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BRP Inc 6-K, filed Sep 2, 2021

BRP Inc. (DOO)

6-K 2021-09-02 For: 2021-09-02
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Added on July 07, 2026

About this 6-K

BRP Inc filed this 6-K on September 2, 2021.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR15D-16

OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of September, 2021

Commission File Number: 001-38648

BRP INC.

(Translation ofregistrant’s name into English)

726 Saint-Joseph Street

Valcourt, Quebec, Canada

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F ☐ Form 40-F ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): _

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): _

EXHIBIT INDEX

Exhibits 99.1 and 99.2 to this report of a Foreign Private Issuer on Form 6-K are deemed filed for all purposes under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended.

Exhibit<br>No. Description
99.1 Unaudited Condensed Consolidated Interim Financial Statements for the Three- and Six-Months Ended July 31, 2021
99.2 Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Three- and Six-Months Ended July 31, 2021
99.3 Regulation 52-109F2 Certification of Chief Executive Officer
99.4 Regulation 52-109F2 Certification of Chief Financial Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BRP Inc.
By: /s/ Sébastien Martel
Name: Sébastien Martel
Title: Chief Financial Officer
Date: September 2, 2021

EX-99.1

Exhibit 99.1

LOGO

Unaudited Condensed Consolidated Interim Financial Statements

BRP Inc.

For the three- and six-month periods ended July 31, 2021 and 2020

BRP Inc.

CONDENSEDCONSOLIDATED INTERIM STATEMENTS OF NET INCOME

[Unaudited]

[in millions of Canadian dollars, except per share data]

Three-month periods ended Six-month periods ended
Notes July 31,<br><br><br>2021 July 31,<br><br><br>2020 July 31,<br><br><br>2021 July 31,<br><br><br>2020
Revenues 13 **** 1,903.8 1,233.3 **** 3,712.4 2,463.1
Cost of sales **** 1,333.7 984.9 **** 2,600.3 1,979.6
Gross profit **** 570.1 248.4 **** 1,112.1 483.5
Operating expenses
Selling and marketing **** 95.3 64.0 **** 195.5 145.7
Research and development **** 68.3 46.9 **** 134.1 97.4
General and administrative **** 57.4 53.7 **** 122.2 98.7
Other operating expenses 14 **** 10.7 18.6 **** 5.4 32.4
Impairment charge 15 **** — 5.7 **** — 177.1
Total operating expenses **** 231.7 188.9 **** 457.2 551.3
Operating income (loss) **** 338.4 59.5 **** 654.9 (67.8 )
Financing costs 16 **** 15.7 28.8 **** 98.4 65.8
Financing income 16 **** (1.6 ) (1.1 ) **** (2.8 ) (15.1 )
Foreign exchange loss (gain) on long-term debt **** 26.1 (94.4 ) **** (49.0 ) (10.2 )
Income (loss) before income taxes **** 298.2 126.2 **** 608.3 (108.3 )
Income tax expense (recovery) 17 **** 85.3 0.1 **** 151.0 (8.3 )
Net income (loss) **** 212.9 126.1 **** 457.3 $(100.0 )
Attributable to shareholders **** 212.6 126.3 **** 456.8 $(99.7 )
Attributable to non-controlling interest **** 0.3 $(0.2 ) **** 0.5 $(0.3 )
Basic earnings (loss) per share 12 **** 2.54 1.45 **** 5.41 $(1.14 )
Diluted earnings (loss) per share 12 **** 2.46 1.43 **** 5.25 $(1.14 )

All values are in US Dollars.

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

2

BRP Inc.

CONDENSEDCONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME

[Unaudited]

[in millions of Canadian dollars]

Three-month periods ended Six-month periods ended
July 31,<br><br><br>2021 July 31,<br><br><br>2020 **** July 31,<br><br><br>2021 July 31,<br><br><br>2020
Net income (loss) **** 212.9 126.1 **** 457.3 $(100.0)
Other comprehensive income
Items that will be reclassified subsequently to net income
Net changes in fair value of derivatives designated as cash flow hedges **** (16.3) (9.8) **** 6.3 (8.1)
Net changes in unrealized gain (loss) on translation of foreign operations **** (2.9) 24.5 **** (19.6) 28.1
Income tax (expense) recovery **** 4.6 2.3 **** (1.6) 2.1
**** (14.6) 17.0 **** (14.9) 22.1
Items that will not be reclassified subsequently to net income
Actuarial gains (losses) on defined benefit pension plans **** (13.5) (34.0) **** 32.9 (16.4)
Gain (loss) on fair value of restricted investments **** 0.3 0.5 **** 0.2 (0.2)
Income tax (expense) recovery **** 3.5 8.8 **** (8.7) 4.4
**** (9.7) (24.7) **** 24.4 (12.2)
Total other comprehensive income (loss) **** (24.3) (7.7) **** 9.5 9.9
Total comprehensive income (loss) **** 188.6 118.4 **** 466.8 $(90.1)
Attributable to shareholders **** 188.3 118.4 **** 466.5 $(90.1)
Attributable to non-controlling interest **** 0.3 - **** 0.3 $-

All values are in US Dollars.

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

3

BRP Inc.

CONDENSEDCONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

[Unaudited]

[in millions of Canadian dollars]

As at

Notes July 31,<br><br><br>2021 January 31,<br><br><br>2021
Cash and cash equivalents **** 355.4 $1,325.7
Trade and other receivables **** 303.0 311.5
Income taxes and investment tax credits receivable **** 20.4 28.4
Other financial assets 3 **** 72.5 76.5
Inventories 4 **** 1,340.6 1,087.3
Other current assets **** 44.0 32.9
Total current assets **** 2,135.9 2,862.3
Investment tax credits receivable **** 20.2 18.8
Other financial assets 3 **** 38.9 31.6
Property, plant and equipment **** 1,146.7 1,064.3
Intangible assets **** 466.1 465.1
Right-of-use assets **** 219.8 214.2
Deferred income taxes **** 222.3 227.1
Other non-current<br>assets **** 3.3 2.5
Total non-currentassets **** 2,117.3 2,023.6
Total assets **** 4,253.2 $4,885.9
Trade payables and accruals **** 1,224.0 $1,296.5
Provisions 6 **** 314.0 353.2
Other financial liabilities 7 **** 180.5 348.6
Income tax payable **** 110.0 63.0
Deferred revenues **** 78.6 72.4
Current portion of long-term debt 8 **** 24.4 25.3
Current portion of lease liabilities **** 36.0 33.5
Total current liabilities **** 1,967.5 2,192.5
Long-term debt 8 **** 1,995.7 2,384.4
Lease liabilities **** 207.4 206.3
Provisions 6 **** 76.5 75.2
Other financial liabilities 7 **** 32.3 34.4
Deferred revenues **** 99.5 132.7
Employee future benefit liabilities **** 257.8 297.8
Deferred income taxes **** 14.3 16.4
Other non-current<br>liabilities **** 20.2 21.1
Total non-currentliabilities **** 2,703.7 3,168.3
Total liabilities **** 4,671.2 5,360.8
Deficit **** (418.0) (474.9)
Total liabilities and deficit **** 4,253.2 $4,885.9

All values are in US Dollars.

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

4

BRP Inc.

CONDENSEDCONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

[Unaudited]

[in millions of Canadian dollars]

For the six-month period ended July 31, 2021

Attributed to shareholders
Capital<br><br><br>Stock<br> <br>(Note 9) Contributed<br><br><br>surplus Retainedlosses Translation<br><br><br>of foreign<br> <br>operations Cash-<br><br><br>flow<br> <br>hedges Total Non-<br><br><br>controlling<br> <br>interests Total<br><br><br>deficit
Balance as at January 31, 2021 **** 210.4 **** $(154.0 ) **** $(575.9 ) **** 35.5 **** 5.3 **** $(478.7 ) **** 3.8 **** $(474.9 )
Net income **** — **** — **** 456.8 **** **** — **** — **** 456.8 **** **** 0.5 **** 457.3 ****
Other comprehensive income (loss) **** — **** — **** 24.4 **** **** (19.4 ) **** 4.7 **** 9.7 **** **** (0.2 ) **** 9.5 ****
Total comprehensive income (loss) **** — **** — **** 481.2 **** **** (19.4 ) **** 4.7 **** 466.5 **** **** 0.3 **** 466.8 ****
Dividends **** — **** — **** (21.9 ) **** — **** — **** (21.9 ) **** — **** (21.9 )
Issuance of subordinate shares **** 15.9 **** (4.2 ) **** — **** **** — **** — **** 11.7 **** **** — **** 11.7 ****
Repurchase of subordinate shares (Note 9) **** (32.7 ) **** 200.0 **** (575.4 ) **** — **** — **** (408.1 ) **** — **** (408.1 )
Stock-based compensation **** — **** 9.8 ^[a]^ **** — **** **** — **** — **** 9.8 **** **** — **** 9.8 ****
Other **** — **** — **** — **** **** — **** — **** — **** **** (1.4 ) **** (1.4 )
Balance as at July 31, 2021 **** 193.6 **** 51.6 **** $(692.0 ) **** 16.1 **** 10.0 **** $(420.7 ) **** 2.7 **** $(418.0 )

All values are in US Dollars.

^[a]^ Includes $0.8 million of income tax recovery.

For the six-month period ended July 31, 2020
Attributed to shareholders
Capital<br><br><br>Stock Contributed<br><br><br>surplus Retained<br><br><br>losses Translation<br><br><br>of foreign<br> <br>operations Cash-<br><br><br>flowhedges Total Non-<br><br><br>controlling<br> <br>interests Total<br><br><br>deficit
Balance as at January 31, 2020 190.6 $(32.6 ) $(757.0 ) 4.9 0.3 $(593.8 ) 4.1 $(589.7 )
Net loss — — (99.7 ) — — (99.7 ) (0.3 ) (100.0 )
Other comprehensive income (loss) — — (12.2 ) 27.8 (6.0 ) 9.6 0.3 9.9
Total comprehensive income (loss) — — (111.9 ) 27.8 (6.0 ) (90.1 ) — (90.1 )
Issuance of subordinate shares 5.1 (1.5 ) — — — 3.6 — 3.6
Repurchase of subordinate shares (4.4 ) 70.3 (63.4 ) — — 2.5 — 2.5
Stock-based compensation — 7.7 ^[a]^ — — — 7.7 — 7.7
Balance as at July 31, 2020 191.3 43.9 $(932.3 ) 32.7 $(5.7 ) $(670.1 ) 4.1 $(666.0 )

All values are in US Dollars.

^[a]^ Includes $0.3 million of income tax recovery.

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

5

BRP Inc.

CONDENSEDCONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

[Unaudited]

[in millions of Canadian dollars]

Six-month periods ended
Notes July 31,<br><br><br>2021 July 31,<br><br><br>2020
OPERATING ACTIVITIES
Net income (loss) **** 457.3 $(100.0)
Non-cash and non-operating<br>items:
Depreciation expense **** 131.7 128.2
Income tax expense (recovery) 17 **** 151.0 (8.3)
Foreign exchange gain on long-term debt **** (49.0) (10.2)
Interest expense and transaction costs 16 **** 73.5 59.5
Impairment charge 15 **** — 177.1
Other **** 32.0 (7.5)
Cash flows generated from operations before changes in working capital **** 796.5 238.8
Changes in working capital:
(Increase) decrease in trade and other receivables **** (1.3) 205.4
(Increase) decrease in inventories **** (279.9) 287.3
Increase in other assets **** (23.5) (5.4)
Decrease in trade payables and accruals **** (53.6) (357.1)
Increase in other financial liabilities **** 40.3 23.3
Decrease in provisions **** (28.8) (40.1)
Decrease in other liabilities **** (23.1) (13.6)
Cash flows generated from operations **** 426.6 338.6
Income taxes paid, net of refunds **** (99.7) (12.0)
Net cash flows generated from operating activities **** 326.9 326.6
INVESTING ACTIVITIES
Additions to property, plant and equipment **** (208.4) (68.2)
Additions to intangible assets **** (20.5) (10.2)
Proceeds on disposal of property, plant and equipment **** 0.2 0.1
Other **** 0.7 (0.5)
Net cash flows used in investing activities **** (228.0) (78.8)
FINANCING ACTIVITIES
Issuance of long-term debt 8 **** 409.0 964.3
Long-term debt amendment fees 8 **** (19.7) (41.9)
Repayment of long-term debt 8 **** (768.8) (9.2)
Repayment of lease liabilities **** (17.6) (16.9)
Interest paid **** (27.7) (44.7)
Issuance of subordinate voting shares **** 11.7 3.6
Repurchase of subordinate voting shares 9 **** (638.2) (59.6)
Dividends paid **** (21.9) —
Decrease in revolving credit facilities **** — (0.3)
Other **** (4.5) (0.6)
Net cash flows generated from (used in) financingactivities **** (1,077.7) 794.7
Effect of exchange rate changes on cash and cash equivalents **** 8.5 1.1
Net increase (decrease) in cash and cash equivalents **** (970.3) 1,043.6
Cash and cash equivalents at the beginning of period **** 1,325.7 42.5
Cash and cash equivalents at the end of period **** 355.4 $1,086.1

All values are in US Dollars.

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

6

BRP Inc.

NOTES TOCONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three- and six-month periods ended July 31, 2021 and 2020

[Unaudited]

[Tabular figures are in millions of Canadian dollars, unless otherwise indicated]

1. NATURE OF OPERATIONS

BRP Inc. (“BRP”) is incorporated under the laws of Canada. BRP’s multiple voting shares are owned by Beaudier Inc. and 4338618 Canada Inc. (collectively, “Beaudier Group”), Bain Capital Luxembourg Investments S.à r.l. (“Bain Capital”) and La Caisse de dépôt et placement du Québec (“CDPQ”), (collectively, the “Principal Shareholders”) whereas BRP’s subordinate voting shares are listed in Canada on the Toronto Stock Exchange under the symbol DOO and in the United States on the Nasdaq Global Select Market under the symbol DOOO.

