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BRP: BRP's Q3 Fiscal 2026 Results: A Strong Beat with Revenue Growth and Margin Expansion

BRP Inc.'s third-quarter fiscal 2026 results significantly exceeded expectations, with revenue reaching $2.3 billion, normalized EBITDA of $326 million, and normalized EPS of $1.59. The company's revenue grew 14%, driven by stronger ORV shipments, with gross profit reaching $541 million and a margin of 24.1%. Normalized EBITDA grew 21%, and free cash flow from continuing operations was $320 million. The actual EPS came in below estimates of $1.97, but still represented a strong performance.

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CAD 106.12

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A-Score: 4.0/10

Publication date: December 4, 2025

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Author: Analystock.ai

📋 Highlights
  • Strong Q3 Performance: Revenue reached $2.3 billion (+14%), normalized EBITDA hit $326 million (+21%), and normalized EPS rose to $1.59.
  • International Growth: Retail sales surged 13% in Latin America, outpacing a 4% decline in North America and flat Canadian sales.
  • Guidance Upside: Raised FY26 normalized EPS guidance to $5, with full-year revenue targeting $8.3 billion and EBITDA of $1.1 billion.
  • Free Cash Flow & Debt Management: Generated $650–700 million in free cash flow YTD, repaid $200 million in debt, and extended debt maturities to lower interest costs.
  • Long-Term Market Share Goals: Aims for 30% ORV market share by FY28 via dealer expansion, product innovation (e.g., HD11), and $420 million annual CapEx for operational scaling.

Segment Performance

The company gained market share in ORV, driven by the success of new models like the Can-Am Defender HD11. Retail sales in North America decreased by 4%, in line with the market, while Canada remained flat. International markets showed solid momentum, particularly in Latin America, where retail sales rose 13%. The company's ability to adjust production to meet demand for popular models was evident, with 3/4 of the new HD11 production and 1/4 of the old one in Q3.

Guidance and Outlook

The company increased its guidance, expecting approximately $5 of normalized EPS for the year. BRP expects to deliver about $8.3 billion of revenue, $1.1 billion of normalized EBITDA, and about $5 of normalized EPS for the year. For fiscal '28, the company targets low single-digit growth in side-by-side, with a plan to reach 30% market share by the end of fiscal year '28. The team is optimistic about the progress made and is investing in dealer engagement to support its M28 plan.

Cash Flow and Leverage

The company generated $650 million in free cash flow year-to-date and expects to end the year with $650-700 million. Working capital has been a focus, and they see a slight tailwind on overall working capital. BRP's target leverage is between 1x and 2x net debt-to-EBITDA, and they plan to be active on the NCIB in the near term. The company's net debt-to-EBITDA ratio currently stands at 3.28, indicating some room to maneuver.

Valuation

With a P/E Ratio of -206.14 and an EV/EBITDA of 12.47, the market is pricing in a certain level of growth and profitability. The company's ROIC of 7.0% and ROE of -8.74% indicate that while there is some return on invested capital, the return on equity is negative, likely due to one-time items or accounting adjustments. Analysts estimate next year's revenue growth at 7.0%, which may be a reasonable assumption given the company's track record and industry trends.

BRP's A-Score