BRP's 2026 Q1 Earnings Call: Unpacking Contradictions in Inventory Management, Tariffs, and Electric Vehicle Strategy

Inventory levels and management, tariff impact and mitigation strategies, dealer inventory and retail demand, inventory and demand trends, and electric vehicle market strategy are the key contradictions discussed in BRP's latest 2026Q1 earnings call.



Revenue and Financial Performance:
- BRP Inc. reported revenue of $1.8 billion for Q1 FY 2026, and normalized EBITDA of $201 million.
- Despite a challenging operating environment with macroeconomic uncertainty, the results were in line with expectations.
- The performance was driven by strong sales in snowmobiles and progress in the marine group, although lower shipments and higher sales programs impacted revenue.

Inventory Reduction and Network Inventory:
- Network inventory levels were reduced by 21% compared to the previous year, with double-digit declines across all product lines.
- This was part of an ongoing effort to align wholesale with retail levels by the end of Q2.
- The reduction aims to alleviate inventory impact on dealers' finances and enhance the company's ability to react quickly to a market rebound.

Retail Trends and Product Performance:
- In North America, Powersport retail held steady, with 21% growth in Canada offsets by a 6% decline in the United States.
- Retail trends showed strong performance in snowmobiles, with an over 80% increase, while other product lines like three-wheel vehicles and personal watercraft faced early-season declines.
- The strong snowmobile sales were driven by favorable snow conditions, while declines in other segments were due to softer industry trends and a late spring.

Tariff Impact and Mitigation:
- BRP estimates the total gross tariff impact for fiscal 2026 to be between $60 million and $70 million.
- This is manageable and expected to be offset using different levers across the value chain, including supplier negotiations and product mix adjustments.
- The impact is primarily on P&A business and U.S. suppliers, with most vehicles being USMCA compliant and thus exempt from specific tariffs.