect to deliver about 8.3 billion dollars of Revenue, 1.1 billion of normalized ibida, and about 5 dollars of normalized, DPS, for the year,
[Company Representative] (BRP Inc.): On that, I turn the call over to José. Thank you, Sébastien. Before closing my remark, I would like to talk about our fourth Yellow Day held on 20 November. As an organization, we are committed to making a positive social impact. I was pleased to see a growing number of employees, dealers, and ambassadors worldwide actively engaging with our cause to ride out intimidation. It is rewarding to know that we are making a real difference. In conclusion, I am proud of our accomplishments so far this year. Our strong Q3 performance has resulted in higher guidance for fiscal 26. In the short term, all our teams are aligned internally and focused on delivering against our new M28 strategic plan to capture our full power sport potential.
On that, I turn the call over to José.
José?Boisjoli: Thank you, Sébastien. Before closing my remark, I would like to talk about our fourth Yellow Day held on 20 November. As an organization, we are committed to making a positive social impact. I was pleased to see a growing number of employees, dealers, and ambassadors worldwide actively engaging with our cause to ride out intimidation. It is rewarding to know that we are making a real difference. In conclusion, I am proud of our accomplishments so far this year. Our strong Q3 performance has resulted in higher guidance for fiscal 26. In the short term, all our teams are aligned internally and focused on delivering against our new M28 strategic plan to capture our full power sport potential.
Looking ahead with our successful product, introductions lean Network, inventory, levels, and improving dealer sentiment. We expect to carry our strong momentum in the fiscal 27, positioning us to deliver double-digit normalized DPS growth while having the financial flexibility to enhance return of capital to shareholders on that. I turn the call over to Jose. Thank you. Sebastian. Before closing my remark, I would like to talk about our fourth yellow Day, held on November 20th,
As an organization, we are committed to making a positive social impact.
I was pleased to see a growing number of employee dealers and ambassadors worldwide actively engaging with our cause to ride out intimidation.
It is a rewarding to know that we are making a real difference.
In conclusion.
I am proud of our accomplishments so far this year. Our strong Q3 performance has resulted in higher guidance for fiscal 26.
[Company Representative] (BRP Inc.): As part of this plan, we introduced a financial objective of $9.5 billion in revenue and $8 in normalized EPS by the end of fiscal 28. We are confident in our ability to reach these objectives. Looking ahead, we are the best-positioned OEM to benefit from an industry rebound given our lean inventory position, engaged dealer network, and strong lineup. We had the most product introductions for model year 26, and we will not stop here. Our goal is to consistently wow consumers with innovative products and unbeatable experience. With the solid foundation we have built over time, we can create a bright future for BRP and drive long-term profitability. Lastly, about the nomination of the new CEO, the process is ongoing, and the board is still targeting the end of January. I will work closely with the executive team to ensure a smooth transition for my successor.
As part of this plan, we introduced a financial objective of $9.5 billion in revenue and $8 in normalized EPS by the end of fiscal 28. We are confident in our ability to reach these objectives. Looking ahead, we are the best-positioned OEM to benefit from an industry rebound given our lean inventory position, engaged dealer network, and strong lineup. We had the most product introductions for model year 26, and we will not stop here. Our goal is to consistently wow consumers with innovative products and unbeatable experience. With the solid foundation we have built over time, we can create a bright future for BRP and drive long-term profitability. Lastly, about the nomination of the new CEO, the process is ongoing, and the board is still targeting the end of January. I will work closely with the executive team to ensure a smooth transition for my successor.
In the short term, all our teams are aligned internally and focused on delivering against our new M28 strategic plan to capture our full power sport potential.
As part of this plan, we introduce a financial objective of $9.5 billion in revenue and $8 in normalized EPS by the end of fiscal 2028.
We are confident in our ability to reach these objectives.
Looking ahead. We are best. We are the best position. We am to benefit from an industry rebound.
Given our lean inventory position, engage dealer, Network, and strong lineup.
We have the most product introduction for model year 26, and we will not stop here. Our goal is to consistently, wow, consumers with Innovative product and unbeatable experience.
Long-term profitability.
Lastly.
About the nomination of the new CEO, the process is ongoing and the board is still targeting the end of January.
[Company Representative] (BRP Inc.): I am proud of what BRP has become. We have built a strong organization, and I have no doubt that we are the best OEM in the industry. This is my last earnings call. It was a pleasure working with all of you. On that note, I turn the call over to the operator for questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star, followed by the one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star, followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. We request that our callers limit their questions to one question and one follow-up. One moment, please.
I am proud of what BRP has become. We have built a strong organization, and I have no doubt that we are the best OEM in the industry. This is my last earnings call. It was a pleasure working with all of you. On that note, I turn the call over to the operator for questions.
I will work closely with the executive team to ensure a smooth transition for my successor.
I am proud of what BRP has become. We have built a strong organization and have no doubt that we are. The best OEM in the industry.
This is my last earning call, it was a pleasure working with all of you.
Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star, followed by the one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star, followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. We request that our callers limit their questions to one question and one follow-up. One moment, please.
On that note, I turned the call over to the operator for questions.
[Company Representative] (BRP Inc.): Your first question comes from James Hardiman with Citigroup. Your line is now open. Hi. This is Sean Wagner on for James Hardiman. You gained share in the quarter in ORV despite, once again, calling out the high levels of non-current inventory and elevated promotions from the other OEMs. I guess I'm just wondering if you can give any color on how things looked if we split it up into current versus non-current, and if you have any thoughts on sort of how that looks in the fourth quarter. I think you mentioned that that should continue through the winter, but I guess maybe do you see that sort of normalizing or maybe even improving next year? Good morning. As you know, we came out of club with great engagement from the dealers.
Your first question comes from James Hardiman with Citigroup. Your line is now open.
Thank you, ladies and gentlemen, we will now begin the question and answer session. Should you have a question please? Press star followed by the 1 on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process? Please press star followed by the 2. If you are using a speaker-phone, please lift the handset. Before pressing any Keys, We request that our callers limit their questions to 1 question and 1 follow-up 1 moment, please
James?Hardiman: Hi. This is Sean Wagner on for James Hardiman. You gained share in the quarter in ORV despite, once again, calling out the high levels of non-current inventory and elevated promotions from the other OEMs. I guess I'm just wondering if you can give any color on how things looked if we split it up into current versus non-current, and if you have any thoughts on sort of how that looks in the fourth quarter. I think you mentioned that that should continue through the winter, but I guess maybe do you see that sort of normalizing or maybe even improving next year?
Your first question comes from James Harden with Citigroup, your line is now open.
José?Boisjoli: Good morning. As you know, we came out of club with great engagement from the dealers.
Hi. Um, this is Sean Wagner on for James Harden. Um, you gained share in the quarter and over RV, despite once again, calling out to high levels of non-current inventory and elevated promotions from the other oems. I guess, I'm just wondering if you can give any color on how things looked, if we split up, split it up into current versus non-current. If you have any thoughts on sort of how that looks in the fourth quarter. I think you mentioned that, that, that should, that should continue through the winter but I I guess. Maybe. Do you see that sort of normalizing or or, um, maybe even improving next year?
[Company Representative] (BRP Inc.): The dealers were extremely pleased, and the media were extremely pleased with the ATV lineup and also the side-by-side lineup, notably the HD11. The review is very good, and we started production and shipment beginning of Q3, and we had the benefit, mainly in the second half of Q3, to have very good retail because the product was at the dealership, and they were selling every day. Then, obviously, like I said in my remark, we've gained in the current, we've lost in non-current, which was on plan. This is basically what I can say. The momentum for side-by-side is very strong, and it was our highest quarter ever in terms of retail. Now, for November, obviously, I cannot go into detail. We have our numbers, but we don't have any industry data. But I can say that, again, the retail is quite positive.
The dealers were extremely pleased, and the media were extremely pleased with the ATV lineup and also the side-by-side lineup, notably the HD11. The review is very good, and we started production and shipment beginning of Q3, and we had the benefit, mainly in the second half of Q3, to have very good retail because the product was at the dealership, and they were selling every day. Then, obviously, like I said in my remark, we've gained in the current, we've lost in non-current, which was on plan. This is basically what I can say. The momentum for side-by-side is very strong, and it was our highest quarter ever in terms of retail. Now, for November, obviously, I cannot go into detail. We have our numbers, but we don't have any industry data. But I can say that, again, the retail is quite positive.
Uh, good morning. As you know, uh, we came out of club with a a great engagement from the dealers. The dealers were extremely, uh, end. The media were extremely pleased with the ETV lined up and also the side by side lineup, notably the HD 11,
The review is very good and we start production and shipment, uh, beginning of 23 and we had the benefit mainly in the second half of Q3 to have a very good retail because the product was at the dealership and they were selling every day. Then obviously, like I said in my remark,
With gain in, uh, in the current, uh, we've lost in non-current, which was on plan.
But this is basically, uh, what I can see: the momentum for side by side is very strong, and it was our highest quarter ever at the term of retail.
Now, for November, obviously, I cannot go in the detail, we have our numbers but we don't have any industry data.
[Company Representative] (BRP Inc.): The HD11 and the ATV backcountry series, the 4x4 and 6x6, are extremely well received. Then, off-road, we are very happy with the trend in October, but also the trend in the month of November. On the snow side, obviously, we're benefiting from an early snowfall in many regions, and right now, the momentum is improving. Then, this is basically what I can say on what happened on off-road and our situation on November. But overall, we are very happy with our position in the industry. Okay. That's very helpful. I guess just following up on that, to your point, you've had a great start to model year 26, it sounds like, for ORVs through November. Your fiscal 28 targets assumed low single-digit growth in side-by-sides.
The HD11 and the ATV backcountry series, the 4x4 and 6x6, are extremely well received. Then, off-road, we are very happy with the trend in October, but also the trend in the month of November. On the snow side, obviously, we're benefiting from an early snowfall in many regions, and right now, the momentum is improving. Then, this is basically what I can say on what happened on off-road and our situation on November. But overall, we are very happy with our position in the industry.
but I can say that again, the retail is quite positive, the HD event and and the ETV Backcountry series with the
then off-road, we are very happy with the trend, in October, but also the trend, uh, in 1 month in November,
on the snow side, uh,
Obviously, we benefiting of an early snow fall in many region. Uh, and, uh, right now, uh, the, the momentum is improving, then, this is basically what I can say on what happened on off-road.
And our situation on.
Uh, the November, but overall, we are very happy with our position in the industry.
James?Hardiman: Okay. That's very helpful. I guess just following up on that, to your point, you've had a great start to model year 26, it sounds like, for ORVs through November. Your fiscal 28 targets assumed low single-digit growth in side-by-sides.
Okay, that's very helpful. I guess just following up on that. Um,
[Company Representative] (BRP Inc.): Has your thinking changed at all there, the potential for that segment, or is this kind of still in line with your expectations, or is it just too early to say? No, obviously. Obviously, we introduced M28 about two months ago then. But as you remember, we reached close to 30% in a few years. We've lost market share in the last 18 months because of our desire to reduce the inventory, and we had less non-current than the competition. But as we said when we introduced the M28, the plan is to go back to 30% by the end of Fiscal 28. Sounds good. Thank you very much, guys. Thank you. Your next question comes from Mark Petrie with CIBC. Your line is now open. Yeah. Thanks. And first, just let me repeat my congratulations to you, Jose.
