Q4 2026 BRP Inc Earnings Call

March 26, 2026

Speaker 0: Good morning, ladies and gentlemen. Welcome to the BRP Inc.'s fiscal year 2026 Q4 results conference call. For participants who use the telephone line, it is recommended to turn off the sound on your device. I will now like 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 fiscal year 2026 Q4 results conference call. For participants who use the telephone line, it is recommended to turn off the sound on your device. I will now like turn the meeting over to Mr. Philippe Deschênes. Please go ahead, Mr. Deschênes.

Speaker #2: I would now like to turn the meeting over to Mr. Philippe Deschnes. Please go ahead, Mr. Deschnes. Thank you, Julie. Good morning, and welcome to BRP's conference call for the fourth quarter of fiscal year '26.

Philippe Deschênes: Thank you, Julie. Good morning, and welcome to BRP's conference call for Q4 of fiscal year 2026. Joining me this morning are Denis Le Vot, 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 update. Also, during the call, reference will be made to supporting slides, and you can find the presentation on our website at brp.com under the investor relations section. With that, I'll turn the call over to Denis.

Speaker #2: Joining me this morning are Denis Levat, 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: 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.

Speaker #2: 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.

Speaker #2: So, with that, I'll turn the call over to Denis.

Speaker #3: Well, thank you, Philippe. Good morning, everyone, and thank you for joining us. I'm truly honored to be here today as the new CEO of BRP.

Denis Le Vot: Well, thank you, Philippe. Good morning, everyone, and thank you for joining us. I'm truly honored to be here today as the new CEO of BRP. Although I've only been here in my role for two months, I can see how José Boisjoli and the team contributed to building an exceptional company and move our industry forward in meaningful ways. I am excited to lead the next chapter of this great organization built on solid foundation and deep-rooted values. Since joining BRP, I have spent my time diving into the business, meeting our talented employees, visiting our sites, and engaging with our dealers, distributors, and partners. Last week, I had the chance to ride our side-by-side vehicle and personal watercraft in Palm Bay, and believe me, that was quite an experience.

Speaker #3: Although I've only been here in my role for two months, I can see how Jos Boisjoli and the team contributed to building an exceptional company and move our industry forward in meaningful ways.

Speaker #3: I am excited to lead the next chapter of this great organization built on solid foundations and deep-rooted values. Since joining BRP, I have spent my time diving into the business, meeting our talented employees, visiting our sites, and engaging with our dealers, distributors, and partners.

Speaker #3: Last week, I had the chance to ride our side-by-side vehicle and personal watercraft in Palm Bay, and believe me, that was quite an experience.

Speaker #3: My views will continue to evolve as I refine my understanding of the business, but so far, I am energized by the passion I've seen and the immense potential ahead of us.

Denis Le Vot: My views will continue to evolve as I refine my understanding of the business, but so far, I am energized by the passion I've seen and the immense potential ahead of us. It is already clear to me that BRP has a proud legacy, a culture of innovation and excellence, and a unique position as a leading powersports OEM poised for continued growth. I'm happy to share with you the solid results our team delivered, starting with a look at fiscal 2026 highlights on slide number 4. Looking at the past year, I am impressed with how the company managed through a volatile tariff environment and challenging competitive landscape as the other OEMs were still working through excess inventory. Despite these headwinds, we delivered financial results above our initial expectation for the year and continued prioritizing our business relationships with dealers by making great strides in right-sizing our network inventory.

Speaker #3: It is already clear to me that BRP has a proud legacy, a culture of innovation and excellence, and a unique position as a leading parasports OEM poised for continued growth.

Speaker #3: I'm happy to share with you the solid results our team delivered, starting with a look at fiscal 26 highlights on slide number four. Looking at the past year, I am impressed with how the company managed through a volatile tariff environment and challenging competitive landscape, as the other OEMs were still working through excess inventory.

Speaker #3: Despite these headwinds, we delivered financial results above our initial expectations for the year, and continued prioritizing our business relationships with dealers by making great strides in right-sizing our network inventory.

Speaker #3: Additionally, several steps have been taken to strengthen the long-term prospects of our business, such as the introduction of several new key models, the divestiture of two of our marine businesses, and the introduction of our M28 strategic plan.

Denis Le Vot: Additionally, several steps have been taken to strengthen the long-term prospects of our business, such as the introduction of several new key models, the divestiture of two of our marine businesses, and the introduction of our Mission 28 strategic plan. BRP is in a solid position heading into fiscal 2027. Now, let's take a look at the year's financial results on slide 5. We ended fiscal 2026 with revenues of CAD 8.4 billion, normalized EBITDA of CAD 1.1 billion, and normalized EPS of CAD 5.21, all coming in above guidance. Additionally, we generated solid free cash flow of more than CAD 900 million, ending the year with a strong balance sheet. Turning to more operational elements, we concluded the year with a healthy network inventory position, as you can see on slide 6.

Speaker #3: BRP is in a solid position heading into fiscal 27. Now, let's take a look at the year's financial results on slide number five. We ended fiscal 26 with revenues of 8.4 billion, normalized EBITDA of 1.1 billion, and normalized EPS of 521 dollars, all coming in above guidance.

Speaker #3: Additionally, we generated solid free cash flow of more than 900 million, ending the year with a strong balance sheet. Turning to more operational elements, we concluded the year with a healthy network inventory position.

Speaker #3: As you can see on slide number six. In North America, our dealers' inventory was down 17% from a year ago, and down 28% over two years.

Denis Le Vot: In North America, our dealers' inventory was down 17% from a year ago and down 28% over two years. We reached optimal levels for ORV and snowmobile following a good quarter at retail, and we are progressing toward these levels for the other product lines. We are now positioned to better align wholesale with retail in fiscal 2027 and to capture market demand when the industry returns to growth. Now, turning to our retail performance by looking at global trends on slide 7. We had a solid quarter with our North American powersports retail increasing 12%, fueled by positive industry trends and market share gains in ORV and snowmobiles. Actually, we delivered a record Q4 performance in ORV in Canada. Let's look at the other regions.

Speaker #3: We reached optimal levels for ORV and snowmobile, following a good quarter at retail. And we are progressing toward these levels for the other product lines.

Speaker #3: We are now positioned to better align wholesale with retail in fiscal 27, and to capture market demand when the industry returns to growth. Now, turning to our retail performance by looking at global trends on slide number seven.

Speaker #3: We had a solid quarter with our North American parasport retail increasing 12%, fueled by positive industry trends and market share gains in ORV and snowmobiles.

Speaker #3: Actually, we delivered a record Q4 performance in ORV in Canada. Let's look at the other regions. Markets in EMEA remain relatively muted, with slight growth in ORV and PWC, but offset by snowmobile trends in Scandinavia due to unfavorable snow conditions.

Denis Le Vot: Markets in EMEA remain relatively muted with slight growth in ORV and PWC, but offset by snowmobile trends in Scandinavia due to unfavorable snow conditions. As a result, we lag the broader industry given our important snowmobile business in the region. Meanwhile, our retail was up 1% in both Latin America and Asia Pacific, primarily driven by a strong end-of-season for PWC in these markets. This notably led our strongest retail quarter ever in Brazil. Overall, we saw global trends continuing to improve in Q4 with industry growth in all regions. Now, turning to slide number 8 for a look at our North American retail performance by product line. As mentioned, we had a very strong quarter with our retail up 12% and market share gains across the portfolio.

Speaker #3: As a result, we lag the broader industry given our important snowmobile business in the region. Meanwhile, our retail was up 1% in both Latin America and Asia Pacific, primarily driven by a strong end-of-season for PWC in these markets.

Speaker #3: This notably led to our strongest retail quarter ever in Brazil. Overall, we saw global trends continuing to improve in Q4, with industry growth in all regions.

Speaker #3: Now, turning to slide number eight for a look at our North American retail performance by product line. As mentioned, we had a very strong quarter with our retail up 12% and market share gains across the portfolio.

Speaker #3: The side-by-side industry remains healthy, up low single digits in the quarter, driven by the utility segment reflecting the growing adoption of CAB units. Can-Am performed remarkably well, with retail up high single digits, thanks to the success of the new Defender HD11.

Denis Le Vot: The side-by-side industry remains healthy, up low single digits in the quarter, driven by the utility segment reflecting the growing adoption of cab units. Can-Am performed remarkably well with retail up high single digits, thanks to the success of the new Defender HD11. For ATV, the industry was down mid-single digits, but up when excluding used models. Can-Am significantly outpaced the industry again with retail up low teens percent, driven by market share gains in the high CC segment following recent product introductions. As for the snowmobiles, the industry was up mid-teens from a weak Q4 last year. Even though we were competing against a high level of discounted and aged network inventory from other OEM, we again outpaced the industry in the quarter. Moreover, a few weeks ago, we launched our new Ski-Doo and Lynx lineups for the upcoming season.

Speaker #3: For ATV, the industry was down mid-single digit, but up when excluding used models. Can-Am significantly outpaced the industry again, with retail up low 10%, driven by market share gains in the high CC segment, following recent product introductions.

Speaker #3: As for the snowmobiles, the industry was up mid-teen, from a weak Q4 last year. Even though we were competing against high levels of discounted and aged network inventory from other OEMs, we again outpaced the industry in the quarter.

Speaker #3: Moreover, a few weeks ago, we launched our new SKIDU and Lynx lineups for the upcoming season, once again we are by far offering our rider and dealers the most innovation in the industry, with improved performance, comfort, and features.

Denis Le Vot: Once again, we are by far offering our rider and dealers the most innovation in the industry with improved performance, comfort, and features. With our strong retail momentum, healthy end-of-season inventory levels, and exciting new lineups, we are well-positioned to further extend our leadership in the snowmobile industry. Finally, Q4 was off-season for three-wheel vehicles, personal watercraft, and pontoons. Retail trends were softer than last year, notably due to an extended winter season. We will get a better picture of market demand when core retail season begins in late April. Before concluding on retail, I want to further emphasize the strong impact of our new ORV models on our retail momentum on slide 9. As I said earlier, we significantly outpaced the ORV industry in Q4, a trend that began in October when our new models were reaching dealer showroom.

Speaker #3: With our strong retail momentum, healthy end-of-season inventory levels, and exciting new lineups, we are well positioned to further extend our leadership in the snowmobile industry.

Speaker #3: Finally, Q4 was off-season for three-wheel vehicle personal watercraft and pontoons, retail trends were softer than last year, notably due to an extended winter season.

Speaker #3: We will get a better picture of market demand when core retail season begins in late April. Before concluding on retail, I want to further emphasize the strong impact of our new RV models on our retail momentum on slide number nine.

Speaker #3: As I said earlier, we significantly outpaced the ORV industry in the fourth quarter, a trend that began in October when our new models were reaching dealers' showroom.

Speaker #3: Since then, our SSV retail has been up about 10%. In fact, we have achieved our highest third and fourth quarter market share ever in utility: the largest and fastest growing side-by-side segment.

Denis Le Vot: Since then, our SSV retail has been up about 10%. In fact, we have achieved our highest Q3 and Q4 market share ever in utility, the largest and fastest-growing side-by-side segment. We had also announced the repricing of certain model year 2026 SSV, and this decision is paying off so far, resulting in a market share gain of almost four points for this model in Q4. As for ATV, the revamped Outlander platform and recently introduced high CC models led to a market share gain of almost nine points in this category. These achievements show the importance of innovation, which has always been part of BRP's DNA and a driving force behind its continued success. On that, I turn the call over to Sébastien.

Speaker #3: We had also announced the repricing of certain model year 26 SSV, and this decision is paying off so far, resulting in a market share gain of almost four points for this model in Q4.

Speaker #3: As for ATV, the revamped Outlander platform and recently introduced high CC models led to a market share gain of almost nine points in this category.

Speaker #3: These achievements show the importance of innovation, which has always been part of BRP's DNA and a driving force behind its continuous success. On that, I turn the call over to Sébastien.

