.2

BRP INC.

MANAGEMENT’S

DISCUSSION AND

ANALYSIS

FOR THE THREE-MONTH PERIOD ENDED APRIL 30, 2026

 

Table of contents

 

Glossary			2
Basis of Presentation			3
Forward-Looking Statements and Non-IFRS Measures			4
Business Overview			6
Factors Affecting the Company’s Results of Operations			7
Executive Summary			10
Retail Performance & Market Statistics			11
Results of Operations			12
Geographical Trends for First Quarter of Fiscal 2027			14
Discontinued Operations			15
Liquidity and Capital Resources			18
Contractual Obligations			20
Capital Resources			21
Consolidated Financial Position			23
Off-Balance Sheet Arrangements			24
Transaction Between Related Parties			26
Financial Instruments			26
Non-IFRS Measures and Reconciliation Tables			28
Reconciliation Tables [2]			29
Summary of Consolidated Quarterly Results [2]			32
Reconciliation Table for Consolidated Quarterly Results [2]			33
Critical Accounting Estimates			36
Controls and Procedures			38
Risk Factors			39
Disclosure of Outstanding Shares			40
Additional Information			40

 

BRP Inc.		Management’s Discussion and Analysis		1

Glossary

 

Abbreviations		Description		Abbreviations		Description
3WV		Three-Wheel Vehicles		MD&A		Management’s Discussion & Analysis
ATV		All-Terrain Vehicles		NCIB		Normal Course Issuer Bid
BPS		Basis points		OEM		Original Equipment Manufacturer
CAPEX		Capital Expenditure		ORV		Off-Road Vehicles
CGU		Cash Generating Unit		PA&A		Parts, Accessories & Apparel
CORRA		Canadian Overnight Repo Rate Average. Defined as the Daily Compounded CORRA or the forward-looking term rate based on CORRA plus a customary credit spread adjustment, when applicable		PP&E		Property, Plant & Equipment
EBITDA		Earnings Before Interest, Taxes, Depreciation & Amortization		PWC		Personal Watercraft
EPS		Earnings (Loss) Per Share		R&D		Research & development
EURIBOR		Euro Interbank Offered Rate		SOFR		Secured Overnight Financing Rate
EV		Electric Vehicles		Term SOFR		Defined as the forward-looking term rate based on SOFR plus a customary credit spread adjustment, when applicable
G&A		General & Administrative		SSV		Side-by-Side Vehicles
IAS		International Accounting Standards		S&M		Selling & marketing
IFRS		IFRS® Accounting Standards as issued by the International Accounting Standards Board		Working Capital		Current assets less current liabilities
International		All regions except United States & Canada

 

BRP Inc.		Management’s Discussion and Analysis		2

Basis of Presentation

The following MD&A provides information concerning the financial position and results of operations of BRP Inc. (the “Company” or “BRP”) for the first quarter of the fiscal year ending January 31, 2027. This MD&A should be read in conjunction with the unaudited condensed consolidated interim financial statements for the three-month periods ended April 30, 2026 and 2025. Some of the information included in this discussion and analysis contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from underlying forward-looking statements as a result of various factors, including those described in the “Forward-Looking Statements” section of this MD&A. This MD&A reflects information available to the Company as at May 27, 2026.

The unaudited condensed consolidated interim financial statements of the Company for the three-month periods ended April 30, 2026 and 2025 have been prepared using accounting policies consistent with IFRS^® Accounting Standards as issued by the International Accounting Standards Board and in accordance with IAS 34 “Interim Financial Reporting”. All amounts presented are in Canadian dollars unless otherwise indicated. The Company’s fiscal year is the twelve-month period ending January 31. All references in this MD&A to “Fiscal 2027, “Fiscal 2026”, and “Fiscal 2025” are to the Company’s fiscal year ended January 31, 2027, 2026 and 2025 respectively.

This MD&A, approved by the Board of Directors on May 27, 2026, is based on the Company’s unaudited condensed consolidated interim financial statements and accompanying notes for the three-month periods ended April 30, 2026 and 2025.

 

BRP Inc.		Management’s Discussion and Analysis		3

Forward-Looking Statements and Non-IFRS Measures

Forward-Looking Statements

Certain statements in this MD&A about the Company’s current and future plans, including statements relating to its strategic plan referred to as “M28”, prospects, expectations, anticipations, estimates and intentions, results, levels of activity, performance, objectives, targets, goals, achievements, including the Company’s environmental, social and governance targets, goals and initiatives set forth under the Company’s new sustainability plan, Beyond the Ride – Sustainability 2030, priorities and strategies, financial position, market position, capabilities, competitive strengths and beliefs, the prospects and trends of the industries in which the Company operates, the expected demand for products and services in the markets in which the Company competes, including softer industry demand trends and sustained promotional intensity and pricing actions, research and product development activities, including projected design, characteristics, capacity or performance of future products and their expected scheduled entry to market, expected financial requirements and the availability of capital resources and liquidity, the Company’s ability to complete its process for the sale of Telwater as expected and to manage and mitigate the risks associated therewith, at expected cost levels and expected proceeds, the impact of the sale of the Marine businesses, ongoing geopolitical instability in the Middle East, including the impact of recent volatility in global oil and energy prices, potential supply chain disruptions, inflationary pressures, and broader macroeconomic conditions or any other future events or developments and other statements in this MD&A that are not historical facts constitute forward-looking statements within the meaning of applicable securities laws. The words “may”, “will”, “would”, “should”, “could”, “expects”, “forecasts”, “plans”, “intends”, “trends”, “indications”, “anticipates”, “believes”, “estimates”, “outlook”, “predicts”, “projects”, “likely” or “potential” or the negative or other variations of these words or other comparable words or phrases, are intended to identify forward-looking statements.

Forward-looking statements are presented for the purpose of assisting readers in understanding certain key elements of the Company’s current objectives, goals, targets, strategic priorities, expectations and plans, and in obtaining a better understanding of the Company’s business and anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes; readers should not place undue reliance on forward-looking statements contained herein. Forward-looking statements, by their very nature, involve inherent risks and uncertainties and are based on a number of assumptions, both general and specific. The Company cautions that its assumptions may not materialize and that the currently challenging macroeconomic and geopolitical environments in which it evolves, including specifically the uncertainty around the potential evolution of tariffs, duties and other trade restrictions (and any retaliatory measures), as well as the ongoing geopolitical instability in the Middle East and its potential negative impact on the global economy, may render such assumptions, although believed reasonable at the time they were made, subject to greater uncertainty. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results or performance of the Company or the industry to be materially different from the outlook or any future results or performance implied by such statements. In addition, many factors could cause the Company’s actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the risk factors discussed in greater detail under the heading “Risk Factors” in the Company’s MD&A for the fiscal year ended January 31, 2026.

The forward-looking statements contained in this MD&A are made as of the date of this MD&A, and the Company has no intention and undertakes no obligation to update or revise any forward-looking statements to reflect future events, changes in circumstances, or changes in beliefs, unless required by applicable securities regulations. In the event that the Company does update any forward-looking statements contained in this MD&A, no inference should be made that the Company will make additional updates with respect to that statement, related matters or any other forward-looking statement.

 

BRP Inc.		Management’s Discussion and Analysis		4

The Company made a number of economic, market and operational assumptions in preparing and making certain forward-looking statements contained in this MD&A, including without limitation the following assumptions: industries in both Seasonal and Year-Round Products consistent with current trends and a continuously challenging macroeconomic environment; expected market share volatility; main currencies in which the Company operates will remain at near current levels; levels of inflation, which are expected to continue to ease; there will be no significant changes in tax laws or treaties applicable to the Company; the Company’s margins are expected to continue to be pressured by lower volumes; the supply base will remain able to support product development and planned production rates on commercially acceptable terms in a timely manner; the absence of unusually adverse weather conditions, especially in peak seasons. BRP cautions that its assumptions may not materialize, and that the currently challenging macroeconomic and geopolitical environment in which it evolves may render such assumptions, although believed reasonable at the time they were made, subject to greater uncertainty. Specifically, these assumptions reflect certain U.S. tariffs currently in effect; however, they do not fully incorporate the potential expansion of U.S. tariffs, including tariffs on all imports from Canada and Mexico, and potential retaliatory tariffs. Given the fast-evolving situation and the high degree of uncertainty around the duration of a potential trade war, it is difficult to predict how the effects would flow through the economy. New and existing tariffs could significantly affect the outlooks for economic growth, consumer spending, inflation and the Canadian dollar.