Has your thinking changed at all there, the potential for that segment, or is this kind of still in line with your expectations, or is it just too early to say?
José?Boisjoli: No, obviously. Obviously, we introduced M28 about two months ago then. But as you remember, we reached close to 30% in a few years. We've lost market share in the last 18 months because of our desire to reduce the inventory, and we had less non-current than the competition. But as we said when we introduced the M28, the plan is to go back to 30% by the end of Fiscal 28. Sounds good.
To your point, there's you've had a great start to model your 26. It sounds like for RVs through November. Um your fiscal 28 targets assumed low single digit growth in side. By side has has has your thinking changed at all there of the potential for that segment. Or is it does this kind of still in line with your expectations or is it just too early to say know, obviously have you stayed in 28 about the 2 months ago, then? But as you remember, we we reached close to 30% in, in the few years we've lost market share in the last, uh, 18 months because of our
We desire to reduce the inventory, and we had less than current in the competition. But as we said, when we introduced the M28, the plan is to go back to 30% by the end of fiscal year 2028.
James?Hardiman: Thank you very much, guys.
José?Boisjoli: Thank you.
Operator: Your next question comes from Mark Petrie with CIBC. Your line is now open.
Sounds good. Thank you very much, guys.
Thank you.
Your next question comes from, Mark Petri with CIBC your line is now open.
Mark?Petrie: Yeah. Thanks. And first, just let me repeat my congratulations to you, Jose.
[Company Representative] (BRP Inc.): It's been a pleasure working with you over the last decade plus, and wish you all the best in your next chapter. Obviously, product innovation is a key short-term variable, but want to hear your comments or if you could just expand on your comments so far about dealer appetite to invest in their business and sort of step up inventory levels just given macro conditions and uncertainty. Yeah. Good morning, Mark. Obviously, when we went to club in August, we couldn't ask for it to be in a better position because we had invested in reducing network inventory, and now we were coming with great products. And so when dealers are sitting down and looking at their business, obviously, they are more willing to take on the new models, the new innovation, and that's what we're seeing from dealer orders. The reception is good.
It's been a pleasure working with you over the last decade plus, and wish you all the best in your next chapter. Obviously, product innovation is a key short-term variable, but want to hear your comments or if you could just expand on your comments so far about dealer appetite to invest in their business and sort of step up inventory levels just given macro conditions and uncertainty.
Sébastien?Martel: Yeah. Good morning, Mark. Obviously, when we went to club in August, we couldn't ask for it to be in a better position because we had invested in reducing network inventory, and now we were coming with great products. And so when dealers are sitting down and looking at their business, obviously, they are more willing to take on the new models, the new innovation, and that's what we're seeing from dealer orders. The reception is good.
Congratulations to you, Jose. It's been a pleasure working with you over the last decade, plus, and wish you all the best in your next chapter. Um, obviously product, Innovation is a key short-term variable, um, but want to hear your comments, or if you could just expand on your comments so far about dealer appetite to invest in their business and sort of Step Up. Inventory levels, just given macro conditions, and, and uncertainty.
Yeah, good morning, Mark obviously. Uh, when uh, when we went to Club in, uh, in August, we were, we couldn't ask for to be in a better position because we had to invest it and and, and reducing Network inventory.
[Company Representative] (BRP Inc.): Dealers are obviously always concerned with the macroeconomic. Have we reached the trough? Some speculate that we are. But obviously, as we see rates come down, as we see inventories being leaned by all the OEMs, the level of appetite from dealers is also increasing to take on more inventory, especially of the new stuff. So we're in a very good position and couldn't ask for a better outlook in terms of dealer engagement. Okay. Thanks. And if I could follow up on that topic, at the Investor Day, I think you talked about some OpEx being allocated, notwithstanding your lean initiative, some OpEx being allocated to support dealer engagement. Hoping you could just talk more about those plans and the timing of that and how you see that affecting your business.
Dealers are obviously always concerned with the macroeconomic. Have we reached the trough? Some speculate that we are. But obviously, as we see rates come down, as we see inventories being leaned by all the OEMs, the level of appetite from dealers is also increasing to take on more inventory, especially of the new stuff. So we're in a very good position and couldn't ask for a better outlook in terms of dealer engagement.
Uh, and now, we were coming with great products and so when dealers are sitting down and and looking at their business, obviously they are more willing to take, on the new models, the new Innovations, uh, and that's what we're seeing from, uh, from, uh, from dealer orders. Uh, the reception is good.
Dealers are obviously always concerned with the macroeconomic. Um,
Have we reached the throat, the throat, uh, some speculate that we are. Uh but obviously as we see rates come down, as we see inventories being leaned by all the oems
Mark?Petrie: Okay. Thanks. And if I could follow up on that topic, at the Investor Day, I think you talked about some OpEx being allocated, notwithstanding your lean initiative, some OpEx being allocated to support dealer engagement. Hoping you could just talk more about those plans and the timing of that and how you see that affecting your business.
Uh, the level of appetite from dealers is also increasing to take on more inventory, especially of the new stuff. So we're in a very good position and and couldn't ask for uh, for better outlook on, in terms of, uh, dealer engagement.
[Company Representative] (BRP Inc.): Like we said, we intend to be the best, obviously, with our we have the best product lineup, but also we want to be the best for experience, and that includes our dealers. Then we will invest to better support our dealers in terms of parts and accessories, training them, and also leading them with all the lead we get from the website. Then this is part of the plan. But like we said, we are full throttle with the M28 plan right now. The plan has been cascaded down. We will increase the number of dealers. We had an objective of 30 dealers addition net this year, and we already have achieved that number. Then it's quite positive. The team is not stopping because we have achieved our number for this year. They are already working on next year's achievement.
José?Boisjoli: Like we said, we intend to be the best, obviously, with our we have the best product lineup, but also we want to be the best for experience, and that includes our dealers. Then we will invest to better support our dealers in terms of parts and accessories, training them, and also leading them with all the lead we get from the website. Then this is part of the plan. But like we said, we are full throttle with the M28 plan right now. The plan has been cascaded down. We will increase the number of dealers. We had an objective of 30 dealers addition net this year, and we already have achieved that number. Then it's quite positive. The team is not stopping because we have achieved our number for this year. They are already working on next year's achievement.
Okay, thanks. And if I could follow up on that topic, um, uh, you know, at the investor day, I think you talked about some Opex, um, being allocated, notwithstanding your lean, uh initiative, some Opex being allocated to support dealer engagement. Um, I hope you could just talk more about those plans and, and the timing of that and how you see that affecting your business,
Like we said, the we intend to be the best obviously with our we have the best product line up but also we want to be the best or experience and that's include our dealers and we will invest to better support our dealers in term of part and accessories training them and also leading them with all the lead. We get from the website then this is part of the plan.
But like we said, we are full throttle. Um,
[Company Representative] (BRP Inc.): But what I want to say is what you saw in Valcourt with the M28, everything is in motion, and we're very happy where we are. Okay. Appreciate all those comments and happy holidays. All the best. Thank you. Your next question comes from Robin Farley with UBS. Your line is now open. Great. Thank you. Just thinking about your commentary on ORV, and you mentioned that other OEMs have elevated inventory still and promos and non-current. It seems like yourselves, some of the larger OEMs, and even CFMOTO have felt good about their inventory position for a while. So isn't it fair to think that at this point, the only other OEMs out there with this kind of excess non-current and being promotional, at this point, that's got to be a fairly small percent of what's out there?
But what I want to say is what you saw in Valcourt with the M28, everything is in motion, and we're very happy where we are.
uh, with
Mark?Petrie: Okay. Appreciate all those comments and happy holidays. All the best.
What I want to see is what you saw, uh, in Vu with the M28. Everything is in motion, and we're very happy with where we are.
Operator: Thank you. Your next question comes from Robin Farley with UBS. Your line is now open.
Okay, appreciate all those comments and uh happy holidays, all the best.
Thank you.
Your next question.
Robin?Farley: Great. Thank you. Just thinking about your commentary on ORV, and you mentioned that other OEMs have elevated inventory still and promos and non-current. It seems like yourselves, some of the larger OEMs, and even CFMOTO have felt good about their inventory position for a while. So isn't it fair to think that at this point, the only other OEMs out there with this kind of excess non-current and being promotional, at this point, that's got to be a fairly small percent of what's out there?
Is Robin Farley with UBS? Your line is now open.
[Company Representative] (BRP Inc.): I guess I'm just curious on your thoughts on why that would be if it's a sort of a single-digit percent of product out there. Is that still pressuring things overall? And how much longer do you think at the rate that you're seeing that sell-through? Do you expect this to continue? Thanks. Well, good morning, Robin. We expect Q4 to still be a non-current market. Obviously, we just transitioned into a new model year, and so as OEMs introduce new models, dealers are selling through their non-current. Obviously, Q3 is a big non-current quarter where the bulk of the retail is non-current, Q4 as well. But we've seen OEMs being still promotional. Even on model year 26 products, we saw OEMs for side-by-side already advertising discounts.
I guess I'm just curious on your thoughts on why that would be if it's a sort of a single-digit percent of product out there. Is that still pressuring things overall? And how much longer do you think at the rate that you're seeing that sell-through? Do you expect this to continue? Thanks.
Great. Thank you. Um, just thinking about your commentary on ORV and you mentioned that um other oems uh have elevated inventory still and and promos and and non-current, you know, it seems like um yourselves and and some of the larger um oems and and even CF Moto have felt good about their inventory position for a while. So it isn't it fair to think that at this point, the only other oems out there with this, you know, kind of excess non-current and and being promotional. At this point, that's got to be a fairly small percent of what's out there. I guess I'm just
increasing your thoughts on why that would be, you know, if it's a sort of a
[Company Representative] (BRP Inc.): Well, good morning, Robin. We expect Q4 to still be a non-current market. Obviously, we just transitioned into a new model year, and so as OEMs introduce new models, dealers are selling through their non-current. Obviously, Q3 is a big non-current quarter where the bulk of the retail is non-current, Q4 as well. But we've seen OEMs being still promotional. Even on model year 26 products, we saw OEMs for side-by-side already advertising discounts.
Single-digit percent of product out there, if is that still, you know, pressuring things overall. And, um, how much longer do you think at the rate that you're seeing that sell-through? Do you expect this to continue? Thanks.
Well, uh, good morning Robin. And we expect uh, Q4 to still be a non-current, uh, Market. Obviously we just transitioned into a new model year and so, uh, as oems, uh, introduced new models dealers are selling through their non-current. Obviously Q3 is a big non-current quarter where the bulk of the retail is not current Q4 as well.
