Q3 2026 BRP Inc Earnings Call

December 4, 2025

Speaker #2: Despite continued activity promotional from other OEMs . As you can see on slide seven , the momentum created by the new generation of the defender , the Outlander backcountry for by four and six by six , and enhancements to our Maverick lineup led to a record month of October at retail for both side by side and ATV .

Operator: Good morning, ladies and gentlemen. Welcome to the BRP Inc.'s FY26 third quarter results conference call. For participants who use the telephone line, it is recommended to turn off the sound on your device. I would now like to turn the meeting over to Mr. Philippe Deschênes. Please go ahead, Mr. Deschênes.

Operator: Good morning, ladies and gentlemen. Welcome to the BRP Inc's FY 2026 Q3 Results Conference Call. For participants who use the telephone line, it is recommended to turn off the sound on your device. I would now like to turn the meeting over to Mr. Philippe Deschênes. Please go ahead, Mr. Deschênes.

Philippe Deschenes: 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. The forward-looking information is based on certain assumptions and is subject to risk 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. So, with that, I'll turn the call over to José. Thank you, Philippe. Good morning, everyone, and thank you for joining us.

Philippe Deschenes: Thank you, Joelle. Good morning and welcome to BRP's conference call for the Q3 of fiscal 26. Joining me thismorning 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.

Speaker #2: new model Our captured consumer attention and earn rave reviews from media representatives who try them . The coverage highlighted our as the market benchmark in the industry .

The forward-looking information is based on certain assumptions and is subject to risk 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. So, with that, I'll turn the call over to José. Thank you, Philippe. Good morning, everyone, and thank you for joining us.

Philippe Deschenes: 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 four for key financial highlights. We ended the quarter with revenue of CAD 2.3 billion, normalized EBITDA of CAD 326 million, normalized EPS of $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 $5 of normalized EPS for the year. Moving on to slide five for global industry trends.

We are pleased with our Q3 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 four for key financial highlights.

We ended the quarter with revenue of CAD 2.3 billion, normalized EBITDA of CAD 326 million, normalized EPS of $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 $5 of normalized EPS for the year. Moving on to slide five for global industry trends.

Philippe Deschenes: 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. 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 in 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.

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. 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 in 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.

Philippe Deschenes: Turning to slide six 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. 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 seven, 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 model captured consumer attention and earned rave reviews from media representatives who tried them. The coverage highlighted our product as the market benchmark in the industry.

Turning to slide six 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. 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 seven, 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 model captured consumer attention and earned rave reviews from media representatives who tried them. The coverage highlighted our product as the market benchmark in the industry.

Philippe Deschenes: 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 eight for a more detailed look at year-round products. Revenue were 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 unit, 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 unit, 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.

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 eight for a more detailed look at year-round products. Revenue were 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 Q3 ever at retail for side-by-side.

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.

Now, let's turn to slide 8 for a more detailed. Look at year round products.

Revenue were up 22% to 1.3 billion driven by higher RV shipments. Following new product launches.

At retail, side by side WhatsApp, high single digit outpacing the industry.

We continue to strongly outperform in current unit, 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 unit, 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.

In fact, we delivered our strongest 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 digits, outperforming the industry which was down high single digits.

In the current unit, we've gained double-digit market share, driven by our Outlander platform and newly introduced models.

Philippe Deschenes: We continue to experience softer retail for our entry-level Ryker lineup, which is consistent with overall market trends. That 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%. Turning to seasonal products on slide nine, revenue 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.

We continue to experience softer retail for our entry-level Ryker lineup, which is consistent with overall market trends. That 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%. Turning to seasonal products on slide nine, revenue were down 2% to CAD 606 million, mainly due to a planned reduction of snowmobile shipments to right-sized network inventory.

As for free will vehicle, we closed the 2025 season lagging the industry.

We continue to experience faster retail for our entry-level Riker, which is consistent with overall market trends.

This said our high-end spider lineup, perform 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.

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.

Revenue were down 2% to 606 million mainly due to a plan reduction of snowmobile shipments to right-size. Network inventory.

Looking at retail, the snowbill industry saw a very high level of discounted non-current units from other OEMs.

In fact, about two-thirds of unit retail during the quarter were non-current, a level we had not seen for many years.

As expected, we lack the industry, given our lower non-current, inventory and strong retail performance at the end of last season.

Philippe Deschenes: However, we outperformed 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. 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 pontoon, 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, revenue were up 18% to CAD 379 million due to a higher volume of parts and accessory sales as dealers replenished their inventory.

However, we outperformed 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. 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.

This Dynamic should continue throughout the winter.

However, we are performing current unit as a result of the overall strength of our lined up and elevated level of pre-sold unit.

Turning to unwatered product trend.

Remain relatively soft in North America.