Non-IFRS Measures

This MD&A makes reference to certain non-IFRS measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS.

The Company defines and reconciles these measures in the “Non-IFRS Measures and Reconciliation Tables” section of this MD&A.

 

BRP Inc.		Management’s Discussion and Analysis		5

Business Overview

BRP Inc. is a global leader in the world of powersports products, propulsion systems and boats built on 80 years of ingenuity and intensive consumer focus. Through its portfolio of industry-leading and distinctive brands featuring Ski-Doo and Lynx snowmobiles, Sea-Doo watercraft and pontoons, Can-Am on- and off-road vehicles, Quintrex boats and Rotax marine propulsion systems, Rotax engines for karts and recreational aircraft and Pinion gearboxes, BRP unlocks exhilarating adventures and provides access to experiences across different playgrounds. The Company completes its lines of products with a dedicated parts, accessories and apparel portfolio to fully optimize the riding experience.

As at the end of Fiscal 2026, the Company employed close to 17,000 employees worldwide. It sold its products in over 110 countries. The products were sold directly through a network of approximately 2,050 dealers in 21 countries, as well as through approximately 140 distributors that served approximately 375 additional dealers.

The Company designs, develops, manufactures and sells powersports vehicles. The Company’s diversified portfolio of products includes Year-Round Products, Seasonal Products and Parts, Accessories & Apparel, OEM engines and others. Year-Round Products consist of BRP vehicles that are sold and used throughout the year in most climates and include ATVs, SSVs, 3WVs and electric motorcycles product lines. All products within the Year-Round Product category are sold under the Can-Am brand. Seasonal products consist of BRP products that are mostly used in specific seasons. These products include snowmobiles, which are mainly used during the winter season with sales to dealers concentrated in the months of September to January, as well as PWC and Sea-Doo pontoons, which are mainly used during the summer season, with sales to dealers concentrated in the months of January to April. All these products leverage BRP’s Rotax engines. PA&A, OEM Engines and Others consist of parts, accessories, and apparel (referred to as “PA&A”), Rotax engines for karts, recreational aircrafts and jet boats, as well as other products and services.

The following table shows the percentage of total revenues by category:

 

Proportion of Total Revenues  (in percentages)		Three-month periods ended
		April 30, 2026				April 30, 2025
Year-Round Products			60.6%				59.9%
Seasonal Products			23.8%				22.7%
PA&A, OEM Engines and Others			15.6%				17.4%
Total Revenues [1]			100.0%				100.0%

^[1] Figures are on a continuing basis.

 

BRP Inc.		Management’s Discussion and Analysis		6

Factors Affecting the Company’s Results of Operations

Revenues and Sales Program Costs

The Company’s revenues are primarily derived from the wholesale activities to dealers and distributors of the Company’s manufactured vehicles, including Year-Round Products, Seasonal Products, and PA&A, OEM Engines and Others. Revenue recognition normally occurs when products are shipped to dealers or distributors from the Company’s facilities.

In order to support the wholesale activities of the Company and the retail activities of dealers and distributors, the Company may provide support in the form of various sales programs consisting of cash and non-cash incentives. The cash incentives consist mainly of rebates and volume discounts given to dealers and distributors, free or extended coverage period under dealer and distributor inventory financing programs, and retail financing programs. The cost of these cash incentives is recorded as a reduction of revenues. The non-cash incentives mainly consist of extended warranty coverage or free PA&A. When an extended warranty coverage is given with the purchase of a product, a portion of the revenue recognized upon the sale of that product is deferred and recognized during the extended warranty coverage period. The cost of the free PA&A is recorded in cost of sales.

The support provided to dealers, distributors and consumers tends to increase when general economic conditions are difficult, when changing market conditions require the launch of new or more competitive programs, or when dealer and distributor inventory is above appropriate levels.

Under dealer and distributor inventory financing arrangements, the Company could be required to purchase repossessed new and unused products in certain cases of default by dealers or distributors. The cost of repossession tends to increase when dealers or distributors are facing challenging and prolonged difficult retail conditions and when their non-current inventory level is high. During the current fiscal year and previous fiscal year, the Company did not experience significant repossessions under its dealer and distributor inventory financing arrangements. Refer to the “Off-Balance Sheet Arrangements” section of this MD&A for more information on dealer and distributor inventory financing arrangements.

Commodity Costs

Approximately 75% of the Company’s cost of sales consists of material used in the manufacturing process. Therefore, the Company is exposed to the fluctuation of prices of certain raw materials such as aluminum, steel, plastic, resins, stainless steel, copper, rubber and certain rare earth metals. Additionally, the Company is exposed to fuel price fluctuations related to its procurement and distribution activities. The Company does not hedge its long-term exposure to such price fluctuations. Therefore, an increase in commodity prices could negatively impact the Company’s operating results if it is not able to transfer these cost increases to dealers, distributors or consumers.

 

BRP Inc.		Management’s Discussion and Analysis		7

Warranty Costs

The Company’s regular warranty generally covers periods ranging from twelve months to three years for most products. In certain circumstances, the Company provides extended warranty coverage as a result of sales programs, under certain commercial accounts, or as required by local regulations. During the warranty period, the Company reimburses dealers and distributors for the entire cost of repair or replacement performed on the products (mainly composed of parts or accessories provided by the Company and labour costs incurred by dealers or distributors). In addition, the Company sells in the normal course of business and provides under certain sales programs extended product warranties.

During its product development process, the Company ensures that high quality standards are maintained at each development stage of a new product. This includes the development of detailed product specifications, the evaluation of the quality of the supply chain and the manufacturing methods and detailed testing requirements over the development stage of the products. Additionally, product quality is ensured by quality inspections during and after the manufacturing process.

The Company records a regular warranty provision when products are sold. Management believes that, based on available information, the Company has adequate provisions to cover any future warranty claims on products sold. However, future claim amounts can differ significantly from provisions that are recorded in the condensed consolidated interim statements of financial position. For extended warranty, the claims are recorded in cost of sales as incurred.

Foreign Exchange

The Company’s revenues are reported in Canadian dollars but are mostly generated in U.S. dollars, Canadian dollars and euros. The Company’s revenues reported in Canadian dollars are to a lesser extent exposed to foreign exchange fluctuations with the Australian dollar, Brazilian real, Swedish krona, Norwegian krone, British pound, New Zealand dollar, Mexican peso and Chinese yuan. The costs incurred by the Company are mainly denominated in Canadian dollars, U.S. dollars and euros and, to a lesser extent in Mexican pesos. Therefore, recorded revenues, gross profit and operating income in Canadian dollars are exposed to foreign exchange fluctuations. The Company’s facilities are located in different countries, which helps mitigate some of its foreign currency exposure.

As of April 30, 2026, the Company had an outstanding balance of U.S. $1,720.8 million ($2,341.9 million) under its U.S. $1,765.0 million ($2,402.0 million) term facility agreement (the “Term Facility”), which results in a gain or loss in net income when the U.S. dollar/Canadian dollar exchange rate at the end of the period varies from the opening period rate. Additionally, the Company’s interest expense on the Term Facility is exposed to U.S. dollar/Canadian dollar exchange rate fluctuations. The Company does not currently hedge the U.S. dollar/Canadian dollar exchange rate fluctuation exposures related to its Term Facility, and therefore, an increase in the value of the U.S. dollar against the Canadian dollar could negatively impact the Company’s net income.