Speaker #2: Thank you, Denis, and welcome to your first BRP earnings call. And good morning, everyone. Driven by robust consumer demand across our lineups and solid execution throughout the organization, we closed the year on a strong note, delivering results ahead of expectations.

Sébastien Martel: Thank you, Denis, and welcome to your first BRP earnings call. Good morning, everyone. Driven by robust consumer demand across our lineups and solid execution throughout the organization, we closed the year on a strong note, delivering results ahead of expectations. Looking at the numbers, revenue grew 16% to CAD 2.5 billion, with solid double-digit growth across all product categories. The increase was primarily driven by personal watercraft, snowmobile, and ORV shipment, a favorable product mix, and positive pricing net of sales programs. Before moving into the profitability metrics on the following slide, I want to briefly address the impairment charge recorded this quarter. As discussed in the past, we entered the EV and light mobility markets during a period of rapid expansion, investing in these areas with a long-term mindset. Since then, adoption has slowed and market dynamics have become more challenging.

Speaker #2: Looking at the numbers, revenue grew 16% to $2.5 billion, with solid double-digit growth across all product categories. The increase was primarily driven by personal watercraft, snowmobile, and ORV shipments.

Speaker #2: A favorable product mix and positive pricing, net of sales programs. Before moving into the profitability metrics on the following slide, I want to briefly address the impairment charge recorded this quarter.

Speaker #2: As discussed in the past, we entered the EV and light mobility markets during a period of rapid expansion, investing in these areas with a long-term mindset.

Speaker #2: Since then, adoption has slowed and market dynamics have become more challenging. Given the reduced outlook for returns on our investments, we recorded an impairment charge on our EV and light mobility assets during the quarter.

Sébastien Martel: Given the reduced outlook for returns on our investments, we recorded an impairment charge on our EV and light mobility assets during the quarter. Still, as previously mentioned, our intention remains to continue selling EV products we have already developed while limiting the annual financial impact to CAD 25 million. Looking at gross profit. Excluding the impact of some of the EV write-down classified as cost of sales, the gross profit was CAD 582 million, representing a margin of 23.7%, up 380 basis points from last year. The improvement was driven by better capacity utilization, lower sales programs, and favorable pricing, partly offset by tariffs, higher warranty expense, and the return of variable compensation. Normalized EBITDA increased 47% to CAD 364 million, and normalized EPS more than doubled to CAD 2.21.

Speaker #2: Still, as previously mentioned, our intention remains to continue selling EV products we have already developed, while limiting the annual financial impact to $25 million.

Speaker #2: Looking at gross profit, excluding the impact of some of the EV write-down classified as cost of sales, the gross profit was $582 million, representing a margin of 23.7%, up 380 basis points from last year.

Speaker #2: The improvement was driven by better capacity utilization, lower sales programs, and favorable pricing, partly offset by tariffs, higher warranty expense, and the return of variable compensation.

Speaker #2: Normalized EBITDA increased 47% to $364 million, and normalized DPS more than doubled to $2.21. These results translated into robust cash generation, as shown on slide 13.

Sébastien Martel: These results translated into robust cash generation, as shown on slide 13. In fact, we delivered our strongest year ever, generating over CAD 900 million of free cash flow from continuing operations. With these strong results and the proactive steps we took last fall to strengthen our debt structure, we ended the year with a solid balance sheet, including over CAD 400 million in cash and a net leverage ratio of just 1.8 times. Combined with our strong retail performance and solid outlook for the business, this positions us well with the financial flexibility to continue investing in our growth while accelerating capital returns to shareholders. As such, we announced a 16% increase to our dividend and plan to be active with buybacks with over 2.6 million shares still authorized for repurchase under our NCIB.

Speaker #2: In fact, we delivered our strongest year ever, generating over $900 million of free cash flow from continuing operations. With these strong results and the proactive steps we took last fall to strengthen our debt structure, we ended the year with a solid balance sheet, including over $400 million in cash and a net leverage ratio of just 1.8 times.

Speaker #2: Combined with our strong retail performance and solid outlook for the business, this positions us well with the financial flexibility to continue investing in our growth while accelerating capital returns to shareholders.

Speaker #2: As such, we announce a 16% increase to our dividend and plan to be active with buybacks with over $2.6 million shares still authorized for repurchase under our NCIB.

Speaker #2: Now turning to slide 14 for an outlook for our guidance. We entered fiscal 27 with strong momentum, supported by solid retail growth in Q4 and continued robust demand for our newly introduced models across the portfolio.

Sébastien Martel: Now turning to slide 14 for an outlook for our guidance. We entered fiscal 2027 with strong momentum, supported by solid retail growth in Q4 and continued robust demand for our newly introduced models across the portfolio. In addition, with our network inventory rightsizing largely behind us, we are well-positioned to benefit from the improved alignment between wholesale and retail. With these factors in mind, we are on an even better trajectory than we thought we would be when we reported our Q3 results back in December and entered fiscal 2027 positioned to deliver north of $6 of normalized EPS. However, as you know, events in the recent weeks have increased uncertainty around the broader environment, making it more challenging to anticipate how market conditions may evolve.

Speaker #2: In addition, with our network inventory right-sizing largely behind us, we are well positioned to benefit from the improved alignment between wholesale and retail. With these factors in mind, we are on an even better trajectory than we thought we would be when we reported our Q3 results back in December.

Speaker #2: And entered fiscal 27 positioned to deliver north of $6 of normalized DPS. However, as you know, events in the recent weeks have increased uncertainty around the broader environment, making it more challenging to anticipate how market conditions may evolve.

Speaker #2: While we are not seeing any material impact on the demand for our products at this time, we have elected to introduce a wider than usual guidance range to reflect potential outcomes should conditions change as the year unfolds.

Sébastien Martel: While we are not seeing any material impact on the demand for our products at this time, we have elected to introduce a wider than usual guidance range to reflect potential outcomes should conditions change as the year unfolds. Consequently, looking at the different scenarios, we expect our revenues to grow between 5% and 8%, our normalized EBITDA between 6% and 16%, and our normalized EPS to end between CAD 5.50 and CAD 6.50. Now looking at how we expect the year to unfold on slide 15. Retail in fiscal 2027 continues to perform well and is tracking in line with our initial plan for the year. This positions for a strong top-line growth in H1, driven by continued market share gains and supported by shipments that are expected to be more aligned with retail following last year's significant network inventory right size.

Speaker #2: Consequently, looking at the different scenarios, we expect our revenues to grow between 5 and 8 percent, our normalized EBITDA between 6 and 16 percent, and our normalized EPS to end between 550 and 650.

Speaker #2: Now looking at how we expect the year to unfold on slide 15. Retail and fiscal '27 continues to perform well and is tracking in line with our initial plan for the year.

Speaker #2: This positions for a strong top-line growth in the first half, driven by continued market share gains and supported by shipments that are expected to be more aligned with retail following last year's significant network inventory right-sizing.

Speaker #2: Revenue growth is expected to moderate in the second half as we lap the initial shipments of last year's significant product introduction and as typical at this time of the year, we take a more conservative view of the snowmobile business for the upcoming season.

Sébastien Martel: Revenue growth is expected to moderate in H2 as we lap the initial shipments of last year's significant product introduction. As typical at this time of the year, we take a more conservative view of the snowmobile business for the upcoming season. Assuming demand continues to track with our plan and incorporating the impact of the recent increases in oil, energy, and commodity prices for the full year, we expect to deliver results in the upper half of our guidance range with normalized EPS of CAD 6 to 6.50, representing 15% to 25% growth over fiscal 2026. While we cannot predict how current events will unfold or whether they may ultimately affect our business, we recognize that they could lead to more uncertainty in the broader economy.

Speaker #2: Assuming demand continues to track with our plan and incorporating the impact of the recent increases in oil, energy, and commodity prices for the full year, we expect to deliver results in the upper half of our guidance range with normalized DPS of 6 to 650, representing a 15 to 25 percent growth over fiscal 26.

Speaker #2: While we cannot predict how current events will unfold or whether they may ultimately affect our business, we recognize that they could lead to more uncertainty in the broader economy.

Speaker #2: As such, we have assessed what it could mean for the business in an alternative scenario where demand gradually softened towards a mid-single-digit industry decline later in the year.

Sébastien Martel: As such, we have assessed what it could mean for the business in an alternative scenario where demand gradually softened towards a mid-single digit industry decline later in the year. In such a case, we expect that the impact on our H1 results would be limited as most of the planned volume is already backed by dealer orders. Any required adjustment would therefore occur primarily in the H2. Factoring in lower volumes, higher sales programs, and the impact of lower variable compensation and alignment of overhead spend to that environment, we expect that our normalized EPS could land within the lower half of our guidance range. Still, based on what we see today across the business, most importantly with retail trends and dealer orders, we continue to track towards the upper half of the guidance range.

Speaker #2: In such a case, we expect that the impact on our first-half results would be limited as most of the planned volume is already backed by dealer orders.

Speaker #2: Any required adjustment would therefore occur primarily in the second half. Factoring in lower volumes, higher sales programs, and the impact of lower variable compensation, and alignment of overhead spend to that environment, we expect that our normalized DPS could land within the lower half of our guidance range.

Speaker #2: Still, based on what we see today across the business—most importantly with retail trends and dealer orders—we continue to track towards the upper half of the guidance range.

Speaker #2: And we are trending towards a strong first half of the year, including normalized EBITDA growth in the 40% range for Q1. All of this supports our confidence in continuing to invest in our long-term growth, while accelerating capital returns to shareholders.

Sébastien Martel: We are trending towards a strong H1 of the year, including normalized EBITDA growth in the 40% range for Q1. All of this supports our confidence in continuing to invest in our long-term growth while accelerating capital returns to shareholders. On that, I will turn the call over back to Denis.

Speaker #2: On that, I will turn the call back over to Denis.

Speaker #1: Thank you, Sébastien. Before concluding, I would like to provide an update on our M28 strategic plan. The team has already progressed on many key strategic initiatives, notably by gaining market share through our new ORV products growing our North American dealer network, expanding our international business, and improving efficiency by unlocking lean value.

Denis Le Vot: Thank you, Sebastian. Before concluding, I would like to provide an update on our Mission 28 strategic plan. The team has already progressed on many key strategic initiatives, notably by gaining market share through our new ORV products, growing our North American dealer network, expanding our international business, and improving efficiency by unlocking lean value. I look forward to working on further progressing on our targets. On the heels of a successful fiscal 2026 and fueled by our Q4 retail momentum, we are stepping into fiscal 2027 with a solid alignment and ready to deliver on our commitments. As mentioned in my introduction, I have met with many of our stakeholders since joining BRP, and they all have this in common, their passion for our products and willingness to contribute to our success.

Speaker #1: I look forward to working on further progressing our targets. On the heels of a successful fiscal '26 and fueled by our Q4 retail momentum, we are stepping into fiscal '27 with solid alignment and are ready to deliver on our commitments.

Speaker #1: As mentioned in my introduction, I have met with many of our stakeholders since joining BRP, and they all have this in common: their passion for our products and willingness to contribute to our success.

Speaker #1: Visiting some dealers allowed me to witness that the network is engaged, and healthy, and that our efforts to improve the dealer sentiment are paying off.

Denis Le Vot: Visiting some dealers allowed me to witness that the network is engaged and healthy and that our efforts to improve the dealer sentiment are paying off, and this is only the beginning. I had a chance to meet with some of our design and engineering colleagues, and I am convinced that we have a strong lineup coming up and an exciting pipeline. Everyone is looking forward to unveiling new innovation later this year and beyond. While the geopolitical environment remains uncertain, we are confident in our ability to adapt and execute on what we can control to continue outpacing our industry. In the longer term, we aim to strengthen BRP's position as a leading global powersports OEM, drive sustained growth, and deliver lasting value for shareholders. I look forward to having the opportunity to further engage with you in the near term.

Speaker #1: And this is only the beginning. I had a chance to meet with some of our design and engineering colleagues, and I am convinced that we have a strong lineup coming up and an exciting pipeline.