As for pontoon, 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, revenue were up 18% to CAD 379 million due to a higher volume of parts and accessory sales as dealers replenished their inventory.

For the season ended in September, personal watercraft sales were down slightly, lagging the industry. But we remain, we maintained our number one position in North America.

As for pontoon, retail was down mid-20% as the industry is still going through a correction period.

We had a better quarter in counter seasonal Market which are entering their Peak retail season which cidu retail up. Mid single digit in both Asia Pacific and Latin America.

Moving to slide 10 for part accessories and apparel and OEM engine.

Revenue. We're up 18% to 379 million due to a higher volume of part and accessory sales.

Philippe Deschenes: The increase in parts and oil sales showed 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. 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 increase in parts and oil sales showed 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. 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.

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 in production.

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 sell water 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 $2.3 billion, driven by stronger ORV 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 EBITDA grew 21% to $326 million, and our normalized earnings per share rose 33% to $1.59. Free cash flow from continuing operations was $320 million, and we closed the quarter with $250 million of cash on hand.

With that, I turn the call over to Sebastian.

Thank you, Jose. Good morning, everyone.

Thanks to our teams, disciplined execution, continued, focus on operational, efficiency and the strong reception of our newly introduced models. We delivered our solid Q3 with retail and financial results above expectations.

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 EBITDA grew 21% to $326 million, and our normalized earnings per share rose 33% to $1.59. Free cash flow from continuing operations was $320 million, and we closed the quarter with $250 million of cash on hand.

Or reshipment partly offset by lower snowmobile deliveries.

Prophet 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. If a doctor 21% to 326 million and our normalized earnings per share Rose 33% to a dollar and 59 cents.

Sébastien Martel: 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. 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.

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. 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.

Free cash flow from continued operations was $320 million, and we closed the quarter with $250 million of cash on hand.

Also, during the quarter, we seize the opportunity to further strengthen our balance sheet by sending 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.

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.

These actions are expected to generate financing cost savings of about $10 million in fiscal 2026, and $30 million annually from fiscal 2027 onwards.

Governor 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.

Sébastien Martel: 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, SSV, and snowmobile, 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.

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, SSV, and snowmobile, all showing strong double-digit reductions.

Now, turning to slide 13 for an update on our Network inventory.

We maintain a disposal approach to network inventory management. Throughout the quarter ending Q3, inventory is down 17% versus last year and down 6% below pre-COVID levels.

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.

Importantly, we have made strong progress in carry as of focus, with three-wheel, personal watercrafts, switched, 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 are 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.

Sébastien Martel: 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. 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 EPS than previously anticipated.

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 2026. As I mentioned earlier, we are pleased with our execution and results so far this year. 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.

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,

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 EPS than previously anticipated.

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.

Sébastien Martel: 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 EPS 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 EPS growth while having the financial flexibility to enhance return of capital to shareholders. On that, I turn the call over to José.

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 EPS 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 EPS growth while having the financial flexibility to enhance return of capital to shareholders. On that, I turn the call over to José.

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 normalized DPS than previously anticipated.

As such, we now expect to deliver about 8.3 billion dollars of Revenue, 1.1 billion of normalized ibida in about 5 dollars of normalized, DPS, for the year.

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 powersport potential. As part of this plan, we introduced financial objectives of CAD 9.5 billion in revenue and CAD 8 in normalized EPS by the end of fiscal 28.

Looking ahead with our successful product, introductions lean Network, inventory, levels and improving dealers sentiments. 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.

In conclusion, I am proud of our accomplishments so far this year. Our strong Q3 performance has resulted in higher guidance for fiscal 2026. In the short term, all our teams are aligned internally and focused on delivering against our new M28 strategic plan to capture our full powersport potential. As part of this plan, we introduced financial objectives of CAD 9.5 billion in revenue and CAD 8 in normalized EPS by the end of fiscal 28.

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 2026.

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.

José Boisjoli: 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 2026, 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. 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.

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 2026, and we will not stop here. Our goal is to consistently wow consumers with innovative products and unbeatable experience.

8 in normalized APS by end of fiscal 28.

We are confident in our ability to reach these objectives.

Looking ahead, we are in the best position. We aim to benefit from an industry rebound.

Given our lean inventory position, engage dealer, Network, and strong lineup.

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. 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.

We have 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 an unbeatable experience.

With the solid foundation, We have dealt over time.

We can create a bright future for BRP and drive long-term profitability.

Lastly.

About the nomination of the new steel, 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.

José Boisjoli: This is my last earnings call. It was a pleasure working with all of you. On that, I turn the call over to the operator for questions.

This is my last earnings call. It was a pleasure working with all of you. On that, I turn the call over to the operator for questions.