For further detail relating to the Company’s exposure to foreign currency fluctuations, see “Financial Instruments – Foreign Exchange Risk” section of this MD&A.

 

BRP Inc.		Management’s Discussion and Analysis		8

Net Financing Costs (Financing Costs less Financing Income)

Net financing costs are incurred principally on long-term debt, defined benefit pension plan liabilities and revolving credit facility. As at April 30, 2026, the Company’s long-term debt of $2,443.5 million was mainly comprised of the Term Facility, which includes Term Loans B-2 and B-3, the currently outstanding tranches of which both bear interest at Term SOFR plus 2.25%. The Company entered into interest rate cap contracts, which limit its exposure to interest rates increases.

Income Taxes

The Company is subject to federal, state and provincial income taxes in jurisdictions in which it conducts business. The Canadian income tax statutory rate was 26.5% for the three-month period ended April 30, 2026. However, the Company’s effective consolidated tax rate is influenced by various factors, including the mix of accounting profits or losses before income tax among tax jurisdictions in which it operates and the foreign exchange gain or loss on the Term Facility. The Company expects to pay cash taxes in all tax jurisdictions for Fiscal 2027.

Seasonality

The Company’s revenues and operating income experience substantial fluctuations from quarter to quarter. In general, wholesale sales of the Company’s products are higher in the period immediately preceding and during their respective season of use. However, the mix of product sales may vary considerably from time to time as a result of changes in seasonal and geographic demand, the introduction of new products and models and production scheduling for particular types of products.

 

BRP Inc.		Management’s Discussion and Analysis		9

Executive Summary

The first quarter of Fiscal 2027 was marked by double-digit revenue growth compared to the same period last year. The increase in revenues was primarily driven by higher ORV shipments and favourable product mix resulting from the introduction of new models and features in this product category. Revenue growth was also attributable to higher PWC shipments compared to the same period last year, during which shipments occurred later in the season. Gross profit and gross profit margin increased compared to last year, reflecting the positive impacts of higher volumes, lower sales programs and favourable pricing, partially offset by the impacts of global tariffs.

The Company’s North American retail sales were down 7% for the three-month period ended April 30, 2026 compared to the same period last year. The decrease in retail sales was mainly due to lower Snowmobile industry volumes compared with a strong end-of-season last year, as well as to market share losses in PWC. The decrease was partially offset by market share gains in ORV.

On April 14, 2026, the Company announced that the potential incremental tariff cost related to the amendment of Section 232 tariffs on Steel, Aluminum and Copper imports into the U.S. was expected to be in excess of $500 million for Fiscal 2027, before any mitigation measures that could partially offset these impacts. Given the amendment came into effect on April 6, 2026, the impacts on the financial results of the first quarter of Fiscal 2027 were limited.

Financial Highlights

 

(in millions of Canadian dollars, except per share data and margin)		Three-month periods ended
		April 30, 2026				April 30, 2025				Variance ($)				Variance (%)
Income Statement [2]
Total Revenues			$2,391.8				$1,846.9				$544.9				29.5%
Gross Profit			561.6				394.8				166.8				42.2%
Gross Profit Margin (%)			23.5%				21.4%				N/A				210bps
Operating Income			225.5				93.9				131.6				140.1%
Normalized EBITDA [1]			334.4				200.8				133.6				66.5%
Net Income			127.3				161.0				(33.7)				(20.9%)
Normalized Net Income [1]			134.5				34.6				99.9				288.7%
Diluted EPS			1.73				2.19				(0.46)				(21.0%)
Normalized Diluted EPS [1]			1.83				0.47				1.36				289.4%
Net Income (Loss) from Discontinued Operations			1.6				(10.9)				12.5				114.7%

^[1] See “Non-IFRS Measures” section.

^[2] Unless otherwise indicated, figures are on a continuing basis.

 

BRP Inc.		Management’s Discussion and Analysis		10

Retail Performance & Market Statistics

North American retail sales - for the First Quarter of Fiscal 2027

The Company’s North American retail sales decreased by 7% for the three-month period ended April 30, 2026 compared to the same period last year. The decrease in retail sales was mainly due to lower Snowmobile industry volumes compared with a strong end-of-season last year, as well as to market share losses in PWC. The decrease was partially offset by market share gains in ORV.

 

●

North American Year-Round Products retail sales increased on a percentage basis in the mid-single digits compared to the three-month period ended April 30, 2025. The Year-Round Products industry sales increased on a percentage basis in the low-single digits over the same period.

●

North American Seasonal Products retail sales decreased on a percentage basis in the low thirties range compared to the three-month period ended April 30, 2025. The Seasonal Products industry sales decreased on a percentage basis in the mid-teens range over the same period.

North American dealer inventories

As at April 30, 2026, North American network inventories decreased by 3% compared to April 30, 2025. The decrease is mainly explained by lower Snowmobile inventory. The decrease was partially offset by higher PWC inventories compared to the same period last year, during which shipments occurred later in the season.

 

BRP Inc.		Management’s Discussion and Analysis		11

Results of Operations

 

(in millions of Canadian dollars, except margin data)		Three-month periods ended
		April 30, 2026				April 30, 2025				Variance ($)				Variance (%)
Income Statement [1]
Revenues
Year-Round Products			$1,448.7				$1,105.8				$342.9				31.0%
Seasonal Products			568.4				419.2				149.2				35.6%
PA&A, OEM Engines and Others			374.7				321.9				52.8				16.4%
Total Revenues			2,391.8				1,846.9				544.9				29.5%
Gross Profit			561.6				394.8				166.8				42.2%
Gross Profit Margin (%)			23.5%				21.4%				N/A				210bps
Operating Expenses			336.1				300.9				35.2				11.7%
Normalized EBITDA [2]			334.4				200.8				133.6				66.5%
Net Financing Costs			41.9				45.3				(3.4	)			(7.5%)
Income Taxes			47.5				14.0				33.5				239.3%
Net Income			127.3				161.0				(33.7	)			(20.9%)
Normalized Net Income [2]			134.5				34.6				99.9				288.7%
Net Income (Loss) from Discontinued Operations			1.6				(10.9)				12.5				114.7%

^[1] Unless otherwise indicated, figures are on a continuing basis.

^[2] See “Non-IFRS Measures” section.

Revenues

Year-Round Products

The increase in revenues from Year-Round Products was primarily attributable to a higher volume of units sold across most product lines and to a favourable product mix in ORV resulting from the introduction of new models and features in this product category. The increase was also attributable to a favourable pricing net of sales programs across most product lines. The increase includes an unfavourable foreign exchange rate variation of $14 million.

Seasonal Products

The increase in revenues from Seasonal Products was primarily attributable to a higher volume of PWC sold compared to the same period last year, during which shipments occurred later in the season. The increase was also attributable to lower sales programs in Snowmobile.

PA&A, OEM Engines and Others

The increase in revenues from PA&A, OEM Engines and Others was primarily attributable to a higher volume of PA&A sold, as well as to favourable pricing across most product lines. The increase was partially offset by higher sales programs and unfavourable product mix in PA&A.

Gross Profit

Gross profit and gross profit margin increased compared to last year, reflecting the positive impacts of higher volumes, lower sales programs and favourable pricing, partially offset by the impacts of global tariffs. The increase in gross profit includes an unfavourable foreign exchange rate variation of $16 million.

 

BRP Inc.		Management’s Discussion and Analysis		12

Operating Expenses

The following table provides a breakdown of the Company’s Operating Expenses for the three-month period ended April 30, 2026 compared to the three-month period ended April 30, 2025:

 

(in millions of Canadian dollars)		Three-month periods ended
		April 30, 2026				April 30, 2025				Variance ($)				Variance (%)
Selling and marketing			$130.4				$107.4				$23.0				21.4%
Research and development			118.8				105.0				13.8				13.1%
General and administrative			88.1				77.9				10.2				13.1%
Other operating (income) expenses			(1.2)				10.6				(11.8)				(111.3%)
Operating Expenses [1]			$336.1				$300.9				$35.2				11.7%

^[1] Unless otherwise indicated, figures are on a continuing basis.