BRP and its subsidiaries (the “Company”) design, develop, manufacture and sell powersports vehicles and marine products. The Company’s Powersports segment comprises “Year-Round Products” which consists of all-terrain vehicles, side-by-side vehicles and three-wheeled vehicles; “Seasonal Products” which consists of snowmobiles and personal watercraft; and “Powersports PA&A and OEM Engines” which consists of parts, accessories and apparel (“PA&A”), engines for karts, motorcycles and recreational aircraft and other services. Additionally, the Company’s “Marine” segment consists of boats, jet boat and outboard engines and related PA&A and other services.

The Company’s products are sold mainly through a network of independent dealers, independent distributors and to original equipment manufacturers (the “Customers”). The Company distributes its products worldwide and manufactures them in Mexico, Canada, Austria, the United States, Finland and Australia.

The Company’s headquarters is located at 726 Saint-Joseph Street, Valcourt, Québec, J0E 2L0.

2. BASIS OF PRESENTATION

These unaudited condensed consolidated interim financial statements for the three- and six-month periods ended July 31, 2021 and 2020 have been prepared using accounting policies consistent with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) and in accordance with IAS 34 “ Interim Financial Reporting ”. These unaudited condensed consolidated interim financial statements for the three- and six-month periods ended July 31, 2021 and 2020 follow the same accounting policies as the audited consolidated financial statements for the year ended January 31, 2021 and, as such, should be read in conjunction with them.

The preparation of these unaudited condensed consolidated interim financial statements in accordance with the Company’s accounting policies requires management to make estimates and judgments that can affect the reported amounts of assets and liabilities, related amounts of revenues and expenses, other comprehensive income and disclosures made. The Company’s best estimates are based on the information, facts and circumstances available at the time estimates are made. Management uses historical experience and information, general economic conditions and trends, as well as assumptions regarding probable future outcomes as the basis for determining estimates. Actual results could differ from the estimates used and such differences could be significant.

These unaudited condensed consolidated interim financial statements include the financial statements of BRP and its subsidiaries. BRP controls all of its subsidiaries that are wholly owned through voting equity interests, except for Regionales Innovations Centrum GmbH in Austria for which a non-controlling interest of 25% is recorded upon consolidation, BRP Commerce & Trade Co. Ltd in China for which a non-controlling interest of 20% is recorded upon consolidation and Telwater Pty Ltd (“Telwater’’) in Australia for which there is a non-controlling interest of 20%. BRP is also part of a joint venture located in Austria. All inter-company transactions and balances have been eliminated upon consolidation.

7

BRP Inc.

NOTES TOCONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three- and six-month periods ended July 31, 2021 and 2020

[Unaudited]

[Tabular figures are in millions of Canadian dollars, unless otherwise indicated]

2. BASIS OF PRESENTATION [CONTINUED]

The Company’s revenues and operating income experience substantial fluctuations from quarter to quarter. In general, wholesale of the Company’s products are higher in the period immediately preceding and during their particular 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.

On September 1, 2021, the Board of Directors of the Company approved these unaudited condensed consolidated interim financial statements for the three- and six-month periods ended July 31, 2021 and 2020.

3. OTHER FINANCIAL ASSETS

The Company’s other financial assets were as follows, as at:

July 31,<br><br><br>2021 January 31,<br><br><br>2021
Restricted investments<br>^[a]^ **** 15.2 $15.7
Derivative financial instruments **** 29.4 25.9
Advances to suppliers related to property, plant and equipment **** 45.7 47.8
Other **** 21.1 18.7
Total other financial assets **** 111.4 $108.1
Current **** 72.5 76.5
Non-current **** 38.9 31.6
Total other financial assets **** 111.4 $108.1

All values are in US Dollars.

^[a]^ The restricted investments are publicly traded bonds that can only be used for severance payments and pension costs<br>associated with Austrian pension plans, and are not available for general corporate use.

The non-current portion is mainly attributable to the restricted investments and derivative financial instruments.

4. INVENTORIES

The Company’s inventories were as follows, as at:

July 31,<br><br><br>2021 January 31,<br><br><br>2021
Materials and work in progress **** 799.0 $540.7
Finished products **** 276.1 305.0
Parts, accessories and apparel **** 265.5 241.6
Total inventories **** 1,340.6 $1,087.3

All values are in US Dollars.

In the condensed consolidated interim statements of net income during the three- and six-month period ended July 31, 2021, the Company recognized a write-down on inventories of $8.6 million and $9.0 million respectively ($20.7 million and $32.3 million respectively during the three- and six-month period ended July 31, 2020).

On July 17, 2021, there was a fire in the storage yard of the Juarez 2, Mexico facility. A preliminary loss of $55.4 million mainly composed of inventory and some property plant and equipment was recorded during the three-month period ended July 31, 2021. The write-off was compensated by a corresponding amount receivable expected to be received from the insurers, net of its deductible.

8

BRP Inc.

NOTES TOCONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three- and six-month periods ended July 31, 2021 and 2020

[Unaudited]

[Tabular figures are in millions of Canadian dollars, unless otherwise indicated]

5. REVOLVING CREDIT FACILITIES

On May 4, 2021, the Company amended its $700.0 million revolving credit facilities to increase the availability to $800.0 million and extend the maturity from May 2024 to May 2026 (the “Revolving Credit Facilities”). The pricing grid and other conditions remained unchanged. As at July 31, 2021, the Company had no outstanding indebtedness under the Revolving Credit Facilities.

The applicable interest rates vary depending on a leverage ratio. The leverage ratio is defined in the Revolving Credit Facilities agreement by the ratio of net debt to consolidated cash flows of the Company (the “Leverage ratio”). The applicable interest rates are as follows:

(i) U.S. dollars at either
(a) LIBOR plus 1.45% to 3.00% per annum; or
--- ---
(b) U.S. Base Rate plus 0.45% to 2.00% per annum; or
--- ---
(c) U.S. Prime Rate plus 0.45% to 2.00% per annum;
--- ---
(ii) Canadian dollars at either
--- ---
(a) Bankers’ Acceptance plus 1.45% to 3.00% per annum; or
--- ---
(b) Canadian Prime Rate plus 0.45% to 2.00% per annum
--- ---
(iii) Euros at Euro LIBOR plus 1.45% to 3.00% per annum.
--- ---

In addition, the Company incurs commitment fees of 0.25% to 0.40% per annum on the undrawn amount of the Revolving Credit Facilities.

As at July 31, 2021, the cost of borrowing under the Revolving Credit Facilities was as follows:

(i) U.S. dollars at either
(a) LIBOR plus 1.45% per annum; or
--- ---
(b) U.S. Base Rate plus 0.45% per annum; or
--- ---
(c) U.S. Prime Rate plus 0.45% per annum;
--- ---
(ii) Canadian dollars at either
--- ---
(a) Bankers’ Acceptance plus 1.45% per annum; or
--- ---
(b) Canadian Prime Rate plus 0.45% per annum
--- ---
(iii) Euros at Euro LIBOR plus 1.45% per annum.
--- ---

As at July 31, 2021, the commitment fees on the undrawn amount of the Revolving Credit Facilities were 0.25% per annum.

The Company is required to maintain, under certain conditions, a minimum fixed charge coverage ratio. Additionally, the total available borrowing under the Revolving Credit Facilities 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.

9

BRP Inc.

NOTES TOCONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three- and six-month periods ended July 31, 2021 and 2020

[Unaudited]

[Tabular figures are in millions of Canadian dollars, unless otherwise indicated]

6. PROVISIONS

The Company’s provisions were as follows, as at:
July 31,<br><br><br>2021 January 31,<br><br><br>2021
Product-related **** 362.5 390.0
Restructuring **** 3.7 11.2
Other **** 24.3 27.2
Total provisions **** 390.5 428.4
Current **** 314.0 353.2
Non-current **** 76.5 75.2
Total provisions **** 390.5 428.4

All values are in US Dollars.

Product-related provisions include provisions for regular warranty coverage on products sold, product liability provisions and provisions related to sales programs offered by the Company to its Customers in order to support the retail activity.

The non-current portion of provisions is mainly attributable to product-related provisions.

The changes in provisions were as follows:

Product-related Restructuring Other Total
Balance as at January 31, 2021 **** 390.0 **** 11.2 **** 27.2 **** 428.4
Expensed during the period **** 221.0 **** — **** 6.1 **** 227.1
Paid during the period **** (233.9 ) **** (7.0 ) **** (7.7 ) **** (248.6 )
Reversed during the period **** (4.9 ) **** 0.1 **** (0.9 ) **** (5.7 )
Effect of foreign currency exchange rate changes **** (9.8 ) **** (0.6 ) **** (0.4 ) **** (10.8 )
Unwinding of discount and effect of changes in discounting<br>estimates **** 0.1 **** — **** — **** 0.1
Balance as at July 31, 2021 **** 362.5 **** 3.7 **** 24.3 **** 390.5

All values are in US Dollars.

7. OTHER FINANCIAL LIABILITIES

The Company’s other financial liabilities were as follows, as at:
July 31,<br><br><br>2021 January 31,<br><br><br>2021
Dealer holdback programs and customer deposits **** 144.6 102.4
Due to Bombardier Inc. **** 22.1 22.2
Derivative financial instruments **** 6.1 8.6
Due to a pension management company **** 0.4 0.7
Non-controlling interest liability **** 24.9 21.0
Financial liability related to NCIB **** — 200.0
Other **** 14.7 28.1
Total other financial liabilities **** 212.8 383.0
Current **** 180.5 348.6
Non-current **** 32.3 34.4
Total other financial liabilities **** 212.8 383.0

All values are in US Dollars.

The non-current portion is mainly comprised of the amount due to Bombardier Inc. in connection with indemnification related to income taxes.

10

BRP Inc.

NOTES TOCONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three- and six-month periods ended July 31, 2021 and 2020

[Unaudited]

[Tabular figures are in millions of Canadian dollars, unless otherwise indicated]

8. LONG-TERM DEBT

As at July 31, 2021 and January 31, 2021, the maturity dates, interest rates, outstanding nominal amounts and carrying amounts of long-term debt were as follows:

July 31, 2021
Maturity date Contractual<br><br><br>interest rate Effective<br><br><br>interest rate Outstanding<br><br><br>nominal amount Carrying<br><br><br>amount
Term Facility
Term Loan B-1 May 2027 2.09% 2.13% U.S. 1,500.0 **** $1,866.1 ****^[a]^ ****
Term Loans Dec. 2021 to Dec. 2030 0.75% to 1.60% 1.00% to 4.67% 110.6 **** 154.0
Total long-term debt **** 2,020.1
Current **** 24.4
Non-current **** 1,995.7
Total long-term debt **** 2,020.1

All values are in US Dollars.

^[^^a^^]^ Net of unamortized transaction costs of $3.9 million.
January 31, 2021
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Maturity date Contractual<br><br><br>interest rate Effective<br><br><br>interest rate Outstanding<br><br><br>nominal amount Carrying<br><br><br>amount
Term Facility
Term Loan B-1 May 2027 2.12% 2.12% U.S. $ 1,207.6 $ 1,543.0
Term Loan B-2 May 2027 6.00% 6.77% U.S. $ 597.0 733.3 ^[a]^
Term Loans Dec. 2021 to Dec. 2030 0.75% to 1.60% 1.00% to 4.67% 92.6 133.4
Total long-term debt $ 2,409.7 ****
Current **** 25.3 ****
Non-current **** 2,384.4 ****
Total long-term debt $ 2,409.7 ****

All values are in Euros.

^[a]^ Net of unamortized transaction costs of $29.5 million.

The following table explains the changes in long-term debt during the six-month period ended July 31, 2021:

Statements of cash flows Non-cash changes
Carrying<br><br><br>amount as at<br> <br>January 31,<br><br><br>2021 Issuance Repayment Effect offoreign<br>currency exchange rate<br>changes Other Carrying<br><br><br>amount as at<br><br><br>July 31, 2021
Term Facility **** 2,276.3 **** 380.8 (767.3) (49.0) **** 25.3 **** 1,866.1
Term Loans **** 133.4 **** 28.2 (1.5) (6.2) **** 0.1 **** 154.0
Total **** 2,409.7 **** 409.0 (768.8) (55.2) **** 25.4 **** 2,020.1

All values are in US Dollars.

11

BRP Inc.

NOTES TOCONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three- and six-month periods ended July 31, 2021 and 2020

[Unaudited]

[Tabular figures are in millions of Canadian dollars, unless otherwise indicated]

8.     LONG-TERM DEBT [CONTINUED]

a)    Term Facility

On February 16, 2021, the Company fully repaid the outstanding U.S. $597.0 million Term Loan B-2. The Company incurred a prepayment premium of $15.1 million, which has been recorded in financing costs. In addition, the unamortized transaction costs of $29.2 million were derecognized and recorded in financing costs. On the same date, the Company increased the amount outstanding under its Term Loan B-1 by U.S. $300.0 million to U.S. $1,507.6 million. This incremental of U.S. $300.0 million has the same terms and conditions and maturity date as the original Term Loan B-1. The Company incurred transaction costs of $4.0 million, which have been incorporated in the carrying amount of the Term Loan B-1 and are amortized over its expected life using the effective interest rate method.

As at July 31, 2021, the cost of borrowing under the Term Loan B-1 was as follows:

(i) LIBOR plus 2.00% per annum, with a LIBOR floor of 0.00%; or
(ii) U.S. Base Rate plus 1.00%; or
--- ---
(iii) U.S. Prime Rate plus 1.00%
--- ---

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 LIBOR.

The Company is required to repay a minimum of 0.25% of the nominal amount each quarter. Consequently, the Company repaid an amount of U.S. $7.6 million ($9.5 million) during the six-month period ended July 31, 2021. 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.

b)    Term Loans

During the six-month period ended July 31, 2021, the Company entered into term loan agreements at favourable interest rates under an Austrian government program. This program supports research and development projects based on the Company’s incurred expenses in Austria. The term loans have a nominal amount of €19.1 million ($28.2 million) with an interest rate varying between 0.88% and 0.93% with a maturity date in December 2030. The Company recognized a grant of €0.6 million ($0.9 million) as a reduction of research and development expenses representing the difference between the fair value of the term loan at inception and the cash received.

12

BRP Inc.