I am proud of what BRP has become. We have built a strong organization and have no doubt that we are the best who I am in the industry.

This is my last earning call, it was a pleasure working with all of you.

On that. I turned a call over to the operator for questions.

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. 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 indicating 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 speakerphone, please lift the handset before pressing any keys. We request that our callers limit their questions to 1 question and 1 follow-up. One moment, please.

Your first question comes from James Hardiman with Citigroup. Your line is now open.

Sean Wagner: Hi. This is Sean Wagner 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?

Sean Wagner: Hi. This is Sean Wagner 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 Q4. 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?

Hi. Um, this is Sean Wagner on for James Harden. Um, you gain 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.

José Boisjoli: Good morning. As you know, we came out of club with great engagements from the dealers. The dealers were extremely, 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. But this is basically 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 into detail. We have our numbers, but we don't have any industry data.

Uh, good morning. As you know, uh, we came out of club with a great engagement from the dealers. Uh, the dealers were extremely uh, and the media were extremely pleased with the ETV lineup and also the side by side lineup, notably the hd11

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 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 into detail. We have our numbers, but we don't have any industry data.

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.

José Boisjoli: But I can say that, again, the retail is quite positive. 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 one month in November. On the snow side, obviously, we're benefiting of 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 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 one month in November. On the snow side, obviously, we're benefiting of 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. Overall, we are very happy with our position in the industry.

Now, for November, obviously, I cannot go in the 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 HD1 and and the ETV Backcountry series 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. Um,

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.

Sébastien Martel: 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. 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?

Sean Wagner: 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. 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?

Okay. That's very helpful. I guess just following up on that. Um,

José Boisjoli: No. 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.

Months ago, then. But as you remember, we we reached close to 30% in, in a few years we've lost market share in the last, uh,

18 months because of our

We desire to reduce the inventory. Uh, and we had left on 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.

Sébastien Martel: Sounds good. Thank you very much, guys.

Sean Wagner: Sounds good. Thank you very much, guys.

José Boisjoli: Thank you.

Sounds good. Thank you very much, guys.

Thank you.

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

Your next question comes from, Mark Petri with CIBC your line is now open.

Mark Petrie: Yeah. Thanks. First, just let me repeat my congratulations to you, José. 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 I 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.

José Boisjoli: 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. 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.

Yep, thanks. Uh, and first, just let me repeat my congratulations to you, Jose. It's been a pleasure working with you over the last decade plus, and I wish you all the best in your next chapter. Um, obviously, product innovation is a key short-term variable, but I 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. Uh

The reception is good. 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. We're in a very good position and couldn't ask for a better outlook in terms of dealer engagement.

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 invested in, in, in reducing Network inventory. 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 innovation, uh, and that's what we're seeing from, uh, from uh, from the other 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

José Boisjoli: We're in a very good position and couldn't ask for a better outlook in terms of dealer engagement.

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 could ask for a better outlook in terms of dealer engagement.

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.

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. We will invest to better support our dealers in terms of parts and accessories, training them, and also leading them with all the leads we get from the website. 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, and 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, uh, ah, ah, 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 that 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,

We intend to be the best obviously with our we have the best product lined up, but also we want to be the best or experience and that's include our dealers.

Then 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, uh, the plan.

But, uh, like we said, we are full throttle. Um,

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, and 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. 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.

José Boisjoli: 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 the m28 plan right now, the plan have been cascaded down and also we will increase, um, the number of dealers. Uh, we had an objective of 30 dealers Edition net this year, and we already have achieved that number, then it's, it's quite positive. And the team is not stopping. Because we have a CR number for this year, that they are already working on next year achievement. But,

What I want to see is what you saw, uh, in Valk with the M28. Everything is in motion, and we're very happy where we are.

Mark Petrie: Okay. Appreciate all those comments and happy holidays. All the best.

José Boisjoli: Thank you.

Okay, I appreciate all those comments and, uh, happy holidays. All the best.

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

Thank you.

Your next question comes from Robin Farley with UBS your line is now open.

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 and 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. 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 big promotional at this point.

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.

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...

Single digit percent of product out there. If if that.

José Boisjoli: 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. 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.

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.

uh,

but we've seen, uh,

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.

Oems being still promotional uh, even on model year 26 products. We saw oems for side by side, already advertising, uh, discounts. So, uh, our our view is that this environment will, uh, be here for

Maybe an extra another few quarters, um and that obviously impacts uh the profitability of everybody's business.

Uh, from my, from the, a consumer point of view, the high-end products are selling well, but the lower end models, uh, the more entry-level models, uh, traffic is lighter. And therefore, we see some oems pushing harder on discounts.

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?

Robin Farley: That's helpful. Thank you. 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?