The increase in operating expenses was mainly attributable to higher S&M expenses following the launch of campaigns to support revenue growth, as well as increased investments in R&D and G&A to reinforce product development and infrastructure, respectively. The increase was partially offset by a favourable foreign exchange variation on working capital, net of forward contracts. The increase in operating expenses includes a favourable foreign exchange rate variation of $10 million.

Normalized EBITDA ^[1]

The increase in Normalized EBITDA ^[1] was primarily due to higher gross profit, partially offset by increased operating expenses.

Net Financing Costs

The decrease in net financing costs was not material.

Income Taxes

The increase in income tax expense was mainly due to a higher operating income. The effective income tax rate amounted to 27.2% for the three-month period ended April 30, 2026 compared to 8% for the three-month period ended April 30, 2025. The increase resulted primarily from the tax and accounting treatment of the foreign exchange loss (gain) on the Term Facility.

Net Income

The decrease in net income was primarily due to an unfavourable foreign exchange rate variation on the U.S. denominated long-term debt and to a higher income tax expense. The decrease was partially offset by a higher operating income.

Normalized Net Income ^[1]

The increase in Normalized net income ^[1] was primarily due to higher gross profit, partially offset by increased operating expenses.

Net Income (Loss) from Discontinued Operations

The increase in net income was primarily due to the closing of the sales of Alumacraft’s and Manitou’s assets during the three-month periods ended July 31, 2025 and October 31, 2025 respectively.

^[1] See “Non-IFRS Measures” section.

 

BRP Inc.		Management’s Discussion and Analysis		13

Geographical Trends for First Quarter of Fiscal 2027

Revenues

 

Revenues by geography  (in millions of Canadian dollars)		Three-month periods ended								Variance ($)				Variance (%)
		April 30, 2026				April 30, 2025
Revenues [1] ($)
United States			$1,327.5				$1,009.7				$317.8				31.5%
Canada			395.7				225.8				169.9				75.2%
International			668.6				611.4				57.2				9.4%
Total Revenues ($)			$2,391.8				$1,846.9
Revenues (%)
United States			55.5%				54.7%				N/A				80bps
Canada			16.5%				12.2%				N/A				430bps
International			28.0%				33.1%				N/A				(510bps)
Total Revenues (%)			100.0%				100.0%

^[1] Unless otherwise indicated, figures are on a continuing basis.

United States

The increase in revenues from the United States was primarily due to a higher volume of shipments, favourable product mix and lower sales programs across most product lines, as well as favourable pricing across all product lines. The increase was partially offset by a lower volume of shipments in Snowmobile and electric motorcycles. The increase includes an unfavourable foreign exchange rate variation of $33 million.

Canada

The increase in revenues from Canada was primarily due to a higher volume of shipments, favourable product mix and lower sales programs across most product lines, as well as favourable pricing across all product lines.

International

The increase in revenues from International was primarily due to a higher volume of shipments and favourable product mix across most product lines. The increase was partially offset by a lower volume of shipments in electric motorcycles, as well as higher sales programs across most product lines. The increase includes a favourable foreign exchange rate variation of $18 million.

 

BRP Inc.		Management’s Discussion and Analysis		14

Discontinued Operations

Manitou and Alumacraft

During the year ended January 31, 2026, the Company completed the sales of Alumacraft Boat Co. (“Alumacraft”) and Triton Industries Inc. (“Manitou”). Consequently, these businesses are presented as discontinued operations as of April 30, 2025, and the associated assets and liabilities were disposed as at January 31, 2026.

Telwater

During the three-month period ended April 30, 2025, the Company announced a definitive agreement to sell 100% of the outstanding shares of Telwater Pty, Ltd. to Yamaha Motor Australia Pty, Ltd. On December 18, 2025, the Company acknowledged the Australian Competition and Consumer Commission’s decision to oppose the proposed sale of Telwater to Yamaha Motor Australia Pty Ltd., a subsidiary of Yamaha Motor Co., Ltd. The Company will continue to pursue potential buyers, keeping Telwater under the sale process.

As at April 30, 2026, Telwater is presented as discontinued operations and the associated assets and liabilities as held for sale.

The net income (loss) and comprehensive income (loss) from discontinued operations, as presented in Note 14 of the unaudited condensed consolidated interim financial statements, are as follows:

 

		Three-month periods ended
(in millions of Canadian dollars)		April 30, 2026				April 30, 2025
Revenues			$28.6				$63.0
Cost of sales			24.4				66.4
Gross profit (loss)			4.2				(3.4)
Operating expenses
Selling and marketing			0.7				6.3
Research and development			0.2				4.8
General and administrative			1.2				2.8
Other operating income			(0.4)				(3.1)
Total operating expenses			1.7				10.8
Operating income (loss)			2.5				(14.2)
Income (loss) before income taxes			2.5				(14.2)
Income tax expense (recovery)			0.9				(3.3)
Net income (loss) from discontinued operations			$1.6				$(10.9)

 

BRP Inc.		Management’s Discussion and Analysis		15

		Three-month periods ended
(in millions of Canadian dollars)		April 30, 2026				April 30, 2025
Net income (loss) from discontinued operations [1]			$1.6				$(10.9)
Net changes in unrealized gain on translation of foreign operations			0.7				8.0
Total comprehensive income (loss) from discontinued operations [1]			$2.3				$(2.9)

^[1] Nil amount of net income (loss) and comprehensive income (loss) are attributable to non-controlling interest.

As at April 30, 2026, the carrying amount of assets and liabilities presented as held for sale is as follows:

 

(in millions of Canadian dollars)		April 30, 2026				January 31, 2026
Inventories			$14.2				$13.6
Property, plant and equipment			70.5				69.4
Intangible assets			40.0				38.7
Other assets			4.8				4.4
Assets classified as held for sale			$129.5				$126.1
Trade payables and accruals			9.4				8.8
Provisions			5.9				6.9
Deferred tax liabilities			9.3				8.7
Other liabilities			2.2				2.4
Liabilities associated to assets classified as held for sale			$26.8				$26.8
Assets net of liabilities held for sale			$102.7				$99.3

The net cash flows from (used in) discontinued operations are as follows:

 

		Three-month periods ended
(in millions of Canadian dollars)		April 30, 2026				April 30, 2025
Net cash flows from (used in) operating activities			$0.8				$(1.1)
Net cash flows used in investing activities			(0.8)				(0.9)
Net cash flows from financing activities			—				0.8
Net cash flows (used in) from discontinued operations			$—				$(1.2)

 

BRP Inc.		Management’s Discussion and Analysis		16

Foreign Exchange

The key average exchange rates used to translate foreign-denominated revenues and expenses, excluding any effect of the Company’s hedging program for the three-month periods ended April 30, 2026 and 2025 were as follows:

 

April 30, 2026

April 30, 2025

U.S. dollars

1.3703

CA$/US$

1.4217

CA$/US$

Euro

1.6029

CA$/€

1.5367

CA$/€

The key period-end exchange rates used to translate foreign-denominated assets and liabilities were as follows:

 

April 30, 2026

January 31, 2026

U.S. dollars

1.3609

CA$/US$

1.3558

CA$/US$

Euro

1.5962

CA$/€

1.6114

CA$/€

When comparing the operating income and the income before income tax for the three-month period ended April 30, 2026 to the corresponding period ended April 30, 2025, the foreign exchange fluctuations impact was as follows:

 

		Foreign exchange (gain) loss
(in millions of Canadian dollars)		Three-month period
Revenues			$15.0
Cost of sales			1.1
Impact of foreign exchange fluctuations on gross profit			$16.1
Operating expenses			(9.7)
Impact of foreign exchange fluctuations on operating income			$6.4
Long-term debt			135.2
Net financing costs			0.7
Impact of foreign exchange fluctuations on income before income taxes			$142.3

 

BRP Inc.		Management’s Discussion and Analysis		17

Liquidity and Capital Resources

Liquidity

The Company’s primary sources of cash consist of existing cash balances, operating activities and available borrowings under the Revolving Credit Facility, Term Facility, Term Loans and Bank Overdraft.