[Company Representative] (BRP Inc.): So our view is that this environment will be here for maybe another few quarters, and that obviously impacts the profitability of everybody's business. From a consumer point of view, the high-end products are selling well, but the lower-end models, the more entry-level models, traffic is lighter, and therefore, we see some OEMs pushing harder on discounts. That's helpful. Thank you. And maybe just as a follow-up, do you have a view on sort of where the industry may shake out for ORV retail in the next 12 months, kind of based on everything you're seeing? Yeah. Our going-in assumption for next year is a flat industry. And if I look year-to-date, the industry is down 1%, so we could call it flat-ish. So our base case for next year is for the industry to remain where it is. Great. Thank you very much.
Sébastien?Martel: So our view is that this environment will be here for maybe another few quarters, and that obviously impacts the profitability of everybody's business. From a consumer point of view, the high-end products are selling well, but the lower-end models, the more entry-level models, traffic is lighter, and therefore, we see some OEMs pushing harder on discounts.
Maybe an extended other few quarters, um, and that obviously impacts the profitability of everybody's business.
uh,
Robin?Farley: That's helpful. Thank you. And maybe just as a follow-up, do you have a view on sort of where the industry may shake out for ORV retail in the next 12 months, kind of based on everything you're seeing?
from a, from the, a consumer point of view, the high-end products are selling well, but the lower end models, the more entry-level models, uh, traffic is lighter. And therefore, we see some oems pushing harder on discounts.
Sébastien?Martel: Yeah. Our going-in assumption for next year is a flat industry. And if I look year-to-date, the industry is down 1%, so we could call it flat-ish. So our base case for next year is for the industry to remain where it is.
That's helpful. Thank you and and maybe this is a follow-up. Um, do you do you have a view on sort of where the industry May shake out for or the retail in the next 12 months? You know, kind of based on everything you're seeing
Robin?Farley: Great. Thank you very much.
Yeah, or going in Assumption for next year is a a flat industry. Uh and I if I look year to date industry is down 1% so forth. We could call it flat is there? So there are base case for next year is for the industry to remain where it is.
I'm great. Thank you very much.
[Company Representative] (BRP Inc.): Your next question comes from Benoit Poirier with Desjardins. Your line is now open. Yes. Thank you very much. And congrats, José. It's been a pleasure working with you over the years. Thank you. Yeah. And maybe first question for Sébastien. When I look at the working cap, you've benefited from a strong working capital release in the quarter. Just wondering if this was more of a one-time item, and how should we expect working capital to play in the coming quarters? Yeah. Obviously, we're really happy with our free cash flow generation year-to-date that we're at about CAD 650 million for the first three quarters of the year. My outlook for the year is we'll probably end about, let's say, CAD 650 to 700 million free cash flow generation.
Operator: Your next question comes from Benoit Poirier with Desjardins. Your line is now open.
Benoit?Poirier: Yes. Thank you very much. And congrats, José. It's been a pleasure working with you over the years.
Your next question comes from Ben with the jumping. Your line is now open.
José?Boisjoli: Thank you.
Yes, thank you very much, and, uh, congrats to José. It's been a pleasure working with you over the years.
Benoit?Poirier: Yeah. And maybe first question for Sébastien. When I look at the working cap, you've benefited from a strong working capital release in the quarter. Just wondering if this was more of a one-time item, and how should we expect working capital to play in the coming quarters?
Sébastien?Martel: Yeah. Obviously, we're really happy with our free cash flow generation year-to-date that we're at about CAD 650 million for the first three quarters of the year. My outlook for the year is we'll probably end about, let's say, CAD 650 to 700 million free cash flow generation.
Thank you, maybe. Yeah. And maybe first question for for Sebastian. Um, when I look at the working cap, you benefited from a strong working capital release in the quarter, just wondering if uh this was more of a 1-time item and pack and how we should, we expect uh working capital to to play in the the coming quarters.
[Company Representative] (BRP Inc.): Working capital has been a big focus of the organization, especially off COVID, where we did build up some safety stock, etc., now with better visibility on the supply chain. Obviously, everyone has been hands-on this element, and we see the benefits today. So I'm expecting overall for the full year, maybe a slight tailwind on overall working cap, but obviously, very happy with the work that the team is doing and freeing up some cash by reducing our investments in working cap. Okay. Thanks. This morning, there are some headlines about the fact that Trump could decide to withdraw from the USMCA. Obviously, you're very well positioned right now, but just wondering, any actions that you can take to mitigate the risk, and how do you deal with this uncertainty?
Working capital has been a big focus of the organization, especially off COVID, where we did build up some safety stock, etc., now with better visibility on the supply chain. Obviously, everyone has been hands-on this element, and we see the benefits today. So I'm expecting overall for the full year, maybe a slight tailwind on overall working cap, but obviously, very happy with the work that the team is doing and freeing up some cash by reducing our investments in working cap.
Yeah, obviously, we're really happy with our free cash flow generation year to date that we're at about 650 million for the first 3 quarters of the year. Um, my outlook for the years will probably end about, let's say 650 to 700, free cash, flow generation.
Um, working capital is, I've been a big focus of the organization, uh, especially of Co where, uh, we we did build up some Safety stock Etc. Now, with better visibility on the supply chain. Obviously everyone has been uh, hands on this. Um,
This element, and we see the benefits today.
Benoit?Poirier: Okay. Thanks. This morning, there are some headlines about the fact that Trump could decide to withdraw from the USMCA. Obviously, you're very well positioned right now, but just wondering, any actions that you can take to mitigate the risk, and how do you deal with this uncertainty?
So I'm expecting overall for the full year, maybe a, a slight Tailwind on overall working Gap. But uh, obviously very happy with the work that the team is doing and uh, and freeing up some cash by reducing our investments and, uh, in working cap.
[Company Representative] (BRP Inc.): As we said, Benoit, we're very involved into following the negotiation and even giving our point of view or giving data on our situation with industry association, but also with some government. The progress of reanalyzing and trying to renew the USMCA is ongoing. We're not reacting to news every day because it will be too painful. We're just focusing to better support the industry and the government with data and our point of view on different things, and we will see what will be the outcome. So far, the people are working hard to renew it with minimum changes. Okay. That's great. Thank you for the time. Thank you. Your next question comes from Craig Kennison with Baird. Your line is now open. Hey, good morning. Thanks for taking my question. Seb, I wanted to follow up on your response to Robin.
José?Boisjoli: As we said, Benoit, we're very involved into following the negotiation and even giving our point of view or giving data on our situation with industry association, but also with some government. The progress of reanalyzing and trying to renew the USMCA is ongoing. We're not reacting to news every day because it will be too painful. We're just focusing to better support the industry and the government with data and our point of view on different things, and we will see what will be the outcome. So far, the people are working hard to renew it with minimum changes.
Okay, thanks, and this morning that there are some headlines about the, uh, the fact that, uh, the Trump could decide to withdraw from the usmca, uh, obviously, you're very well positioned right now. But, uh, just wondering any actions that you can take to mitigate the risk. And, uh, how how do you deal with the with, with the, uh, this uncertainty?
As we said, then why we very involved in to following the negotiation and even giving our point of view or giving data on our situation with industry Association. But also with some government
And the progress of realizing, uh, and trying to renew the USMC is ongoing.
Um we are not reacting to uh news uh every day because uh uh it will be too painful. Then we just focusing to better support the industry and the government with data and our point of view on different thing. And we
Benoit?Poirier: Okay. That's great. Thank you for the time.
We uh we will see what will be the outcome, but so far, the people are working hard to uh, renew it with minimum changes.
José?Boisjoli: Thank you.
José?Boisjoli: Your next question comes from Craig Kennison with Baird. Your line is now open.
Okay, that's great. Thank you for the time. Thank you.
Craig?Kennison: Hey, good morning. Thanks for taking my question. Seb, I wanted to follow up on your response to Robin.
Your next question comes from Craig Kennedy with beard, your line is now open.
[Company Representative] (BRP Inc.): When you talked about flat retail for the year, were you talking about calendar 2026? Yes. Calendar 2026. Thank you for clarifying. And then you were also talking about the low-end consumer still struggling relative to the more affluent consumer. Do you have an assessment of the rate sensitivity of that low-end consumer and the impact of meaningfully lower rates next year? Yeah. It was obviously difficult to triangulate how a movement of, let's say, 25 basis points in rate will impact consumers. But what I can tell you is if we look at Canada versus the US, rates are probably about 175 basis points lower in Canada than the US. And we've seen good demand and good, better retail in Canada. So certainly, as rates will come down in the US, we do hope that we'll see the same impact that it had on Canadian demand. Thanks.
When you talked about flat retail for the year, were you talking about calendar 2026?
Sébastien?Martel: Yes. Calendar 2026.
Hey, good morning. Thanks for taking my question. Seb, I wanted to follow up on your response to Robin. When you talked about flat retail for the year, were you talking about calendar 2026?
Craig?Kennison: Thank you for clarifying. And then you were also talking about the low-end consumer still struggling relative to the more affluent consumer. Do you have an assessment of the rate sensitivity of that low-end consumer and the impact of meaningfully lower rates next year?
Uh, yes, calendar 26.
Thank you for clarifying. You were also talking about the low-end consumers who are still struggling relative to the more affluent consumer.
Sébastien?Martel: Yeah. It was obviously difficult to triangulate how a movement of, let's say, 25 basis points in rate will impact consumers. But what I can tell you is if we look at Canada versus the US, rates are probably about 175 basis points lower in Canada than the US. And we've seen good demand and good, better retail in Canada. So certainly, as rates will come down in the US, we do hope that we'll see the same impact that it had on Canadian demand.
Yeah, do you have an assessment of the rate sensitivity of that low-end consumer and the impact of, you know, meaningfully lower rates next year?
Yeah. Well obviously difficult to triangulate, uh, how a movement of let's say, 25 basis points and rate will impact consumers. But what I can tell you is, if we look at Canada versus the US rates are probably about 175 basis points lower in Canada than
Craig?Kennison: Thanks.
Come down in the US. We do hope that uh we'll see the same impact that it had on uh on Canadian demand.
[Company Representative] (BRP Inc.): Finally, it sounds like HD11 has done really well, and dealers are selling through that quickly. I'm curious, how quickly are you getting retail signals such that you can adjust production to make sure you have the right inventory? Because we do hear that, "Hey, we'd love more HD11s, but we've got too many of the other units that are turning more slowly." I'm curious if you've upgraded your ability to process those signals. Yeah. To give you a sense, we're still producing the old platform and the new one, but in Q3, we produce about 3/4 of the new one and 1/4 of the old one. Then we're definitely transitioning fast. We're taking orders every month, Craig, as you know. Right now, beginning of December, we're taking deliveries. We're taking orders for what will be delivered in February.
Finally, it sounds like HD11 has done really well, and dealers are selling through that quickly. I'm curious, how quickly are you getting retail signals such that you can adjust production to make sure you have the right inventory? Because we do hear that, "Hey, we'd love more HD11s, but we've got too many of the other units that are turning more slowly." I'm curious if you've upgraded your ability to process those signals.