José Boisjoli: Yeah. Our going-in assumption for next year is a flat industry. If I look year-to-date, the industry is down 1%, so we could call it flattish. Our base case for next year is for the industry to remain where it is.

Um, yep. 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

Yeah, or going in Assumption for next year is uh a flat industry. Uh and if I look year to date, industry is down 1%. So we could call it flat is there. So our base case for next year is for the industry to remain where it is.

Robin Farley: Great. Thank you very much.

I'm great. Thank you very much.

Operator: Your next question comes from Benoit Poiry with Desjardins Securities. Your line is now open.

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

Mark Petrie: Yes. Thank you very much, and congrats, José. It's been a pleasure working with you over the years.

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 venue your line is now open.

Yes, thank you very much and, uh, congrats Jose. It's been a pleasure working with you over the years.

José Boisjoli: Thank you. Yeah. And maybe first question for Sébastien. When I look at the working cap, you 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?

José Boisjoli: 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. 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 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. 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.

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.

Yeah, obviously, we're really happy with our free cash flow generation year to date. We're at about $650 million for the first three quarters of the year. Um, my outlook for the year will probably end up around, let's say, $650 million to $700 million in free cash flow generation.

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.

Um, working capital is, I've been a big focus of the organization, uh, especially of coid 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.

Mark Petrie: Okay. Thanks. And 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?

Benoit Poirier: Okay. Thanks. And 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, in freeing up some cash by reducing our investments and, uh, in working cap.

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, by the way, we very involved in to following the negotiation and even giving our point of view or giving data on our situation uh with industry Association. But also with uh some government

And the progress of realizing uh, and trying to renew the USMC is ongoing.

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.

Um, we're not reacting to news every day because it will be too painful, then we're just focusing.

To better support the industry and the government with data and our point of view on different thing. And we

Mark Petrie: 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.

Okay, that's great. Thank you for the time.

Operator: Your next question comes from Craig Kennison with Baird. Your line is now open.

Thank you.

Your next question comes from Craig Kennedy with beard, your line is now open.

Craig Kennison: 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?

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?

Mark Petrie: Yes. 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?

Thank you for clarifying, and then you were also talking about the low-end consumer, still struggling relative to the more affluent consumer.

José Boisjoli: Yeah. It's 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 I 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, I would obviously find it difficult to triangulate how a movement of, let's say, 25 basis points in rates will impact consumers. But what I can tell you is, if we look at Canada versus the U.S., rates are probably about 175 basis points lower in Canada than in the U.S.

uh, than the US. And we've, 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 uh we'll see the same impact that it had on uh, on Canadian demand.

Craig Kennison: 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 created the ability to process those signals.

Thanks and finally uh, just it sounds like hd11 has done really well and 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 HD1, 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. And right now, beginning of December, we're taking deliveries. We're taking orders for what will be delivered in February. 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 steal the floor very often. Then we could not be happier of the reception of the new Defender.

You know, the 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 produced about three-quarters of the new one and one-quarter of the old one. We're definitely transitioning fast.

We're taking orders every month. Craig, as you know,

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, the dealer received the unit, the PDI it the and it don't steal on the floor. Very often then we could not be happier.

Of the reception of the new Defender.

Craig Kennison: Great. Thank you. Congratulations, José.

José Boisjoli: Thank you.

Great. Thank you. Congratulations. Jose

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

Thank you.

Your next question comes from Martin Landry with Stifel. Your line is now open.

Mark Petrie: 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 comfort level in terms of snowmobiles right now.

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 comfort level in terms of snowmobiles right now.

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. 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 lessened the non-current as planned, and it will be a year of correction, and this was all planned.

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.

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. And obviously, we are 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.

Uh, what is good right now, in the Northeast, uh, uh, including Quebec. The snow is quite good. Good in Upper Peninsula.

In the west Canada us. It's a bit taxi then and in Scandinavia it's good then overall it's a good start of the season.

We gain uh, market share in the current. Uh and we have a lot of pre-sold unit with the last in the non-current has plan. And it will be a year of Correction. Uh, and this was all planned.

Mark Petrie: Okay. So can we expect you to have fully cleared your older models by the end of the snowmobile season?

Martin Landry: Okay. So can we expect you to have fully cleared your older models by the end of the snowmobile season?

José Boisjoli: We were a bit on the high side, but we were in relatively good shape at the end of the season 2025. 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.

Okay. So can we expect, uh, you'd have fully cleared your older, uh, models by the end of the summer mobile season?

We were a bit on the high side, but we were in relatively good shape 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.

Mark Petrie: Perfect. Thank you. And best of luck, José, in your future projects.

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 Jose in your future projects. Thank you.

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

Philippe Deschenes: 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?

Joe 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. Altabella with Raymond James, your line is now open.

