BRP (TSX: DOO) opened fiscal 2026 with a mixed first quarter in which core profitability deteriorated even as headline earnings ballooned on a foreign-exchange windfall.
Revenue slipped 7.7% YoY to $1.85 billion as softer consumer demand and deliberate shipment cuts in Seasonal Products outweighed modest price gains and favourable currency translation.
Gross profit fell 24.3% to $394.8 million, and gross margin compressed 470 basis points to 21.4%. Operating expenses fell 9.2% to $300.9 million on cost-optimisation efforts, but the savings could not fully counteract the gross-profit erosion.
Reported net income soared 279% to $161.0 million, or $2.19 a share, due to a $128.6 million non-cash gain on US-dollar debt pushing the bottom line.
In stark contrast, normalized EBITDA plunged 34.7% to $200.8 million, while normalized net income tumbled 71% to $34.6 million, reducing normalized diluted EPS to just $0.47 from $1.58 a year earlier.
Segment results revealed a pronounced drag from Seasonal Products, where revenue dropped 21.7% to $419 million as the company continued to purge dealer inventories despite a late-season snowmobile rally. Year-Round Products, which generate 60% of sales, declined 4.5% to $1.11 billion amid weaker side-by-side and three-wheel vehicle demand.
Only the Parts, Accessories & Apparel and OEM Engines division managed growth, rising 4.9% to $322 million thanks to robust aftermarket parts orders following the snowmobile season.
Operating cash flow jumped 52% to $214.5 million on extended supplier terms and lower income-tax payments. After $54.5 million of capital and intangible investments, free cash flow more than doubled to $160.0 million, allowing the company to fund $15.6 million in dividends while refraining from share repurchases.
Strategically, BRP closed the sale of Alumacraft’s assets on 1 May and reached a definitive agreement to divest Australian boat maker Telwater on 1 April.
The board declared a $0.215 quarterly dividend payable 14 July and unveiled a CEO succession plan, though specifics remain undisclosed. Management again withheld formal guidance, with CEO José Boisjoli acknowledging that “demand remains soft” but insisting leaner inventories and a robust product pipeline position the company for eventual recovery.
BRP last traded at $60.16 on the TSX.
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