The Company’s primary use of cash is to fund operations, working capital requirements and capital expenditures in connection with product development and manufacturing infrastructure. The fluctuation of working capital requirements is primarily due to the seasonality of the Company’s production schedule and product shipments.

A summary of consolidated net cash flows by activity for the three-month periods ended April 30, 2026 and 2025 is presented below:

 

		Three-month periods ended
(in millions of Canadian dollars)		April 30, 2026				April 30, 2025
Net cash flows generated from operating activities			$425.5				$255.8
Net cash flows used in investing activities			(57.1)				(51.4)
Net cash flows used in financing activities			(98.0)				(78.9)
Effect of exchange rate changes on cash and cash equivalents			(0.7)				6.8
Net increase in cash and cash equivalents			269.7				132.3
Cash and cash equivalents at beginning of period			427.8				180.0
Cash and cash equivalents at end of period			$697.5				$312.3
Free cash flow [1]			$367.3				$201.3

As presented in the unaudited condensed consolidated interim financial statements, the cash flow will be analyzed on a consolidated basis.

Net Cash Flows Generated from Operating Activities

A summary of consolidated cash flows from operating activities for the three-month periods ended April 30, 2026 and 2025 is presented below:

 

		Three-month periods ended
(in millions of Canadian dollars)		April 30, 2026				April 30, 2025
Net income			$128.9				$150.1
Non-cash and non-operating items			209.6				74.6
Changes in working capital			120.0				72.3
Income taxes paid, net of refunds			(33.0)				(41.2)
Net cash flows generated from operating activities			$425.5				$255.8

Net cash flows generated from operating activities totalled $425.5 million for the three-month period ended April 30, 2026 compared to $255.8 million for the three-month period ended April 30, 2025. The $169.7 million increase in net cash flows generated was mainly due to higher profitability, favourable changes in working capital and lower income taxes paid. The favourable changes in working capital were the result of increased provisions, partially offset by increases in inventories and income tax receivables.

^[1] See “Non-IFRS Measures” section.

 

BRP Inc.		Management’s Discussion and Analysis		18

Net Cash Flows Used in Investing Activities

A summary of consolidated cash flows used in investing activities for the three-month periods ended April 30, 2026 and 2025 is presented below:

 

		Three-month periods ended
(in millions of Canadian dollars)		April 30, 2026				April 30, 2025
Additions to property, plant and equipment			$(46.1)				$(45.1)
Additions to intangible assets			(12.1)				(9.4)
Other			1.1				3.1
Net cash flows used in investing activities			$(57.1)				$(51.4)

Net cash flows used in investing activities totalled $57.1 million for the three-month period ended April 30, 2026 compared to $51.4 million for the three-month period ended April 30, 2025. The $5.7 million increase in net cash flows used was not significant, reflecting comparable investments in property, plant and equipment and intangible assets compared to the same period last year.

Net Cash Flows Used in Financing Activities

A summary of consolidated cash flows used in financing activities for the three-month periods ended April 30, 2026 and 2025 is presented below:

 

		Three-month periods ended
(in millions of Canadian dollars)		April 30, 2026				April 30, 2025
Repurchase of subordinate voting shares			$(44.5)				$—
Dividends paid			(18.2)				(15.6)
Repayment of long-term debt			(7.1)				(6.9)
Interest paid			(39.5)				(41.9)
Repayment of lease liabilities			(14.2)				(14.0)
Issuance of subordinate voting shares			25.5				—
Other			—				(0.5)
Net cash flows used in financing activities			$(98.0)				$(78.9)

Net cash flows used in financing activities totalled $98.0 million for the three-month period ended April 30, 2026 compared to $78.9 million for the three-month period ended April 30, 2025. The $19.1 million increase in net cash flows used was mainly attributable to the repurchase of subordinate voting shares during the three-month period ended April 30, 2026. The increase was partially offset by a higher number of stock options exercised during the same period.

 

BRP Inc.		Management’s Discussion and Analysis		19

Contractual Obligations

The following table summarizes the Company’s significant contractual obligations as at April 30, 2026:

 

(in millions of Canadian dollars)		Less than 1 year				1-3 years				4-5 years				More than 5 years				Total  amount
Trade payables and accruals			$1,563.4				$—				$—				$—				$1,563.4
Long-term debt (including interest)			190.5				370.5				2,490.8				—				3,051.8
Lease liabilities (including interest)			71.4				120.3				83.1				366.7				641.5
Derivative financial instruments			18.0				4.6				—				—				22.6
Other financial liabilities			54.1				22.6				5.8				32.7				115.2
Other liabilities			26.8				6.0				—				—				32.8
Total			$1,924.2				$524.0				$2,579.7				$399.4				$5,427.3

The Company enters into purchasing agreements with suppliers related to material used in production. These agreements are usually entered into before production begins and may specify a fixed or variable quantity of material to be purchased. Due to the uncertainty as to the amount and pricing of material that may be purchased, the Company is not able to determine with precision its commitments in connection with these supply agreements.

Management believes that the Company’s operating activities and available financing capacity will provide adequate sources of liquidity to meet its short-term and long-term needs.

 

BRP Inc.		Management’s Discussion and Analysis		20

Capital Resources

Revolving Credit Facility

The Company has a Revolving Credit Facility totaling $1,500.0 million, which can also be drawn in U.S dollar or Euro equivalent. As at April 30, 2026, the Company had no outstanding amount drawn on the Revolving Credit Facility (nil as at January 31, 2026). Commitment fees on the undrawn amount of the Revolving Credit Facility, varying from 0.25% to 0.40%, were 0.25%.

The applicable interest rates are subject to a customary credit spread adjustment ranging from 0.45% to 3.00%, which varies depending on a Leverage Ratio. Based on the Leverage Ratio, the cost of borrowing as at April 30, 2026, in Canadian dollars, was either the CORRA plus 1.70% or the Canadian Prime Rate plus 0.70%. In U.S. dollars, it was either the SOFR plus 1.70%, the U.S. Base Rate plus 0.70% or the U.S. Prime Rate plus 0.70%. In Euros, it was the EURIBOR plus 1.70%.

The Company is required to maintain, under certain conditions, a minimum fixed charge coverage ratio. Additionally, the total available borrowing under the Revolving Credit Facility is subject to a borrowing base calculation representing 75% of the carrying amount of trade and other receivables plus 50% of the carrying amount of inventories. The total amount available was $1,330.9 million as at April 30, 2026.

As at April 30, 2026, the Company had issued letters of credit for an amount of $20.1 million under the Revolving Credit Facility ($20.0 million as at January 31, 2026). In addition, $5.1 million in letters of credit were outstanding under other agreements as at April 30, 2026, ($5.1 million as at January 31, 2026).

 

(in millions of Canadian dollars)		April 30, 2026				January 31, 2026
Bank overdraft			$—				$—
Issued letters of credit under the Revolving Credit Facility			20.1				20.0
Other outstanding letters of credit			5.1				5.1

Term Facility

As at April 30, 2026, the cost of borrowing under the Term Loan was as follows:

 

Loan		Cost of Borrowing
Term Loan B-2		◾   Term SOFR plus 2.25% per annum, with a Term SOFR floor of 0.50%
Term Loan B-3		◾   Term SOFR plus 2.25% per annum, with a Term SOFR floor of 0.00%

Under the Term Facility, the cost of borrowing in U.S. Base Rate or U.S. Prime Rate cannot be lower than the cost of borrowing in SOFR.