Thank you. Hey guys, good morning. Um want to go back to the the promotional environment. Um I think in the press release, you mentioned that you saw a favorable variations in in your sales programs but this morning you're talking about, you're still very elevated levels of promotion um in the industry. So is it that the

very promotional, but but you

these were

José Boisjoli: Yeah. Well, if you recall last year, Joe, we wanted to address inventory in the network and the non-current inventory as well. And so we did put a lot of dollars last year to work in order to flush that inventory, which we were able to do. And 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. So 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.

In terms of sales, programs versus last year.

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.

Philippe Deschenes: Got it. Okay. In terms of fiscal 2027, you mentioned that wholesale and retail should be largely in alignment. I think, Seb, in the past, you said that just lapping this year's destocking probably gives you CAD 400 to 500 million of revenue. Is that still the case? Should we think about that as a base and then layer on whatever assumptions we have on pricing and market share gains?

Joe Altobello: Got it. Okay. In terms of fiscal 2027, you mentioned that wholesale and retail should be largely in alignment. I think, Seb, in the past, you said that just lapping this year's destocking probably gives you CAD 400 to 500 million of revenue. Is that still the case? Should we think about that as a base and then layer on whatever assumptions we have on pricing and market share gains?

José Boisjoli: 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's just the right sizing of the inventory that is behind us last year and this year. And 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. 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.

Got it. Okay. And in terms of fiscal 27, you mentioned that wholesale and Retail should be largely in alignment and I think Seb in the past you said that just lapping this year's destocking, you know, probably gives you 4 to 500 million. Dollars of Revenue is, is that still the case. And so 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 in the middle of our planning for next year, but it's certainly too early to provide a detailed guidance uh to all of you. Uh, 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, uh, a Tailwind of about 4 to 500 million of Revenue and probably roughly about a buck 25 of eps.

José Boisjoli: Depreciation expense will go up probably about CAD 30 million next year. I'm also expecting my tax rate to go up to historical levels, call it 25% to 26%. If you factor these elements in your base case, Joel, you'll probably end up in an EPS probably up in the mid- to high-teens percentages for next year and probably a little bit of margin, ballpark 14-ish%. But again, this is a base case. Obviously, over the next few months, we'll see how the business trends. Snowmobile season is an important business for us. 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. We'll see how that unfolds. Obviously, there's a competition as well. How are other OEMs going to behave?

Depreciation expense will go up probably about CAD 30 million next year. I'm also expecting my tax rate to go up to historical levels, call it 25% to 26%. If you factor these elements in your base case, Joel, you'll probably end up in an EPS probably up in the mid- to high-teens percentages for next year and probably a little bit of margin, ballpark 14-ish%. But again, this is a base case. Obviously, over the next few months, we'll see how the business trends. Snowmobile season is an important business for us. 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. We'll see how that unfolds. Obviously, there's a competition as well. How are other OEMs going to behave?

Uh obviously there are some headwinds we're transitioning the production of Riker to uh to Vietnam and so with that transition it'll be less Riker delivery next year. So that's 1 of the headwinds, some of the cost drivers as well. Depreciate depreciate expense 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 tool or you probably end up in an EPS, probably up in the mid, the high 10% is for next year and probably in a bit of a margin ballpark 14-inch percent.

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 it will be, uh, it'll be good. The macro environment is also evolving every day, uh, but no, I mentioned this morning. We have new, uh, into a new data on terrorists. We'll see how that unfolds and obviously there's a competition as well.

José Boisjoli: 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 the strong lineup that we have in all of the product categories.

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 the strong lineup that we have in all of the product categories.

Our uh how are other oems 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. But again, with 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 in in all the product categories.

Philippe Deschenes: Very helpful. Thank you. And also, let me offer José my good luck in future endeavors. Thank you.

José Boisjoli: Thank you.

Very helpful. Thank you. And also let me uh offer Jose, my my uh, good luck uh in uh in future endeavors. Thank you.

Thank you.

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

Philippe Deschenes: Yeah. Thanks very much. And 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 CD 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?

Brian Morrison: Yeah. Thanks very much. And 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 CD 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?

Your next question comes from Brian Morrison with TD Cowen. Your line is now open.

Yeah, thanks very much. And just say, it's 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, um,

And snowmobiles, can you just maybe let us know how CD6 is shaping up as we enter into the season? With respect to OVS, how has the initial reception been regarding the discounting of your entry-level product line?

José Boisjoli: 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 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, there was an overall reception.

Yeah, 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 very happy with where we sit. Um, 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, uh, 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.

From my current point of view, the lineup we have is obviously very strong.

And the orders that we got from the dealers uh at our club in August, also uh provide us a good outlook for next year. So we were sitting at 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. Just to give you a sense, on side-by-side, our premium unit 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 the export was down mid-single-digit. And you can see the trend don't change. Our household customer, 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.