NOTES TOCONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three- and six-month periods ended July 31, 2021 and 2020

[Unaudited]

[Tabular figures are in millions of Canadian dollars, unless otherwise indicated]

9. CAPITAL STOCK

The changes in capital stock issued and outstanding were as follows:

Number of shares Carrying Amount
Subordinate voting shares
Balance as at January 31, 2021 **** 42,652,906 **** **** 206.8
Issued upon exercise of stock options 317,059 15.9
Issued in exchange of multiple voting shares 936,692 0.1
Repurchased under the substantial issuer bid offer (3,381,641 ) (19.1 )
Repurchased under the normal course issuer bid program (2,807,028 ) (13.6 )
Balance as at July 31, 2021 **** 37,717,988 **** **** 190.1
Multiple voting shares
Balance as at January 31, 2021 **** 43,891,671 **** **** 3.6
Exchanged for subordinate voting shares (936,692 ) (0.1 )
Balance as at July 31, 2021 **** 42,954,979 **** **** 3.5
Total outstanding as at July 31, 2021 **** 80,672,967 **** **** 193.6

All values are in US Dollars.

a)     Substantial issuer bid offer (“SIB”)

On July 27, 2021, the Company repurchased for cancellation 3,381,641 subordinate voting shares following the completion of its SIB for a total consideration of $350.0 million, of which $17.9 million represent the carrying amount of the shares repurchased and $332.1 million representing the amount charged to retained losses. Prior to the completion of the SIB, Beaudier group converted 936,692 of multiple voting shares into an equivalent number of subordinate voting shares. These converted shares were repurchased and cancelled in the SIB. The Company incurred $1.2 million of fees and expenses ($1.3 million net of income tax recovery of $0.1 million) relating to the SIB, which were recorded in capital stock.

b)    Normal Course Issuer Bid Program (“NCIB”)

During the six-month period ended July 31, 2021, the Company completed the NCIB that was announced and started during the fiscal year ended January 31, 2021 and repurchased 2,807,028 subordinate voting shares for a total consideration of $278.2 million.

When the Company was not permitted to purchase subordinate voting shares due to regulatory restrictions or self-imposed blackout periods, an automatic share purchase plan with a designated broker allowed the purchase of subordinate voting shares under pre-set conditions. During the six-month period ended July 31, 2021, the Company recognized a loss of $21.3 million in financing costs related to the automatic share purchase plan. The loss represents the difference between the share price used to establish the financial liability at the end of each quarter and the amount actually paid to repurchase shares during the regulatory restrictions or self-imposed blackout periods.

Of the total consideration of $278.2 million, $13.6 million represent the carrying amount of the shares repurchased, $243.3 million represents the amount charged to retained losses and $21.3 million represent the loss recognized in net income.

13

BRP Inc.

NOTES TOCONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three- and six-month periods ended July 31, 2021 and 2020

[Unaudited]

[Tabular figures are in millions of Canadian dollars, unless otherwise indicated]

10. STOCK OPTION PLAN

During the six-month period ended July 31, 2021 and 2020, the Company granted respectively 505,100 and 1,649,100 stock options to eligible officers and employees to acquire subordinated voting shares at an average exercise price of $109.66 and $26.66 respectively. The fair value of the options at the grant date was $43.06 and $9.03, respectively. Such stock options are time vesting and 25% of the options will vest on each of the first, second, third and fourth anniversary of the grant. The stock options have a ten-year term at the end of which the options expire.

11. SEGMENTED INFORMATION

Details of segment information were as follows:

For the three-month period ended July 31, 2021 Powersportssegment Marine    segment Inter-segmenteliminations Total
Revenues **** 1,778.8 **** 128.8 **** (3.8) $ 1,903.8
Cost of sales **** 1,221.5 **** 116.0 **** (3.8) **** 1,333.7
Gross profit **** 557.3 **** 12.8 **** — **** 570.1
Total operating expenses **** 231.7
Operating income **** 338.4
Financing costs **** 15.7
Financing income **** (1.6 )
Foreign exchange loss on long-term debt **** 26.1
Income before income taxes **** 298.2
Income tax expense **** 85.3
Net income **** 212.9
For the three-month period ended July 31, 2020 Powersportssegment Marinesegment Inter-segmenteliminations Total
Revenues 1,153.0 81.0 (0.7) $ 1,233.3
Cost of sales 858.6 127.0 (0.7) 984.9
Gross profit (loss) 294.4 (46.0 ) — 248.4
Total operating expenses 188.9 ^[a]^
Operating income 59.5
Financing costs 28.8
Financing income (1.1 )
Foreign exchange gain on long-term debt (94.4 )
Income before income taxes 126.2
Income tax expense 0.1
Net income 126.1

All values are in US Dollars.

^[a]^ Including an impairment charge of $5.7 million related to the Marine segment.

14

BRP Inc.

NOTES TOCONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three- and six-month periods ended July 31, 2021 and 2020

[Unaudited]

[Tabular figures are in millions of Canadian dollars, unless otherwise indicated]

11. SEGMENTED INFORMATION [CONTINUED]
For the six-month period ended July 31, 2021 Powersportssegment Marine    segment Inter-segmenteliminations Total
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Revenues **** 3,465.4 **** 256.3 **** $(9.3 ) **** 3,712.4
Cost of sales **** 2,389.5 **** 220.1 **** (9.3 ) **** 2,600.3
Gross profit **** 1,075.9 **** 36.2 **** — **** 1,112.1
Total operating expenses **** 457.2
Operating income **** 654.9
Financing costs **** 98.4
Financing income **** (2.8 )
Foreign exchange gain on long-term debt **** (49.0 )
Income before income taxes **** 608.3
Income tax expense **** 151.0
Net income **** 457.3
For the six-month period ended July 31, 2020 Powersportssegment Marinesegment Inter-segmenteliminations Total
Revenues 2,273.4 193.1 (3.4) 2,463.1
Cost of sales 1,748.5 234.5 (3.4) 1,979.6
Gross profit (loss) 524.9 (41.4 ) — 483.5
Total operating expenses 551.3 ^[a]^
Operating loss (67.8 )
Financing costs 65.8
Financing income (15.1 )
Foreign exchange gain on long-term debt (10.2 )
Income before income taxes (108.3 )
Income tax expense (8.3 )
Net loss (100.0)

All values are in US Dollars.

^[a]^ Including an impairment charge of $177.1 million related to the Marine segment.

15

BRP Inc.

NOTES TOCONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three- and six-month periods ended July 31, 2021 and 2020

[Unaudited]

[Tabular figures are in millions of Canadian dollars, unless otherwise indicated]

12.    EARNINGS PER SHARE

a) Basic earnings per share

Details of basic earnings per share were as follows:

Three-month periods ended Six-month periods ended
July 31,<br><br><br>2021 July 31,<br><br><br>2020 **** July 31,<br><br><br>2021 July 31,<br><br><br>2020
Net income (loss) attributable to shareholders **** 212.6 126.3 **** 456.8 $(99.7)
Weighted average number of shares **** 83,857,134 87,349,741 **** 84,402,885 87,473,575
Earnings (loss) per share - basic **** 2.54 1.45 **** 5.41 $(1.14)

All values are in US Dollars.

b) Diluted earnings per share

Details of diluted earnings per share were as follows:

Three-month periods ended Six-month periods ended
July 31,<br><br><br>2021 July 31,<br><br><br>2020 **** July 31,<br><br><br>2021 July 31,<br><br><br>2020
Net income (loss) attributable to shareholders **** 212.6 126.3 **** 456.8 $(99.7)
Weighted average number of shares **** 83,857,134 87,349,741 **** 84,402,885 87,473,575
Dilutive effect of stock options **** 2,472,483 1,123,978 **** 2,553,351 —
Weighted average number of diluted shares **** 86,329,617 88,473,719 **** 86,956,236 87,473,575
Earnings (loss) per share - diluted **** 2.46 1.43 **** 5.25 $(1.14)

All values are in US Dollars.

For the six-month period ended July 31, 2020, basic and diluted loss per share are the same, as the effect of stock options is antidilutive. Stock options that could potentially dilute basic earnings per share in the future, which are not included in the calculation of diluted loss per share, represent 488,518 stock options for the six-month period ended July 31, 2020.

16

BRP Inc.

NOTES TOCONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three- and six-month periods ended July 31, 2021 and 2020

[Unaudited]

[Tabular figures are in millions of Canadian dollars, unless otherwise indicated]

13. REVENUES

Details of revenues were as follows:

Three-month periods ended Six-month periods ended
July 31,<br><br><br>2021 July 31,<br><br><br>2020 July 31,<br><br><br>2021 July 31,<br><br><br>2020
Powersports
Year-Round Products **** 955.6 621.2 **** 1,878.1 $1,261.5
Seasonal Products **** 574.5 322.7 **** 1,037.9 645.3
Powersports PA&A and OEM Engines **** 248.6 209.0 **** 549.2 366.3
Marine **** 125.1 80.4 **** 247.2 190.0
Total **** 1,903.8 1,233.3 **** 3,712.4 $2,463.1

All values are in US Dollars.

The following table provides geographic information on Company’s revenues. The attribution of revenues was based on customer locations.

Three-month periods ended Six-month periods ended
July 31,<br><br><br>2021 July 31,<br><br><br>2020 July 31,<br><br><br>2021 July 31,<br><br><br>2020
United States **** 1,123.2 632.8 **** 2,145.1 $1,409.6
Europe **** 294.2 268.4 **** 594.9 458.6
Canada **** 294.1 168.5 **** 570.1 328.0
Asia Pacific **** 127.1 104.4 **** 255.2 162.9
Latin America **** 62.1 57.3 **** 140.3 98.6
Other **** 3.1 1.9 **** 6.8 5.4
**** 1,903.8 1,233.3 **** 3,712.4 $2,463.1

All values are in US Dollars.

14. OTHER OPERATING EXPENSES

Details of other operating expenses were as follows:

Three-month periods ended Six-month periods ended
July 31,<br><br><br>2021 July 31,<br><br><br>2020 July 31,<br><br><br>2021 July 31,<br><br><br>2020
Restructuring costs ^[a]^ **** — 23.6 **** $(0.1 ) $29.3
Foreign exchange (gain) loss on working capital elements **** 6.8 (2.9) **** (6.1) 15.9
(Gain) loss on forward exchange contracts **** 1.4 (1.5) **** 8.8 (11.1)
Other **** 2.5 (0.6) **** 2.8 (1.7)
Total **** 10.7 18.6 **** 5.4 $32.4

All values are in US Dollars.

^[a]^ During the three-month period ended July 31, 2020, as a result of the decision to wind-down the production of<br>Evinrude outboard engines and the realignment of its marine business, the Company announced the reduction of its global workforce by approximately 650 employees and incurred costs for terminating contracts. An amount of $29.8 million was<br>recorded as restructuring costs relating to this initiative.

17

BRP Inc.

NOTES TOCONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three- and six-month periods ended July 31, 2021 and 2020

[Unaudited]

[Tabular figures are in millions of Canadian dollars, unless otherwise indicated]

15. IMPAIRMENT CHARGE

During the three-month period ended April 30, 2020, the Company determined that some of its cash-generating units (“CGU”) were impaired and recorded an impairment charge of $30.5 million related to intangible assets of Alumacraft Boat Co. CGU, $33.3 million related to Triton Industries, Inc. CGU, and $60.7 million related to Telwater Pty Ltd CGU. The charges were determined by comparing the carrying amount of each CGU to its recoverable amount, which is the higher of the fair value less costs of disposal or the value in use. The recoverable amount for the impaired CGUs was based on a fair value less costs to sell (“FVLCTS”) calculation using market-based measurement rather than an entity-specific measurement. The Company has determined that the discounted cash flow (“DCF”) technique provided the best assessment of what each impaired CGU could be exchanged for in an arm’s length transaction. Fair value is represented by the present value of expected future cash flows of the business together with the residual value of the business at the end of the forecast period.

In addition, as a consequence of the wind-down of the Evinrude outboard engines production, an impairment charge of $52.6 million of which $30.5 million was allocated to property, plant and equipment and $22.1 million to intangible assets was recorded during the three-month period ended April 30, 2020.

16. FINANCING COSTS AND INCOME

Details of financing costs and financing income were as follows:

Three-month periods ended Six-month periods ended
July 31,<br><br><br>2021 July 31,<br><br><br>2020 July 31,<br><br><br>2021 July 31,<br><br><br>2020
Interest on long-term debt **** 11.0 22.6 **** 23.5 $37.3
Transaction costs on long-term debt **** — (0.1) **** 44.3 12.6
Interest and commitment fees on revolving credit facilities **** 0.8 1.5 **** 1.5 4.8
Interest on lease liabilities **** 2.1 2.4 **** 4.2 4.8
Net interest on employee future benefit liabilities **** 1.2 1.3 **** 2.5 2.7
Other **** 0.6 1.1 **** 22.4 3.6
Financing costs **** 15.7 28.8 **** 98.4 65.8
Financing income **** (1.6) (1.1) **** (2.8) (15.1)
Total **** 14.1 27.7 **** 95.6 $50.7

All values are in US Dollars.

18

BRP Inc.

NOTES TOCONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three- and six-month periods ended July 31, 2021 and 2020

[Unaudited]

[Tabular figures are in millions of Canadian dollars, unless otherwise indicated]

17. INCOME TAXES

Details of income tax expense (recovery) were as follows:

Three-month periods ended Six-month periods ended
July 31,<br><br><br>2021 July 31,<br><br><br>2020 July 31,<br><br><br>2021 July 31,<br><br><br>2020
Current income tax expense
Related to current year **** 91.5 7.6 **** 162.2 21.1
Related to prior years **** 1.1 (0.1) **** (0.6) 3.6
**** 92.6 7.5 **** 161.6 24.7
Deferred income tax recovery
Temporary differences **** (9.6) 5.5 **** (3.6) (30.6)
Effect of income tax rate changes on deferred income taxes **** — (0.2) **** — (0.2)
Increase (decrease) in valuation allowance **** 2.3 (12.7) **** (7.0) (2.2)
**** (7.3) (7.4) **** (10.6) (33.0)
Income tax expense (recovery) **** 85.3 0.1 **** 151.0 $(8.3 )

All values are in US Dollars.

