BRP Q2 2026 slides: Revenue grows 4% as company positions for stronger second half

BRP Inc. (TSX:DOO) reported Q2 FY26 revenue of $1,888 million, up 4%, with diluted EPS increasing 44% to $0.79, despite declines in normalized EPS and EBITDA amidst mixed global retail trends. The powersports manufacturer emphasized a 20% reduction in North American dealer inventory and strong free cash flow generation. BRP maintained its full-year guidance, projecting a significantly stronger second half for FY26, driven by new product introductions and optimized inventory, signaling confidence in accelerated growth.

Analysis

BRP Inc. reported resilient Q2 FY26 results, with revenue growing 4% to $1,888 million despite significant headwinds, including a 15% powersports retail sales decline in the United States. The divergence between a 44% jump in reported diluted EPS to $0.79 and a 10% decline in normalized diluted EPS to $0.92 indicates underlying operational pressures, which were also reflected in a 9% drop in normalized EBITDA. However, a 54% increase in free cash flow to $99 million signals strong discipline in working capital management amidst the company's strategic inventory reduction. This strategy was evident in segment performance, where a 13% revenue decline in Seasonal Products, driven by lower PWC shipments to clear channel inventory, was more than offset by a 13% revenue increase in the core Year-Round Products segment. The primary investment thesis now hinges on the maintained full-year guidance, which implies a significant acceleration in the second half of FY26. BRP projects H2 revenue growth of 8-12% and normalized EBITDA growth of 22-31%, predicated on the combined impact of leaner dealer inventory (down 20% in North America) and a major new product cycle, including the redesigned Can-Am Defender.

Key Decisions for Investors

• Investors should focus on the company's ability to execute on its heavily back-half-weighted guidance, as successful delivery on the projected H2 acceleration is critical to the investment case given the mixed Q2 results.
• Monitor North American retail sales data closely; a stabilization or recovery in consumer demand is necessary to validate the inventory reduction strategy and ensure successful absorption of the new product launches.
• The market reception and early sales velocity of the new MY26 product lineup, particularly the Can-Am Defender, should be considered a primary catalyst and key performance indicator for achieving the aggressive second-half growth targets.