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. Just to give you a sense, on side-by-side, our premium unit 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 the export was down mid-single-digit. And you can see the trend don't change. Our household customer, 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.

Um, just to give you some statistics, the new trend in Q3 was 21%, about in line with the pre-COVID level.

And premium sells better than value. That just gives 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 up load the voltage when recsport was down mid single digit. And you can see

The trend don't change, uh our household customer household income of our customer high at 175,000 us. Then the same Trend continued.

José Boisjoli: But overall, our lineups are more high-end than low-end, and it's very good for us.

But overall, our lineups are more high-end than low-end, and it's very good for us.

Philippe Deschenes: Right. Hey, Seb, 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 with the NCIB in the near term.

Brian Morrison: Right. Hey, Seb, 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 with the NCIB in the near term.

The beauty of all this, uh, it's 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, uh, it's very good for us.

Right. Okay so 1, follow-up question if I can you uh, you renew 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, in the near term,

José Boisjoli: 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 USD of debt and also the repricing, where it provides us a big tailwind of $0.30 next year. So I couldn't ask for a better result from our treasurer and our legal team. Really happy with the outcome. 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.

Yeah, our target leverage for the end of the year is probably in the range of 2 times net debt to EBITDA.

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,

Just a few months ago with the repayment of a hundred million dollars US of debt and uh, also the repricing where is it provides us a big deal when 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. Uh,

Waiting to see where the overall uh economy is going to go trade, Etc.

José Boisjoli: Our intention is to be active on the NCIB in the next few weeks.

Our intention is to be active on the NCIB in the next few weeks.

Philippe Deschenes: Have great holiday season. 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.

José Boisjoli: Yep. Yep.

Have a great holiday season, thank you.

You're cute.

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

Sébastien Martel: Great. Thanks. 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. Operating leverage is obviously a potential part of the story going forward. So just are you back to something resembling normal production, or whereabouts will your factories be for the next year based on?

Sabahat Khan: Great. Thanks. 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. Operating leverage is obviously a potential part of the story going forward. So just are you back to something resembling normal production, or whereabouts will your factories be for the next year based on?

Your next question comes from sibaja Khan. With RBC Capital markets, your line is now open.

José Boisjoli: We'll still be below average asset utilization rates. Again, I talked about a tailwind of, I would say, CAD 400 to 500 million of revenue. It still would bring us in the probably lowest of any 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 for you but the margin 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 where about where your factories be for the next year, based on. So we'll still be, uh, we'll still be, uh, below average asset utilization rate. Uh, you know, and I talked about it till when of, uh, let's say 400 to 500 million dollars of Revenue, uh, and would still would bring us in the probably low. 700, yes, that utilization.

Sébastien Martel: Great. 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.

Sabahat Khan: Great. 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 I just talked about, you know, the terrorists might evolve, but is this more the idea that look

José Boisjoli: It really all depends. It's tough to speculate. 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 customs 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 customs 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.

Anything additional might just have to be sort of worked through via efficiencies, or is pricing on the table as well, depending on how Terrace evolves. Thanks very much.

It it really all depends.

Uh, to reality on.

Uh on what components it impacts on the flexibility. We have with suppliers can re relocate Parts Etc. But what I can say is that uh,

Our teams, our custom Brokers are getting smarter more sophisticated. Um, 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, the, the better processes we have, uh, and better collaboration. We have with the various, uh partners.

Sébastien Martel: Great. Thanks very much and all the best, José. Thank you.

Sabahat Khan: Great. Thanks very much and all the best, José. Thank you.

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.

José Boisjoli: Thank you.

Great. Thanks very much and all the best chosen. Thank you, thank you.

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

Robin Farley: Thanks. Good morning. 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 2027 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.

Luke Hannan: Thanks. Good morning. 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 2027 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.

Your next question comes from Luke Hannon with Canaccord Genuity. Your line is now open.

José Boisjoli: 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.

7 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 fed 1.

Yep, that's correct. Because I mentioned again we uh the teams obviously is a huge focus of us.

Uh, and um, we worked on.

Finding ways to reduce the overall exposure. Uh,

Robin Farley: Got it. Very helpful. Thanks. Then from my follow-up here, the higher level. When we think about the bridge between the new raise guidance that you just put out there and then the M28 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 2028 as well. Can you just help us think from a high level what should be the bigger drivers of EPS growth during Fiscal 2027 versus 2026?

Luke Hannan: Got it. Very helpful. Thanks. Then from my follow-up here, the higher level. When we think about the bridge between the new raise guidance that you just put out there and then the M28 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 2028 as well. Can you just help us think from a high level what should be the bigger drivers of EPS growth during Fiscal 2027 versus 2026?

and uh, it's a very positive outcome and so my expectation is that we should be flattish next year.