 

BRP Inc.		Management’s Discussion and Analysis		21

The Company is required to repay a minimum of 0.25% of the nominal amount each quarter, less any voluntary prepayments done to date. Consequently, the Company repaid an amount of U.S. $4.3 million ($5.9 million) during the three-month period ended April 30, 2026 (U.S. $3.7 million ($5.2 million) during the three-month period ended April 30, 2025). Also, the Company may be required to repay a portion of the Term Facility in the event that it has an excess cash position at the end of the fiscal year and its leverage ratio is above a certain threshold level. As at April 30, 2026 and 2025, the Company was not required to repay any portion of the Term Facility under this requirement.

Austrian Term Loans

As at April 30, 2026, the Company had €66.3 million ($105.9 million) outstanding under its Austrian term loans bearing interest at a range between 0.93% to 3.23% and maturing between June 2026 and December 2030.

Lease Liabilities

As at April 30, 2026, the contractual obligations in relation to assets recognized under lease agreements amounted to $641.5 million ($258.8 million as at January 31, 2026).

Normal Course Issuer Bid Program

During the three-month period ended April 30, 2026, the Company continued share repurchases under the NCIB that was announced and started during the fiscal year ended January 31, 2026 and repurchased for cancellation 438,200 subordinate voting shares, for a total consideration of $44.5 million.

Dividend

On May 27, 2026, the Company’s Board of Directors declared a quarterly dividend of $0.25 per share for holders of its multiple and subordinate voting shares. The dividend will be paid on July 14, 2026 to shareholders of record at the close of business on June 30, 2026.

The Board of Directors has determined that this quarterly dividend is appropriate based on several relevant factors, including, without limitation, the Company’s results of operations, current and anticipated cash requirements and surplus, financial condition, contractual restrictions and financing agreement covenants (including restrictions in the Term Facility and the Revolving Credit Facility or other material agreements) and solvency tests imposed by corporate law.

The payment of each quarterly dividend remains subject to the declaration of that dividend by the Board of Directors. The actual amount, the declaration date, the record date and the payment date of each quarterly dividend are subject to the discretion of the Board of Directors.

 

BRP Inc.		Management’s Discussion and Analysis		22

Consolidated Financial Position

The following table reflects the main variances that have occurred in the Company’s unaudited condensed consolidated interim statements of financial position between April 30, 2026 and January 31, 2026, the impact of the fluctuation of exchange rates on such variances, the related net variance (excluding the impact of the fluctuation of exchange rates on such variances) as well as explanations for the net variance:

 

(in millions of  Canadian dollars)		April 30, 2026				January 31, 2026				Variance				Exchange Rate Impact				Net Variance				Explanation of Net Variance
Trade and other receivables			$520.8				$607.2				$(86.4)				$(1.9)				$(88.3)			Mostly explained by seasonality.
Inventories			1,863.4				1,824.6				38.8				(6.2)				32.6			Mostly explained by finished goods for upcoming deliveries.
Property, plant and equipment			1,773.3				1,816.8				(43.5)				3.5				(40.0)			Mostly explained by depreciation.
Right-of-use assets			452.3				212.2				240.1				(0.3)				239.8			The increase in right-of-use assets was primarily attributable to a new PA&A distribution center.
Trade payables and accruals			1,563.4				1,515.2				48.2				35.6				83.8			Mostly explained by an increase in purchasing activities.
Provisions			937.4				858.1				79.3				(0.8)				78.5			Mostly explained by higher sales programs.
Long-term debt, including current portion			2,443.5				2,442.3				1.2				(7.8)				(6.6)			Variance is not material.
Lease liabilities			478.4				237.4				241.0				(0.5)				240.5			The increase in lease liabilities was primarily attributable to a new PA&A distribution center.

 

BRP Inc.		Management’s Discussion and Analysis		23

Off-Balance Sheet Arrangements

Dealer and Distributor Financing Arrangements

The Company, most of its independent dealers and some of its independent distributors are parties to agreements with third-party financing service providers. These agreements provide financing to facilitate the purchase of the Company’s products and improve the Company’s working capital by allowing an earlier collection of accounts receivable from dealers and distributors. Approximately three-quarters of the Company’s sales are made under such agreements. The parties listed above have agreements with Huntington Distribution Finance, Inc., Huntington Commercial Finance Canada Inc., Huntington Commercial Finance LLC and Huntington Commercial Finance New Zealand Ltd (collectively, “Huntington”), to provide financing facilities in North America, Australia and New Zealand, and with Wells Fargo Commercial Distribution Finance, Wells Fargo Bank International Unlimited Company and Wells Fargo International Finance LLC (collectively “Wells Fargo”) for financing facilities in North America. The agreement between the Company and Huntington will expire on January 31, 2028. During the three-month period ended July 31, 2025, the Company signed a wholesale financing agreement in Europe with De Lage Landen International B.V. (“DLL”), in replacement of the Wells Fargo Bank International Unlimited Company agreement that expired on January 31, 2026. The agreement became effective on December 12, 2025.

The total amount of financing provided to the Company’s independent dealers and distributors totalled $2,238.3 million for the three-month period ended April 30, 2026, compared to $1,492.4 million for the three-month period ended April 30, 2025. The outstanding financing between the Company’s independent dealers and distributors and third-party finance companies amounted to $2,903.4 million and $2,635.2 million as at April 30, 2026, and January 31, 2026, respectively.

The breakdown of outstanding amounts by country and local currency between the Company’s independent dealers and distributors with third-party finance companies were as follows, as at:

 

(in millions)		Currency				April 30, 2026				January 31, 2026
Total outstanding			CAD				$2,903.4				$2,635.2
United States			USD				$1,519.6				$1,399.1
Canada			CAD				$613.7				$533.4
Europe			EUR				€ 66.0				€ 55.5
Australia and New Zealand			AUD				$119.1				$121.7
Total outstanding - continuing operations			CAD				$2,859.4				$2,564.9
Total outstanding - discontinued operations			CAD				$44.0				$70.3

The costs incurred by the Company under the dealers’ and distributors’ financing agreements totalled $27.5 million for the three-month period ended April 30, 2026 compared to $26.4 million for the three-month period ended April 30, 2025.

 

BRP Inc.		Management’s Discussion and Analysis		24

Under the dealer and distributor financing agreements, in the event of default, the Company may be required to purchase, from the finance companies, repossessed new and unused products at the total unpaid principal balance of the dealer or distributor to the finance companies.

The combined consolidated maximum obligation is generally within a range of:

i) U.S. $25.0 million ($34.0 million) or 10% of the last twelve-month average amount of consolidated financing outstanding under the financing agreements ($251.7 million as at April 30, 2026) and;

ii) Euro €10.0 million ($16.0 million) or 10% of the calendar year twelve-month average amount of consolidate financing outstanding under the financing agreements (not applicable as at April 30, 2026).

As such, the maximum consolidated amount subject to the Company’s obligation to purchase repossessed new and unused products from the finance companies was $274.1 million as at April 30, 2026 and $284.4 million as at January 31, 2026. This includes a remaining obligation of $6.4 million from financing agreements with Wells Fargo.

For the year ended April 30, 2026, the Company did not incur losses related to new and unused products repossessed by the finance companies ($0.8 million loss for the year ended April 30, 2025).

Consumer Financing Arrangements

The Company has contractual relationships with third-party financing companies in order to facilitate consumer credit for the purchase of its products in North America. The agreements generally allow the Company to offer a subsidized interest rate to consumers for a certain limited period under certain sales programs. Under these contracts, the Company’s financial obligations are related to the commitments made under certain sales programs.

 

BRP Inc.		Management’s Discussion and Analysis		25

Transaction Between Related Parties

Transactions with Bombardier Inc., a Company Related to Beaudier Group

Pursuant to the purchase agreement entered into in 2003 in connection with the acquisition of the recreational product business of Bombardier Inc., the Company committed to reimburse to Bombardier Inc. income taxes amounting to $22.4 million as at April 30, 2026 and $22.4 million as at January 31, 2026, respectively. The payments will begin when Bombardier Inc. starts making income tax payments in Canada and/or in the United States. The Company does not expect to make any payments to Bombardier Inc. in relation to that obligation for Fiscal 2027.