The reconciliation of income taxes computed at the Canadian statutory rates to income tax expense (recovery) recorded was as follows:

Three-month periods ended Six-month periods ended
July 31,<br><br><br>2021 July 31,<br><br><br>2020 July 31,<br><br><br>2021 July 31,<br><br><br>2020
Income taxes calculated at statutory rates **** 79.0 **** 26.5% **** 33.4 26.5% **** 161.2 **** 26.5% **** $(28.7 ) 26.5%
Increase (decrease) resulting from:
Income tax rate differential of foreign subsidiaries **** (1.6 ) (3.3 ) **** (3.5 ) (5.0 )
Effect of income tax rate changes on deferred income taxes **** — (0.2 ) **** — (0.2 )
Increase (decrease) in valuation allowance **** 2.3 (12.7 ) **** (7.0 ) (2.2 )
Recognition of income taxes on foreign currency translation **** (0.5 ) (1.0 ) **** 0.5 4.2
Permanent differences ^[a]^ **** 4.0 (15.7 ) **** 1.0 22.8
Adjustments in respect of prior years **** 2.1 0.6 **** (0.4 ) 1.3
Other **** — (1.0 ) **** (0.8 ) (0.5 )
Income tax expense (recovery) **** 85.3 0.1 **** 151.0 $(8.3 )

All values are in US Dollars.

^[a]^ The permanent differences result mainly from the impairment charge on goodwill recorded during the six-month period ended July 31, 2020 and from the foreign exchange gain on the long-term debt denominated in U.S. dollars.

19

BRP Inc.

NOTES TOCONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three- and six-month periods ended July 31, 2021 and 2020

[Unaudited]

[Tabular figures are in millions of Canadian dollars, unless otherwise indicated]

18. FINANCIAL INSTRUMENTS
a) Fair value
--- ---

The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair values of the Company’s financial instruments take into account the credit risk embedded in the instrument. For financial assets, the credit risk of the counterparty is considered whereas for financial liabilities, the Company’s credit risk is considered.

In order to determine the fair value of its financial instruments, the Company uses, when active markets exist, quoted prices from these markets (“Level 1” fair value). When public quotations are not available in the market, fair values are determined using valuation techniques. When inputs used in the valuation techniques are only inputs directly and indirectly observable in the marketplace, fair value is presented as “Level 2” fair value. If fair value is assessed using inputs that require considerable judgment from the Company in interpreting market data and developing estimates, fair value is presented as “Level 3” fair value. For Level 3 fair value, the use of different assumptions and/or estimation methodologies may have a material effect on the estimated fair values.

The fair value level, carrying amount and fair value of restricted investments, non-controlling interest liability, derivative financial instruments and long-term debt were as follows:

As at July 31, 2021
Fair value level Carrying amount Fair value
Restricted investments (Note 3) Level 2 **** 15.2 **** 15.2
Non-controlling interest<br>liability (Note 7) Level 3 **** (24.9) **** (24.9)
Derivative financial instruments
Forward exchange contracts
Favourable **** 19.7 **** 19.7
(Unfavourable) **** (5.0 ) **** (5.0 )
Interest rate cap **** 9.7 **** 9.7
Inflation rate swap **** (1.1 ) **** (1.1 )
Level 2 **** 23.3 **** 23.3
Long-term debt (including current portion)
Term Facility (Note 8) Level 1 **** $(1,866.1 ) **** $(1,842.7 )
Term Loans (Note 8) Level 2 **** (154.0 ) **** (165.9 )
**** $(2,020.1 ) **** $(2,008.6 )

All values are in US Dollars.

For cash, trade and other receivables, revolving credit facilities, trade payables and accruals, dealer holdback programs and customer deposits, the carrying amounts reported on the condensed consolidated interim statements of financial position or in the notes approximate the fair values of these items due to their short-term nature.

20

BRP Inc.

NOTES TOCONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three- and six-month periods ended July 31, 2021 and 2020

[Unaudited]

[Tabular figures are in millions of Canadian dollars, unless otherwise indicated]

18. FINANCIAL INSTRUMENTS [CONTINUED]

b)     Liquidity risk

The following table summarizes the contractual maturities of the Company’s financial liabilities as at July 31, 2021:

Less than1 year 1-3 years 4-5 years More than5 years Totalamount
Trade payables and accruals 1,224.0 - - - 1,224.0
Long-term debt (including interest) 66.2 140.7 221.8 1,840.0 2,268.7
Lease liabilities (including interest) 43.4 76.9 54.5 106.4 281.2
Derivative financial instruments 4.3 1.8 — — 6.1
Other financial liabilities 176.2 4.4 1.7 24.4 206.7
Total **** 1,514.1 **** 223.8 **** 278.0 **** 1,970.8 **** 3,986.7

All values are in US Dollars.

19. SUBSEQUENT EVENTS

On September 1st, 2021, the Company completed the repurchase of the remaining 20% non-controlling interest in Telwater in exchange for an amount of AUD 27.2 million ($24.9 million).

21

EX-99.2

Exhibit 99.2

BRP INC.

MANAGEMENT’S DISCUSSION ANDANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

FOR THE THREE- AND SIX-MONTH PERIOD ENDED JULY 31, 2021

The following management’s discussion and analysis (“MD&A”) provides information concerning financial conditionand results of operations of BRP Inc. (the “Company” or “BRP”) for the second quarter of the fiscal year ending January 31, 2022. This MD&A should be read in conjunction with the unaudited condensed consolidated interimfinancial statements for the three- and six-month period ended July 31, 2021 and the audited consolidated financial statements and MD&A for the year ended January 31, 2021. Some of theinformation contained 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, includingthose described in the “Forward-Looking Statements” section of this MD&A. This MD&A reflects information available to the Company as at September 1, 2021.

Basis of Presentation

The unaudited condensed consolidated interim financial statements of the Company have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) 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 2022” are to the Company’s fiscal year ending January 31, 2022, to “Fiscal 2021” are to the Company’s fiscal year ended January 31, 2021 and to “Fiscal 2020” are to the Company’s fiscal year ended January 31, 2020.

This MD&A, approved by the Board of Directors on September 1, 2021, is based on the Company’s unaudited condensed consolidated interim financial statements and accompanying notes thereto for the three- and six-month periods ended July 31, 2021 and 2020.

The Company’s Powersports segment comprises Year-Round Products, which consists of all-terrain vehicles (referred to as “ATVs”), side-by-side vehicles (referred to as “SSVs”) and three-wheeled vehicles (referred to as “3WVs”); Seasonal Products, which consists of personal watercraft (referred to as “PWCs”) and snowmobiles; and Powersports PA&A and OEM Engines which consists of parts, accessories and apparel (referred to as “PA&A”), engines for karts, motorcycles and recreational aircraft and other services. Additionally, the Company’s Marine segment consists of boats, jet boat and outboard engines and related PA&A and other services.

Forward-Looking Statements

Certain statements in this MD&A about the Company’s current and future plans, prospects, expectations, anticipations, estimates and intentions, results, levels of activity, performance, objectives, targets, goals or achievements, priorities and strategies, financial position, market position, capabilities, competitive strengths, beliefs, the prospects and trends of the industries in which the Company operates, the expected growth in demand for products and services in the markets in which the Company competes, 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 liquidities or any other future events or developments and other statements 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.

1

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 current economic conditions 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 following factors, which are discussed in greater detail under the heading “Risk Factors” of its Annual Information Form: the impact of adverse economic conditions such as those resulting from the ongoing coronavirus (known as COVID-19) health crisis (including on consumer spending, the Company’s operations and supply and distribution chains, the availability of credit and the Company’s workforce); any decline in social acceptability of the Company’s products; fluctuations in foreign currency exchange rates; high levels of indebtedness; any unavailability of additional capital; unfavourable weather conditions; seasonal sales fluctuations; any inability to comply with product safety, health, environmental and noise pollution laws; the Company’s large fixed cost base; any inability of dealers and distributors to secure adequate access to capital; any supply problems, termination or interruption of supply arrangements or increases in the cost of materials; the Company’s competition in product lines; the Company’s inability to successfully execute its growth strategy; the Company’s international sales and operations; any failure of information technology systems or security breach; any failure to maintain an effective system of internal control over financial reporting and to produce accurate and timely financial statements; any loss of members of the Company’s management team or employees who possess specialized market knowledge and technical skills; any inability to maintain and enhance the Company’s reputation and brands; any significant product liability claim; any significant product repair and/or replacement due to product warranty claims or product recalls; the Company’s reliance on a network of independent dealers and distributors; the Company’s inability to successfully manage inventory levels; any intellectual property infringement and litigation; the Company’s inability to successfully execute its manufacturing strategy; increased freight and shipping costs or disruptions in transportation and shipping infrastructure; any failure to comply with covenants in financing and other material agreements; any changes in tax laws and unanticipated tax liabilities; any impairment in the carrying value of goodwill and trademarks; any deterioration in relationships with employees; pension plan liabilities; natural disasters; any failure to carry proper insurance coverage; volatility in the market price for BRP’s subordinate voting shares; the Company’s conduct of business through subsidiaries; the significant influence by Beaudier Inc. and 4338618 Canada Inc. (together the “Beaudier Group”) and Bain Capital Luxembourg Investments S. à r. l. (“Bain Capital”); and future sales of BRP’s shares by Beaudier Group, Bain Capital, directors, officers or senior management of the Company. These factors are not intended to represent a complete list of the factors that could affect the Company; however, these factors should be considered carefully.

Unless otherwise stated, 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. The forward-looking statements contained in this MD&A are expressly qualified by this cautionary statement.

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 the following: reasonable industry growth ranging from slightly down to up high-single digits; market share that will remain constant or moderately increase; no further deterioration and a relatively rapid stabilization of global and North

2

American economic conditions, including with respect to the ongoing health crisis; any increase in interest rates will be modest; currencies will remain at near current levels; inflation will remain in line with central bank expectations in countries where the Company is doing business; the Company’s margins, excluding the impact of the wind-down of Evinrude outboard engines, COVID-19 and supply chain constraints, will remain near current levels; the Company anticipates supply chain constraints but expects to be able to support product development and planned production rates on commercially acceptable terms; there will be no significant changes in tax laws or free trade arrangements or treaties applicable to the Company; no trade barriers will be imposed amongst jurisdictions in which the Company carries operations; the absence of unusually adverse weather conditions, especially in peak seasons.

3

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 uses non-IFRS measures including Normalized revenues, Normalized gross profit, Normalized EBITDA, Normalized net income, Normalized income tax expense, Normalized effective tax rate, Normalized basic earnings per share and Normalized diluted earnings per share.

Normalized revenues and Normalized gross profit are provided to assist investors in determining the financial performance of the Company on a consistent basis by excluding elements such as wind-down costs which are considered not being reflective of the ongoing operational performance of the Company. Normalized EBITDA is provided to 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, gain or loss on litigation and acquisition-related costs, may also 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, Normalized income tax expense, Normalized effective tax rate, Normalized basic earnings per share and Normalized diluted earnings per share, in addition to the financial performance of operating activities, take into account the impact of investing activities, financing activities and income taxes on the Company’s financial results.

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.

Normalized revenues is defined as revenues before normalized elements. Normalized gross profit is defined as gross profit before normalized elements. Normalized EBITDA is defined as net income before financing costs, financing income, income tax expense (recovery), depreciation expense and normalized elements. Normalized net income is defined as net income before normalized elements adjusted to reflect the tax effect on these elements. Normalized income tax expense is defined as income tax expense adjusted to reflect the tax effect on normalized elements and to normalize specific tax elements. Normalized effective tax rate is based on Normalized net income before Normalized income tax expense. Normalized earnings per share - basic and Normalized earnings per share – diluted are calculated respectively by dividing the Normalized net income by the weighted average number of shares – basic and the weighted average number of shares – diluted. The Company refers the reader to the “Selected Consolidated Financial Information” section of this MD&A for the reconciliations of Normalized EBITDA and Normalized net income presented by the Company to the most directly comparable IFRS measure.

4

Overview

BRP is a global leader in the design, development, manufacturing, distribution and marketing of powersports vehicles and marine products. The Company is a diversified manufacturer of powersports vehicles and marine products, providing enthusiasts with a variety of exhilarating, stylish and powerful products for year-round use on a variety of terrains. The Company’s diversified portfolio of brands and products includes for Powersports: Can-Am ATVs, SSVs and 3WVs, Ski-Doo and Lynx snowmobiles, Sea-Doo PWCs and Rotax engines for karts, motorcycles and recreational aircraft. For Marine, the portfolio of brands and products includes Alumacraft, Manitou, Quintrex, Stacerand Savage boats and Rotax engines for jet boats. Additionally, the Company supports its line of products with a dedicated PA&A business.

The Company employs more than 14,500 people mainly in manufacturing and distribution sites in Mexico, Canada, Austria, the United States, Finland and Australia. The Company sells its products in over 130 countries. The products are sold directly through a network of approximately 3,500 dealers in 21 countries, as well as through approximately 190 distributors serving approximately 680 additional dealers.

Highlights of the three-month period ended July 31, 2021

For the three-month period ended July 31, 2021, the Company’s financial performance was as follow in comparison to the three-month period ended July 31, 2020:

● Revenues of $1,903.8 million, an increase of $670.5 million or 54.4%;
● Gross profit of $570.1 million representing 29.9% of revenues, an increase of $321.7 million;<br>
--- ---
● Net income of $212.9 million, an increase of $86.8 million, which resulted in a diluted earnings per share of<br>$2.46, an increase of $1.03 per share;
--- ---
● Normalized net income^[1]^ of $249.5 million, an increase of<br>$148.6 million, which resulted in a normalized diluted earnings per share ^[1]^ of $2.89, an increase of $1.75 per share or 153.5%;
--- ---
● Normalized EBITDA^[1]^ of $415.0 million representing 21.8% of<br>revenues, an increase of $200.7 million or 93.7%.
--- ---

In addition, during the three-month period ended July 31, 2021:

● On May 4, 2021, the Company amended its $700.0 million Revolving Credit Facilities to increase the total<br>availability to $800.0 million and to extend the maturity from May 2024 to May 2026. The pricing grid and other conditions remain unchanged.
● The Company completed its substantial issuer bid offer (“SIB”) launched in June 2021 with the repurchase for<br>cancellation of 3,381,641 subordinate voting shares for a total consideration of $350.0 million.
--- ---

Recent events

On August 11, 2021, the Company introduced the Sea-Doo Switch, an all-new pontoon boat that marries the spirit and fun of Sea-Doo with the incredible versatility and stability of a pontoon platform.