José Boisjoli: Well, for next year, I gave you well, are you talking calendar or you're talking fiscal?

Got it, very helpful, thanks. And then so much for my follow-up here, the higher level when we think about the bridge between the, the new race guidance that you just put out there and then the mission 2028 Target of of 8 dollars of eps. And then we also factor in the the mid to high TPS growth. Roughly speaking that we should expect for next year. It does imply 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.

Robin Farley: Fiscal year. Yeah.

Luke Hannan: Fiscal year. Yeah.

José Boisjoli: So I gave you the fiscal detail. So the drivers, obviously, in the base case is mainly the tailwind coming from retail equal wholesale. 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 uh retail equal wholesale.

But then, when you look at 28, obviously there's a lot of elements, the market share gains from 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, 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.

Robin Farley: Very helpful. Thanks. And all the best, José.

Luke Hannan: Very helpful. Thanks. And all the best, José.

José Boisjoli: Thank you.

Very helpful. Thanks and and all the best Jose.

Thank you.

Operator: Your next question comes from Xian Siew with BNP Paribas. Your line is now open.

Your next question comes from xan Sue with BNP paraba your line is now open.

José Boisjoli: 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. And 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 in the next year or so? I mean, we don't want to start to split quarters because it will be complicated. But we were talking more about off-road. Basically, we introduced very good novelty for model year 2026. And those products were introduced in August at the club. We started production the day after.

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. And 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 in the next year or so? I mean, we don't want to start to split quarters because it will be complicated. But we were talking more about off-road. Basically, we introduced very good novelty for model year 2026. And those products were introduced in August at the club. We started production the day after.

Thanks guys. Um, could you talk maybe a little bit about how

Retail and market share.

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 what the exit rate improving, does that give you kind of more confidence and potential market share gains within the next year or so.

I mean, I don't, we don't want to start to split quarters, uh, because it will be complicated. But we were talking more about off-road. Basically, we introduced very, uh, good.

For model year 26.

José Boisjoli: 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. Then it's more a timing of new model hitting the dealership. What I'm happy with is in November, the trend continued. This is promising for the remaining of the fiscal year.

And those products were introduced in August. At the club, we started production the day after. Basically, the time that you produce, you ship to the dealer PDI (Pre-Delivery Inspection), 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, that is more a timing of new model heating.

Robin Farley: Okay. Very helpful. Sorry. Go ahead. On the utilization rate, I think you mentioned in the 70% next year. Can you maybe just remind us this year what is the utilization rate and how so that we can kind of calibrate as utilization steps up, how we think about margin benefits?

Xian Siew: Okay. Very helpful. Sorry. Go ahead. On the utilization rate, I think you mentioned in the 70% next year. Can you maybe just remind us this year what is the utilization rate and how so that we can kind of calibrate as utilization steps up, how we think about margin benefits?

The the dealership what I'm happy with is in November, the trend continue and this is uh providing for the remaining of the the fiscal year.

Okay, very helpful and then maybe uh yeah, sorry go ahead.

José Boisjoli: 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 so that we can kind of calibrate, you know? Um, as utilization steps up, how how we think about margin benefits?

Yeah, we're in the average of 65% utilization rate this year.

Robin Farley: Okay. Great. Thank you. Good luck.

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

Craig Kennison: Yeah. Thanks, Seb. Good morning. 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. 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 revenue from the alignment of retail and wholesale, or is that kind of incorporated into that assumption?

Cameron Doerksen: Yeah. Thanks, Seb. Good morning. 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. 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 revenue from the alignment of retail and wholesale, or is that kind of incorporated into that assumption?

Cameron doerksen with National Bank, your line is now open.

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.

José Boisjoli: 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. And that obviously is going to be a good tailwind for the back half of fiscal year 2027. 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.

It feels like this could be a very, you know, a very nice Tailwind for you. Uh, in fiscal 2027, 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?

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 in, obviously have will have great product news next year as well.

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 27. So, um, but we always like to plan snowmobile conservatively, because it's very dependent on snowfall.

Craig Kennison: Okay. No, that's good. That's helpful. And Seb, just a, I guess, just a clarification, I guess, on the remaining marine sale, the Telwater, I think José you 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 $200 million that you would expect from that. Have I got that right? And if not, what is the expected cash inflow from that?

Cameron Doerksen: Okay. No, that's good. That's helpful. And Seb, just a, I guess, just a clarification, I guess, on the remaining marine sale, the Telwater, I think José you 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 $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, and uh, and so again, every uh, every inch of snow is, uh, is more units than get retail. So we'll take it.

José Boisjoli: Well, obviously, we have a good offer from Yamaha for that asset. In the ballpark, it's around that amount of expected cash inflow from the proceeds that is expected.