Speaker #1: Everyone is looking forward to unveiling new innovation later this year and beyond. While the geopolitical environment remains uncertain, we are confident in our ability to adapt and execute on what we can control, to continue outpacing our industry.

Speaker #1: In the longer term, we aim to strengthen BRP's position as a leading global power source OEM. Drive sustained growth and deliver lasting value for shareholders.

Speaker #1: I look forward to having the opportunity to further engage with you in the near term and on that note, I turn the call over to the operator for questions.

Denis Le Vot: On that note, I turn the call over to the operator for questions.

Speaker #3: Thank you, ladies and gentlemen. If you'd like to ask a question, please press star one on your telephone keypad. If you'd like to withdraw your question, press star two.

Operator 2: Thank you. Ladies and gentlemen, if you'd like to ask a question, please press star one on your telephone keypad. If you'd like to withdraw your question, press star two. Please limit yourself to one question and one follow-up. One moment please for your first question. Your first question comes from Benoit Poirier from Desjardins. Please go ahead.

Operator: Thank you. Ladies and gentlemen, if you'd like to ask a question, please press star one on your telephone keypad. If you'd like to withdraw your question, press star two. Please limit yourself to one question and one follow-up. One moment please for your first question. Your first question comes from Benoit Poirier from Desjardins. Please go ahead.

Speaker #3: Please limit yourself to one question and one follow-up. One moment, please, for your first question. Your first question comes from Benoît Poirier from Desjardins.

Speaker #3: Please go ahead.

Speaker #4: Yep. Thank you very much. And good morning, and welcome on board, Denis. So, obviously, very impressive engineering background in the automotive industry and in a few companies around the globe.

Speaker 10: Yeah. Thank you very much and good morning and welcome on board, Denis. Obviously very impressive engineering background in the automotive industry and in a few companies around the globe. Could you give us your first impression and where do you see the greatest opportunities to bring value on the back of your strong experience?

Benoit Poirier: Yeah. Thank you very much and good morning and welcome on board, Denis. Obviously very impressive engineering background in the automotive industry and in a few companies around the globe. Could you give us your first impression and where do you see the greatest opportunities to bring value on the back of your strong experience?

Speaker #4: So could you give us your first impression and where do you see the greatest opportunities to bring value on the back of your strong experience?

Speaker #5: Well, thank you, Benoît. Thank you very much. And hello, everyone. Yeah, very happy to join. I've been in the car industry and the auto industry for decades.

Denis Le Vot: Well, thank you, Benoit. Thank you very much. And hello, everyone. Yeah, very happy to join. I've been in the car industry and the auto industry for decades. That's true in Europe as well as in North America. I was the head of a Japanese brand in the US a few years ago. I think that when you look at motorsports, there are two folds to your question. The first one is the similarities. There are similarities. This is a big volume industrial business, B to B to C, in which of course you have the same challenges. The value of the brand, relationship with the network, the quality of the product, the competitiveness of the company. This is very, very similar. On that one, I guess I have a huge experience. The second fold, of course, is the differences.

Speaker #5: That's true. In Europe, as well as in North America, I was the head of a Japanese brand in the US a few years ago.

Speaker #5: And I think that when you look at motorsports, there are two folds to your question. The first one is the similarities, the assimilarities. This is a big volume industrial business, B2B2C, in which, of course, you have the same challenges the value of the brand, relationship with the network, the quality of the product, the competitiveness of the company, this is very, very similar.

Speaker #5: And on that one, I guess I have a huge experience. The second fold, of course, is the differences. These are the products. Though I've been riding motorbikes all my life, you don't come to this job like you come to any job.

Denis Le Vot: These are the products, though I've been riding motorbikes all my life, you don't come to this job like you come to any job. You have to be attracted, and I am fully attracted by the products of the company. These are great products. These are dream machines to me, and this is another part of the game which I think is very important, especially on positioning the brand, on the marketing positioning. I'm really excited, you know, to be here.

Speaker #5: You have to be attracted and I am fully attracted by the products of the company. These are great, great, great products. These are dream machines to me and this is another part of the game which I think is very important, especially on positioning the brand, on the marketing positioning, and I'm really excited to be here.

Speaker #4: Okay. That's a great caller. And just for the follow-up question, looking at fiscal year 27, obviously, we saw the forecast, the guidance for fiscal year 27.

Speaker 10: Okay. That's great, caller. Just for the follow-up question, looking at fiscal year 2027, obviously we saw the forecast, the guidance for fiscal year 2027. Could you talk maybe about the assumptions from a tariff standpoint, also in terms of promotional activities and given on what you're tracking so far in terms of market share gain, if there is room to exceed the fiscal year 2028 targets, in terms of side by side and ATVs?

Benoit Poirier: Okay. That's great, caller. Just for the follow-up question, looking at fiscal year 2027, obviously we saw the forecast, the guidance for fiscal year 2027. Could you talk maybe about the assumptions from a tariff standpoint, also in terms of promotional activities and given on what you're tracking so far in terms of market share gain, if there is room to exceed the fiscal year 2028 targets, in terms of side by side and ATVs?

Speaker #4: Could you talk maybe about the assumptions from a tariff standpoint, also in terms of promotional activities, and given on what you're tracking so far in terms of market share gain if there's room to exceed the fiscal year 28 targets in terms of side-by-side and ATVs?

Speaker #5: Yeah, good morning, Benoît. I think I'll start with the last part of your question. I think it's too early to call out whether or not the M28 target—we will exceed it.

Sébastien Martel: Yeah. Good morning, Benoit. I think it's I'll start with the last part of your question. I think it's too early to call out whether or not Mission 28's target we will exceed it. We're certainly focused on delivering it. As you saw Denis's prepared remarks, he covered the accomplishments we've achieved on Mission 28. One thing's for sure is we're happy with the reception that our products have gained in Q4 and with the retail momentum. As I said in my prepared remarks, we're actually ahead of where we thought we would be when we talked back in December. That's good news. The snowmobile season went well. For the puts and takes for next year, obviously we expect EBITDA margin expansion.

Speaker #5: We're certainly focused on delivering it. And as you saw, Denis prepared remarks. He covered the accomplishments we've achieved on M28. One thing's for sure is we're happy with the reception that our products have gained in Q4 and with the retail momentum.

Speaker #5: And as I said in my prepared remarks, we're actually ahead of where we were—where we thought we would be—when we talked back in December.

Speaker #5: So that's good news. Automobile season went well. For the puts and takes, for next year, obviously, we expect EBITDA margin expansion will come from gross margin.

Sébastien Martel: That EBITDA margin expansion will come from gross margin. I'll start with the overhead and the OpEx. We're planning for a little leverage on OpEx as we are making targeted investments in order to achieve Mission 28 objectives. The elements that we covered during the investor meeting in terms of product and also dealer network, the margin growth is gonna certainly come from the added volume now that retail is more balanced with wholesale. The lean initiatives that we have, and there are some tailwind as well coming from programs. What we did build in our guidance, which we had not forecasted initially, was the oil barrel going up from $60 to $100. Our assumption initially was at a $60.

Speaker #5: I'll start with the overhead and the OPEX. We're planning for a little leverage on OPEX as we are making targeted investments in order to achieve N28 objectives.

Speaker #5: The elements that we covered during the investor meeting in terms of product and also dealer network. But the margin growth is going to certainly come from the added volume now that retail is more balanced with wholesale.

Speaker #5: The lean initiatives that we have, and there are some tailwinds as well coming from programs. What we did build in our guidance, which we had not forecasted initially, was the oil barrel going up from $60 to $100.

Speaker #5: So our assumption initially was at a $60. And going to $100 from a freight perspective commodity, is an impact of about 60 basis points that we baked into our guidance.

Sébastien Martel: Going to $100 from a freight perspective, commodity is an impact of about 60 basis points that we baked into our guidance.

Speaker #4: That's perfect. That's a great caller. Thank you very much, for the time.

Speaker 10: That's perfect.

Benoit Poirier: That's perfect.

Sébastien Martel: Yeah.

Speaker 10: That's great, caller. Thank you very much for the time.

Benoit Poirier: That's great, caller. Thank you very much for the time.

Speaker #3: Your next question comes from Robin Farley from UBS. Please go ahead.

Operator 2: Your next question comes from Robin Farley from UBS. Please go ahead.

Operator: Your next question comes from Robin Farley from UBS. Please go ahead.

Speaker #6: Great. Thank you. Just wanted to get more clarity around your guidance. It sounds like you're saying that what you're seeing is actually in the top half of your EPS range and that the sort of entire bottom half would be a change from what you're seeing.

Robin Farley: Great. Thank you. Just wanted to get more clarity around your guidance. It sounds like you're saying that what you're seeing is actually in the top half of your EPS range, and that the sort of entire bottom half would be a change from what you're seeing. I just wanna clarify, you just mentioned that you already do have higher fuel price baked in to the top end of guidance, right? In other words, the current fuel price still puts you in the top end of that guidance. Then-

Speaker #6: But I just want to clarify, you just mentioned that you already do have higher fuel price baked into the top end of guidance, right?

Speaker #6: In other words, the current fuel price still puts you at the top end of that guidance. And then also, if you could give us some color around just what's baked in for your expectation for ORV retail for this year, and how much—you mentioned shipping in line with retail—and then if you could help us quantify sort of the dollar amount of destocking that you're comping.

Sébastien Martel: Yeah.

Robin Farley: Also, if you could give us some color around just what's baked in for your expectation for ORV retail for this year, and like how much you mentioned shipping in line with retail, and then if you could help us quantify sort of the dollar amount of destocking that you're comping. In other words, if you ship in line with retail and retail is flat, you would still be up X amount, you know, just to help us. Thank you.

Speaker #6: So, in other words, if you ship in line with retail and retail's flat, you would still be up X amount, just to help us.

Speaker #6: Thank you.

Sébastien Martel: Yes, on your question, we have baked in the financial impact of a higher barrel cost on our business, obviously. As I mentioned to Benoit, it's about a 60 basis point impact. In terms of industry expectation, we're expecting a flat industry. That's the going-in assumption. Overall for all of the powersports industry, a slight increase there, low single digit for ORV. We are expecting market share gains. ORV, we're expecting market share gains. Snowmobile off a good season, inventory corrected, we're expecting a solid season next year, so that's also baked in. Where we might see a bit of gnarliness is on the market share for personal watercraft. Other OEMs have more inventory. They finish the season higher than they were last year.

Speaker #5: So yes, on your question, we have baked in the financial impact of a higher barrel cost on our business. Obviously, and as I mentioned to Benoît, it's about a 60 basis point impact.

Speaker #5: In terms of industry expectation, we're expecting a flat industry. That's the going assumption. Overall, for all of the powersport industry, a slight increase.

Speaker #5: They're low, low single digit for ORV, and we are expecting market share gains. So ORV, we're expecting market share gains. Snowmobile off a good season.

Speaker #5: Inventory corrected. We're expecting a solid season next year, so that's also baked in. Where we might see a bit of gnarliness is on the market share for personal watercraft.

Speaker #5: Other OEMs have more inventory. They finished the season higher than they were last year, so we might see a bit of market share loss on that front.

Sébastien Martel: We might see a bit of market share loss on that front.

Speaker #5: And as Sebastien, we were saying the first half is already solid by the orders. We get from our dealers. And the gains of market share is already the momentum is already there because the Q4 is really outpacing the market when you come to US, as you ask, SSV, ORV.

Denis Le Vot: As Sébastien was saying, H1 is already solid by the orders we get from our dealers. The gains of market share is already, the momentum is already there because Q4 is really outpacing the market when it comes to US, as you asked, SSV, ORV. We are 12% growth already in the Q4 only.

Speaker #5: We are 12% growth already in Q4 only.

Speaker #6: Okay. Great. Thank you. And then just I didn't know if you could help quantify the destocking benefit to your.

Robin Farley: Okay, great. Thank you. Just, I didn't know if you could help quantify the destocking benefit to your

Speaker #4: Yeah, sorry. There was many questions in your one.

Sébastien Martel: Yeah, sorry. There was many questions in your one question.