Thanks, and finally, it sounds like HD11 has done really well and dealers are selling through that quickly. I'm curious, how quickly are you getting retail signals such that you can adjust production to make sure you have the right inventory? Because we do hear that, hey, we'd love more HD11s, but we've got too many of the other units that are turning more slowly. I'm curious if you've...
José?Boisjoli: Yeah. To give you a sense, we're still producing the old platform and the new one, but in Q3, we produce about 3/4 of the new one and 1/4 of the old one. Then we're definitely transitioning fast. We're taking orders every month, Craig, as you know. Right now, beginning of December, we're taking deliveries. We're taking orders for what will be delivered in February.
You know, ability to process those signals. Yeah. To give you a sense, we still producing the old platform and the new 1. But in Q3 we produce about 3/4 of the new 1 and 1 quarter of the old 1, then we definitely transitioning fast. We're taking order every month Craig as you know,
[Company Representative] (BRP Inc.): Then we have quite a good ability to adjust to the most popular model at retail. Then we're very confident with it; it's a fast turnover. The dealer receives the unit, they PDI it, and they don't fill the floor very often. Then we could not be happier of the reception of the new Defender. Great. Thank you. Congratulations, José. Thank you. Your next question comes from Martin Landry with Stifel. Your line is now open. Hi. Good morning. I would like to focus a little bit on snowmobiles. Wondering if you can just refresh or remind us what's your inventory level versus your confirmed level in terms of snowmobiles right now? Then just to give you a sense, we finished last season, last spring with about 60% market share in North America, I'm talking, and 30% of the inventory, the non-current inventory.
Then we have quite a good ability to adjust to the most popular model at retail. Then we're very confident with it; it's a fast turnover. The dealer receives the unit, they PDI it, and they don't fill the floor very often. Then we could not be happier of the reception of the new Defender.
And right now, beginning of December. We taking, deliveries. We're taking orders for, what would be delivered in February? Then we have
We have quite a good ability to adjust to the the most popular model at retail. Then we we're very confident with
uh,
It's a fast turnover at the dealer. We received the unit, performed the PDI, and it doesn't stay on the floor very often. We could not be happier.
Craig?Kennison: Great. Thank you. Congratulations, José.
Of the reception of the new Defender.
José?Boisjoli: Thank you.
Operator: Your next question comes from Martin Landry with Stifel. Your line is now open.
Great. Thank you. Congratulations. Jose
Thank you.
Martin?Landry: Hi. Good morning. I would like to focus a little bit on snowmobiles. Wondering if you can just refresh or remind us what's your inventory level versus your confirmed level in terms of snowmobiles right now?
Your next question comes from Martin Landry with Stifel. Your line is now open.
José?Boisjoli: Then just to give you a sense, we finished last season, last spring with about 60% market share in North America, I'm talking, and 30% of the inventory, the non-current inventory.
Hi, good morning. I would like to um focus a little bit on snowmobiles. Um wondering if you can just um refresh uh or remind us um what's your inventory, level versus your uh your comfort level uh in terms of snowmobiles right now.
[Company Representative] (BRP Inc.): Then obviously, we're planning to lose market share this year because of this unbalanced current/non-current ratio from other OEM. But this was all planned, all included in our guidance. What is good right now in the Northeast, including Quebec, the snow is quite good, good in Upper Peninsula. In the West, Canada, US, it's a bit patchy. Then in Scandinavia, it's good. Then overall, it's a good start of the season. We gain market share in the current, and we have a lot of pre-sold units. We've lost in the non-current as planned, and it will be a year of correction, and this was all planned. Okay. So can we expect you to have fully cleared your older models by the end of the snowmobile season? We were a bit on the high side, but we were in relatively good shape at the end of the season 2025.
Then obviously, we're planning to lose market share this year because of this unbalanced current/non-current ratio from other OEM. But this was all planned, all included in our guidance. What is good right now in the Northeast, including Quebec, the snow is quite good, good in Upper Peninsula. In the West, Canada, US, it's a bit patchy. Then in Scandinavia, it's good. Then overall, it's a good start of the season. We gain market share in the current, and we have a lot of pre-sold units. We've lost in the non-current as planned, and it will be a year of correction, and this was all planned.
Then, just to give you a sense, we finished last season last spring with about 60% market share in North America. I'm talking about 30% of the inventory, the non-current inventory. Then, obviously,
we planning to lose market share this year because
this unbalanced current non-current ratio from aurem.
But this was all planned, all included in our guidance.
What is good right now in the Northeast, uh, uh, including Quebec. The snow is quite good. Good in Upper Peninsula.
Uh, in the West, Canada, it’s a bit patchy, and in Scandinavia, it’s good. Overall, it’s a good start to the season.
We gained market share in the current quarter, and we have a lot of pre-sold units. We've lost in the non-current plans, and it will be a year of correction. This was all planned.
José?Boisjoli: Okay. So can we expect you to have fully cleared your older models by the end of the snowmobile season?
Martin?Landry: We were a bit on the high side, but we were in relatively good shape at the end of the season 2025.
Okay, so can you expect, uh, you'd have fully cleared your older, uh, models by the end of the snowmobile season?
[Company Representative] (BRP Inc.): Then we still need to deplete some of that inventory to be at, I would say, normal level. But we believe that, and partially with the good snow, we believe that all of this should be, for us, realigned at the end of the season 2026. Perfect. Thank you. And best of luck, José, in your future projects. Thank you. Your next question comes from Joe Altabello with Raymond James. Your line is now open. Thank you. Hey, guys. Good morning. I wanted to go back to the promotional environment. I think in your press release, you mentioned that you saw favorable variations in your sales programs, but this morning, you're talking about still very elevated levels of promotion in the industry. So is it that the industry is still very promotional, but you guys were a little bit lower in terms of sales programs versus last year? Yeah.
Then we still need to deplete some of that inventory to be at, I would say, normal level. But we believe that, and partially with the good snow, we believe that all of this should be, for us, realigned at the end of the season 2026
We were a bit on the high side, but we were in the relatively good shape, uh, at the end of the season 25. Then we still need to deplete.
Some of that inventory to be at, I would say normal level.
But, uh, we believe that, uh, and partially with the, the good snow, uh, we believe that all of this should be for us realign at the end of, uh, the season 26.
Martin?Landry: Perfect. Thank you. And best of luck, José, in your future projects.
José?Boisjoli: Thank you.
Perfect, thank you and best of luck just in your future projects. Thank you.
Operator: Your next question comes from Joe Altabello with Raymond James. Your line is now open.
Joseph Altobello: Thank you. Hey, guys. Good morning. I wanted to go back to the promotional environment. I think in your press release, you mentioned that you saw favorable variations in your sales programs, but this morning, you're talking about still very elevated levels of promotion in the industry. So is it that the industry is still very promotional, but you guys were a little bit lower in terms of sales programs versus last year?
Your next question comes from Joe Altobello with Raymond James. Your line is now open.
Thank you. Hey guys, good morning. Um wanted to go back to the the promotional environment. Um I think in your press release, you mentioned that you saw favorable variations in in your sales programs, but this morning you're talking about, you know, still very elevated levels of promotion um, in the industry. So is is it that the industry is still very promotional. But but you guys were a little bit lower in terms.
Sébastien?Martel: Yeah.
[Company Representative] (BRP Inc.): Well, if you recall last year, Joe, we wanted to address inventory in the network and the non-current inventory as well. So we did put a lot of dollars last year to work in order to flush that inventory, which we were able to do. So this year, we're probably trending about, let's say, 70 to 80 basis points lower in terms of retail promotion versus last year. That's the main reason. But nonetheless, I mean, there's still some high levels of promotions that are being advertised out there in the market. Got it. Okay. In terms of fiscal '27, you mentioned that wholesale and retail should be largely in alignment. I think, Seb, in the past, you've said that just lapping this year's destocking probably gives you CAD 400 to 500 million of revenue. Is that still the case?
Well, if you recall last year, Joe, we wanted to address inventory in the network and the non-current inventory as well. So we did put a lot of dollars last year to work in order to flush that inventory, which we were able to do. So this year, we're probably trending about, let's say, 70 to 80 basis points lower in terms of retail promotion versus last year. That's the main reason. But nonetheless, I mean, there's still some high levels of promotions that are being advertised out there in the market.
Joseph Altobello: Got it. Okay. In terms of fiscal '27, you mentioned that wholesale and retail should be largely in alignment. I think, Seb, in the past, you've said that just lapping this year's destocking probably gives you CAD 400 to 500 million of revenue. Is that still the case?
Yeah. Well, if you recall last year, Joe, uh, we uh, we wanted to address, uh, inventory in the network and the non-current inventory as well. And so we, we did put a lot of dollars last year to work, uh, in order to flush that inventory, which we were able to do. Uh, and so this year, we're probably trending about. Let's say 70 to 80 basis points, lower in terms of retail promotion, uh, versus uh, last year. So, um, that's the the main reason. But nonetheless, I mean, there's, uh, there's still some high levels of promotions that are being advertised out there in the market.
[Company Representative] (BRP Inc.): Should we think about that as a base and then layer on whatever assumptions we have on pricing and market share gains? Yeah. Obviously, we are in the middle of our planning for next year, but it's certainly too early to provide a detailed guidance to all of you. As you mentioned, there are some elements we already know, and that should serve as your best case for your models there for next year. The big tailwind is the element that you mentioned there, just the right sizing of the inventory that is behind us last year and this year. So that is a tailwind of about CAD 400 to 500 million of revenue and probably roughly about CAD 1.25 of EPS. Obviously, there are some headwinds. We're transitioning the production of Ryker to Vietnam.
Should we think about that as a base and then layer on whatever assumptions we have on pricing and market share gains?
Sébastien?Martel: Yeah. Obviously, we are in the middle of our planning for next year, but it's certainly too early to provide a detailed guidance to all of you. As you mentioned, there are some elements we already know, and that should serve as your best case for your models there for next year. The big tailwind is the element that you mentioned there, just the right sizing of the inventory that is behind us last year and this year. So that is a tailwind of about CAD 400 to 500 million of revenue and probably roughly about CAD 1.25 of EPS. Obviously, there are some headwinds. We're transitioning the production of Ryker to Vietnam.
This year's destocking you know probably gives you 4 to 500 million. Dollars of Revenue is is that still the case since we think about that as a base and then later on whatever assumptions we have on pricing and and market share gains
Yeah, obviously we are in the middle of our planning for next year, but it's certainly too early to provide a detailed guidance to all of you.
And as you mentioned there, there's some elements we already know.
And that should serve as your best case for your models, or for next year. The big tailwind is the element that you mentioned. They're just the right sizing of the inventory that is behind us, uh, last year and this year. And so that is a tailwind of about $400 to $500 million of revenue and probably roughly about $1.25 of BPS.