^[1]^ See “Non-IFRS Measures” section.

5

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, Powersports PA&A and OEM Engines as well as Marine products. 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 given to dealers, distributors and consumers, volume discounts 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.

Warranty Costs

The Company’s regular warranty generally covers periods ranging from six months to five 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 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.

6

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.

ForeignExchange

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, the Brazilian real, the Swedish krona, the Norwegian krone, the British pound, the New Zealand dollar and the Russian ruble. 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 July 31, 2021, the Company had an outstanding balance of U.S. $1,500.0 million ($1,870.0 million) under its U.S. $1,535.0 million ($1,913.7 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.

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 facilities. As at July 31, 2021, the Company’s long-term debt of $2,020.1 million was mainly comprised of the Term Facility, which bear interest at LIBOR plus 2.00%. The Company entered into interest rate cap contracts, which limit its exposure to interest rate increase.

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- and six-month period ended July 31, 2021. 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 the fiscal year ending January 31, 2022, except in the United States where the Company plans to utilize its tax attributes to offset taxable income or income tax payable.

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 highest in the period immediately preceding their respective season and during the said 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. As a result, the Company’s financial results are likely to fluctuate significantly from period to period.

7

Selected Consolidated Financial Information

The selected consolidated financial information set out below for the three- and six-month periods ended July 31, 2021 and 2020, has been determined based on the unaudited condensed consolidated interim financial statements and related notes approved on September 1, 2021.

Net Income data ****
Three-month periods ended Six-month periods ended
(in millions of Canadian dollars) July 31,<br><br><br>2021 July 31,<br><br><br>2020 July 31,<br><br><br>2021 July 31,<br><br><br>2020
Revenues by category Powersports
Year-Round Products **** 955.6 621.2 **** 1,878.1 1,261.5
Seasonal Products **** 574.5 322.7 **** 1,037.9 645.3
Powersports PA&A and OEM Engines **** 248.6 209.0 **** 549.2 366.3
Marine **** 125.1 80.4 **** 247.2 190.0
Total Revenues **** 1,903.8 1,233.3 **** 3,712.4 2,463.1
Cost of sales **** 1,333.7 984.9 **** 2,600.3 1,979.6
Gross profit **** 570.1 248.4 **** 1,112.1 483.5
As a percentage of revenues **** 29.9% 20.1% **** 30.0% 19.6%
Operating expenses
Selling and marketing **** 95.3 64.0 **** 195.5 145.7
Research and development **** 68.3 46.9 **** 134.1 97.4
General and administrative **** 57.4 53.7 **** 122.2 98.7
Other operating expenses **** 10.7 18.6 **** 5.4 32.4
Impairment charge **** — 5.7 **** — 177.1
Total operating expenses **** 231.7 188.9 **** 457.2 551.3
Operating income (loss) **** 338.4 59.5 **** 654.9 (67.8 )
Net financing costs **** 14.1 27.7 **** 95.6 50.7
Foreign exchange gain on long-term debt **** 26.1 (94.4 ) **** (49.0 ) (10.2 )
Income (loss) before income taxes **** 298.2 126.2 **** 608.3 (108.3 )
Income tax expense (recovery) **** 85.3 0.1 **** 151.0 (8.3 )
Net income (loss) **** 212.9 126.1 **** 457.3 (100.0)
Attributable to shareholders **** 212.6 126.3 **** 456.8 (99.7)
Attributable to<br>non-controlling interest **** 0.3 (0.2) **** 0.5 (0.3)
Normalized EBITDA ^[1]^ **** 415.0 214.3 **** 794.0 337.3
Normalized net income ^[1]^ **** 249.5 100.9 **** 471.6 123.6

All values are in US Dollars.

^[1^^]^ See “Non-IFRS Measures” section.

8

Financial Position data

As at July 31,<br>2021 January 31,<br><br><br>2021
(in millions of Canadian dollars)
Cash and cash equivalents 355.4 $1,325.7
Working capital 168.4 669.8
Property, plant and equipment 1,146.7 1,064.3
Total assets 4,253.2 4,885.9
Total non-current financial liabilities 2,235.4 2,625.1
Total liabilities 4,671.2 5,360.8
Shareholders deficit (418.0) (474.9)

All values are in US Dollars.

Other Financial data

Three-month periods ended Six-month periods ended
(in millions of Canadian dollars, except per share data) July 31,<br><br><br>2021 July 31,<br><br><br>2020 July 31,<br><br><br>2021 July 31,<br><br><br>2020
Revenues by geography
United States **** 1,123.2 632.8 **** 2,145.1 $1,409.6
Canada **** 294.1 168.5 **** 570.1 328.0
International<br>^[1]^ **** 486.5 432.0 **** 997.2 725.5
**** 1,903.8 1,233.3 **** 3,712.4 $2,463.1
Declared dividends per share **** 0.13 0.10 **** 0.26 $-
Weighted average number of shares – basic **** 83,857,134 87,349,741 **** 84,402,885 87,473,575
Weighted average number of shares – diluted<br>^[2]^ **** 86,329,617 88,473,719 **** 86,956,236 87,473,575
Weighted average number of shares – diluted (normalized)<br>^[2]^ **** 86,329,617 88,473,719 **** 86,956,236 87,962,093
Earnings (loss) per share – basic **** 2.54 1.45 **** 5.41 $(1.14)
Earnings (loss) per share – diluted **** 2.46 1.43 **** 5.25 (1.14)
Normalized earnings per share – basic ^[3]^ **** 2.97 1.16 **** 5.58 1.42
Normalized earnings per share – diluted ^[3]^ **** 2.89 1.14 **** 5.42 1.41

All values are in US Dollars.

^[^^1]^International is defined as all jurisdictions except the United States and Canada.

^[2]^For the six-month period ended July 31, 2020, basic and diluted loss per share are the same, as the effect of stock options is antidilutive. Stock options that could potentially dilute basic earnings per share in the future, which are included in the calculation of normalized diluted earnings per share, represent 488,518 stock options for the six-month period ended July 31, 2020.

^[3]^See “Non-IFRS Measures” section.

9

Reconciliation Tables

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

Three-month periods ended Six-month periods ended
(in millions of Canadian dollars) **** July 31, 2021 **** July 31, 2020 **** July 31, 2021 **** July 31, 2020
Net income (loss) **** 212.9 126.1 **** 457.3 (100.0)
Normalized elements
Foreign exchange (gain) loss on long-term debt and lease liabilities **** 27.3 (97.8) **** (51.3) (9.0)
Transaction costs and other related expenses<br>^[2]^ **** 5.6 0.4 **** 5.8 0.9
Restructuring and related costs ^[3]^ **** — 1.8 **** (0.1) 7.5
Impairment charge ^[4]^ **** — 5.7 **** — 177.1
Transaction costs on long-term debt ^[5]^ **** — — **** 44.3 12.7
Evinrude outboard engine wind-down ^[6]^ **** 1.6 80.6 **** 2.4 80.6
COVID-19 pandemic impact ^[7]^ **** — 5.4 **** — 9.6
(Gain) loss on NCIB **** — — **** 21.3 (12.2)
Depreciation of intangible assets related to business combinations **** 1.0 1.0 **** 2.1 2.1
Other elements **** 2.9 — **** 2.9 —
Income tax adjustment **** (1.8) (22.3) **** (13.1) (45.7)
Normalized net income ^[1]^ **** 249.5 100.9 **** 471.6 123.6
Normalized income tax expense ^[1]^ **** 87.1 22.4 **** 164.1 37.4
Financing costs adjusted ^[1] [8]^ **** 15.8 28.8 **** 32.9 53.1
Financing income adjusted ^[1] [8]^ **** (1.6) (1.1) **** (2.8) (2.9)
Depreciation expense adjusted ^[1] [9]^ **** 64.2 63.3 **** 128.2 126.1
Normalized EBITDA^[1]^ **** 415.0 214.3 **** 794.0 337.3

All values are in US Dollars.

^[1]^ See “Non-IFRS Measures” section.
^[2]^ Costs related to business combinations.
--- ---
^[3]^ The Company is involved, from time to time, in restructuring and reorganization activities in order to gain flexibility<br>and improve efficiency. The costs related to these activities are mainly composed of severance costs and retention salaries.
--- ---
^[4]^ During the six-month period ended July 31, 2020, the Company recorded an<br>impairment charge of $177.1 million related to its Marine segment.
--- ---
^[5]^ During Fiscal 2022, the Company incurred a prepayment premium of $15.1 million and derecognized unamortized<br>transaction costs of $29.2 million related to the full repayment of its outstanding U.S. $597.0 million Term Loan B-2.
--- ---
^[6]^ During Fiscal 2022, the Company incurred costs related to the wind-down of the outboard engine production such as, but<br>not limited to, idle costs and other exit costs.
--- ---
^[7]^ Incremental costs associated with the COVID-19 pandemic such as, but not<br>limited to, labour cost related to furloughs.
--- ---
^[8]^ Adjusted for transaction costs on long-term debt and normal course issuer bid program (“NCIB”) gains and<br>losses in net income.
--- ---
^[9]^ Adjusted for depreciation of intangible assets acquired through business combinations.
--- ---

10

Results of operations

Analysis of Results for the second quarter of Fiscal 2022

The following section provides an overview of the financial performance of the Company for the three-month period ended July 31, 2021 compared to the same period ended July 31, 2020.

In March 2020, the World Health Organization declared coronavirus (“COVID-19”) a global pandemic. This outbreak resulted in governments worldwide enacting emergency measures to combat the spread of the virus. In April and May 2020, most of the Company’s manufacturing operations were suspended following government measures adopted in response to COVID-19. These temporary suspensions limited the Company’s ability to manufacture and wholesale units during the first half of Fiscal 2021 (“COVID-19 impact”). However, beginning in the second quarter of Fiscal 2021, retail demand started to recover and remained strong in the first half of Fiscal 2022 as the Company’s products provide an attractive outdoor and social-distancing solution for new entrants and existing powersports consumers. In the second quarter of Fiscal 2022, demand for our products remained strong and combined with a challenging supply chain environment that contributed to further decrease the dealer inventories.

Revenues

Revenues increased by $670.5 million, or 54.4%, to $1,903.8 million for the three-month period ended July 31, 2021, compared to the $1,233.3 million for the corresponding period ended July 31, 2020. The revenue increase was primarily due to a higher wholesale of Year-Round Products and Seasonal Products due to COVID-19 impact last year, lower sales programs due to a strong retail environment and a higher volume of Powersports PA&A, partially offset by an unfavourable foreign exchange rate variation of $100 million.

The Company’s North American retail sales for powersports vehicles decreased by 19% for the three-month period ended July 31, 2021 compared to the three-month period ended July 31, 2020. The decrease was mainly driven by limited product availability. North American boat retail sales decreased by 16% compared to the three-month period ended July 31, 2020 also as a result of lower product availability.

As at July 31, 2021, North American dealer inventories for powersports vehicles decreased by 51% compared to July 31, 2020, as retail sales outpaced wholesale.

Gross Profit

Gross profit increased by $321.7 million, or 129.5%, to $570.1 million for the three-month period ended July 31, 2021, compared to the $248.4 million for the corresponding period ended July 31, 2020. The gross profit increase includes an unfavourable foreign exchange rate variation of $43 million. Gross profit margin percentage increased by 980 basis points to 29.9% from 20.1% for the three-month period ended July 31, 2020. The increase was attributable to a higher volume of Year-Round and Seasonal Products sold and a favourable product mix combined with lower sales programs driven by the strong retail environment and limited product availability. The increase was partially offset by higher logistics, commodities and labour costs due to inefficiencies related to supply chain disruptions and an unfavourable foreign exchange rate variation.

Operating Expenses

Operating expenses increased by $42.8 million, or 22.7%, to $231.7 million for the three-month period ended July 31, 2021, compared to the $188.9 million for the three-month period ended July 31, 2020. This increase was mainly attributable to lower expenses in Fiscal 2021 following cost reduction initiatives to mitigate the impact of COVID-19.

Normalized EBITDA ^[1]^

Normalized EBITDA ^[1]^ increased by $200.7 million, or 93.7%, to $415.0 million for the three-month period ended July 31, 2021, compared to the $214.3 million for the three-month period ended July 31, 2020. The increase was primarily due to higher gross profit, partially offset by higher operating expenses.

^[1]^ See “Non-IFRS Measures” section.

11

Net Financing Costs

Net financing costs decreased by $13.6 million, or 49.1%, to $14.1 million for the three-month period ended July 31, 2021, compared to the $27.7 million for the three-month period ended July 31, 2020. The decrease primarily resulted from lower interest expense on the Term Facility due to a lower outstanding nominal amount and a lower average interest rate on the Term Facility.

Foreign Exchange

The key average exchange rates used to translate foreign-denominated revenues and expenses, excluding any effect of the Company’s hedging program, were as follows for the three-month periods ended July 31, 2021 and 2020:

**** July 31, 2021 **** July 31, 2020
U.S. dollars 1.2286 CA/US 1.3675 CA/US
Euro 1.4753 CA/ 1.5330 CA/

All values are in US Dollars.

When comparing the operating income and the income before income tax for the three-month period ended July 31, 2021 to the corresponding period ended July 31, 2020, the foreign exchange fluctuations impact was as follows:

Foreign exchange (gain) loss
(in millions of Canadian dollars) Three-month period
Revenues 100.4
Cost of sales (57.4)
Impact of foreign exchange fluctuations on gross profit **** 43.0
Operating expenses 1.5
Impact of foreign exchange fluctuations on operating income **** 44.5
Long-term debt 120.5
Net financing costs (1.1)
Impact of foreign exchange fluctuations on income before incometaxes **** 163.9

All values are in US Dollars.

Income Taxes

Income tax expense increased by $85.2 million to $85.3 million for the three-month period ended July 31, 2021, compared to the $0.1 million for the three-month period ended July 31, 2020. The increase was primarily due to higher operating income. The effective income tax rate amounted to 28.6% for the three-month period ended July 31, 2021 compared to the 0.1% for the three-month period ended July 31, 2020. The increase resulted primarily from the tax and accounting treatment of the foreign exchange (gain) loss on the Term Facility.