Speaker #6: I know. Sorry. It was my multi-point.

Robin Farley: I know, sorry. It was my multi-tasking.

Sébastien Martel: Yeah, the destocking impact, depending on the guidance range, we're talking, let's say +$350 to 450 million positive tailwind that we're getting in next year.

Speaker #5: Yeah, the destocking impact, depending on the guidance range, we're talking, let's say, $350 to $450 million positive tailwind that we're getting in next year.

Sébastien Martel: Yeah, the destocking impact, depending on the guidance range, we're talking, let's say +$350 to 450 million positive tailwind that we're getting in next year.

Speaker #6: Great. Thank you.

Robin Farley: Great. Thank you.

Operator 2: Your next question comes from Sabahat Khan from RBC Capital Markets. Please go ahead.

Operator: Your next question comes from Sabahat Khan from RBC Capital Markets. Please go ahead.

Speaker #3: Your next question comes from Sabahat Khan from RBC Capital Markets. Please go ahead.

Speaker #7: Hey, good morning. This is Arturon. For Sabah. I wanted to start with the EPS guidance, specifically the bottom end of the range. I guess just in terms of your outlook for the back half of the year, can you share how you ended up at the assumption behind the mid-single digit decline outlook?

Speaker 12: Good morning. This is Arthur on for Sabahat Khan. I wanted to start with the EPS guidance, specifically the bottom end of the range. Just in terms of your outlook for the H2, can you share how you ended up at the assumption behind the mid-single-digit decline outlook?

Arthur Nagorny: Good morning. This is Arthur on for Sabahat Khan. I wanted to start with the EPS guidance, specifically the bottom end of the range. Just in terms of your outlook for the H2, can you share how you ended up at the assumption behind the mid-single-digit decline outlook?

Speaker #5: Well, a mid-single digit decline outlook is probably, let's say, a 10% volume reduction in the back half of the year. So 5 to 10 percent for us wholesale reduction.

Denis Le Vot: Well, a mid-single digit decline outlook is probably, let's say, a 10% volume reduction in H2. Five to 10% for us, wholesale reduction. Which we think, again, today is a fair assumption. We don't know where things will go sideways, et cetera. We've lived a few disruptions in the last few years with the war in Ukraine last year, the tariff uncertainty. The assumption we took in a context where economic uncertainty may grow, consumers are under pressure, interest rates do not go down, or even might go up. That's the assumption we took, but obviously there are multiple scenarios we could have run, but we think this is a fair scenario today with what we know. Again, we've already built 60 basis points of headwind coming from higher fuel costs in our numbers.

Speaker #5: Which we think, again, today is a fair assumption. We don't know where things will go, if things will go sideways, etc. We've lived a few disruptions in the last few years with the war in Ukraine, the last year.

Speaker #5: The tariff uncertainty. So again, it's the assumption we took. In a context where economic uncertainty may grow, consumers are being under pressured, interest rates do not go down, or even might go up.

Speaker #5: So that's the assumption we took. But obviously, there are multiple scenarios we could have run. But we think this is a fair scenario today with what we know.

Denis Le Vot: That's the assumption we took, but obviously there are multiple scenarios we could have run, but we think this is a fair scenario today with what we know. Again, we've already built 60 basis points of headwind coming from higher fuel costs in our numbers.

Speaker #5: And again, we've already built 60 basis points of headwind coming from higher fuel costs in our numbers.

Speaker #7: Okay. That's helpful. And then maybe switching to inventory, it seems like your inventory is in a good spot for the most part. Can you just comment on how you feel about your current mix and, I guess, as a follow-up, I think you mentioned you still see elevated levels of non-current inventory from competitors.

Speaker 12: Okay, that's helpful. Maybe switching to inventory. It seems like your inventory is in a good spot for the most part. Can you just comment on how you feel about your current mix? I guess as a follow-up, I think you mentioned you still see elevated levels of non-current inventory from competitors. Can you just talk about maybe what that looks like today compared to the past few quarters?

Arthur Nagorny: Okay, that's helpful. Maybe switching to inventory. It seems like your inventory is in a good spot for the most part. Can you just comment on how you feel about your current mix? I guess as a follow-up, I think you mentioned you still see elevated levels of non-current inventory from competitors. Can you just talk about maybe what that looks like today compared to the past few quarters?

Speaker #7: Can you just talk about maybe what that looks like today compared to the past few quarters?

Speaker #5: Yeah. Well, as you saw on slide six, our inventory is down 17% versus last year, 28% versus two years ago. When I look at even for ORV, our inventory is down prior COVID.

Denis Le Vot: Well, as we saw on slide six, our inventory down 17% versus last year, 28% versus two years ago. When I look at even for ORV, our inventory is down pre-COVID, so lower than before COVID, and our retail has actually gone up by 40%. Again, a super healthy spot. As for the competition and other OEMs, the situation has improved a lot over the last 12 to 18 months. For ORV, we see a few smaller OEMs that still have a lot of inventory, so they're gonna have to work through that. It's not as meaningful as we saw in past years. As I mentioned, for personal watercraft, some OEMs also have a bit more inventory.

Speaker #5: So lower than before COVID. And our retail has actually gone up by 40%. So again, a super healthy spot. As for the competition and other OEMs, the situation has improved a lot over the last 12 to 18 months.

Speaker #5: But for ORV, we see a few smaller OEMs that still have a lot of inventory, so they're going to have to work through that.

Speaker #5: But it's not as meaningful as we saw in past years. And as I mentioned, for personal watercraft, some OEMs also have a bit more inventory.

Speaker #5: But generally, we expect that the environment will lead to a less promotional environment. And that's why we've built a 50 basis point tailwind coming from programs.

Denis Le Vot: Generally, we expect that environment will lead to less promotional environment, and that's why we built a 50 basis point tailwind coming from programs in our numbers for fiscal 2027.

Speaker #5: In our numbers for fiscal 27.

Speaker #7: Got it. That's helpful. And then maybe just on retail sales, last question for me. Another good quarter of share gains. Can you just maybe talk about the uptake of your new product offerings and maybe kind of what your expectations are for that over the coming year?

Speaker 12: Got it. That's helpful. Maybe just on retail sales, last question for me. Another good quarter of share gains. Can you just maybe talk about the uptake of your new product offerings and maybe kind of what your expectations are for that, over the coming year?

Arthur Nagorny: Got it. That's helpful. Maybe just on retail sales, last question for me. Another good quarter of share gains. Can you just maybe talk about the uptake of your new product offerings and maybe kind of what your expectations are for that, over the coming year?

Speaker #5: Yeah, for sure. So, there’s a lot of new product coming in the year, right? But what we can say is that the momentum is based on innovation, right?

Denis Le Vot: Yeah, for sure. There's a lot of new product coming in the year, right? But what we can say is that the momentum is based on innovation, right? This is a healthy momentum that we're having, and the growth that we're posting for next year is based on that. The Ski-Doo is starting very well with the new 600cc engine that we've launched, right? The Rotax, which is a top-notch engine with very low inertia, very responsive, and we have a very good order trend on the Ski-Doo for that reason, right? We also renewed all our platforms on the utility for the Ski-Doos. Of course, the most important innovation in a way is the Defender HD11 we talked about, right?

Speaker #5: So, this is a healthy momentum that we're having, and the growth that we're posting for next year is based on that. The Ski-Doo is starting very well.

Speaker #5: With the new 600 cc engine that we've launched, right, the RR, which is a top-notch engine with very low inertia, very responsive, and we have a very, very good order trend on the Ski-Doo for that reason, right?

Speaker #5: We also renewed all our platforms on the utility for the Ski-Doos. But of course, the most important innovation, in a way, is the Defender HD11 we talked about, right?

Speaker #5: Because Defender HD11 is a complete new platform, new engines. We have new dashboard. We have a 10-inch screen. On an SSV, this is a very big hit.

Denis Le Vot: Because Defender HD11 is a complete new platform, new engines. We have a new dashboard. We have a 10-inch screen on an SSV. This is a very big hit. More importantly, this is the biggest growing segment by far is the cab. We're having a success. We can hardly produce as the demand is growing. This is a very good position that we're having for the future. This is mostly the two that are fueling the growth for 2027.

Speaker #5: And more importantly, this is the biggest growing segment, by far—it’s the cab. And here, we're having success. We can hardly produce as fast as the demand is going.

Speaker #5: So this is a very, very good position that we're having for the future. So this is mostly the two that are fueling the growth for '27.

Speaker #5: Thank you.

Speaker 12: Thank you.

Arthur Nagorny: Thank you.

Speaker #3: Your next question comes from Joe Altobello from Raymond James. Please go ahead.

Operator 2: Your next question comes from Joseph Altobello from Raymond James. Please go ahead.

Operator: Your next question comes from Joseph Altobello from Raymond James. Please go ahead.

Speaker #7: Thanks. Hey, guys. Good morning. Welcome, Denis. I guess first question for you. And it's probably a tough one because you've been in the seat for all of two months here.

Joseph Altobello: Thanks. Hey, guys. Good morning. Welcome, Denis. I guess, you know, first question for you, and it's probably a tough one because you've been in the seat for all of two months here, but, you know, what sort of changes, you know, can we expect at BRP, either strategically or operationally or financially?

Speaker #7: But what sort of changes can we expect at BRP, either strategically or operationally or financially?

Speaker #5: Yeah. It's another tough question. It's a bad question because actually, I don't see the point to make changes. I'm sitting in a company which is growing 7% in revenue to 8.4 billion, as you saw, which is posting 8.9 or 9 billion revenue for next year and also is believing hard in its M28 plan of 9.5 billion revenue, two years down the road.

Denis Le Vot: Yeah, it's not a tough question, it's a bad question. Because actually, I don't see the point to make changes. You know, I'm sitting in a company which is growing 7% in revenue to CAD 8.4 billion, as you saw, which is posting CAD 8.9 or 9 billion revenue for next year, and also is believing hard in its Mission 28 plan of CAD 9.5 billion revenue two years down the road. I don't think that it's the moment for very quick and short-term changes, right? Still, beyond our plan for 2028, there will be the longer term plan that we have to build all together in the company. This is gonna be one of my jobs.

Speaker #5: So I don't think that it's the moment for very quick and short-term changes, right? But still, beyond our plan for 28, there will be the longer-term plan that we have to build altogether in the company.

Speaker #5: And this is going to be one of my jobs. I'm very confident in the short-term position and the business that we are running. I can tell you that the product lineup that I've seen that you haven't seen for the years to come is very, very solid.

Denis Le Vot: I'm very confident in the short-term position and the business that we are running. I can tell you that the product lineup that I've seen, that you haven't seen, for the years to come is very, very solid. This is the chance that I'm having because we have a plan. Our plan is solid, and we believe in it, so it gives me a little time in order to prepare with the team the next longer term plan. This is where potentially there could be a novelty, but this will come in due time.

Speaker #5: And this is the chance that I'm having because we have a plan. Our plan is solid, and we believe in it. So it gives me a little time in order to prepare with the team the next longer-term plan.

Speaker #5: And this is where potentially there could be novelties. But this will come in due time.

Speaker #7: Got it. Very helpful. And just to follow up on that, you mentioned the M28 targets. Glad to hear that you're backing them this morning.

Joseph Altobello: Got it. Very helpful. Just to follow up on that, you mentioned the Mission 28 targets. Glad to hear that you're backing them this morning. If I take the high end of guidance this year on EPS of CAD 6.50, it's quite a leap to CAD 8. Can you remind us what's driving that largely margin expansion in 2028?

Speaker #7: If I take the high end of guidance this year on EPS of $6.50, it's quite a leap to $8. Can you remind us what's driving that largely margin expansion in 28?

Speaker #5: Well, the drive in margin expansion is going to come with a volume growth. Obviously, part of the M28 plan is gains in market share in ORV and especially in side-by-side.

