Q2 2026 Earnings Call Contradictions: Tariff Mitigation Strategies, Inventory Normalization, and Supply Chain Outlook Diverge

The above is the analysis of the conflicting points in this earnings call

Business Commentary:

* Revenue Growth and Market Share: - BRP Inc. reported revenue of $1.9 billion for Q2 FY '26, with normalized EBITDA of $213 million and normalized EPS of $0.92. - The growth was driven by the company's strong position in the off-road vehicle (ORV) market, particularly in North America, where retail decreased by 11% but Canada showed a 4% growth.

• Inventory Management and Product Launches:
• The company's dealers' inventory ended Q2 down 20% year-over-year, with ORV retail up about 50% over the same pre-COVID period, despite a 36% decline in U.S. retail.

• This significant inventory reduction positioned BRP to better align wholesale with retail, which is expected to enhance competitiveness and capture demand upside.

• Tariff Impact and Mitigation:

• BRP's fiscal guidance for 2026 includes $90 million in gross tariff impact, up from $60 million to $70 million, due to increased tariffs on steel and aluminum.

• The company is mitigating these costs through strategic sourcing decisions and higher pricing in parts and accessories, which is expected to offset a significant portion of tariff-related expenses.

• Product Innovation and Market Positioning:

• The introduction of the new Can-Am Defender and other product upgrades bolstered BRP's market share, particularly in the utility side-by-side segment, which represents over 60% of the market.
• The positive reception by dealers and media for these new products is anticipated to drive market demand and support further market share gains.