Net Income

Net income increased by $86.8 million to $212.9 million for the three-month period ended July 31, 2021, compared to the $126.1 million for the three-month period ended July 31, 2020. The increase was primarily due to higher operating income, partly offset by an unfavourable foreign exchange rate variation impact on the U.S. denominated long-term debt and higher income tax expense.

12

Analysis of Segment Results for the second quarter of Fiscal 2022

The following section provides an overview of the financial performance of the Company’s segments for the three-month period ended July 31, 2021 compared to the same period ended July 31, 2020. The inter-segment transactions are included in the analysis.

Powersports

Revenues

Year-Round Products

Revenues from Year-Round Products increased by $334.4 million, or 53.8%, to $955.6 million for the three-month period ended July 31, 2021, compared to the $621.2 million for the corresponding period ended July 31, 2020. The increase was primarily attributable to a higher volume of products sold due to COVID-19 impact last year, lower sales programs due to a strong retail environment and a favourable product mix of SSV sold. The increase was partially offset by an unfavourable foreign exchange rate variation of $51 million.

North American Year-Round Products retail sales decreased on a percentage basis in the mid-twenties range compared to the three-month period ended July 31, 2020.

Seasonal Products

Revenues from Seasonal Products increased by $251.8 million, or 78.0%, to $574.5 million for the three-month period ended July 31, 2021, compared to the $322.7 million for the corresponding period ended July 31, 2020. The increase resulted primarily from a higher volume of PWC sold due to COVID-19 impact last year, lower sales programs in light of a strong retail environment and a favourable product mix of PWC sold. The increase was partially offset by an unfavourable foreign exchange rate variation of $29 million.

North American Seasonal Products retail sales decreased on a percentage basis by high single-digits compared to the three-month period ended July 31, 2020.

Powersports PA&A and OEM Engines

Revenues from Powersports PA&A and OEM Engines increased by $39.6 million, or 18.9%, to $248.7 million for the three-month period ended July 31, 2021, compared to the $209.1 million for the corresponding period ended July 31, 2020. The increase was mainly attributable to a higher volume of PA&A and lower sales programs in light of a strong retail environment, increased usage of vehicles by consumers and the COVID-19 impact last year. The increase was partially offset by an unfavourable foreign exchange rate variation of $15 million.

Gross Profit

Gross profit increased by $262.9 million, or 89.3%, to $557.3 million for the three-month period ended July 31, 2021, compared to $294.4 million for the corresponding period ended July 31, 2020. The gross profit increase includes an unfavourable foreign exchange rate variation of $44 million. Gross profit margin percentage increased by 580 basis points to 31.3% in comparison to 25.5% for the three-month period ended July 31, 2020. The increase was due to a higher volume of products sold and a favourable product mix combined with lower sales programs driven by the strong retail environment and limited product availability. The increase was partially offset by higher logistics, commodities and labour costs due to inefficiencies relating to supply chain disruptions and an unfavourable foreign exchange rate variation.

13

Marine

Revenues

Revenues from the Marine segment increased by $47.8 million, or 59.0%, to $128.8 million for the three-month period ended July 31, 2021, compared to $81.0 million for the corresponding period ended July 31, 2020. The increase was mainly due to the strong product mix in boats and lower sales programs, partially offset by the wind-down of the Evinrude E-TEC outboard engines production resulting in a lower volume of outboard engines sold and an unfavourable foreign exchange rate variation of $6 million.

Gross Profit

Gross profit increased by $58.8 million, or 127.8%, to $12.8 million for the three-month period ended July 31, 2021, compared to a loss of 46.0 million for the corresponding period ended July 31, 2020. Gross profit margin percentage increased to 9.9% from a gross loss of -56.8% for the three-month period ended July 31, 2020. The increase was primarily due to the discontinuance of production following the decision to wind-down the Evinrude outboard engines production resulting in non-recurring discount and sales programs for the three-month period ended July 31, 2020.

Geographical Trends

Revenues

United States

Revenues from the United States increased by $490.4 million, or 77.5%, to $1,123.2 million for the three-month period ended July 31, 2021, compared to $632.8 million for the corresponding period ended July 31, 2020. The increase is mainly attributable to higher wholesale volume of Year-round Products due to COVID-19 impact last year, lower sales programs due to a strong retail environment and a favourable product mix of SSV sold. The increase was partially offset by an unfavourable foreign exchange impact of $87 million. The United States represented 59.0% and 51.3% of revenues during the three-month periods ended July 31, 2021 and 2020, respectively.

Canada

Revenues from Canada increased by $125.6 million, or 74.5%, to $294.1 million for the three-month period ended July 31, 2021, compared to $168.5 million for the corresponding period ended July 31, 2020. The increase was mainly attributable to higher wholesale due to COVID-19 impact last year and lower sales programs due to a strong retail environment. Canada represented 15.4% and 13.7% of revenues during the three-month periods ended July 31, 2021 and 2020, respectively.

International

Revenues from International increased by $54.5 million, or 12.6%, to $486.5 million for the three-month period ended July 31, 2021, compared to $432.0 million for the corresponding period ended July 31, 2020. The increase primarily resulted from lower sales programs due to a strong retail environment, a favourable product mix for of Year-round Products and Seasonal products. The increase was partially offset by a lower volume of products sold and an unfavourable foreign exchange impact of $13 million. International represented 25.6% and 35.0% of revenues during the three-month periods ended July 31, 2021 and 2020, respectively.

14

Analysis of Results for the first half of Fiscal 2022

The following section provides an overview of the Company’s financial performance for the six-month period ended July 31, 2021 compared to the same period ended July 31, 2020. The inter-segment transactions are included in the analysis.

Revenues

Revenues increased by $1,249.3 million, or 50.7%, to $3,712.4 million for the six-month period ended July 31, 2021, compared to $2,463.1 million for the corresponding period ended July 31, 2020. The revenue increase was primarily due to a higher wholesale of SSV, PWC, 3WV and PA&A due to COVID-19 impact last year, lower sales programs due to a strong retail environment and favourable product mix of SSV. The increase was partially offset by the wind-down of the Evinrude E-TEC outboard engines production resulting in a lower volume of outboard engines sold and an unfavourable foreign exchange rate variation of $192 million.

The Company’s North American retail sales for powersports vehicles remained flat for the six-month period ended July 31, 2021 compared to the six-month period ended July 31, 2020, mainly attributable to limited product availability. North American boat retail sales increased by 6% compared to the six-month period ended July 31, 2020.

Gross Profit

Gross profit increased by $628.6 million, or 130.0%, to $1,112.1 million for the six-month period ended July 31, 2021, compared to $483.5 million for the corresponding period ended July 31, 2020. The gross profit increase includes an unfavourable foreign exchange rate variation of $98 million. Gross profit margin percentage increased by 1040 basis points to 30.0% in comparison to 19.6% for the six-month period ended July 31, 2020. The increase was the result of a higher volume of products sold and a favourable product mix combined to lower sales programs driven by the strong retail environment and limited product availability. The increase was partially offset by higher logistics, commodities and labour costs due to inefficiencies relating to supply chain disruptions and an unfavourable foreign exchange rate variation.

Operating Expenses

Operating expenses decreased by $94.1 million, or 17.1%, to $457.2 million for the six-month period ended July 31, 2021, compared to $551.3 million for the six-month period ended July 31, 2020. The decrease was mainly attributable to the $177.1 million impairment charge recorded during the first half of Fiscal 2021 for the Marine segment, as well as a favourable foreign exchange rate variation of $21 million, partially offset by lower expenses in Fiscal 2021 following cost reduction initiatives to mitigate the impact of COVID-19.

15

Normalized EBITDA ^[1]^

Normalized EBITDA ^[1]^ increased by $456.7 million, or 135.4%, to $794.0 million for the six-month period ended July 31, 2021, compared to $337.3 million for the six-month period ended July 31, 2020. The increase was primarily due to higher gross profit, partially offset by higher operating expenses, when excluding the impairment charge relating to the Marine segment recorded in Fiscal 2021.

Net Financing Costs

Net financing costs increased by $44.9 million, or 88.6%, to $95.6 million for the six-month period ended July 31, 2021, compared to $50.7 million for the six-month period ended July 31, 2020. The increase is primarily attributable to the transaction costs on the Term Facility following the amendment incurred during the first quarter of Fiscal 2022, as well as the $21.3 million loss on the NCIB in Fiscal 2022 compared to the $12.2 million gain in Fiscal 2021. The gains and losses on the NCIB represent the difference between the share price used to establish the financial liability and the amount actually paid to repurchase shares during the regulatory restrictions or self-imposed blackout periods. The increase was partly offset by a lower interest expense on the Term Facility due to a lower outstanding nominal amount, and lower average interest rate on the Term Facility.

Foreign Exchange

The key average exchange rates used to translate foreign-denominated revenues and expenses, excluding any effect of the Company’s hedging program, were as follows for the three-month periods ended July 31, 2021 and 2020:

July 31,<br><br><br>2021 July 31,<br><br><br>2020
U.S. dollars 1.2436 CA/US 1.3722 CA/US
Euro 1.4923 CA/ 1.5195 CA/
The key period-end exchange rates used to translate<br>foreign-denominated assets and liabilities were as follows:
July 31,<br><br><br>2021 January 31,2021
U.S. dollars 1.2467 CA/US 1.2777 CA/US
Euro 1.4789 CA/ 1.5506 CA/

All values are in US Dollars.

When comparing the operating income and the income before income tax for the six-month period ended July 31, 2021 to the corresponding period ended July 31, 2020, the foreign exchange fluctuations impact was the following:

Foreign exchange (gain) loss
(in millions of Canadian dollars) Six-month period
Revenues $191.9
Cost of sales (93.5)
Impact of foreign exchange fluctuations on gross profit 98.4
Operating expenses (20.7)
Impact of foreign exchange fluctuations on operating income 77.7
Long-term debt (38.8)
Net financing costs (2.2)
Impact of foreign exchange fluctuations on income before incometaxes $36.7

^[1]^ See “Non-IFRS Measures” section.

16

Income Taxes

Income tax expense increased by $159.3 million to $151.0 million for the six-month period ended July 31, 2021, compared to an income tax recovery of $8.3 million for the six-month period ended July 31, 2020. The increase was primarily due to a higher operating income and to the impairment charge recorded during the three-month period ended April 30, 2020. The effective income tax rate amounted to 24.8% for the six-month period ended July 31, 2021 compared to the 7.7% for the six-month period ended July 31, 2020. The increase resulted primarily from the tax and accounting treatment of the impairment charge recorded during the three-month period ended April 30, 2020, partially offset by the tax and accounting treatment of the foreign exchange (gain) loss on the Term Facility.

Net Income (Loss)

Net income increased by $557.3 million to $457.3 million for the six-month period ended July 31, 2021, compared to a net loss of $100.0 million for the six-month period ended July 31, 2020. The increase was primarily due to higher operating income and a favourable foreign exchange rate variation on the U.S. denominated long-term debt, partially offset by higher income tax expense and higher net financing costs.

Analysisof Segment Results for first half of Fiscal 2022

The following section provides an overview of the financial performance of the Company’s segments for the six-month period ended July 31, 2021 compared to the same period ended July 31, 2020. The inter-segment transactions are included in the analysis.

Powersports

Revenues

Year-Round Products

Revenues from Year-Round Products increased by $616.6 million, or 48.9%, to $1,878.1 million for the six-month period ended July 31, 2021, compared to $1,261.5 million for the corresponding period ended July 31, 2020. The increase was primarily attributable to a higher volume of products sold due to COVID-19 impact last year, lower sales programs due to a strong retail environment and a favourable product mix of SSV sold. The increase was partially offset by an unfavourable foreign exchange rate variation of $105 million.

North American Year-Round Products retail sales decreased on a percentage basis by low single-digits compared to the six-month period ended July 31, 2020.

Seasonal Products

Revenues from Seasonal Products increased by $392.6 million, or 60.8%, to $1,037.9 million for the six-month period ended July 31, 2021, compared to $645.3 million for the corresponding period ended July 31, 2020. The increase resulted primarily from a higher volume of PWC sold due to COVID-19 impact last year, lower sales programs due to a strong retail environment and a favourable product mix of PWC sold. The increase was partially offset by an unfavourable foreign exchange rate variation of $50 million.

North American Seasonal Products retail sales increased on a percentage basis by high single-digits compared to the six-month period ended July 31, 2020.

Powersports PA&A and OEM Engines

Revenues from Powersports PA&A and OEM Engines increased by $182.8 million, or 49.9%, to $549.4 million for the six-month period ended July 31, 2021, compared to $366.6 million for the corresponding period ended July 31, 2020. The increase was mainly attributable to a higher volume of PA&A due to the strong retail environment, increased usage of vehicles by consumers and the COVID-19 impact last year. The increase was also attributable to a higher volume of aircraft engines sold. The increase was partially offset by an unfavourable foreign exchange rate variation of $27 million.

17

Gross Profit

Gross profit increased by $551.0 million, or 105.0%, to $1,075.9 million for the six-month period ended July 31, 2021, compared to $524.9 million for the corresponding period ended July 31, 2020. The gross profit increase includes an unfavourable foreign exchange rate variation of $99 million. Gross profit margin percentage increased to 31.0% in comparison to 23.1% for the six-month period ended July 31, 2020. The increase was the result of a higher volume of products sold and a favourable product mix combined to lower sales programs driven by the strong retail environment and the scarcity of our products in the network. The increase was partially offset by higher logistics, commodities and labour costs due to inefficiencies relating to supply chain disruptions and an unfavourable foreign exchange rate variation.

Marine

Revenues

Revenues from the Marine segment increased by $63.2 million, or 32.7%, to $256.3 million for the six-month period ended July 31, 2021, compared to $193.1 million for the corresponding period ended July 31, 2020. The increase was mainly due to a higher volume of boats sold, partially offset by a lower volume of outboard engines sold following the wind-down of the Evinrude production and an unfavourable foreign exchange rate variation of $10 million.

Gross Profit

Gross profit increased by $77.6 million, or 187.4%, to $36.2 million for the six-month period ended July 31, 2021, compared with a gross loss of $41.4 million for the corresponding period ended July 31, 2020. The increase was primarily due to the wind-down of the EvinrudeE-TEC outboard engines production resulting in non-recurring discounts and sales programs.