Financial Instruments

The Company’s financial instruments, divided into financial assets and financial liabilities, are measured at the end of each period at fair value or amortized costs using the effective interest method depending on their classification determined by IFRS. By nature, financial assets are exposed to credit risk whereas financial liabilities are exposed to liquidity risk. Additionally, the Company’s financial instruments and transactions could be denominated in foreign currency creating a foreign exchange exposure that could be mitigated by the use of derivative financial instruments. The Company is to a lesser extent exposed to interest risk associated to its Revolving Credit Facility, Term Facility and Austrian term loans.

Foreign Exchange Risk

The elements presented in the Company’s unaudited condensed consolidated interim financial statements in Canadian dollars are significantly exposed to the fluctuation of exchange rates, mainly the Canadian dollar/U.S. dollar rate and the Canadian dollar/euro rate.

The Company’s cash inflows and outflows are mainly comprised of Canadian dollars, U.S. dollars and euros. The Company intends to maintain, as a result of its business transactions, a certain offset position on U.S. dollar and euro denominated cash inflows and outflows. 

For some currencies over which the Company cannot achieve an offset through its recurring business transactions, the Company uses foreign exchange contracts according to the Company’s hedging strategy. Management periodically reviews the relevant hedging position and may hedge at any level within the authorized parameters of the policy, up to the maximum percentage allowed. Those contracts are accounted for under the cash flow hedge model covering highly probable forecasted sales in these currencies, and the gains or losses on those derivatives are recorded in net income only when the forecasted sales occur. 

Finally, the Company reduces the exposure on its net income arising from the revaluation at period-end of monetary items denominated in a different functional currency by using foreign exchange contracts. Those contracts are recorded in net income at each period end in order to mitigate the gains or losses resulting from the revaluation at spot rate of these foreign-denominated positions.

While the Company’s operating income is protected, to a certain extent, from significant fluctuations of foreign exchange rates resulting from the application of the Company’s hedging strategy, the net income is significantly exposed to Canadian dollar/U.S. dollar rate fluctuations due to the U.S. dollar-denominated long-term debt. However, there is a monetary impact for the Company only to the extent the Term Facility is repaid.

 

BRP Inc.		Management’s Discussion and Analysis		26

Liquidity Risk

The Company is exposed to the risk of encountering difficulty in meeting obligations related to its financial liabilities. In order to manage its liquidity risk accurately, the Company continuously monitors its operating cash requirements taking into account the seasonality of the Company’s working capital needs, revenues and expenses. The Company believes the cash flows generated from operations combined with its cash on hand and the availability of funds under its credit facility ensures its financial flexibility and mitigates its liquidity risk.

Credit Risk

The Company could be exposed, in the normal course of business, to the potential inability of dealers, distributors and other business partners to meet their contractual obligations on financial assets and on amounts guaranteed under dealer and distributor financing arrangements with Huntington, Wells Fargo and DLL.

The Company considers that its credit risk associated with its trade receivables and its limited responsibilities under the dealer and distributor financing agreements with Huntington, Wells Fargo and DLL does not represent a significant concentration of risk and loss due to the large number of dealers, distributors and other business partners and their dispersion across many geographic areas. Moreover, the Company mitigates such risk by doing business through its own distribution channels and by monitoring the creditworthiness of the dealers and distributors in the different geographic areas.

Interest Rate Risk

The Company is exposed to the variation of interest rates mainly resulting from the Term SOFR on its Term Facility. However, the Company entered into interest rate cap contracts, which limit its exposure to interest rate increase.

 

BRP Inc.		Management’s Discussion and Analysis		27

Non-IFRS Measures and Reconciliation Tables

The Company uses non-IFRS measures and ratio, including the following:

 

Non-IFRS  measures		Definition		Reason for use
Normalized EBITDA		Net income before financing costs, financing income, income tax expense (recovery), depreciation expense and normalized elements		Assist investors in determining the financial performance of the Company’s operating activities on a consistent basis by excluding certain non-cash elements such as depreciation expense, impairment charge, foreign exchange gain or loss on the Company’s long-term debt denominated in U.S. dollars and foreign exchange gain or loss on certain of the Company’s lease liabilities. Other elements, such as restructuring and wind-down costs, non-recurring gain or loss and acquisition-related costs, may be excluded from net income in the determination of Normalized EBITDA as they are considered not being reflective of the operational performance of the Company
Normalized net income		Net income before normalized elements adjusted to reflect the tax effect on these elements		In addition to the financial performance of operating activities, these measures consider the impact of investing activities, financing activities and income taxes on the Company’s financial results
Normalized income tax expense		Income tax expense adjusted to reflect the tax effect on normalized elements and to normalize specific tax elements		Assist investors in determining the tax expense relating to the normalized items explained above, as they are considered not being reflective of the operational performance of the Company
Normalized effective tax rate		Based on Normalized net income before Normalized income tax expense		Assist investors in determining the effective tax rate including the normalized items explained above, as they are considered not being reflective of the operational performance of the Company
Normalized earnings per share – diluted		Calculated by dividing the Normalized net income by the weighted average number of shares – diluted		Assist investors in determining the normalized financial performance of the Company’s activities on a per share basis
Free cash flow		Cash flows from operating activities less additions to PP&E and intangible assets		Assist investors in assessing the Company’s liquidity generation abilities that could be available for shareholders, debt repayment and business combination, after capital expenditure

The Company believes non-IFRS measures are important supplemental measures of financial performance because they eliminate items that have less bearing on the Company’s financial performance and thus highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS measures. The Company also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of companies, many of which present similar metrics when reporting their results. Management also uses non-IFRS measures in order to facilitate financial performance comparisons from period to period, prepare annual operating budgets, assess the Company’s ability to meet its future debt service, capital expenditure and working capital requirements and also as a component in the determination of the short-term incentive compensation for the Company’s employees. Because other companies may calculate these non-IFRS measures differently than the Company does, these metrics are not comparable to similarly titled measures reported by other companies.

 

BRP Inc.		Management’s Discussion and Analysis		28

Reconciliation Tables ^[2]

The following table presents the reconciliation of Net income to Normalized net income ^[1] and Normalized EBITDA ^[1].

 

		Three-month periods ended
(in millions of Canadian dollars)		April 30, 2026				April 30, 2025
Net income			$127.3				$161.0
Normalized elements
Foreign exchange loss (gain) on long-term debt and lease liabilities			9.0				(128.6)
Costs related to business combinations [3]			1.1				3.1
Other elements [4]			—				0.9
Income tax adjustment [1] [5]			(2.9)				(1.8)
Normalized net income [1]			134.5				34.6
Normalized income tax expense [1]			50.4				15.8
Financing costs adjusted [1]			44.6				46.6
Financing income			(3.1)				(1.3)
Depreciation expense adjusted [1]			108.0				105.1
Normalized EBITDA [1]			$334.4				$200.8

 

[1]	See “Non-IFRS Measures” section.

 

[2]	Figures are on a continuing basis.

 

[3]	Transaction costs and depreciation of intangible assets related to business combinations.

 

[4]	Other elements include transaction costs associated with the sale of the Marine businesses and restructuring costs.

 

[5]	Income tax adjustment is related to the income tax on Normalized elements subject to tax and for which income tax has been recognized and to the adjustment related to the impact of foreign currency translation from Mexican operations.

 

BRP Inc.		Management’s Discussion and Analysis		29

The following table presents the reconciliation of consolidated net cash flows generated from operating activities to consolidated free cash flow ^[1].

 

(millions of Canadian dollars)		Three-month periods ended
		April 30, 2026				April 30, 2025
Net cash flows generated from operating activities			$425.5				$255.8
Additions to property, plant and equipment			(46.1)				(45.1)
Additions to intangible assets			(12.1)				(9.4)
Free cash flow [1]			$367.3				$201.3
Free cash flow from continuing operations [1]			$367.3				$203.3
Free cash flow used in discontinued operations [1]			$—				$(2.0)

^[1] See “Non-IFRS Measures” section.