Sébastien Martel: Well, the drive and margin expansion is gonna come with the volume growth. Obviously part of the Mission 28 plan is gains in market share and ORV and especially in side-by-side. With that, it's gonna be fueled by dealer network expansion. As you saw this year, we finished above our target. We have a target of opening new dealers as well in the coming year. It's a combination of volume efficiency gain with the lean initiatives that we have, and also continuing to execute and build dealer engagement around the brand.

Speaker #5: And so with that, we're also it's going to be fueled by dealer network expansion, as you saw this year. We finished above our target.

Speaker #5: We have a target of opening new dealers as well. In the coming year. So it's a combination of volume, efficiency gain with the lean initiatives that we have.

Speaker #5: And also continuing to execute and build dealer engagement around the brand.

Speaker #7: Got it. And can I sneak in one more on tariffs? I think somebody asked this earlier, and I'm not sure we got a number.

Joseph Altobello: Got it. Can I sneak in one more on tariffs? I think somebody asked this earlier, and I'm not sure we got a number, but what was the incremental tariff in 2026, and what's the expected tariff in 2027?

Speaker #7: But what was the incremental tariff in 26, and what's the expected tariff in 27?

Speaker #5: Yeah, the expectation is a flat year-over-year tariff assumption. So we've only built—we did not build anything coming out of the recent Supreme Court ruling in terms of saving.

Sébastien Martel: Yeah. The expectation is a flat year-over-year tariff assumption, so we did not build anything coming out of the recent Supreme Court ruling, in terms of saving. We have a $90 million impact built in our guidance for this year, and it was also ballparked $90 million as well last year. A flattish tariff impact.

Speaker #5: So, we have a $90 million impact built into our guidance for this year, and it was also ballpark $90 million as well last year.

Speaker #5: So a flattish tariff impact.

Speaker #7: Got it. Perfect. Thank you.

Joseph Altobello: Got it. Perfect. Thank you.

Operator 2: Your next question comes from Mark Petrie from CIBC. Please go ahead.

Operator: Your next question comes from Mark Petrie from CIBC. Please go ahead.

Speaker #3: Your next question comes from Mark Petrie from CIBC. Please go ahead.

Speaker #8: Yeah. Good morning. I wanted to ask actually, you just touched on it, Seb, but on the dealer network growth, as you noted, you added a little bit more or a few more than planned for fiscal 26.

Speaker 14: Yeah, good morning. I wanted to ask, actually, you just touched on it, Seb, but on the dealer network growth, as you noted, you added a little bit more or a few more than planned for fiscal 2026. I think the plan was 40 for fiscal 2027. Just update that. Then I'm curious just to hear, you know, anecdotally what sort of reaction you're hearing from your existing dealers. Then any color you can add just with regards to sort of where those dealers are going and a sense of sort of the geographic opportunities.

Mark Petrie: Yeah, good morning. I wanted to ask, actually, you just touched on it, Seb, but on the dealer network growth, as you noted, you added a little bit more or a few more than planned for fiscal 2026. I think the plan was 40 for fiscal 2027. Just update that. Then I'm curious just to hear, you know, anecdotally what sort of reaction you're hearing from your existing dealers. Then any color you can add just with regards to sort of where those dealers are going and a sense of sort of the geographic opportunities.

Speaker #8: I think the plan was 40 for fiscal '27. Just update that. And then I'm curious just to hear anecdotally what sort of reaction you're hearing from your existing dealers.

Speaker #8: And then any color you can add just with regards to sort of where those dealers are going and a sense of, yeah, sort of the geographic opportunities.

Speaker #5: Yeah. Maybe I’ll take this one. We grew in North America, mainly in the US, by 36 dealers this year, right? Of course, you can imagine, with the momentum that we're having on our products, the growth that we're having, this movement is partially natural, if I may say, right?

Denis Le Vot: Yeah. Maybe I take this one. We grew in North America, mainly in the US by 36 dealers this year, right? Of course, you can imagine with the momentum that we're having on our products, the growth that we're having, this movement is partially natural, if I may say, right? We are attractive to dealers. As I said before, the dealer sentiment is increasing, and we work on that. Going forward, as Seb just said, the biggest potential we're having is still in the ORV in North America and especially in the US. The momentum is here, we said, right? With the HD11, with a 12% growth in Q4. This is something that we are working hard on. I would say that apart from this, we are also growing in Brazil.

Speaker #5: We are attractive to dealers, as I said before, the dealer sentiment is increasing, and we work on that. Going forward, as I just said, we still the biggest potential we're having is still in the ORV in North America and especially in the US.

Speaker #5: The momentum is here, we said, right? With the HD11, with a 12% growth in Q4. So this is something that we are hard at work on.

Speaker #5: And I would say that apart from this, we are also growing in Brazil. We are also growing in other zones of the world where we can also expand the size of our dealerships.

Denis Le Vot: We are also growing in other zones of the world where we can also expand the size of our dealerships.

Speaker #5: And to your last question, in terms of dealer feedback, in some states in the US, we are underpenetrated. We haven't expanded our dealer network in the last five, six years.

Sébastien Martel: To your last question, in terms of dealer feedback, in some states in the US, we are under-penetrated. We haven't expanded our dealer network in the last 5, 6 years, and so we were overdue to do it. Most of the dealers that we open are actually existing dealers that decide to open a new rooftop, either by acquiring a dealer and bringing in the brand or adding a rooftop. Given this under-penetration, we're not seeing a lot of friction from the existing dealer base.

Speaker #5: And so we were overdue to do it. And most of the dealers that we open are actually existing dealers that decide to open a new rooftop, either by acquiring a dealer and bringing in the brand or adding a rooftop.

Speaker #5: And so given this underpenetration, we're not seeing any a lot of friction from the existing dealer base.

Speaker #8: Okay, thanks. And then I just wanted to follow up and just sort of clarify—you aren't seeing any reaction from consumers or dealers in the last month or so as macro uncertainties have elevated? Or how have those conversations with the dealers gone or evolved in that timeframe?

Speaker 14: Okay, thanks. I just wanted to follow up and just to sort of clarify, you aren't seeing any reaction from consumers or dealers in the last month or so as macro uncertainties have elevated? Or how are those sort of conversations with the dealers gone or evolved in that timeframe?

Mark Petrie: Okay, thanks. I just wanted to follow up and just to sort of clarify, you aren't seeing any reaction from consumers or dealers in the last month or so as macro uncertainties have elevated? Or how are those sort of conversations with the dealers gone or evolved in that timeframe?

Speaker #5: No, the inventory being low and the momentum being high, we cannot say today that we have a reaction by our dealers on that one, on the country where manufacturing as quickly as we can.

Denis Le Vot: No, the inventory being low and the momentum being high, we cannot say today that we have a reaction by our dealers on that one. On the contrary, we are manufacturing as quickly as we can. From the client standpoint, remember what Motorsports is, right? Our client are rather wealthy households. We are above $150,000 a year, about in the north of that to $170-something a year. That's why, with the team, we decided to have this confirming H1 and being cautious on H2 in our guidance.

Speaker #5: From the client standpoint, remember what Motorsports is, right? Our client, rather wealthy households. We are above 150,000 a year, but in the north of that to 170-something dollars per year.

Speaker #5: So there is probably a distance between what's happening short-term and what the reaction of the market will be. So that's why with the team, we decided to have this confirming the first half of the year and being cautious on the second half of the year in our guidance.

Speaker #8: Yeah. Fair enough. Okay. Appreciate the comments. Welcome, Denny, and all the best.

Speaker 14: Yeah, fair enough. Okay. Appreciate the comments. Welcome, Denis, and all the best.

Mark Petrie: Yeah, fair enough. Okay. Appreciate the comments. Welcome, Denis, and all the best.

Speaker #5: Thanks.

Denis Le Vot: Thanks.

Speaker #3: Your next question comes from Anthony Bonario from Wells Fargo. Please go ahead.

Operator 2: Your next question comes from Anthony Bonadio from Wells Fargo. Please go ahead.

Operator: Your next question comes from Anthony Bonadio from Wells Fargo. Please go ahead.

Speaker #9: Yeah. Hey, good morning, guys. Thanks for taking our questions. So, I wanted to start out with your lean value initiative. I think you guys had another $200 million to go from the original $350 million when you presented to us in October.

Anthony Bonadio: Yeah. Hey, good morning, guys. Thanks for taking our questions. I wanted to start out with your lean value initiative. I think you guys had another CAD 200 million to go from the original CAD 350 when you presented to us in October. Can you just talk about how much benefit you're expecting in fiscal 2027 and maybe how you're thinking about the level of flow through there versus reinvestment at this point?

Speaker #9: So, can you just talk about how much benefit you're expecting in fiscal '27, and maybe how you're thinking about the level of flow-through there versus reinvestment at this point?

Speaker #5: Yeah. Well, obviously, it's a big priority of the team to drive lean. We saw we delivered $150 million last year. The expectation this year is 100 basis points value coming from this lean initiative.

Sébastien Martel: Yeah. Well, obviously, it's a big priority of the team to drive lean. We saw we delivered CAD 150 million last year. The expectation this year is 100 basis points value coming from this lean initiative. So that's what's baked into the guidance. Obviously we are facing inflation as we do every year, and the expectation is that pricing will offset inflationary costs that we see. So globally, I'm happy with how we're tracking, what we're driving. Like, this year, if we deliver the 100 basis point, we'll make delivering the Mission 28 objective certainly achievable for next year.

Speaker #5: So that's what's baked into the guidance. Obviously, we are facing inflation as we do every year, and the expectation is that pricing will be will offset inflationary costs that we see.

Speaker #5: So globally, I'm happy with how we're tracking. What we're driving—and I can say this year, if we deliver the 100 basis points, we'll make delivering the M28 objective certainly achievable for next year.

Speaker #9: Got it, that's helpful. And then just a follow-up question on tariffs. I know there's sort of a refund request process underway. Can you just talk about maybe how you're thinking about getting any of that money back, and just any thoughts on the timeline at this point?

Anthony Bonadio: Got it. That's helpful. Just a follow-up question on tariffs. I know there's sort of a refund request process underway. Can you just talk about maybe how you're thinking about getting any of that money back and just any thoughts on the timeline at this point?

Speaker #5: Yeah. We're not honestly, we're not in a obviously, we like to get the money as quick as possible, but we're going to we're still monitoring.

Sébastien Martel: Yeah, we're not. Honestly, we're not. Obviously we like to get the money as quick as possible, but we're still monitoring. We're gonna see how the process is and the likelihood of capturing it. I'm not a big fan of spending money on lawyers if we're not able to get that money. Obviously we won't leave any money on the table, and once the process is clearly established and the certainty is there, we will obviously file for refunds.

Speaker #5: We're going to see how the process is and the likelihood of capturing it. I'm not a big fan of spending money on lawyers if we're not able to get that money.

Speaker #5: But obviously, we won't leave any money on the table. And once the process is clearly established and the certainty is there, we will obviously file for refunds.

Speaker #9: And it's not in our.

Denis Le Vot: It's not in our

Speaker #5: Yeah. Yeah. And we haven't baked that in our guidance, obviously.

Sébastien Martel: Yeah, we haven't baked that in our guidance, obviously.

Speaker #9: Got it. Thanks so much, guys.

Anthony Bonadio: Got it. Thanks so much, guys.

Operator 2: Your next question comes from Martin Landry from Stifel. Please go ahead.

Operator: Your next question comes from Martin Landry from Stifel. Please go ahead.

Speaker #3: Your next question comes from Martin Landry from Stifel. Please go ahead.

Speaker #10: Hi. Good morning, guys. I was wondering how if there is a correlation between industry demand and oil prices, have you looked at how the industry behaved in past periods of oil shocks?

Martin Landry: Hi, good morning, guys. I was wondering how, you know, if there's a correlation between industry demand and oil prices. Have you looked at how the industry behaved in past period of oil shocks? Just trying to understand a little bit if there's any at all correlations. I understand that so far you haven't seen any impact on demand, but it'd be great to have a little bit more color on if there's any correlation between oil prices and industry demand.

Speaker #10: And just trying to understand a little bit if there's any at all correlations. I understand that so far you haven't seen any impact on demand, but it'd be great to have a little bit more color on if there's any correlation between oil prices and industry demand.