[Company Representative] (BRP Inc.): And so with that transition, there'll be less Ryker deliveries next year. So that's one of the headwinds. Some of the cost drivers as well, depreciation expense will go up probably about CAD 30 million next year. And I'm also expecting my tax rate to go up to historical levels, call it 25% to 26%. So if you factor these elements in your base case, Joe, you'll probably end up in an EPS probably up in the mid- to high-teens percentages for next year and probably in the margin ballpark 14-ish%. But again, this is a base case. And obviously, over the next few months, we'll see how the business trends. Snowmobile season is an important business for us. And so if the snow sticks, maybe it'll be good. The macro environment is also evolving every day. As Benoit mentioned this morning, we have new data on tariffs.
And so with that transition, there'll be less Ryker deliveries next year. So that's one of the headwinds. Some of the cost drivers as well, depreciation expense will go up probably about CAD 30 million next year. And I'm also expecting my tax rate to go up to historical levels, call it 25% to 26%. So if you factor these elements in your base case, Joe, you'll probably end up in an EPS probably up in the mid- to high-teens percentages for next year and probably in the margin ballpark 14-ish%. But again, this is a base case. And obviously, over the next few months, we'll see how the business trends. Snowmobile season is an important business for us. And so if the snow sticks, maybe it'll be good. The macro environment is also evolving every day. As Benoit mentioned this morning, we have new data on tariffs.
Uh, obviously there are some headwinds. We're transitioning the production of Riker to Vietnam, and so with that transition there will be fewer Riker deliveries next year. So that's one of the headwinds.
Some of the cost drivers, as well, depreciate. Expenses will go up, probably about $30 million next year.
And I'm also expecting my tax rate to go up to historical levels, call it 25 to 26%.
So if you factor these elements in your best and your best case, Joel you'll probably end up in an EPS probably up in the mid to high percentages for next year and probably inhibit the margin ballpark 14-inch percent.
[Company Representative] (BRP Inc.): We'll see how that unfolds. And obviously, there's a competition as well. How are other OEMs going to behave? Are they going to be more aggressive in terms of putting units in the industry and also discounting? So obviously, there's a lot of variables that we're monitoring in order for us to make an educated guess on the industry. But again, with still a few months to go before we issue guidance, we'll be able to give you the full download in March. But again, we're optimistic, especially with a strong lineup that we have in all of the product categories. Very helpful. Thank you. And also, let me offer José my good luck in future endeavors. Thank you. Thank you. Your next question comes from Brian Morrison with TD Cowen. Your line is now open. Yeah. Thanks very much.
We'll see how that unfolds. And obviously, there's a competition as well. How are other OEMs going to behave? Are they going to be more aggressive in terms of putting units in the industry and also discounting? So obviously, there's a lot of variables that we're monitoring in order for us to make an educated guess on the industry. But again, with still a few months to go before we issue guidance, we'll be able to give you the full download in March. But again, we're optimistic, especially with a strong lineup that we have in all of the product categories.
Um, but again, this is a base case and obviously over the next few months, we'll see how the business Trends snowmobile season is, is an important business for us. Uh, and so if the snow sticks, maybe will be, uh, it'll be good. The macro environment is also evolving every day, uh, Beno. I mentioned this morning, we have new, uh, into new data on terrorists. We'll see how that unfolds and obviously there's a competition as well.
Our uh our other OEM is going to behave or they're going to be more aggressive in terms of uh putting units in the in the industry. And also discounting
Uh so obviously there's a lot of variables that we're monitoring in order for us to make an educated guess on the industry uh but again with uh still a few months to go before we issue guidance.
Uh we'll be able to give you the full download and uh in March but again we're optimistic especially with a strong lineup that we have.
uh,
Joseph Altobello: Very helpful. Thank you. And also, let me offer José my good luck in future endeavors. Thank you.
In, in all of the product categories.
José?Boisjoli: Thank you.
Operator: Your next question comes from Brian Morrison with TD Cowen. Your line is now open.
Very helpful. Thank you. And also let me uh offer Jose, my my uh good luck uh in uh in the future endeavors. Thank you.
Thank you.
Brian Morrison: Yeah. Thanks very much.
Your next question comes from Brian Morrison. Would you be calling your line is now open?
[Company Representative] (BRP Inc.): José, it's certainly been a pleasure working together all these years. I want to go back to the inventory, and you've done a very good job explaining ORV and snowmobiles. Can you just maybe let us know how PWC sits as we enter into the season? And with respect to ORVs, how has the initial reception been with respect to the discounting of your entry-level product lines? Yeah. I'll take on the first question, personal watercraft. If you look at slide 13 on the deck, personal watercraft is actually down 22% versus last year. So obviously, very happy with where we sit. As I've shared with you in the past, other OEMs do have more inventory in the network.
José, it's certainly been a pleasure working together all these years. I want to go back to the inventory, and you've done a very good job explaining ORV and snowmobiles. Can you just maybe let us know how PWC sits as we enter into the season? And with respect to ORVs, how has the initial reception been with respect to the discounting of your entry-level product lines?
Yeah, thanks very much. And just say, certainly been a pleasure working together all these years. Um, I want to go back to the inventory. And you've done a very good job explaining ORV and and, um,
Sébastien?Martel: Yeah. I'll take on the first question, personal watercraft. If you look at slide 13 on the deck, personal watercraft is actually down 22% versus last year. So obviously, very happy with where we sit. As I've shared with you in the past, other OEMs do have more inventory in the network.
And snowmobiles, can you just maybe let us know how CD sits as we enter into the season. And with respect to orvs, how is the initial reception been with respect to the discounting of your entry level product line.
no, I'll take on the first uh question personal watercraft, if you look at slide
13 on the deck. Personal watercraft is actually down 22% versus last year, so obviously, I am very happy with where we sit.
[Company Representative] (BRP Inc.): And so we believe it'll be a similar, I guess, a similar dynamic than we see in snowmobile for the next season with some non-current units impacting overall market share performance. But from a current point of view, the lineup we have is obviously very strong. And the orders that we got from the dealers at our club in August also provide us a good outlook for next year. So we were sitting in a very good position, much better than where we were last year. And on the entry-level product, what was the overall reception? Yeah. Basically, consumer trend, no big change since the beginning of the year. Just to give you some statistic, new entry in Q3 was 21%, about in line with the pre-COVID level. And premium sells better than value.
And so we believe it'll be a similar, I guess, a similar dynamic than we see in snowmobile for the next season with some non-current units impacting overall market share performance. But from a current point of view, the lineup we have is obviously very strong. And the orders that we got from the dealers at our club in August also provide us a good outlook for next year. So we were sitting in a very good position, much better than where we were last year. And on the entry-level product, what was the overall reception?
Uh, as I've shared with you in the past, uh, other oems do have more inventory, uh, in the network and so, uh, we believe it will be a similar risk. I guess the similar Dynamic that we see in snowmobile for the next season with some non-current uh units impacting overall market share performance.
But for my current point of view, the lineup we have is obviously very strong. Uh,
And the orders that we got from the dealers at our club in August also provide us a good outlook for next year. So we are sitting in a very good position, much better than where we were last year.
José?Boisjoli: Yeah. Basically, consumer trend, no big change since the beginning of the year. Just to give you some statistic, new entry in Q3 was 21%, about in line with the pre-COVID level. And premium sells better than value.
And on the entry-level products there was a overall reception. Yeah basically uh consumer Trend, no big change since the beginning of the year. Um just to give you some statistical new interest in Q3 was 21% about in line with the preco level.
[Company Representative] (BRP Inc.): Just to give you a sense, on side by side, our premium units was up mid double digit when this is the industry, by the way. The premium was up mid double digit when the value was down low double digit. And for the utility, selling better, up low double digit when Rec-Sport was down mid single digit. And you can see the trend don't change. Our household income of our customer high at $175,000. Then the same trend continue. The beauty of all this, obviously, we don't like when we talk about Spark Ryker, our entry-level product. But overall, our lineups are more high-end than low-end, and it's very good for us. Right. Hey, Seb, one follow-up question if I can. You renewed your NCIB here this morning.
Just to give you a sense, on side by side, our premium units was up mid double digit when this is the industry, by the way. The premium was up mid double digit when the value was down low double digit. And for the utility, selling better, up low double digit when Rec-Sport was down mid single digit. And you can see the trend don't change. Our household income of our customer high at $175,000. Then the same trend continue. The beauty of all this, obviously, we don't like when we talk about Spark Ryker, our entry-level product. But overall, our lineups are more high-end than low-end, and it's very good for us.
And premiums tell better than value, just to give you a sense.
On side by side, our premium units uh, was up, mid double digit. When this is the industry, by the way, the the premium was up mid double digit. When the value was down, loadable digit.
And for the utility selling better, uh, uploadable digit when recsport was down mid single digit. And you can see
High at 175,000 us. Then the same Trend continued.
Brian Morrison: Right. Hey, Seb, one follow-up question if I can. You renewed your NCIB here this morning.
The beauty of all this, um, it's uh, obviously we don't like when we talk about Spark Riker, our entry-level product. But overall, our lineups are more high-end than low-end, and it's a very good position for us.
[Company Representative] (BRP Inc.): I wonder if you can just reiterate what your target leverage is and if you expect to be active with the MCIV in the near term? Yeah. Our target leverage for the end of the year is probably in the range of 2x net debt to EBITDA. We've always said our overall target is between 1x and 2x. So we're really happy with how the business has progressed and the refinancing that we did just a few months ago with the repayment of $200 million of debt and also the repricing where it provides us a big tailwind of $0.30 next year. So I couldn't ask for better results from our treasurer and our legal team. Really happy with the outcome.
I wonder if you can just reiterate what your target leverage is and if you expect to be active with the MCIV in the near term?
Sébastien?Martel: Yeah. Our target leverage for the end of the year is probably in the range of 2x net debt to EBITDA. We've always said our overall target is between 1x and 2x. So we're really happy with how the business has progressed and the refinancing that we did just a few months ago with the repayment of $200 million of debt and also the repricing where it provides us a big tailwind of $0.30 next year. So I couldn't ask for better results from our treasurer and our legal team. Really happy with the outcome.
Right. Okay, so one follow-up question. If I can, you renewed your NCIB here this morning. I wonder if you can just reiterate what your target leverage is and if you expect to be active at the end of the day.
yeah, our Target leverage uh for the end of the year, probably in the range of 2 times that debt to a bit uh
We've always said we're our overall Target is between 1 and 2 times. So we're really happy with uh how the business has progressed and the refinancing that we did.
Last. Uh,
[Company Representative] (BRP Inc.): On the NCIB, we've been on the sideline now, being more cautious over the last 15 months, waiting to see where the overall economy is going to go, trade, etc. Now that we are seeing our leverage come down, we're strong free cash flow generation. Our intention is to be active on the NCIB in the next few weeks. Have a great holiday, Susan. Thank you. Yep. Yep. Your next question comes from Sabahat Khan with RBC Capital Markets. Your line is now open. Great. Thanks. And good morning. I guess just some of the directional comments you gave on calendar 2026, something around a 14% type base case for EBITDA margin. Just curious, based on your current visibility, what sort of production levels are you at? Just trying to think. And operating leverage is obviously a potential part of the story going forward.