Okay. No, that's good. That that that's helpful and and some just to I guess just a clarification, I guess on the remaining uh 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 that you would expect from that is, is have I got that right? And and if not what what is the expected cash inflow from that?

Well, uh, obviously we have, uh, a good offer from, uh, Yamaha for that asset. Uh, and the ballpark is around that amount of expected cash and flow from the proceeds.

Craig Kennison: Okay. So that would come in Q4, assuming that the regulator approves it?

Cameron Doerksen: Okay. So that would come in Q4, assuming that the regulator approves it?

Um, that is expected.

José Boisjoli: Yes. It would come into Q4 or early Q4.

Okay, so it is that that would come in in Q4 assuming that the regulator approves it. Yep. It would come into Q4 or early. Yeah.

Craig Kennison: Okay. Perfect. Thanks very much.

Cameron Doerksen: Okay. Perfect. Thanks very much.

Okay, perfect. Thanks very much.

Operator: Your next question comes from Jamie Katz with Morningstar. Your line is now open.

Jamie 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?

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 Caps with Morningstar. Your line is now open.

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 were 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.

José Boisjoli: Yeah. Nothing special to call out for this year. Obviously, we are diligent in our CapEx spend. 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.

Yeah nothing special to call out for this year. Obviously we are diligent in 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.

Jamie Katz: 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 getting them to convert sales? Is it promotions, innovation, financing deals, some mix of that all? Just curious what's motivating consumers the most right now.

Jaime Katz: 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 getting them to convert sales? Is it promotions, innovation, financing deals, some mix of that all? Just curious what's motivating consumers the most right now.

And for next year um probably in the range of uh let's see. For 420 million is the 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 in 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 the product and Technology.

okay, and then I I don't know that this was called out, but for new to Brand consumers, is there anything noteworthy on what is, um,

José Boisjoli: 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, some mix of that all. Um just curious, what's what's motivating consumers? The most right now.

Uh, I'd say innovation is what's motivating customers the most, uh,

obviously with, uh,

With, uh, products that have been out there in the market for quite a bit of time, uh, discounts can drive consumers, but, uh,

Jamie Katz: Excellent. Thanks.

Jaime Katz: Excellent. Thanks.

For new to be RP. 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 uh, the conversion from other brands.

Excellent. Thanks.

Operator: Your next question comes from Ellie Latt with BMO Capital Markets. Your line is now open.

Ellie Latt: 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.

[Analyst] (BMO Capital Markets): 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, with BMO Capital Markets. Your line is now open.

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?

José Boisjoli: Yeah. 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 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. And so overall leverage is very comfortable. And 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,

the implied value is we, we like to return Capital to shareholders. 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.

Comfortable. And I don't feel that we need to reduce the overall debt level.

Ellie Latt: 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?

[Analyst] (BMO Capital Markets): 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?

José Boisjoli: 1.5 to 2x leverage.

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 1 to 2 times.

Ellie Latt: 1.5x to 2x. Okay. All right. Thank you.

[Analyst] (BMO Capital Markets): 1.5x to 2x. Okay. All right. Thank you.

1.5 to 2 times Leverage.

José Boisjoli: Thank you.

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 star 1.

José Boisjoli: 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?

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?

Your next, your next question comes from. Jonathan Goldman with Scotia Bank, your line is now open

Hi. Good morning, and thanks for taking my questions. Um, most of them have been asked, but maybe just to clarify 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?

José Boisjoli: 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.

Uh, well, again our plan, if you look at the m28 Target, we send modish share gains and the orb segments. Uh, so yeah. It does Factor, uh, a bit of share gains next year.

um,

José Boisjoli: Okay. Perfect. Thanks for that. And 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?

Jonathan Goldman: Okay. Perfect. Thanks for that. And 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?

But it would be, uh, a modest impact.

Okay, 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.

José Boisjoli: 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. 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. So I do not expect huge operational leverage coming from OpEx, maybe, let's say, 50 basis points, which could bring us to a 14% dividend margin on the base case.

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,

and so from asset utilization and cost efficiency that should drive margins up, we are expecting as well to, uh, continue investing in, uh, in the business or R&D marketing. So, I'm do not expect a huge operational. Leverage coming from Opex, maybe let's say 50 bits.

Which could bring us to a 14% if it's a margin on the base case.

José Boisjoli: Okay. Perfect. I appreciate the color. Thanks.

Jonathan Goldman: Okay. Perfect. I appreciate the color. Thanks.

Okay, perfect. I appreciate the color, thanks.

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

José Boisjoli: Thank you, Joel. 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.

Philippe Deschenes: Thank you, Joel. 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.

Darno for the questions. At this time, 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 very well. 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 or earnings and marks. 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 lines.

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