Speaker #5: Yeah, fair question. Martin, obviously, when we look to the last time we saw oil prices this high was when the Ukraine war started, and we did not see an impact on demand.

Sébastien Martel: Yeah, to your question, Martin. Obviously, when we look to the last time we saw oil prices this high was when the Ukraine war started and we did not see an impact on demand. It's all a question of where the barrel goes, how long does it stay there, and what's the impact on the overall economy. I think that's the biggest factor. There's a question of the nature. How big it is, the extent, how long it lasts, and which market is being more impacted. That's why we preferred this morning to issue a kind of lower, wider guidance range and provide a kind of potential downside scenario for the H2.

Speaker #5: It's all a question of where the barrel goes, how long does it stay there, and what's the impact on the overall economy. I think that's the biggest factor.

Speaker #5: So there's a question of the nature. So how big it is, the extent, how long it lasts, and which market is being more impacted.

Speaker #5: So that's why we preferred this morning to issue a kind of a low a wider guidance range and provide a kind of a potential downside scenario for the back half of the year.

Speaker #10: Okay. That's fair. And in light of that, Brent, has gone up a lot more than WTI. So I was wondering, you're talking about your guidance assuming flat industry demand.

Martin Landry: Okay, that's fair. In light of that, you know, Brent has gone up a lot more than WTI. I was wondering, you're talking about your guidance assuming flat industry demand. Can you break that down between regions? Just trying to see what assumptions you've used for North America and then what assumptions you've used for EMEA, Latin America and Asia-Pacific, if possible.

Speaker #10: Can you break that down between regions? Just trying to see what assumptions you've used for North America, and then what assumptions you've used for EMEA, Latin, and Asia-Pacific, if possible.

Speaker #5: Yeah. Again, I think we look at it we do look at it more from a macro level. Our volumes in the Middle East are quite low, less than 1%.

Sébastien Martel: Yeah. Again, I think we look at it more from a macro level. Our volumes in the Middle East are quite low, less than 1%. So obviously we were more pessimistic there. But generally, given that all consumers can be impacted from higher oil prices, from inflation, from interest rates, and given the affluence of our customers is pretty much standard around the world, we decided to apply the similar assumption globally.

Speaker #5: So obviously, we were more pessimistic there. But generally, given that all consumers can be impacted from higher oil prices, from inflation, from interest rates, and given the affluency of our customers, it's pretty much standard around the world.

Speaker #5: We decided to apply the similar assumption. Globally.

Speaker #10: Which would still permit growth. Don't misunderstand. Because last year, it was about snow for Europe. So hopefully, snow will be here this season. We are faced the markets even if they are flattish in Latin America and Asia.

Denis Le Vot: Which will still permit growth, don't misunderstand, because last year it was about snow for Europe, so hopefully snow will be here this season. We outpaced the markets in even if they are flattish in Latin America and Asia. As we said already during the call, our growth in North America will mostly be the market share in the ORVs in the US, so.

Speaker #10: And as we said already during the call, our growth in North America will mostly be the market share in the ORVs in the US.

Speaker #10: So okay, that's helpful. And Denny, welcome.

Martin Landry: Okay, that's helpful. Benoit, welcome.

Speaker #9: Thanks, Martin.

Sébastien Martel: Thanks, Martin.

Operator 2: Your next question comes from Xian Siew from BNP Paribas. Please go ahead.

Operator: Your next question comes from Xian Siew from BNP Paribas. Please go ahead.

Speaker #3: Your next question comes from Xian Su from BNP Paribas. Please go ahead.

Speaker #8: Hi, guys. Thanks for the question. I wanted to ask first about the first quarter you talked about EBITDA being up 40%. Can you maybe give us a little bit more in terms of what's underlying the underlying assumptions for the quarter in terms of revenue, because it does feel like you have kind of a lot of more visibility to 1Q.

Xian Siew: Hi, guys. Thanks for the question. I wanted to ask first about the Q1 you talked about EBITDA being up 40%. Can you maybe give us a little bit more in terms of what's underlying the underlying assumptions for the quarter in terms of like revenue? Because it does feel like, you know, you have kind of a lot more visibility to Q1. Yeah, just curious on on some more guidance on that.

Speaker #8: So yeah, just curious on some more guidance on that.

Speaker #5: Yeah. Certainly, last year, you might recall that it was a quarter where we undershipped because of the inventory depletion, especially on personal watercraft. It's a quarter where we recorded as well provision related to snowmobile.

Sébastien Martel: Yeah, certainly, last year, you might recall that it was a quarter where we undershipped because of the inventory depletion, especially on personal watercraft. It's a quarter where we recorded SWAP provision related to snowmobile. It was a tough snowmobile season. We could see revenues grow quite sizably, obviously to drive this big growth in EBITDA. And also on year-round, we'll be seeing increases as well in terms of overall revenue growth coming from the HD11, the side-by-side and also ORV. Ballpark, you could see a CAD 300 million revenue growth in the quarter, and that obviously is trickling down to solid EBITDA and EPS.

Speaker #5: It was a tough snowmobile season, so we could see revenues grow quite sizably, obviously, to drive this big growth in EBITDA. And also, on year-round, we'll be seeing increases as well in terms of overall revenue growth coming from the HD11, the side-by-side, and also ORV.

Speaker #5: So ballpark, you could see a $300 million revenue growth in the quarter. And that obviously is trickling down to solid EBITDA and EPS.

Speaker #8: Okay, great. Then I wanted to ask about the utility segment. Obviously, you guys are making a lot of progress, and the new platform is quite impressive.

Xian Siew: Okay, great. I want to ask about the utility segment. Obviously, you guys are making a lot of progress and the new platform is quite impressive. But just kind of wondering, like the share gain, do you think it's from new customers or existing customers kind of trading up? Maybe customers who entered the industry, I don't know, in 2020 and are now kind of looking to upgrade their product? Or like I'm just curious about kind of the customer base that you're attracting and if you're kind of seeing a replacement cycle in utility. Thanks.

Speaker #8: But just kind of wondering, the share gains, do you think it's from new customers, existing customers kind of trading up, maybe customers who entered the industry - I don't know - in 2020 and are now kind of looking to upgrade their product?

Speaker #8: I'm just curious about the kind of customer base that you're attracting, and if you're seeing a replacement cycle in utility. Thanks.

Speaker #10: Yeah. We have both, actually, because that's true. We are growing in the utility, which means that we are bringing more people. Let's say Conquest on the market, that maybe we are on the rec part of the segment.

Denis Le Vot: Yeah, we have both actually, because that's true, we are growing in the utility, which means that we are bringing more people, let's say conquest on the market, that maybe we are on the rec part of the segment. As a global figure, I would tell you that we are bringing like 230,000 new people to our family every year, right? We are really on a dynamic of growing our market share and growing our base of clients, so we are attracting people. The offer coming to utility that we're having, again on the HD11 is really a hit, right? By the vehicle, by the new three-cylinder engine we're having.

Speaker #10: As a global figure, I would tell you that we are bringing, like, 230,000 new people to our family every year, right? So we are really on a dynamic of growing our market share and growing our base of clients.

Speaker #10: So we are attracting people. And the offer coming to utility that we're having again on the HD11 is really a hit, right? By the vehicle, by the new three-cylinder engine we're having, the positioning on the vehicle makes it, I mean, a complete hit on the subsegment of the utility, and we are really producing full speed on that one.

Denis Le Vot: The positioning on the vehicle makes it, I mean, a complete hit on the sub-segment of the utility, and we are really producing full speed on that one.

Speaker #8: Okay. Great. Thanks. And good luck.

Operator 2: Okay, great. Thanks and good luck.

Xian Siew: Okay, great. Thanks and good luck.

Speaker #10: Thanks.

Sébastien Martel: Thanks.

Speaker #3: Your next question comes from Luke Annan from Canaccord Genuity. Please go ahead.

Operator 2: Your next question comes from Luke Hannan from Canaccord Genuity. Please go ahead.

Operator: Your next question comes from Luke Hannan from Canaccord Genuity. Please go ahead.

Speaker #8: Thanks. Good morning. And welcome, Denny. I wanted to follow up. You mentioned as far as what you're baking in the guidance right now, I think you had said a 50 basis point tailwind from sales programs.

Luke Hannan: Thanks. Good morning and welcome, Denis. So I wanted to follow up. You mentioned as far as what you're baking in the guidance right now, I think you had said a 50 basis point tailwind from sales programs, assuming you stay within the top half of the guidance range there. What would be implied for you then to be at the lower end of the guidance range? Would you assume sort of no tailwinds from sales programs, or would there be a headwind there?

Speaker #8: Assuming you stay within the top half of the guidance range there, what would be implied for you then to be at the lower end of the guidance range?

Speaker #8: Would you assume sort of no tailwinds from sales programs, or would there be headwinds there?

Speaker #5: Yeah. The lower end of the guidance, obviously, means a tougher macro, more competitiveness as well, more promotional environments. So certainly, we would lose that tailwind of 50 basis points coming from programs.

Sébastien Martel: Yeah, the lower end of the guidance obviously means a tougher macro, more competitiveness as well, a more promotional environment. Certainly, we would lose that tailwind of 50 basis points coming from programs, and we have a favorable impact at the top end of the guidance coming from volume and mix of about 40 basis points and probably lose a big part of that as well.

Speaker #5: And we have an impact. I have a favorable impact at the top end of the guidance coming from volume and mix of about 40 basis points and probably lose a big part of that as well.

Speaker #8: Thanks. And then I wanted to follow up also with Telwater and basically just where things stand as of today and when we might expect to hear a little more on that.

Luke Hannan: Thanks. I wanted to follow up also with Telwater and basically just where things stand as of today and when we might expect to hear a little more on that.

Speaker #5: The well, as you probably saw, the Telwater business is still classified as a discontinued operation. So that means that it's still available for business, a great management team as well running the operations there.

Sébastien Martel: Well, as you probably saw, the Telwater business is still classified as a discontinued operation, so that means that it's still available for sale. It is a great business, a great management team as well running the operations there. Probably revenue slightly above the $100 million range with EBITDA margin potential in the low teens. So good business. We're not in a rush to sell it, so obviously we're in the market. If there are buyers that are interested, they'll approach us. But that's where we stand today.

Speaker #5: Probably revenue slightly about $100 million range with EBITDA margin potential in the low teens. So good business. We're not in a rush to sell it.

Speaker #5: So obviously, we're in the market. If there are buyers that are interested, they'll approach us. But that's where we stand today.

Speaker #10: Yeah.

Speaker #8: Great. Thank you very much.

Luke Hannan: Great. Thank you very much.

Operator 2: Your next question comes from Tristan Thomas-Martin from BMO Capital Markets. Please go ahead.

Operator: Your next question comes from Tristan Thomas-Martin from BMO Capital Markets. Please go ahead.

Speaker #3: Your next question comes from Tristan Thomas Martin from BMO Capital Market. Please go ahead.

Speaker #10: Okay, good morning. And Denny, looking forward to working with you. Just a question on the HD11 production ramp—kind of. I think you said you're producing at full speed.

Tristan Thomas-Martin: Hey, good morning. Denis, looking forward to working with you. Just a question on the HD11 production kind of ramp. I think you said you're producing full speed. Does that mean you're at 100% of where you wanna be, or is that still ramping?

Speaker #10: Does that mean you’re at 100% of where you want to be, or is that still ramping?

Speaker #5: No, no. We are 100% of where we want it to be. The ramp-up is totally finished and we are at the right level of production right now.

Sébastien Martel: No, no. We are 100% of where we wanted to be. The ramp-up is totally finished, and we are at the right level of production right now. Now, I just mentioned that because this is one of the product which is a real hit on the market, and it's a good thing that most of the parts of the factory are working three shifts on this vehicle. Mm-hmm.

Speaker #5: Now, I just mentioned that because this is one of the products which is a real hit on the market and it's a good thing that we are most of the parts of the factory are working three shifts on this vehicle.