Geographical Trends

Revenues

United States

Revenues from the United States increased by $735.5 million, or 52.2%, to $2,145.1 million for the six-month period ended July 31, 2021, compared to $1,409.6 million for the corresponding period ended July 31, 2020. The increase is mainly attributable to higher wholesale in all product lines due to COVID-19 impact last year, as well as favourable mix of SSV and lower sales programs due to a strong retail environment. The increase was partially offset by an unfavourable foreign exchange impact of $167 million. The United States represented 57.7% and 57.2% of revenues during the six-month period ended July 31, 2021 and 2020, respectively.

Canada

Revenues from Canada increased by $242.1 million, or 73.8%, to $570.1 million for the six-month period ended July 31, 2021, compared to $328.0 million for the corresponding period ended July 31, 2020. The increase was mainly attributable to higher wholesale in all Powersport product lines due to COVID-19 impact last year and lower sales programs due to a strong retail environment. Canada represented 15.4% and 13.3% of revenues during the six-month period ended July 31, 2021 and 2020, respectively.

International

Revenues from International increased by $271.7 million, or 37.5%, to $997.2 million for the six-month period ended July 31, 2021, compared to $725.5 million for the corresponding period ended July 31, 2020. The increase primarily resulted from higher wholesale in all Powersport product lines due to COVID-19 impact last year, lower sales programs due to a strong retail environment and favourable pricing. The increase was partially offset by an unfavourable foreign exchange impact of $25 million. International represented 26.9% and 29.5% of revenues during the six-month period ended July 31, 2021 and 2020, respectively.

18

Summary of Consolidated Quarterly Results

Three-month periods ended
July April January October July April January October
31, 30, 31, 31, 31, 30, 31, 31,
2021 2021 2021 2020 2020 2020 2020 2019
(millions of Canadian dollars,<br><br><br>except per share data) Fiscal2022 Fiscal2021 Fiscal2021 Fiscal2021 Fiscal2021 Fiscal2020 Fiscal2020 Fiscal2020
Revenues by category Powersports
Year-Round Products **** 955.6 922.5 759.7 803.0 621.2 640.3 705.1 725.0
Seasonal Products **** 574.5 463.4 671.4 508.3 322.7 322.6 542.7 554.8
Powersports PA&A and OEM Engines **** 248.6 300.7 256.8 259.7 209.0 157.3 215.4 225.7
Marine **** 125.1 122.0 127.2 103.7 80.4 109.6 152.7 138.1
Total Revenues **** 1,903.8 1,808.6 1,815.1 1,674.7 1,233.3 1,229.8 1,615.9 1,643.6
Gross profit **** 570.1 542.0 501.9 486.9 248.4 235.1 383.7 441.9
As a percentage of revenues **** 29.9% 30.0% 27.7% 29.1% 20.1% 19.1% 23.7% 26.9%
Net income (loss) **** 212.9 244.4 264.2 198.7 126.1 (226.1 ) 118.2 135.3
Normalized EBITDA ^[1]^ **** 415.0 379.0 313.1 348.6 214.3 123.0 221.8 268.2
Normalized net income ^[1]^ **** 249.5 222.0 162.8 190.6 100.9 22.7 100.2 136.7
Basic earnings (loss) per share **** 2.54 2.87 3.02 2.27 1.45 (2.58 ) 1.34 1.51
Diluted earnings (loss) per share **** 2.46 2.79 2.95 2.22 1.43 (2.58 ) 1.32 1.49
Normalized basic earnings per share ^[1]^ **** 2.97 2.61 1.86 2.17 1.16 0.26 1.13 1.53
Normalized diluted earnings per share ^[1]^ **** 2.89 2.53 1.82 2.13 1.14 0.26 1.12 1.51

All values are in US Dollars.

^[^^1]^ See “Non-IFRS Measures” section.

19

Reconciliation Table for Consolidated Quarterly Results

Three-month periods ended
July 31, April 30, January 31, October 31, July 31, April 30, January 31, October 31,
2021 2021 2021 2020 2020 2020 2020 2019
(millions of Canadian dollars) Fiscal2022 Fiscal2021 Fiscal 2021 Fiscal 2021 Fiscal2021 Fiscal2021 Fiscal 2020 Fiscal 2020
Net income (loss) $ 212.9 **** $ 244.4 $ 264.2 $ 198.7 $ 126.1 $ (226.1 ) $ 118.2 $ 135.3
Normalized elements
Foreign exchange (gain) loss on long-term debt and lease liabilities **** 27.3 **** (78.6 ) (103.0 ) (9.8 ) (97.8 ) 88.8 9.9 0.1
Transaction costs and other related expenses<br>^[1]^ **** 5.6 **** 0.2 0.2 0.4 0.4 0.5 0.6 0.6
Restructuring and related costs (reversal) ^[2]^ **** — **** (0.1 ) — — 1.8 5.7 (0.3 ) 0.1
Impairment charge ^[3]^ **** — **** — — — 5.7 171.4 — —
(Gain) loss on litigation ^[4]^ **** — **** — — (4.0 ) — — (40.4 ) —
Transaction costs on long-term debt ^[5]^ **** — **** 44.3 **** — **** — — 12.7 — —
Evinrude outboard engine wind-down ^[6]^ **** 1.6 **** 0.7 2.0 13.5 80.6 — — —
COVID-19 pandemic impact ^[7]^ **** — **** — (1.7 ) 2.7 5.4 4.2 — —
Gain on disposal of property, plant and equipment **** — **** — — (12.7 ) — — — —
(Gain) loss on NCIB **** — **** 21.3 **** — **** — — (12.2 ) — —
Depreciation of intangible assets related to business combinations **** 1.0 **** 1.1 1.1 1.2 1.0 1.1 1.2 1.1
Other elements **** 2.9 **** — — 0.6 — — 0.9 —
Income tax adjustment **** (1.8 ) (11.3 ) — — (22.3 ) (23.4 ) 10.1 (0.5 )
Normalized net income ^[8]^ **** 249.5 **** 222.0 162.8 190.6 100.9 22.7 100.2 136.7
Normalized income tax expense ^[8]^ **** 87.1 **** 77.0 60.7 69.0 22.4 15.0 35.0 49.4
Financing costs adjusted ^[8] [9]^ **** 15.8 **** 17.1 26.2 28.0 28.8 24.3 24.9 24.1
Financing income adjusted ^[8] [9]^ **** (1.6 ) (1.2 ) (2.7 ) (2.0 ) (1.1 ) (1.8 ) (0.3 ) (0.3 )
Depreciation expense adjusted ^[8] [10]^ **** 64.2 **** 64.1 66.1 63.0 63.3 62.8 62.0 58.3
Normalized EBITDA^[8]^ $ 415.0 **** $ 379.0 $ 313.1 $ 348.6 $ 214.3 $ 123.0 $ 221.8 $ 268.2
^[^^1]^ Costs related to business combinations.
--- ---
^[2]^ The Company is involved, from time to time, in restructuring and reorganization activities in order to gain flexibility<br>and improve efficiency. The costs related to these activities are mainly composed of severance costs and retention salaries.
--- ---
^[3]^ During Fiscal 2021, the Company recorded an impairment charge of $177.1 million related to its Marine segment.<br>
--- ---
^[4]^ The Company was involved in patent infringement litigation cases with one of its competitors.
--- ---
^[5]^ During Fiscal 2022, the Company incurred a prepayment premium of $15.1 million and derecognized unamortized<br>transaction costs of $29.2 million related to the full repayment of its outstanding U.S. $597.0 million Term Loan B-2.
--- ---
^[6]^ The Company incurred costs related to the wind-down of the outboard engine production such as, but not limited to,<br>retail sales incentives, restructuring costs, idle costs and other exit costs.
--- ---
^[7]^ Incremental costs associated with the COVID-19 pandemic such as, but not<br>limited to, labour cost related to furloughs.
--- ---
^[8]^ See “Non-IFRS Measures” section.
--- ---
^[9]^ Adjusted for transaction costs on long-term debt and NCIB gains and losses in net income.
--- ---
^[10]^ Adjusted for depreciation of intangible assets acquired through business combinations.
--- ---

20

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 Facilities and Term Facility.

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 net cash flows by activity is presented below for the three-month periods ended July 31, 2021 and 2020:

Six-month periods ended
(millions of Canadian dollars) July 31,<br>2021 July 31,<br><br><br>2020
Net cash flows generated from operating activities 326.9 $326.6
Net cash flows used in investing activities (228.0) (78.8)
Net cash flows generated from (used in) financing activities (1,077.7) 794.7
Effect of exchange rate changes on cash and cash equivalents 8.5 1.1
Net increase (decrease) in cash and cash equivalents (970.3) 1,043.6
Cash and cash equivalents at beginning of period 1,325.7 42.5
Cash and cash equivalents at end of period 355.4 $1,086.1

All values are in US Dollars.

Net Cash Flows Generated from Operating Activities

Net cash flows generated from operating activities totalled $326.9 million for the six-month period ended July 31, 2021 compared to $326.6 million for the six-month period ended July 31, 2020. The $0.3 million increase in net cash flows generated was mainly due to higher operating income partially offset by unfavourable changes in working capital of $469.7 million and to higher income taxes paid. The unfavourable changes in working capital were primarily driven by higher Inventory in Fiscal 2022 due to logistic and supply chain disruptions.

Net Cash Flows Used in Investing Activities

Net cash flows used in investing activities totalled $228.0 million for the six-month period ended July 31, 2021 compared to $78.8 million for the six-month period ended July 31, 2020. The $149.2 million increase was mainly attributable to investments related to production capacity increase to support future growth.

Net Cash Flows Generated from (Used in) Financing Activities

Net cash flows used in financing activities totalled $1,077.7 million for the six-month period ended July 31, 2021 compared to net cash flows generated in the amount of $794.7 million for the six-month period ended July 31, 2020. The $1,872.4 million increase in net cash flows used was mainly attributable to a lower usage of revolving credit facilities, a higher amount invested to repurchase shares and a net repayment of long-term debt in Fiscal 2022.

21

Contractual Obligations

The following table summarizes the Company’s significant contractual obligations as at July 31, 2021:

(millions of Canadian dollars) Less than<br><br><br>1 year 1-3 years 4-5 years More than<br><br><br>5 years Total<br><br><br>amount
Trade payables and accruals 1,224.0 - - - 1,224.0
Long-term debt (including interest) 66.2 140.7 221.8 1,840.0 2,268.7
Lease liabilities (including interest) 43.4 76.9 54.5 106.4 281.2
Derivative financial instruments 4.3 1.8 — — 6.1
Other financial liabilities 176.2 4.4 1.7 24.4 206.7
Total **** 1,514.1 **** 223.8 **** 278.0 **** 1,970.8 **** 3,986.7

All values are in US Dollars.

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.

Capital Resources

Revolving CreditFacilities

On May 4, 2021, the Company amended its $700.0 million revolving credit facilities to increase the availability to $800.0 million and to extend the maturity from May 2024 to May 2026 (the “Revolving Credit Facilities”). The pricing grid and other conditions remained unchanged. As at July 31, 2021, the Company had no outstanding indebtedness under the Revolving Credit Facilities.

As at July 31, 2021, the Company had no outstanding indebtedness under the Revolving Credit Facilities.

The applicable interest rates vary depending on a leverage ratio. The leverage ratio is defined in the Revolving Credit Facilities agreement by the ratio of net debt to consolidated cash flows of the Company (the “Leverage ratio”). The applicable interest rates are as follows:

(i) U.S. dollars at either
(a) LIBOR plus 1.45% to 3.00% per annum; or
--- ---
(b) U.S. Base Rate plus 0.45% to 2.00% per annum; or
--- ---
(c) U.S. Prime Rate plus 0.45% to 2.00% per annum;
--- ---
(ii) Canadian dollars at either
--- ---
(a) Bankers’ Acceptance plus 1.45% to 3.00% per annum; or
--- ---
(b) Canadian Prime Rate plus 0.45% to 2.00% per annum
--- ---
(iii) Euros at Euro LIBOR plus 1.45% to 3.00% per annum.
--- ---

In addition, the Company incurs commitment fees of 0.25% to 0.40% per annum on the undrawn amount of the Revolving Credit Facilities.

22

As at July 31, 2021, the cost of borrowing under the Revolving Credit Facilities was as follows:

(i) U.S. dollars at either
(a) LIBOR plus 1.45% per annum; or
--- ---
(b) U.S. Base Rate plus 0.45% per annum; or
--- ---
(c) U.S. Prime Rate plus 0.45% per annum;
--- ---
(ii) Canadian dollars at either
--- ---
(a) Bankers’ Acceptance plus 1.45% per annum; or
--- ---
(b) Canadian Prime Rate plus 0.45% per annum
--- ---
(iii) Euros at Euro LIBOR plus 1.45% per annum.
--- ---

As at July 31, 2021, the commitment fees on the undrawn amount of the Revolving Credit Facilities were 0.25% per annum.

Under certain conditions, the Company is required to maintain a minimum fixed charge coverage ratio in order to have full access to its Revolving Credit Facilities. Additionally, the total available borrowing under the Revolving Credit Facilities 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.

As at July 31, 2021 and 2020, the Company had no outstanding indebtedness under the Revolving Credit Facilities. The Company had issued letters of credit for an amount of $11.6 million as at July 31, 2021 ($5.9 million as at July 31, 2020) and, in addition, $4.7 million of letters of credit were outstanding under other bank agreements as at July 31, 2021 ($4.9 million as at January 31, 2021).

Term Facility

On February 16, 2021, the Company fully repaid the outstanding U.S. $597.0 million Term Loan B-2. The Company incurred a prepayment premium of $15.1 million and, in addition, unamortized transaction costs of $29.2 million were derecognized. On the same date, the Company increased the amount outstanding under its Term Loan B-1 by U.S. $300.0 million to U.S. $1,507.6 million. This incremental of U.S. $300.0 million has the same terms and conditions and maturity date as the original Term Loan B-1. The Company incurred transaction costs of $4.0 million for the increase.

