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On September 3, BRP Inc. (NASDAQ:DOO) reported a second quarter that looked ugly on the bottom line and strong everywhere else. Revenue climbed 18.5% year over year to $2.24 billion, yet normalized diluted EPS swung to a loss of $0.18 a share from a profit of $0.92 a year earlier. Tariffs did the damage. Demand did not. Management raised full-year guidance anyway, and that contradiction is the whole story here.
The off-road vehicle business is why BRP can absorb a tariff hit and still lift guidance. Side-by-side retail share rose more than three percentage points in current model year units, with Can-Am capturing nearly a third of everything sold in North America, an all-time high for the brand. ATV retail rose mid-single digits even as the broader industry fell, pushing Can-Am into the number two spot in that category. Utility cab units have quadrupled over the past six years and now make up almost half the utility side-by-side industry, prompting BRP to expand manufacturing capacity by roughly 33%.
Asia Pacific retail grew 8%, well ahead of a low-single-digit industry pace. On the strength of that momentum, plus a favorable side-by-side mix, management raised full-year revenue guidance to a range of $9.23 billion to $9.475 billion and lifted normalized EPS guidance by $1, to $4 to $4.5. Free cash flow came in at $193 million for the quarter and $560 million year to date, and dealer inventory stayed disciplined at roughly 100 days for off-road vehicles despite rising 2% year over year.