Speaker #8: Okay. Great. And then just curious, in times of elevated oil and gas prices, have you seen increased utility demand in those regions? Thanks.

Tristan Thomas-Martin: Okay, great. Just curious, in times of like elevated oil and gas prices, have you seen increased utility demand in those regions? Thanks.

Sébastien Martel: I can't say there's a high correlation. Obviously, if there were to be a slowdown, we would expect less of a slowdown in utility because of the novelty of the HD11. There's obviously impacts on the ag market as well, on the construction industry.

Speaker #5: I can't say there's a high correlation. Obviously, if there were to be a slowdown, we would expect less of a slowdown in utility because of the novelty of the HD11.

Speaker #5: But there's obviously impacts on the ag market as well, on construction industry, etc., coming from high oil prices. So it's difficult to call a shot as to what the actual outcome is.

Operator 2: Yeah.

Tristan Thomas-Martin: Yeah.

Sébastien Martel: Et cetera, coming from higher oil prices. It's difficult to call a shot as to what the actual outcome.

Speaker #10: Yeah, that would be the global economy more. Yeah.

Operator 2: Yeah, that would be the global economy more. Yeah.

Denis Le Vot: Yeah, that would be the global economy more.

Sébastien Martel: Yeah.

Speaker #8: Okay. Got it. Thank you.

Tristan Thomas-Martin: Okay. Got it. Thank you.

Speaker #3: Your next question comes from Jamie Katz from Morningstar. Please go ahead.

Operator 2: Your next question comes from Jaime Katz from Morningstar. Please go ahead.

Operator: Your next question comes from Jaime Katz from Morningstar. Please go ahead.

Speaker #11: Hi. Good morning. We haven't heard too much about demand trends on premium or whether you guys have seen any sort of value-seeking behavior? So I guess if you have any color on whether attachment rates are staying consistent or if there has been any value-seeking behavior, that would be really helpful to hear about.

Jaime Katz: Hi. Good morning. You know, we haven't heard too much about demand trends on premium or whether you guys have seen any sort of value-seeking behavior. I guess if you have any color on whether attachment rates are staying consistent or if there has been any value-seeking behavior, that would be really helpful to hear about.

Speaker #5: Sorry. Jamie, we lost you. Got you. You're still there?

Sébastien Martel: Sorry, Jaime, we lost you.

Jaime Katz: Oh.

Sébastien Martel: Not sure if you're still there.

Speaker #11: I'm sorry. Can you hear me?

Jaime Katz: I'm sorry. Can you hear me?

Speaker #5: Operator, maybe we go to the next question and we bring back Jamie later?

Sébastien Martel: Operator, maybe we go to the next question, and we bring back Jaime later.

Speaker #3: I'm able to hear Jamie. Yeah.

Operator 2: I'm able to hear Jaime.

Operator: I'm able to hear Jaime.

Sébastien Martel: Operator, you can?

Speaker #11: Can you guys hear me?

Operator 2: Yeah.

Operator: Yeah.

Jaime Katz: Can you guys hear me?

Speaker #3: Hi there.

Operator 2: Hi there.

Operator: Hi there.

Speaker #11: Hi. You can hear me, but they can't.

Jaime Katz: Hi. You can hear me, but they can't.

Speaker #3: Correct. Yes. This is the operator. We experienced some technical difficulty just one moment, please.

Operator 2: Correct.

Operator: Correct.

Sébastien Martel: Oh.

Operator 2: Yes, this is the operator. We experienced some technical difficulty. Just one moment, please.

Operator: Yes, this is the operator. We experienced some technical difficulty. Just one moment, please.

Speaker #10: Okay.

Sébastien Martel: Yep. Operator, we can hear you now.

Speaker #5: Operator, we can hear you now.

Speaker #3: Oh, perfect. Okay. And are you able to hear Jamie also?

Operator 2: Oh, perfect. Okay. Are you able to hear Jaime also?

Operator: Oh, perfect. Okay. Are you able to hear Jaime also?

Sébastien Martel: Okay.

Speaker #11: Can you guys hear me?

Jaime Katz: Can you guys hear me?

Speaker #10: Yeah.

Speaker #5: Yeah. We're good.

Sébastien Martel: Jaime, yeah. Yeah.

Operator 2: Yeah.

Operator: Yeah.

Jaime Katz: Awesome.

Speaker #11: Awesome.

Speaker #3: Amazing.

Operator 2: Amazing.

Operator: Amazing.

Speaker #11: Sorry. So, I guess I was interested in hearing more about demand trends, given your tilt to premium. Whether you guys have seen any value-seeking behavior, for example, have attachment rates stayed the same or is there anything that is changing given the increasing uncertainty in the macroeconomic environment?

Jaime Katz: Sorry. I guess I was interested in hearing more about demand trends, given your tilt to premium, whether you guys have seen any value-seeking behavior, via things like, have attachment rates stayed the same, or is there anything that is changing given, sort of the increasing uncertainty in the macro, economic environment?

Speaker #5: We haven't seen any changes. The trend has been towards more the affluent customer in the last, let's say, 12 to 18 months. And that trend continues.

Sébastien Martel: We haven't seen any changes. The trend has been towards the more affluent customer in the last, let's say, 12 to 18 months, and that trend continues. BRP is obviously, as you well know, positioned more towards the higher end. That consumer is, I guess, more isolated from inflationary pressures, high interest rates, et cetera. Even that kind of shields us a bit from a potential slowdown if it were to happen. Nonetheless, we monitor overall retail trends continuously to make sure that we understand where the trend is going towards.

Speaker #5: And BRP has obviously, as you well know, positioned more towards the higher end. And so that consumer is, I guess, more isolated from inflationary pressures, high interest rates, etc.

Speaker #5: And so even that kind of shields us a bit from potential slowdown if it were to happen. But nonetheless, we monitor overall retail trends continuously to make sure that we understand where the trend is going towards.

Speaker #11: Yeah. And I guess on that note, has there been any different in mix in finance versus cash purchases?

Jaime Katz: Yeah. I guess on that note, has there been any difference in mix in financed versus cash purchases?

Speaker #5: No. Generally, we still see about 30% of the retail financing going through our dedicated partners. FICO scores remain high, and so I haven't seen any changes between this quarter and any previous quarters.

Sébastien Martel: No. Generally, we still see about 30% of the retail financing going through our dedicated partners. FICO scores remain high. I haven't seen any changes between this quarter and any previous quarters.

Speaker #11: Great. Helpful. Thank you guys so much.

Garik Shmois: Great. Helpful. Thank you guys so much.

Jaime Katz: Great. Helpful. Thank you guys so much.

Operator 2: Your next question comes from Cameron Doerksen from National Bank. Please go ahead.

Operator: Your next question comes from Cameron Doerksen from National Bank. Please go ahead.

Speaker #3: Your next question comes from Cameron Darkson from National Bank. Please go ahead.

Speaker #8: Yeah, thanks. Good morning. Question on free cash flow: you had a very strong year in fiscal '26. There was a fairly nice tailwind from working capital.

Cameron Doerksen: Yeah, thanks. Good morning. A question on free cash flow. You had a very strong year in fiscal 2026, but there was a fairly nice tailwind from working capital. Just wondering what your expectations here are for fiscal 2027 on free cash flow and what we should expect from the working capital.

Speaker #8: So, just wondering what your expectations are here for fiscal '27 on free cash flow, and what we should expect from the working capital.

Speaker #5: Yeah, it depends on where we land on the guidance, but we're expecting another strong year next year on free cash flow, maybe in the range of, let's say, $750 to $800 million.

Sébastien Martel: Yeah, it depends on where we land on the guidance, but we're expecting another strong year next year on free cash flow, maybe in the range of, let's say, CAD 750 to 800 million. CapEx in the CAD 400 million range, as you saw. Another good year next year.

Speaker #5: Capex in the 400-million-dollar range, as you saw. So another good year next year.

Speaker #8: Okay. And in that context, I mean, it looks like you're going to continue to build cash on the balance sheet. So obviously, if you've announced the dividend increase this morning, but I guess where are the capital allocation priorities here?

Cameron Doerksen: Okay. In that context, you know, it looks like you're gonna continue to build cash on the balance sheet. Obviously you've announced the dividend increase this morning, but I guess where are the capital allocation priorities here? I mean, the CapEx is, you know, fairly stable, but you know, just wondering what your expectation is here for capital deployment.

Speaker #8: I mean, the CapEx is fairly stable, but just wondering what your expectation is here for capital deployment.

Speaker #5: Yeah. We've strengthened further the balance sheet last year with debt refund and debt maturity extensions. So we're obviously in a very good position. We still have 2.6 million shares to repurchase under the inside B and our intention is to be active on that front.

Sébastien Martel: Yeah. We've strengthened further the balance sheet last year with debt refunding and debt maturity extension. We're obviously in a very good position. We still have 2.6 million shares to repurchase under the NCIB, and our intention is to be active on that front.

Speaker #8: Okay.

Cameron Doerksen: Okay.

Speaker #5: And as I said before, sorry, Denise speaking. And this gives us a solid ground to prepare the next plan that we will be preparing during the year.

Sébastien Martel: As I said before, this. Sorry, Denis speaking. This gives us a solid ground to prepare the next plan that we will be preparing during the year.

Speaker #8: Absolutely. No, it's a good position to be in. So thanks very much.

Cameron Doerksen: Absolutely. No, it's a good position to be in. Thanks very much.

Speaker #3: Your next question comes from Alice Wickland from Baird. Please go ahead.

Operator 2: Your next question comes from Alec Wickland from Baird. Please go ahead.

Operator: Your next question comes from Alec Wickland from Baird. Please go ahead.

Speaker #12: Yeah. Good morning, gentlemen. Thanks for taking my questions. I wanted to touch in a little more detail on the utility side-by-side segment and particularly that CAB category that you called out.

Speaker 23: Yeah. Good morning, gentlemen. Thanks for taking my questions. Wanted to touch on in a little more detail on the utility side-by-side segment, and particularly that cab category that you called out. Maybe just provide a little more detail on the impact that that's having and how long you think momentum can be sustained in that product category.

Alec Wickland: Yeah. Good morning, gentlemen. Thanks for taking my questions. Wanted to touch on in a little more detail on the utility side-by-side segment, and particularly that cab category that you called out. Maybe just provide a little more detail on the impact that that's having and how long you think momentum can be sustained in that product category.

Speaker #12: Maybe just provide a little more detail on the impact that that's having and how long you think momentum can be sustained in that product category.

Speaker #5: Well, it's a trend we've seen over the last few years, and we've invested, one, in capacity because it's different to build a CAB unit than a non-CAB unit in the plant.

Sébastien Martel: Well, it's a trend we've seen over the last few years, and we've invested in capacity because it's different to build a cab unit than a non-cab unit in the plant. We have invested in capacity. The new Defender platform was designed around it being a cab unit, so that specifically design purpose. What we're seeing is that consumers are seeking automotive features more and more in their vehicles. Obviously an enclosed space, heating, air conditioning, connectivity, and that's what we're offering. Now the HD11 was the first model on the new platform, and obviously we will be introducing other models in the HD10, HD8 in the coming years. That obviously is gonna increase the addressable market that we have.

Speaker #5: So we have invested in capacity. And the new Defender platform was designed around it being a CAB unit, so that was specifically the design purpose. What we're seeing is that consumers are seeking automotive features more and more in their vehicles.

Speaker #5: So, obviously, an enclosed space, heating, air conditioning, connectivity—and that's what we're offering. And now, the HD11 was the first model on the new platform.

Speaker #5: And obviously, we will be introducing other models in the HD10, HD8 in the coming years. And so that obviously is going to increase the addressable market that we have.

Speaker #5: So, we expect continued growth in the utility segment for the next few years.

Sébastien Martel: We expect continued growth on the utility segment for the next few years.

Speaker #12: Thanks, that's helpful. And then maybe just checking the box on guidance—what kind of interest rate assumptions are embedded in your outlook?