 

BRP Inc.		Management’s Discussion and Analysis		30

The following table ^[2] presents the reconciliation of items as included in the Normalized net income ^[1] and Normalized EBITDA ^[1] compared to respective IFRS measures as well as the Normalized EPS – basic and diluted ^[1] calculation.

 

(millions of Canadian dollars, except per share data)		Three-month periods  ended
		April 30, 2026				April 30, 2025
Depreciation expense reconciliation
Depreciation expense			$108.7				$106.5
Depreciation of intangible assets related to business combinations			(0.7)				(1.4)
Depreciation expense adjusted [1]			$108.0				$105.1
Income tax expense reconciliation
Income tax expense			$47.5				$14.0
Income tax adjustment [3]			2.9				1.8
Normalized income tax expense [1]			$50.4				$15.8
Financing costs reconciliation
Financing costs			$45.0				$46.6
Other			(0.4)				—
Financing costs adjusted [1]			$44.6				$46.6
Normalized basic EPS [1] calculation
Normalized net income [1]			$134.5				$34.6
Non-controlling interests			0.6				0.1
Weighted average number of shares - basic			73,151,257				73,031,821
Normalized basic EPS [1]			$1.85				$0.48
Normalized diluted EPS [1] calculation
Normalized net income [1]			$134.5				$34.6
Non-controlling interests			0.6				0.1
Weighted average number of shares - diluted			73,931,682				73,513,777
Normalized diluted EPS [1]			$1.83				$0.47

[1]	See “Non-IFRS Measures” section.

[2]	Figures are on a continuing basis.

[3]	Income tax adjustment is related to the income tax on Normalized elements subject to tax and for which income tax has been recognized and to the adjustment related to the impact of foreign currency translation from Mexican operations.

 

BRP Inc.		Management’s Discussion and Analysis		31

Summary of Consolidated Quarterly Results ^[2]

 

		Three-month periods ended
		April				January				October				July				April				January				October				July
		30,				31,				31,				31,				30,				31,				31,				31,
		2026				2026				2025				2025				2025				2025				2024				2024
		Fiscal 2027				Fiscal 2026				Fiscal 2026				Fiscal 2026				Fiscal 2026				Fiscal 2025				Fiscal 2025				Fiscal 2025
(millions of Canadian dollars,  except per share and gross profit  data)
Revenues
Year-Round Products			$1,448.7				$1,317.2				$1,265.6				$1,113.8				$1,105.8				$1,128.0				$1,036.4				$985.0
Seasonal Products			568.4				796.4				606.2				469.7				419.2				677.5				616.0				541.8
PA&A, OEM Engines and Others			374.7				343.7				378.5				304.7				321.9				312.8				321.1				284.3
Total revenues			2,391.8				2,457.3				2,250.3				1,888.2				1,846.9				2,118.3				1,973.5				1,811.1
Gross profit			561.6				553.6				541.2				397.7				394.8				421.8				435.1				399.3
As a percentage of revenues			23.5%				22.5%				24.1%				21.1%				21.4%				19.9%				22.0%				22.0%
Net income (loss)			127.3				45.8				76.5				57.1				161.0				(50.5)				30.6				42.0
Normalized EBITDA [1]			334.4				363.8				325.6				213.2				200.8				247.0				268.5				234.9
Normalized net income [1]			134.5				163.3				117.7				66.9				34.6				76.8				88.5				76.5
Basic EPS			1.75				0.64				1.05				0.79				2.21				(0.69)				0.42				0.56
Diluted EPS			1.73				0.63				1.04				0.79				2.19				(0.68)				0.42				0.55
Normalized basic EPS [1]			1.85				2.24				1.61				0.93				0.48				1.06				1.22				1.03
Normalized diluted EPS [1]			1.83				2.21				1.59				0.92				0.47				1.05				1.20				1.02

^[1] See “Non-IFRS Measures” section.

^[2] Unless otherwise indicated, figures are on a continuing basis and prior periods are reclassified accordingly.

 

BRP Inc.		Management’s Discussion and Analysis		32

Reconciliation Table for Consolidated Quarterly Results ^[2]

 

		Three-month periods ended
		April				January				October				July				April				January				October				July
		30,				31,				31,				31,				30,				31,				31,				31,
		2026				2026				2025				2025				2025				2025				2024				2024
(millions of Canadian dollars)		Fiscal 2027				Fiscal 2026				Fiscal 2026				Fiscal 2026				Fiscal 2026				Fiscal 2025				Fiscal 2025				Fiscal 2025
Net income (loss)			$127.3				$45.8				$76.5				$57.1				$161.0				$(50.5)				$30.6				$42.0
Normalized elements
Foreign exchange (gain) loss on long-term debt and lease liabilities			9.0				(80.0)				31.8				7.0				(128.6)				103.4				26.2				11.8
Cybersecurity incident [3]			—				—				—				—				—				(12.5)				—				—
Impairment and other charges [4]			—				232.5				—				—				—				—				9.4				—
Costs related to business combinations (reversal) [5]			1.1				1.5				3.1				3.3				3.1				(7.9)				3.6				3.8
Exit costs [6]			—				—				—				—				—				15.1				—				—
Restructuring and related costs (reversal) [7]			—				(0.5)				(0.5)				—				—				41.8				11.9				8.9
Transaction costs on long-term debt [8]			—				—				12.6				—				—				—				—				—
Special long-term incentive program [9]			—				—				—				4.4				—				—				—				—
Executive management transition cost [10]			—				2.5				2.5				2.5				—				—				—				—
Other elements [11]			—				2.0				0.9				1.0				0.9				1.2				—				—
Income tax adjustment [1][12]			(2.9)				(40.5)				(9.2)				(8.4)				(1.8)				(13.8)				6.8				10.0
Normalized net income [1]			134.5				163.3				117.7				66.9				34.6				76.8				88.5				76.5
Normalized income tax expense [1]			50.4				41.9				39.7				(12.4)				15.8				19.5				26.3				10.8
Financing costs adjusted [1]			44.6				46.5				55.0				50.5				46.6				48.4				51.1				50.1
Financing income adjusted [1]			(3.1)				(3.2)				(3.2)				(3.3)				(1.3)				(0.9)				(1.3)				(4.0)
Depreciation expense adjusted [1]			108.0				115.3				116.4				111.5				105.1				103.2				103.9				101.5
Normalized EBITDA [1]			$334.4				$363.8				$325.6				$213.2				$200.8				$247.0				$268.5				$234.9

[1]	See “Non-IFRS Measures” section.

[2]	Unless otherwise indicated, figures are on a continuing basis and prior periods are reclassified accordingly.

[3]	During Fiscal 2025, the Company received insurance payments in relation to the cybersecurity incident that occurred in Fiscal 2023.

[4]

During Fiscal 2026, the Company recognized impairment charges related to the EV assets and light mobility CGU, increased provisions related to EV products, as well as reversed the non-controlling interest liability. During Fiscal 2025, the Company recognized an impairment charge on unutilized assets.

[5]	Transaction costs and depreciation of intangible assets related to business combinations.

[6]	The Company impaired service parts inventory related to its Evinrude outboard engine business.

[7]	The Company recorded restructuring costs, which includes severance packages to employees as part of workforce reduction, contract exit costs and supplier claims related to restructuring activities.

[8]	Derecognition of unamortized transaction costs and incremental transaction costs related to the amendment of the Company’s Term Facility.

[9]	Incremental fair value recorded as a result of a special long-term incentive program.

[10]	Includes the impact of accelerated vesting of executive management stock options.

[11]	Other elements include transaction costs associated with the sale of the Marine businesses and fees associated with the secondary offerings that occurred during Fiscal 2025 and 2026.

[12]

Income tax adjustment is related to the income tax on Normalized elements subject to tax and for which income tax has been recognized, to the adjustment related to the impact of foreign currency translation from Mexican operations, and to the deferred income tax on operating losses recorded as part of the impairment.

 

BRP Inc.		Management’s Discussion and Analysis		33