On the NCIB, we've been on the sideline now, being more cautious over the last 15 months, waiting to see where the overall economy is going to go, trade, etc. Now that we are seeing our leverage come down, we're strong free cash flow generation. Our intention is to be active on the NCIB in the next few weeks.
Just a few months ago with the repayment of a hundred million dollars US of debt and uh also the repricing, where it provides us a big Tailwind of 30 cents next year. So I couldn't ask for a better result from our our Treasurer and our legal team. Really happy with the the outcome on the ncib. We've been on the sidelines now being more cautious over the last 15 months. Um waiting to see where the overall uh economy is going to go trade Etc.
Brian Morrison: Have a great holiday, Susan. Thank you.
Uh, now that we uh, are seeing our Leverage come down, we're strong free cash flow generation. That Our intention is to be active on the ncib in the next uh in the next few weeks.
[Company Representative] (BRP Inc.): Yep. Yep.
Operator: Your next question comes from Sabahat Khan with RBC Capital Markets. Your line is now open.
Have a great holiday season. Thank you.
Yep. Yep.
Sabahat Khan: Great. Thanks. And good morning. I guess just some of the directional comments you gave on calendar 2026, something around a 14% type base case for EBITDA margin. Just curious, based on your current visibility, what sort of production levels are you at? Just trying to think. And operating leverage is obviously a potential part of the story going forward.
Your next question comes from sibaja Khan. With RBC Capital markets, your line is now open.
[Company Representative] (BRP Inc.): So are you back to something resembling normal production, or whereabouts will your factories be for the next year based on? So we'll still be below average asset utilization rates. And I talked about a tailwind of, I would say, CAD 400 to 500 million dollars of revenue. And so it still would bring us in the probably low 70 asset utilization. Great. And then you noted the tariff impact to the dollar amount in the calendar release here, or sorry, in the presentation. Can you just talk about the tariffs might evolve, but is this more the idea that, look, anything additional might just have to be sort of worked through via efficiencies, or is pricing on the table as well depending on how tariffs evolve? Thanks very much. It really all depends. It's tough to speculate.
So are you back to something resembling normal production, or whereabouts will your factories be for the next year based on?
Sébastien?Martel: So we'll still be below average asset utilization rates. And I talked about a tailwind of, I would say, CAD 400 to 500 million dollars of revenue. And so it still would bring us in the probably low 70 asset utilization.
Great, thanks and good morning. Um I guess just some of the the the directional comments you gave on calendar 26, you know something around the 14% type base case rate but Martin just curious based on your current visibility. What sort of production levels? Are you at? Just trying to think an operating Leverage is obviously the potential part of the story going forward. So just are you back to something resembling normal production or whereabout will your factories be for the next year based on? So we'll still be, uh, we'll still be, uh, below average asset utilization rates, uh, and I talked about it till when of, uh, let's say 4 to 500 million dollars of Revenue. Uh, and so it still would bring us in the probably low 700s that utilization.
Sabahat Khan: Great. And then you noted the tariff impact to the dollar amount in the calendar release here, or sorry, in the presentation. Can you just talk about the tariffs might evolve, but is this more the idea that, look, anything additional might just have to be sort of worked through via efficiencies, or is pricing on the table as well depending on how tariffs evolve? Thanks very much.
Great. And then, you know, you noted, the Tariff impact to the dollar amount in the in the calendar release here. Um, or sorry in the, in the, in the presentation can you just talk about, you know, the terrorists might evolve, but is this more the idea that look
Sébastien?Martel: It really all depends. It's tough to speculate.
Anything additional might just have to be sort of worked through via efficiencies, or is pricing on the table as well, depending on how tariffs evolve? Thanks very much. It really all depends.
[Company Representative] (BRP Inc.): It'll depend on the materiality, on what components it impacts, on the flexibility we have with suppliers, can relocate parts, etc. But what I can say is that our teams, our custom brokers are getting smarter, more sophisticated. We have now more granular data that allows us to be a lot more targeted when we do file custom declaration forms. And so that headwind that we have this year is expected to be actually very similar next year as well because of the better processes we have and better collaboration we have with the various partners. But again, we'll monitor and we'll act accordingly as we usually do. We've always been very proactive in adapting to new situations, Seb. Great. Thanks very much and all the best, José. Thank you. Thank you. Your next question comes from Luke Hannan with Canaccord Genuity. Your line is now open. Thanks. Good morning.
It'll depend on the materiality, on what components it impacts, on the flexibility we have with suppliers, can relocate parts, etc. But what I can say is that our teams, our custom brokers are getting smarter, more sophisticated. We have now more granular data that allows us to be a lot more targeted when we do file custom declaration forms. And so that headwind that we have this year is expected to be actually very similar next year as well because of the better processes we have and better collaboration we have with the various partners. But again, we'll monitor and we'll act accordingly as we usually do. We've always been very proactive in adapting to new situations, Seb.
Uh, it will depend on the materiality on, uh, on what components it impacts on the flexibility. We have, with suppliers, can relocate parts, etc. But what I can say is that, uh, our teams, our custom brokers, are getting smarter, more sophisticated. Uh, we have now more granular data that allows us to be a lot more targeted when we do file, uh, custom declaration forms. And so, um, that headwind that we have this year is expected to be actually very similar next year as well because of the better processes we have, uh, and better collaboration we have with the various, uh, partners.
Sabahat Khan: Great. Thanks very much and all the best, José.
Um, but again, we'll monitor and we'll act accordingly, as we usually do. Um, we've always been very proactive in adapting to new situations and stuff.
Thank you.
José?Boisjoli: Thank you.
Operator: Your next question comes from Luke Hannan with Canaccord Genuity. Your line is now open. Thanks. Good morning.
Great. Thanks very much and all the best Joseph. Thank you. Thank you.
Your next question comes from Luke Hannon with Canaccord Genuity. Your line is now open.
[Company Representative] (BRP Inc.): I wanted to follow up on that last line of questioning, Seb. So just to be absolutely clear, if we went back to last quarter, I think the gross headwind that you were expecting for fiscal '27 was in the neighborhood of CAD 120 to 130 million. So it should now be closer to, pardon me, CAD 90 million when it comes to the gross tariff headwind. Yep. That's correct. As I mentioned, again, the teams, obviously, it's a huge focus of us. And we worked on finding ways to reduce the overall exposure. And it's a very positive outcome. And so my expectation is that we should be flattish next year. Got it. Very helpful. Thanks. And then for my follow-up here, the higher level.
Luke Hannan: I wanted to follow up on that last line of questioning, Seb. So just to be absolutely clear, if we went back to last quarter, I think the gross headwind that you were expecting for fiscal '27 was in the neighborhood of CAD 120 to 130 million. So it should now be closer to, pardon me, CAD 90 million when it comes to the gross tariff headwind.
Sébastien?Martel: Yep. That's correct. As I mentioned, again, the teams, obviously, it's a huge focus of us. And we worked on finding ways to reduce the overall exposure. And it's a very positive outcome. And so my expectation is that we should be flattish next year.
Thanks. Good morning. I want to follow up on that that last line of questioning said so just to be absolutely clear if we went back to last quarter, I think the the gross headwind that you were expecting for, for fiscal, 27 was in the neighborhood of 120 to 130 million. So it should now be closer to 100. Uh, pardon me 90 million when it comes to the gross tariff headwind.
Yep, that's correct. As I mentioned again, the teams, obviously, are a huge focus for us.
Uh, and uh, we worked on.
Luke Hannan: Got it. Very helpful. Thanks. And then for my follow-up here, the higher level.
Finding ways to reduce the overall exposure. Uh, and, uh, it's a very positive outcome, and so my expectation is that we should be flattish next year.
[Company Representative] (BRP Inc.): When we think about the bridge between the new raise guidance that you just put out there and then the mission 2028 target of $8 of EPS, and then we also factor in the mid to high teens EPS growth, roughly speaking, that we should expect for next year. It does imply more contribution, I suppose, during the year of fiscal '28 as well. Can you just help us think from a high level what should be the bigger drivers of EPS growth during fiscal '27 versus '26? Well, for next year, I gave you well, are you talking calendar or you're talking fiscal? Fiscal year. Yeah. So I gave you the fiscal details. So the drivers, obviously, in the base case is mainly the tailwind coming from retail equal wholesale.
When we think about the bridge between the new raise guidance that you just put out there and then the mission 2028 target of $8 of EPS, and then we also factor in the mid to high teens EPS growth, roughly speaking, that we should expect for next year. It does imply more contribution, I suppose, during the year of fiscal '28 as well. Can you just help us think from a high level what should be the bigger drivers of EPS growth during fiscal '27 versus '26?
Sébastien?Martel: Well, for next year, I gave you well, are you talking calendar or you're talking fiscal?
28 Target of of 8 dollars of eps and then we also factor in the the mid to high teens EPS growth roughly speaking that we should expect for next year. It does imply uh more contribution I suppose during the year of of fiscal 28 um, as well. Can you just help us think from a high level what what should be the bigger drivers of of eps growth during uh 2027 physical 27 versus 26.
Luke Hannan: Fiscal year. Yeah.
Sébastien?Martel: So I gave you the fiscal details. So the drivers, obviously, in the base case is mainly the tailwind coming from retail equal wholesale.
[Company Representative] (BRP Inc.): But then when you look at '28, obviously, there's a lot of elements, market share gains from the ORV business, the dealer network expansion. All of that will be drivers of growth in '28. So the base case for '27 remains as I highlighted, and the drivers between '26 and '27. But '28, obviously, there's the product introductions that we'll be doing and the focus on the dealer experience and the dealer network. Very helpful. Thanks. And all the best, José. Thank you. Your next question comes from Xian Siew with BNP Paribas. Your line is now open. Thanks, guys. Could you talk maybe a little bit about how retail and market share gains evolved over the quarter? It sounded like maybe the first couple of months of the quarter were a little bit more promotional, and maybe there's some acceleration in October and into November.
But then when you look at '28, obviously, there's a lot of elements, market share gains from the ORV business, the dealer network expansion. All of that will be drivers of growth in '28. So the base case for '27 remains as I highlighted, and the drivers between '26 and '27. But '28, obviously, there's the product introductions that we'll be doing and the focus on the dealer experience and the dealer network.
Well for uh next year I gave you well are you talking calendar? Or you're talking fiscal fiscal year? Yeah, so I gave you the, I gave you the fiscal details. So the drivers obviously are in the base case. So is mainly the Tailwind coming from retail equal wholesale.
But then when you look at 28, obviously there's a lot of elements, the market share gains from uh from the RV business. The dealer Network expansion. All of that will be, uh, drivers of, uh, of growth in 28.
So the base case for 27 remains, as I highlighted, uh, and the drivers between 26 and 27 but 28, obviously there's uh, the product introductions that we'll be doing and uh, the focus on the dealer experience and the dealer Network.
Luke Hannan: Very helpful. Thanks. And all the best, José.
José?Boisjoli: Thank you.
Operator: Your next question comes from Xian Siew with BNP Paribas. Your line is now open.
Very helpful. Thanks and and all the best Jose. Thank you.