Speaker 23: Thanks. That's helpful. Maybe just checking the box on guidance. What kind of interest rate assumptions are embedded in your outlook?

Alec Wickland: Thanks. That's helpful. Maybe just checking the box on guidance. What kind of interest rate assumptions are embedded in your outlook?

Speaker #5: We've assumed flat interest rate compared to this year. No changes in the Federal Reserve rates.

Sébastien Martel: We've assumed flat interest rate compared to this year. No changes in Federal Reserve rates.

Speaker #12: Great. Thank you.

Speaker 23: Great. Thank you.

Alec Wickland: Great. Thank you.

Speaker #3: Your next question comes from Catherine Song from TD Cowen. Please go ahead.

Operator 2: Your next question comes from Katrin Sung from TD Cowen. Please go ahead. Hi. Just to follow up on the margin guidance. Should the EV rightsizing be a benefit to the margin outlook?

Operator: Your next question comes from Katrin Sung from TD Cowen. Please go ahead.

Speaker #13: Hi. Just a follow-up on the margin guidance. Should the EV rightsizing be a benefit to the margin outlook?

Catherine Sung: Hi. Just to follow up on the margin guidance. Should the EV rightsizing be a benefit to the margin outlook?

Speaker #5: It is a benefit. Last year, we were investing in the launching of the two-wheel product. And so, when you look at the overall EBITDA margin growth that we're planning this year compared to last year, yes, EV is a tailwind of about 50 basis points.

Sébastien Martel: It is a benefit. Last year we were investing in the launching of the two-wheel product. When you look at the overall EBITDA margin growth that we're planning this year compared to last year, yes, EV is a tailwind of about 50 basis points, which is gonna be offset by investments that we are making on the Mission 28 plan, i.e., R&D, product lineup. Despite having a very fresh lineup, we're gonna continue investing in the sales organization and network organization as well. We're expecting no operational leverage coming from OpEx investments this year versus last year. Yeah, tailwind, but compensated by other investments.

Speaker #5: Which is going to be offset by investments that we are making on the M28 plan, i.e., R&D. So product lineup. Despite having a very fresh lineup, we're going to continue investing.

Speaker #5: And also, on the sales organization and network organization as well. So we're expecting no operational leverage coming from OPEX investments this year versus last year.

Speaker #5: So yeah, tailwind, but compensated by other investments.

Speaker #13: Okay. Thank you.

Operator 2: Okay. Thank you. Your next question comes from Garik Shmois from Seaport Research. Please go ahead.

Catherine Sung: Okay. Thank you.

Operator: Your next question comes from Garik Shmois from Seaport Research. Please go ahead.

Speaker #3: Your next question comes from Garrick Johnson from Seaport Research. Please go ahead.

Speaker #14: Good morning. Thank you. Denise, welcome. So maybe a finer point on the oil impact on costs. Sebastian, can you remind us the percent of cost-to-goods sold that shipping would be?

Garik Shmois: Good morning. Thank you. Denis, welcome. Maybe a finer point on the oil impact on costs. Sébastien, can you remind us the percent of cost of goods sold that shipping would be and then also resins? How far are those contracted out? How locked in are you on those prices?

Gerrick Johnson: Good morning. Thank you. Denis, welcome. Maybe a finer point on the oil impact on costs. Sébastien, can you remind us the percent of cost of goods sold that shipping would be and then also resins? How far are those contracted out? How locked in are you on those prices?

Speaker #14: And then also resins? And then, how far are those contracted out? How locked in are you on those prices?

Speaker #5: Yeah, from a commodity point of view, we do have long-term agreements with our suppliers, and so we are pretty much hedged. And obviously, freight costs—I probably won't go into too much detail for competitive reasons, but it is an important part of our business.

Sébastien Martel: Yeah. From a commodity point of view, we do have long-term agreements with our suppliers. We are pretty much hedged. Obviously, freight costs. I probably won't go in too much detail for competitive reasons, but it is an important part of our business. As I've mentioned, going from $60 to $100 per barrel is a 60 basis point impact on our business, Garik.

Speaker #5: And as I’ve mentioned, going from $60 to $100 per barrel is a 60 basis point impact on our business, Garrick.

Speaker #14: Okay. Okay. You're going to make us do the math. That's fine. Hey, on utility, getting.

Garik Shmois: Okay. You're gonna make us do the math. That's fine. Hey, on utility-

Gerrick Johnson: Okay. You're gonna make us do the math. That's fine. Hey, on utility-

Sébastien Martel: Given you're back, I'll have you work a bit.

Speaker #5: Given your back, I'll have you work a bit. It's nice to hear your voice.

Sébastien Martel: Given you're back, I'll have you work a bit.

Garik Shmois: Yeah. Thank you. Thanks. Hey, on utility, back on that topic, are your dealers seeing any sort of impact or increase in demand for utility from businesses, farmers, ranchers, et cetera, owing to the reinstatement of bonus depreciation 100% in the US?

Gerrick Johnson: Yeah. Thank you. Thanks. Hey, on utility, back on that topic, are your dealers seeing any sort of impact or increase in demand for utility from businesses, farmers, ranchers, et cetera, owing to the reinstatement of bonus depreciation 100% in the US?

Speaker #14: Thanks. Hey, on utility, back on that topic, are your dealers seeing any sort of impact or increase in demand for utility from businesses, farmers, ranchers, etc., owing to the reinstatement of bonus depreciation of 100% in the US?

Speaker #5: Yeah. Well, certainly, that has been a driver for small businesses as well. And not just the we'll call it the commercial business. And we also have commercial programs in place to drive awareness on that consumer group.

Sébastien Martel: Yeah. Well, certainly, that has been a driver for small businesses as well, and we'll call it the commercial business. We also have commercial programs in place to drive awareness on that consumer group.

Garik Shmois: Mm-hmm.

Gerrick Johnson: Mm-hmm.

Speaker #5: And so yes, we are seeing a benefit coming from we'll call it the commercial business. Is it 100% driven by the accelerated depreciation? I don't know, but certainly, it's an area that we focused on.

Sébastien Martel: Yes, we are seeing a benefit coming from, we'll call it the commercial business. Is it 100% driven by the accelerated depreciation? I don't know, but certainly it's an area that we focused on.

Speaker #14: Fantastic. Thank you very much.

Garik Shmois: Fantastic. Thank you very much.

Gerrick Johnson: Fantastic. Thank you very much.

Speaker #5: Thank you, Garrick. Welcome back.

Sébastien Martel: Thank you, Garik Shmois. Welcome back.

Operator 2: Your next question comes from Jonathan Goldman from Scotiabank. Please go ahead.

Operator: Your next question comes from Jonathan Goldman from Scotiabank. Please go ahead.

Speaker #3: Your next question comes from Jonathan Goldman from Scotiabank. Please go ahead.

Speaker #15: Hey, good morning, team, and thanks for taking my questions. Most of them have been asked, but just maybe to put a finer point on it—the walk to margin expansion, gross margin expansion year over year.

Jonathan Goldman: Hey, good morning, team, and thanks for taking my questions. Most of them have been asked, but just maybe to put a finer point on it, the walk to margin expansion, gross margin expansion year on year, can you remind me of the drivers there? There's a tailwind from lower promo, freight headwind of 60 basis points and a volume mixed tailwind of 40 basis points. Is that right?

Speaker #15: Can you remind me of the drivers there? There's a tailwind from lower promo freight, headwind of 60 bps, and a volume/mix tailwind of 40 bps.

Speaker #15: Is that right?

Speaker #5: Yeah. Let me give you the we'll call it let me give you the EBITDA margin bridge. But OPEX is stable. Year over year. As a percentage, volume and mix a tailwind of 40 bips.

Sébastien Martel: Let me give you the EBITDA margin bridge. OpEx stable year over year as a percentage. Volume and mix a tailwind of 40 bps. Sales program, 50 bps. Pricing net of inflation, that's a wash. Lean cost improvements, 100 bps. Overhead investments in the gross margin, about 40 bps negative. That brings us to 150 bps. The recent events that we talked about, oil prices being higher, is 60 bps. At the top end of the guidance range, we're looking at a number just shy of 14% EBITDA margin. At the lower end of the guidance, we're about just north of 13%.

Speaker #5: Sales program 50 bips. Pricing net of inflation, that's a wash. Lean cost improvement 100 bips. Overhead investments in the gross margin about 40 bips.

Speaker #5: Negative. So that brings us to 150 bips. And then the recent events that we talked about, oil prices being higher at 60 bips. So at the top end of the guidance range, we're looking at a number just shy of 14% EBITDA margin.

Speaker #5: And at the lower end of the guidance, we're about just north of 13%.

Speaker #15: Okay. That's helpful. And then maybe another one on the competitive environment. I know you've baked in some conservatism to the guide kind of a wide-range of outcomes.

Jonathan Goldman: Okay, that's helpful. Maybe another one on the competitive environment. I know you've baked in some conservatism into the guide, kind of a wide range of outcomes. Have you seen any other competitors maybe move quicker to try and, you know, respond to consumer anxiety and kind of lower prices to take some share ahead of any sort of headwinds?

Speaker #15: But have you seen any other competitors maybe move quicker to try and respond to consumer anxiety and kind of lower prices to take some share ahead of any sort of headwinds?

Speaker #5: No, we haven't seen anything. Given, I think, the big plus we have as an industry is that everyone's been diligent in reducing inventories over the last 18 months.

Sébastien Martel: No, we haven't seen anything. Given, I think the big plus we have as an industry is that everyone's been diligent in reducing inventories over the last 18 months. I think it positions everyone and the industry in a good position to face a potential downside if it were to happen.

Speaker #5: And so I think it pushes everyone, and the industry, and a good position to face a potential downside if it were to happen.

Speaker #15: And then, I guess related to that last one—on the industry inventory—could you give us an update on where we are versus current and non-current, and maybe obviously how it differs by product line?

Jonathan Goldman: Then I guess related to that last one, on the industry inventory, could you give us an update on where we are versus current and non-current? Maybe it obviously differs by product line.

Speaker #5: Yeah, I did share a bit of comments earlier, but Snowmobile, we’re in a decent shape. Obviously, winter has decided to hang around a bit longer than we all would like.

Sébastien Martel: Yeah, I did share a bit of comments earlier, but snowmobile, we're in a decent shape. Obviously, winter has decided to hang around a bit longer than we all would like, and obviously that helps on the snowmobile side. Personal watercraft, some OEMs have a bit more non-current inventory, and so that's gonna probably hurt our market share for the next season. Generally, aside from a few small OEMs, the overall ORV inventory is in good shape.

Speaker #5: And obviously, that helps on the snowmobile side. But personal watercraft—some OEMs have a bit more non-current inventory, and so that's going to probably hurt our market share for the next season.

Speaker #5: But generally, aside from a few small OEMs, the overall ORV inventory is in good shape.

Speaker #15: Okay, that's a good color. I'll get back in queue. Thanks.

Jonathan Goldman: Okay. That's good color. I'll get back. Thank you. Thanks.

Speaker #5: Thank you.

Sébastien Martel: Thank you.

Speaker #3: And there are no more questions. I will turn the call back over to Mr. Deschênes to close the meeting.

Operator 2: There are no more questions. I will turn the call back over to Mr. Deschênes to close the meeting.

Operator: There are no more questions. I will turn the call back over to Mr. Deschênes to close the meeting.

Speaker #14: Thank you, Julie. And thanks, everyone, for joining us this morning and for your interest in BRP. We look forward to speaking with you again on May 28th for our first quarter conference call.

Sébastien Martel: Thank you, Julie. Thanks everyone for joining us this morning and for your interest in BRP. We look forward to speaking with you again on May 28 for our Q1 conference call. Thanks again, everyone, and have a good day.

Philippe Deschênes: Thank you, Julie. Thanks everyone for joining us this morning and for your interest in BRP. We look forward to speaking with you again on May 28 for our Q1 conference call. Thanks again, everyone, and have a good day.

Speaker #14: Thanks again, everyone, and have a good day.

Operator 2: Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you.

Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you.

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