Xian Siew: Thanks, guys. Could you talk maybe a little bit about how retail and market share gains evolved over the quarter? It sounded like maybe the first couple of months of the quarter were a little bit more promotional, and maybe there's some acceleration in October and into November.
Your next question comes from xan Sue with BNP paraba your line is now open.
[Company Representative] (BRP Inc.): If that's the case, I guess with the exit rate improving, does that give you kind of more confidence in potential market share gains within the next year or so? I mean, we don't want to start to split quarters because it would be complicated. We were talking more about off-road. Basically, we introduced very good novelty for model year 2026. Those products were introduced in August at the club. We started production the day after. Basically, the time that you produce, you ship the dealer PDI, transportation dealer PDI. That's why our second half of Q3 in terms of retail for off-road was stronger than the first half because the new model hit the ground at the dealership when they had low inventory. It's more a timing of a new model hitting the dealership. What I'm happy with is in November, the trend continued.
If that's the case, I guess with the exit rate improving, does that give you kind of more confidence in potential market share gains within the next year or so? I mean, we don't want to start to split quarters because it would be complicated. We were talking more about off-road. Basically, we introduced very good novelty for model year 2026. Those products were introduced in August at the club. We started production the day after. Basically, the time that you produce, you ship the dealer PDI, transportation dealer PDI. That's why our second half of Q3 in terms of retail for off-road was stronger than the first half because the new model hit the ground at the dealership when they had low inventory. It's more a timing of a new model hitting the dealership. What I'm happy with is in November, the trend continued.
Thanks guys. Um, could you talk maybe a little bit about how retail and market share gains uh, evolved over the quarter. It sounded like maybe the the first couple months of the quarter were a little bit more Promotional and maybe, you know, there's some acceleration in October and into November. And if that's the case, I guess, like with the exit rate improving, does that give you kind of more confidence and potential market share gains over the next year or so.
I mean I don't we don't want to be to start to split quarters, uh, because it will be complicated, but we were talking more about Offroad. Basically, we introduced very, uh, good novelty from other year. 26.
And those products were introduced in August. At the club, we started production the day after, and basically the time that you produce, you ship to the dealer, PDI transportation, the early PDI. That's why our second half of Q3 in terms of retail for off-road was stronger than the first half.
Because the new model hit the ground at the dealership when they had a low inventory, that is more a timing of new model heating.
[Company Representative] (BRP Inc.): This is promising for the remaining of the fiscal year. Okay. Very helpful. And then maybe on, yeah. Sorry. Go ahead. On the utilization rate, I think you mentioned 70% next year. Can you maybe just remind us this year what is the utilization rate and how that we can kind of calibrate as utilization steps up? How would you think about margin benefits? Yeah. We're in the average of a 65% utilization rate this year. Okay. Great. Thank you. Good luck. Your next question comes from Cameron Doerksen with National Bank Financial. Your line is now open. Yeah. Thanks. Good morning. And let me echo my congratulations to José. I'm sure you're looking forward to the end of January. I wanted to come back to, I guess, the snowmobile market discussion.
This is promising for the remaining of the fiscal year.
[Company Representative] (BRP Inc.): Okay. Very helpful. And then maybe on, yeah. Sorry. Go ahead. On the utilization rate, I think you mentioned 70% next year. Can you maybe just remind us this year what is the utilization rate and how that we can kind of calibrate as utilization steps up? How would you think about margin benefits?
The the the dealership what I'm happy with is in November the trend continue and this is uh promising for the remaining of the the fiscal year.
Okay, very helpful and then maybe on, yeah.
Sorry guys.
Sébastien?Martel: Yeah. We're in the average of a 65% utilization rate this year.
Um, on the utilization rate, I think you mentioned like in the 70s percent next year. Can you maybe just remind us this year, what the utilization rate and how like that we can kind of calibrate, you know? Um, as utilization steps up, how how we think about margin benefits?
Xian Siew: Okay. Great. Thank you. Good luck.
Yeah, we're in the average of 65% utilization rate this year.
Okay, great. Thank you. Good luck.
Operator: Your next question comes from Cameron Doerksen with National Bank Financial. Your line is now open.
Cameron Doerksen: Yeah. Thanks. Good morning. And let me echo my congratulations to José. I'm sure you're looking forward to the end of January. I wanted to come back to, I guess, the snowmobile market discussion.
Your next question comes from Cameron doerksen with National Bank. Your line is now open.
[Company Representative] (BRP Inc.): So if you and the industry end this season with very healthy dealer inventories and we have a pretty decent snow season, it's off to a decent start so far. It feels like this could be a very nice tailwind for you in fiscal 2027. I'm just wondering if that's potential upside to kind of that CAD 400 to 500 million dollar revenue from the alignment of retail and wholesale, or is that kind of incorporated into that assumption? Oh, no. Obviously, if we have a, again, a super good season, we have a lot of enthusiast customers in the snowmobile industry. And so if you have a lot of snow and people get a lot of riding in, we obviously will have great product news next year as well. You can expect strong customer orders in the spring.
So if you and the industry end this season with very healthy dealer inventories and we have a pretty decent snow season, it's off to a decent start so far. It feels like this could be a very nice tailwind for you in fiscal 2027. I'm just wondering if that's potential upside to kind of that CAD 400 to 500 million dollar revenue from the alignment of retail and wholesale, or is that kind of incorporated into that assumption?
Yeah. Thanks. Good morning and let me echo my congratulations to Jose. I'm sure you're looking forward to to the end of January. Um wanted to come back to the I guess the the snowmobile Market uh discussion. Uh so if you and and the industry and this season with a very healthy uh dealer inventories and we have a pretty decent snow season, it's off to a decent start so far.
Sébastien?Martel: Oh, no. Obviously, if we have a, again, a super good season, we have a lot of enthusiast customers in the snowmobile industry. And so if you have a lot of snow and people get a lot of riding in, we obviously will have great product news next year as well. You can expect strong customer orders in the spring.
It feels like this could be a very, you know, a very nice Tailwind for you. Uh, in fiscal 2027, uh, I'm just wondering if that's potential upside to kind of that 400 to 500 million dollar Revenue, uh, you know, from the alignment of retail and wholesale or, or is that kind of incorporated into that assumption?
Uh know obviously if we have a a again it's super good season.
We have a lot of Enthusiast customers in the snowmobile industry and so if you have a lot of snow and people get a lot of riding and obviously have will have great product news next year as well.
[Company Representative] (BRP Inc.): That obviously is going to be a good tailwind for the back half of fiscal year 27. But we always like to plan snowmobile conservatively because it's very dependent on snowfall. And so, again, every inch of snow is more units that get retailed. So we'll take it. Okay. No, that's good. That's helpful. And, Seb, just to, I guess, just a clarification, I guess, on the remaining marine sale, the Telwater, I think José mentioned hopefully coming in the next few weeks. Just what's the cash inflow? I mean, I think the number, it looks like it's probably something like CAD 200 million that you would expect from that. Have I got that right? And if not, what is the expected cash inflow from that? Well, obviously, we have a good offer from Yamaha for that asset.
That obviously is going to be a good tailwind for the back half of fiscal year 27. But we always like to plan snowmobile conservatively because it's very dependent on snowfall. And so, again, every inch of snow is more units that get retailed. So we'll take it. Okay. No, that's good. That's helpful. And, Seb, just to, I guess, just a clarification, I guess, on the remaining marine sale, the Telwater, I think José mentioned hopefully coming in the next few weeks. Just what's the cash inflow? I mean, I think the number, it looks like it's probably something like CAD 200 million that you would expect from that. Have I got that right? And if not, what is the expected cash inflow from that?
Uh, you can expect strong customer orders in the spring, uh, and that obviously is going to be a good tailwind for, uh, for the back half of fiscal year 2027. So, um, but we always like to plan snowmobile conservatively because it's very dependent on snowfall.
Uh, and uh, and so again, every uh, every inch of snow is uh, is more units than yet retail. So we'll take it.
Sébastien?Martel: Well, obviously, we have a good offer from Yamaha for that asset.
And some just to, I guess, just a clarification I guess on the remaining Marine sale. That the the tail water I think Josie mentioned, hopefully coming in the next few weeks. Um just what's what's the cash inflow? I mean I think the number it looks like it's probably something like 200 million dollars that you would expect from that have. I got that right? And and if not what what is the expected cash inflow from that?
[Company Representative] (BRP Inc.): In the ballpark, it's around that amount of expected cash inflow from the proceeds that is expected. Okay. So that would come in Q4, assuming that the regulator approves it? Yes. It would come into Q4 or early Q4. Yeah. Early Q4. Okay. Perfect. Thanks very much. Your next question comes from Jamie Katz with Morningstar. Your line is now open. Hey. Good morning, guys. I have just a quick one on CapEx. I know it was shifted down a little bit. Were there any particular investments that we should be aware were sort of either pushed out or delayed? And then should we be thinking of CapEx as a percentage of sales still around that 4.5% level longer term? Yeah. Nothing special to call out for this year. Obviously, we are diligent in our CapEx spend.
In the ballpark, it's around that amount of expected cash inflow from the proceeds that is expected.
Well, uh, obviously we have uh, a good offer from uh, Yamaha for that asset. Uh, and the ballpark gets around that amount of expected cash and flow from the proceeds,
Cameron Doerksen: Okay. So that would come in Q4, assuming that the regulator approves it?
Um, that is expected.
Yes. It would come into Q4 or early Q4.
Cameron Doerksen: Yeah.
Sébastien?Martel: Early Q4.
Cameron Doerksen: Okay. Perfect. Thanks very much.
Okay, so it is that that would come in in Q4 assuming that the regulator approves it. Yes, it would come into Q4 or early. Yeah.
Operator: Your next question comes from Jamie Katz with Morningstar. Your line is now open.
Okay, perfect. Thanks very much.
Jaime Katz: Hey. Good morning, guys. I have just a quick one on CapEx. I know it was shifted down a little bit. Were there any particular investments that we should be aware were sort of either pushed out or delayed? And then should we be thinking of CapEx as a percentage of sales still around that 4.5% level longer term?
Your next question comes from Jamie Cats with Morningstar. Your line is now open.
Sébastien?Martel: Yeah. Nothing special to call out for this year. Obviously, we are diligent in our CapEx spend.
Hey, good morning guys. I have just a quick 1 on um, capex. I know it was shifted down a little bit. Were there any particular Investments um that we should be aware where sort of either pushed out or delayed? And then should we be thinking of capex as a percentage of sales still around that like 4 and a half percent level longer term.
[Company Representative] (BRP Inc.): The teams know that if we push a project out, it doesn't mean that they lose it. So everyone's being responsible in how they deploy CapEx. For next year, probably in the range of, let's say, CAD 420 million is a fair number in terms of CapEx and for the out years as well. As you might know, we've invested quite a bit in the last few years in capacity. So we don't necessarily need to build any more capacity out for our plants. That's the good news. Most of the investments are around product and technology. Okay. Then I don't know that this was called out, but for new-to-brand consumers, is there anything noteworthy on what is getting them to convert sales? Is it promotions, innovation, financing deals, and some mix of that all? Just curious what's motivating consumers the most right now.
The teams know that if we push a project out, it doesn't mean that they lose it. So everyone's being responsible in how they deploy CapEx. For next year, probably in the range of, let's say, CAD 420 million is a fair number in terms of CapEx and for the out years as well. As you might know, we've invested quite a bit in the last few years in capacity. So we don't necessarily need to build any more capacity out for our plants. That's the good news. Most of the investments are around product and technology.
Jaime Katz: Okay. Then I don't know that this was called out, but for new-to-brand consumers, is there anything noteworthy on what is getting them to convert sales? Is it promotions, innovation, financing deals, and some mix of that all? Just curious what's motivating consumers the most right now.
Yeah nothing special to call out for this year. Obviously we are diligent in uh in our capex spend and the team is know that if we push a project out, it doesn't mean that they lose it. And so everyone's being responsible and how they uh how they deploy capex. And for next year, um probably in the range of uh let's say 4 420. Million is a fair number uh in terms of capex and for the out years as well as you might know we've invested quite a bit in the last few years and capacity and so we don't necessarily need to build any more capacity out uh for uh for our plants. Uh that's a good news and most of the Investments are around product and Technology.
Okay, and then I don't know that this was called out, but for new-to-brand consumers, is there anything noteworthy on what is, um,
[Company Representative] (BRP Inc.): I'd say innovation is what's motivating customers the most, obviously, with products that have been out there in the market for quite a bit of time. Discounts can drive consumers. But for new-to-BRP, obviously, when they see the innovation that we have on most of the product line, on all the lineup, that is what's driving the conversion from other brands. Excellent. Thanks. Your next question comes from Ellie Latt with BMO Capital Markets. Your line is now open. Oh, thank you. Two for me. I just wanted to follow up on the potential sale to Yamaha and what you would potentially do with those proceeds, the CAD 200 million. And then just kind of in the same vein, you mentioned CAD 210 million of debt reduction. Could you tell us where your debt stood, where your total debt stood at the end of the quarter? Thank you. Yeah.
Sébastien?Martel: I'd say innovation is what's motivating customers the most, obviously, with products that have been out there in the market for quite a bit of time. Discounts can drive consumers. But for new-to-BRP, obviously, when they see the innovation that we have on most of the product line, on all the lineup, that is what's driving the conversion from other brands.
Getting them to convert sales as a promotions innovation, financing deals, or some mix of that all. Um, just curious, what's motivating consumers the most right now?
Uh, I'd say Innovation is what's motivating customers? The most, uh, obviously with uh,
Jaime Katz: Excellent. Thanks.
With, uh, products that have been out there in the market for quite a bit of time, uh, discounts can drive consumers. But, uh, for new to BRP, obviously, when they see the innovation that we have on most of the product line, on all the lineup, that is what's uh driving the uh the conversion from other brands.
Operator: Your next question comes from Ellie Latt with BMO Capital Markets. Your line is now open.
Excellent. Thanks.
Eliaser Macias: Oh, thank you. Two for me. I just wanted to follow up on the potential sale to Yamaha and what you would potentially do with those proceeds, the CAD 200 million. And then just kind of in the same vein, you mentioned CAD 210 million of debt reduction. Could you tell us where your debt stood, where your total debt stood at the end of the quarter? Thank you.
Your next question comes from Ellie. Lat with BMO Capital markets, your line is now open.
Sébastien?Martel: Yeah.
Oh, thank you. Um, 2 for me, I just wanted to follow up on the potential sale of Yamaha at toy Yamaha and what you would potentially do with those proceeds, the 200 million and then just kind of in the same vein, you mentioned, 210 million of debt reduction. Could you tell us where your debt stood um, where you're, you know your total debt stood at the end of the quarter?
[Company Representative] (BRP Inc.): Well, our capital deployment priorities are not changing. The first one is to invest in the business, and that will remain. Then the other capital deployment priority is obviously to modestly increase our dividend and then any excess free cash flow. When the shares trade below what the implied value is, we like to return capital to shareholders. So the good news is we have flexibility. I feel that our cap structure is adequate today with the refinancing that we did just a few months ago. The overall debt stands at $1.7 billion today. So overall leverage is very comfortable. I don't feel that we need to reduce the overall debt level. So just as a follow-up, you had mentioned during the call, I think, that if you correct me if I'm mistaken, but I think you said your long-term guidance was one to two times?
Well, our capital deployment priorities are not changing. The first one is to invest in the business, and that will remain. Then the other capital deployment priority is obviously to modestly increase our dividend and then any excess free cash flow. When the shares trade below what the implied value is, we like to return capital to shareholders. So the good news is we have flexibility. I feel that our cap structure is adequate today with the refinancing that we did just a few months ago. The overall debt stands at $1.7 billion today. So overall leverage is very comfortable. I don't feel that we need to reduce the overall debt level.
Thank you. Yeah. Uh, well, our, our Capital deployment priorities, uh, are not changing. Uh, the first 1 is to invest in the business, uh,
And, uh, and and that will remain. Then the other Capital, uh, deployment priority is obviously, uh, modestly. Increase our dividend and then any excess free cash flow.
uh, when the shares trade below, what the, uh,
Implied value is we, we like to return Capital to shareholders.
Eliaser Macias: So just as a follow-up, you had mentioned during the call, I think, that if you correct me if I'm mistaken, but I think you said your long-term guidance was one to two times?
So the good news is we have flexibility. Um, I feel that our cap structure is adequate today with the refinancing that we did just a few months ago. The overall debt stands at 1.7 billion us today. Uh, and so, uh, overall Leverage is very comfortable and I don't feel that, uh, we need to reduce the overall debt level
[Company Representative] (BRP Inc.): 1.5x to 2x leverage. 1.5x to 2x. Okay. All right. Thank you. Thank you. Ladies and gentlemen, as a reminder, should you have a question, please press star one. Your next question comes from Jonathan Goldman with Scotiabank. Your line is now open. Hi. Good morning. And thanks for taking my questions. Most of them have been asked, but maybe just a clarifying one to begin with. I'm sorry if I missed this. But, Seb, did you talk about the base case for next year, including share gains? Well, again, our plan, if you look at the M28 target, we said modest share gains in the ORV segment. So yeah, it does factor a bit of share gains next year. But it would be a modest impact. Okay. Perfect. Thanks for that.
Sébastien?Martel: 1.5x to 2x leverage.
So just just as a follow you you had mentioned during the call. I think that if if you correct me if I'm mistaken, but I think you said your long-term guidance was 1 to 2 times.
Eliaser Macias: 1.5x to 2x. Okay. All right. Thank you.
Sébastien?Martel: Thank you.
1.5 to 2 times leverage 1.5 to 2 times, okay, all right. Thank you.
Thank you.
Operator: Ladies and gentlemen, as a reminder, should you have a question, please press star one. Your next question comes from Jonathan Goldman with Scotiabank. Your line is now open.
Ladies and gentlemen, as a reminder, should you have a question, please press *1.
Jonathan?Goldman: Hi. Good morning. And thanks for taking my questions. Most of them have been asked, but maybe just a clarifying one to begin with. I'm sorry if I missed this. But, Seb, did you talk about the base case for next year, including share gains?
Sébastien?Martel: Well, again, our plan, if you look at the M28 target, we said modest share gains in the ORV segment. So yeah, it does factor a bit of share gains next year. But it would be a modest impact.
I'm sorry if I missed this but Seb. Did you talk about the base case for next year including share games?
uh,
Well again, our plan if you look at the um m28 targets, we send modes share games and the orb segments.
Uh, so yeah, it does factor a bit of share gains next year.
Um,
Jonathan?Goldman: Okay. Perfect. Thanks for that.
But it, it would be a modest impact.
[Company Representative] (BRP Inc.): Then on the gross margin, I believe, Seb, on the last call, you said you could possibly see a tailwind next year in the 50 basis points range. Given where the inventory is in the industry right now and your comments about promo still being somewhat elevated, how are you thinking about potential gross margin expansion next year? Well, the big driver of gross margin, obviously, is some of the volume that we're going to be bringing back from just matching retail with wholesale. The other element is obviously cost initiatives that we have in all of our plants, all of our product lines. And so from asset utilization and cost efficiency, that should drive margins up. We are expecting as well to continue investing in the business or in the marketing.
Then on the gross margin, I believe, Seb, on the last call, you said you could possibly see a tailwind next year in the 50 basis points range. Given where the inventory is in the industry right now and your comments about promo still being somewhat elevated, how are you thinking about potential gross margin expansion next year?
Sébastien?Martel: Well, the big driver of gross margin, obviously, is some of the volume that we're going to be bringing back from just matching retail with wholesale. The other element is obviously cost initiatives that we have in all of our plants, all of our product lines. And so from asset utilization and cost efficiency, that should drive margins up. We are expecting as well to continue investing in the business or in the marketing.
Thank you, perfect. Thanks for that. And then on the gross margin, I believe, 7 on the last call. You said, you know, you could possibly see a Tailwind next year in the 50 bit range. You know, given where the inventory is in the industry right now. In your comments about um, promo still being you know, somewhat elevated. How are you thinking about potential? Gross margin expansion, next year?
Well, the Big Driver of gross margin obviously is uh, is some of the volume that we're going to be bringing back from uh, just matching retail with wholesale. Uh, the other element is obviously cost initiatives that we have in all of the uh, all of our plans, all of our product lines.
uh,
[Company Representative] (BRP Inc.): So I do not expect huge operational leverage coming from OPEX, maybe 50 basis points, which could bring us to a 14% dividend margin on the base case. Okay. Perfect. I appreciate the color. Thanks. There are no further questions at this time. I will now turn the call over to Mr. Deschênes for closing remarks. Thank you, Joe. And thanks, everyone, for joining us this morning and for your interest in BRP. We look forward to speaking with you again for Q4 earnings in March. Thanks again, everyone, and have a good day. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
So I do not expect huge operational leverage coming from OPEX, maybe 50 basis points, which could bring us to a 14% dividend margin on the base case.
And so from asset utilization and cost efficiency, which should drive margins up, we are expecting to continue investing in the business, particularly in R&D and marketing. So, I don't expect a huge operational leverage coming from Opex, maybe let's say 50 basis points.
Jonathan?Goldman: Okay. Perfect. I appreciate the color. Thanks.
Which could bring us to weigh 14% of the margin on the base case.
Operator: There are no further questions at this time. I will now turn the call over to Mr. Deschênes for closing remarks.
Okay, perfect. I appreciate the color. Thanks.
Darno for the question.
Philippe Deschênes: Thank you, Joe. And thanks, everyone, for joining us this morning and for your interest in BRP. We look forward to speaking with you again for Q4 earnings in March. Thanks again, everyone, and have a good day.
I will now turn the call over to Mr. Dishon for closing remarks.
Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
Thank you. And thanks everyone for joining us this morning and for your interest in BRP. We look forward to speaking with you again for a 2 4, erne in March, thanks again, everyone and have a good day.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating. In NASA you, please disconnect your line.