As at July 31, 2021, the cost of borrowing under the Term Loan B-1 was as follows:

(i) LIBOR plus 2.00% per annum, with a LIBOR floor of 0.00%; or
(ii) U.S. Base Rate plus 1.00%; or
--- ---
(iii) U.S. Prime Rate plus 1.00%
--- ---

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 LIBOR.

The Company is required to repay a minimum of 0.25% of the nominal amount each quarter. Consequently, the Company repaid an amount of U.S. $7.6 million ($9.5 million) during the six-month period ended July 31, 2021. 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.

Austrian Term Loans

During the six-month period ended July 31, 2021, the Company entered into term loans agreements at favourable interest rates under an Austrian government program. This program supports research and development projects based on the Company’s incurred expenses in Austria. The term loans have a nominal amount of €19.1 million ($28.2 million) and a maturity date on December 2027.

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As at July 31, 2021, the Company had €110.6 million ($153.8 million) outstanding under its Austrian term loans bearing interest at a range between 0.75% and 1.60% and maturing between December 2021 and December 2030.

Lease Liabilities

As at July 31, 2021, the contractual obligations in relation to assets acquired under lease agreements amounted to $281.2 million.

Substantial issuer bid offer (“SIB”)

During the three-month period ended July 31, 2021, the Company repurchased for cancellation 3,381,641 subordinate voting shares following the completion of its SIB for a total consideration of $350.0 million. Prior to the completion of the SIB, 936,692 multiple voting shares were converted into an equivalent number of subordinate voting shares. These converted shares were repurchased in the SIB. The Company incurred $1.2 million of fees and expenses related to the SIB, which were recorded in capital stock.

Normal Course Issuer Bid Program (“NCIB”)

During the six-month period ended July 31, 2021, the Company continued and completed the NCIB that was announced and started during the fiscal year ended January 31, 2021 and repurchased 2,807,028 subordinate voting shares for a total consideration of $278.2 million.

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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 July 31, 2021 and January 31, 2021, 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:

(millions of<br>Canadian dollars) July 31,<br><br><br>2021 January 31,<br><br><br>2021 Variance ExchangeRateImpact Net  Variance Explanation of Net Variance
Trade and other receivables **** 303.0 311.5 (8.5) 7.6 $(0.9) No significant variances
Inventories **** 1,340.6 1,087.3 253.3 47.1 300.4 Mostly explained by higher work in progress inventory due to logistic and supply chain<br>disruptions and higher material inventory of snowmobile for upcoming production
Property, plant and equipment **** 1,146.7 1,064.3 82.4 20.3 102.7 Mostly explained by the construction of the new facility in Juárez,<br>Mexico
Trade payables and accruals **** 1,224.0 1,296.5 (72.5) 19.1 (53.4) Mostly explained by lower compensation benefits in accruals
Provisions **** 390.5 428.4 (37.9) 10.8 (27.1) Mostly explained by the decrease in sales programs caused by sustained higher<br>demand
Long-term debt, including current portion **** 2,020.1 2,409.7 (389.6) 55.2 (334.4) Mostly explained by the full repayment of the U.S. $597.0 million Term Loan B-2, partially offset by the increase of the outstanding under Term Loan B-1 by U.S. $300.0 million
Employee future benefit liabilities **** 257.8 297.8 (40.0) 6.7 (33.3) Mostly explained by the decrease of the discount rate by approximately 25 basis points for<br>the Canadian defined benefit obligations

All values are in US Dollars.

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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 TCF Inventory Finance Inc., TCF Commercial Finance Canada Inc., TCF Commercial Finance LLC and TCF Commercial Finance New Zealand Ltd (collectively, “TCF”), to provide financing facilities in North America, Australia and New Zealand, and with Wells Fargo Commercial Distribution Finance, Wells Fargo Bank International, Wells Fargo International Finance LLC and Wells Fargo International Finance (New Zealand) Limited (collectively “Wells Fargo”) for financing facilities in North America, Europe, Australia and New Zealand. The agreement between the Company and TCF will expire on January 31, 2023. For most of the contracts with Wells Fargo, the maximum commitment period is up to September 2, 2022.

The total amount of financing provided to the Company’s independent dealers and distributors totalled $1,489.9 million and $3,066.0 million for the three- and six-month period ended July 31, 2021, compared to $832.4 million and $1,879.7 million for the three- and six-month period ended July 31, 2020. The outstanding financing between the Company’s independent dealers and distributors and third-party finance companies amounted to $720.6 million and $985.0 million as at July 31, 2021, and January 31, 2021, 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 **** July 31,<br>2021 **** January 31,<br>2021
Total outstanding **** CAD **** 721 **** 985
United States 343 529
Canada CAD 184 193
Europe 33 31
Australia and New Zealand AUD 67 70
Latin America — 1

All values are in US Dollars.

The costs incurred by the Company under the dealers’ and distributors’ financing agreements totalled $5.4 million and $12.9 million for the three- and six-month period ended July 31, 2021 compared to $3.9 million and $27.4 million for the three- and six-month period ended July 31, 2020.

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. During the three-month period ended July 31, 2021, the Company renegotiated and regrouped some of its repurchase obligations for obligations that were held with the same third-party financing providers. Henceforth, the obligations are generally within a range of U.S. $14.0 million ($17.5 million) or 15% of the calendar year twelve-month average amount of financing outstanding under the financing agreements and U.S. $25.0 million ($31.2 million) or 10% of the last twelve-month average amount of financing outstanding under the financing agreements. For boat products, the repurchase obligation decreases according to the age of the inventory and there is no obligation to repurchase for boat products older than 900 days.

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The maximum amount subject to the Company’s obligation to purchase repossessed new and unused products from the finance companies was $113 million as at July 31, 2021 and $175 million as at January 31, 2021.

The Company did not incur significant losses related to new and unused products repossessed by the finance companies for the three- and six-month periods ended July 31, 2021 and 2020.

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. In Canada, the Company has agreements with TD Financing Services and the Fédération des caisses Desjardins du Québec for such purposes. In the United States, the Company has agreements with Sheffield Financial, Citi Retail Services and Roadrunner Financial. Under these contracts, the Company’s financial obligations are related to the commitments made under certain sales programs.

Transactions 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 $22.1 million as at July 31, 2021 and $22.2 million as at January 31, 2021, 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 with that obligation for the year ending January 31, 2022.

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 Facilities, Term Facility and Austrian term loans.

Foreign Exchange Risk

The elements reported in the consolidated statements of net income, in the consolidated statements of financial position and in the consolidated statements of cash flows 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 currencies over which the Company cannot achieve an offset through its recurring business transactions, mainly the U.S. dollar, the Australian dollar, the Swedish krona, the Norwegian krone and the British pound, 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.

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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 liabilities.

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.

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 facilities 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 TCF and Wells Fargo.

The Company considers that its credit risk associated with its trade receivables and its limited responsibilities under the dealer and distributor financing agreements with TCF and Wells Fargo 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 LIBOR on its Term Facility. However, the Company entered into interest rate cap contracts, which limit its exposure to interest rate increase.

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Critical Accounting Estimates

Significant Estimates and Judgments

The preparation of the unaudited condensed consolidated interim financial statements in accordance with the Company’s accounting policies requires management to make estimates and judgments that can affect the reported amounts of assets and liabilities, related amounts of revenues and expenses, other comprehensive income and disclosures made.

The Company’s best estimates are based on the information, facts and circumstances available at the time estimates are made. Management uses historical experience and information, general economic conditions and trends, as well as assumptions regarding probable future outcomes as the basis for determining estimates. Estimates and their underlying assumptions are reviewed periodically and the effects of any changes are recognized immediately. Actual results could differ from the estimates used and such differences could be significant.

The Company’s annual operating budget and operating budget revisions performed during the year (collectively “Budget”) and the Company’s strategic plan comprise fundamental information used as a basis for some significant estimates necessary to prepare the unaudited condensed consolidated interim financial statements. Management prepares the annual operating budget and strategic plan each year using a process whereby a detailed one-year budget and three-year strategic plan are prepared by each entity and then consolidated.

Cash flows and profitability included in the Budget are based on the existing and future expected sales orders, general market conditions, current cost structures, anticipated cost variations and current agreements with third parties. Management uses the annual operating budget information as well as additional projections or assumptions to derive the expected results for the strategic plan and periods thereafter.

The Budget and the strategic plan are approved by management and the Board of Directors. Management then tracks performance as compared to the Budget. Significant variances in actual performance are a key trigger to assess whether certain estimates used in the preparation of financial information must be revised.

Management needs to rely on estimates in order to apply the Company’s accounting policies and considers that the most critical ones are the following:

Estimating the Net Realizable Value of Inventory

The net realizable value of materials and work in progress is determined by comparing inventory components and value with production needs, current and future product features, expected production costs to be incurred and the expected profitability of finished products. The net realizable value of finished products and parts and accessories is determined by comparing inventory components and value with expected sales prices, sales programs and new product features.

Estimating the Useful Life of Tooling

Tooling useful life is estimated by product line based on their expected physical life and on the expected life of the product platform to which they are related.

Estimating Impairment on Property, Plant and Equipment, Intangible Assets and Right-of-Use Assets

Management assesses the value in use of property, plant and equipment, intangible assets and right-of-use assets mainly at groups of CGU level using a discounted cash flow approach by product line based on annual budget and strategic plan process. When the Company acquired the recreational products business from Bombardier Inc. in 2003, trademarks and goodwill were recorded as part of the business acquisition. As at July 31, 2021, $122.6 million of trademarks and $114.7 million of goodwill were related to this transaction. In addition, trademarks of $74.0 million and goodwill of $1.2 million were recorded following various business combinations that occurred after 2003.

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Trademarks and Goodwill Impairment Test

For the purpose of impairment testing, trademarks are allocated to their respective CGU. As at July 31, 2021, after the impairment charge taken, the carrying amount of trademarks amounting to $196.6 million related to Ski-Doo, Sea-Doo, Alumacraft, Manitou, Quintrex and Stacer is $63.5 million, $59.1 million, $18.8 million, $36.3 million, $14.4 million and $4.5 million respectively.

Following the creation of the Powersports and Marine segments during Fiscal 2019, the Company has fully allocated the goodwill of $114.7 million created in 2003 to the Powersports segment.

Recoverable Amount

The recoverable amount for the group of CGU is based on a value-in-use calculation using cash flow projections, which takes into account the Company’s one-year budget and three-year strategic plan, with a terminal value calculated by discounting the final year in perpetuity. The figures used as the basis for the key assumptions in the value-in-use calculation includes sales volume, sales price, production costs, distribution costs and operating expenses as well as discount rates. This information represents the best available information as at the date of impairment testing. The estimated future cash flows are discounted to their present value. In addition, a market approach was performed to assess the reasonability of the conclusions reached.

Estimating Recoverability of Deferred Tax Assets

Deferred tax assets are recognized only if management believes it is probable that they will be realized based on annual budget, strategic plan and additional projections to derive the expected results for the periods thereafter.

Estimating Provisions for Regular ProductWarranty, Product Liability, Sales Program and Restructuring

The regular warranty cost is established by product line and recorded at the time of sale based on management’s best estimate, using historical cost rates and trends. Adjustments to the regular warranty provision are made when the Company identifies a significant and recurring issue on products sold or when costs and trend differences are identified in the analysis of regular warranty claims.

The product liability provision at period end is based on management’s best estimate of the amounts necessary to resolve existing claims. In addition, the product liability provision at the end of the reporting period includes incurred, but not reported claims, based on average historical cost information.

Sales program provision is estimated based on current program features, historical data and expected retail sales for each product line.

Restructuring provision is initially estimated based on restructuring plan estimated costs in relation to the plan elements approved by management. Restructuring provision is reviewed at each period end in order to take into account updated information related to the realization of the plan. If necessary, the provision is adjusted accordingly.

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Estimating the Discount Rates Used in Assessing Defined Benefit Plan Expenses and Liability

In order to select the discount rates used to determine defined benefit plan expenses and liabilities, management consults with external actuarial firms to provide commonly used and applicable discount rates that are based on the yield of high quality corporate fixed income investments with cash flows that match expected benefit payments for each defined benefit plan. Management uses its knowledge and comprehension of general economic factors in order to conclude on the accuracy of the discount rates used.

Estimating theincremental borrowing rate used in measuring lease liability

Management makes estimates in the determination of the incremental borrowing rate used to measure the lease liability for each lease contract when the interest rate implicit in the lease is not readily available. The incremental borrowing rate should reflect the interest rate the Company would have to pay to borrow the same asset at a similar term and with a similar security.

Estimating the lease term

On commencement date, when determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option or not exercise a termination option. Extension options or periods subject to termination options are only included in the lease term if the lease is reasonably certain to be extended or not terminated. This assessment is reviewed if a significant change in circumstances occurs within the Company’s control.

Significant Judgments in Applyingthe Company’s Accounting Policies

Management needs to make certain judgments in order to apply the Company’s accounting policies and the most significant ones are the following:

Impairment of Property, Plant and Equipment, Intangible Assets and Right-of-Use Assets

The Company operates using a high level of integration and interdependency between design, development, manufacturing and distribution operations. The cash inflows generated by each product line require the use of various assets of the Company, limiting the impairment testing to be done for a single asset. Therefore, management performs impairment testing by grouping assets into CGUs.

Functional Currency

The Company operates worldwide but its design, development, manufacturing and distribution operations are highly integrated, which require significant judgments from management in order to determine the functional currency of each entity using factors provided by IAS 21 “The Effects of Changes in Foreign Exchange Rates”. Management established the functional currency of each entity as its local currency unless the assessment of the criteria established by IAS 21 to assess the functional currency leads to the determination of another currency. IAS 21 criteria are reviewed annually for each entity and are based on transactions with third-parties only.

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Controls and Procedures

The Company’s President and Chief Executive Officer and the Chief Financial Officer are responsible for establishing and maintaining the Company’s disclosure controls and procedures as well as its internal control over financial reporting, as those terms are defined in National Instrument 52-109 – Certification ofDisclosure in Issuers ’ Annual and Interim Filings of the Canadian securities regulatory authorities and Rule 13a-15(e) and Rule 15d-15(e) under the U.S. Securities Exchange Act of 1934, as amended.

Disclosure controls and procedures

The President and Chief Executive Officer and the Chief Financial Officer have designed, or caused to be designed under their supervision, disclosure controls and procedures in order to provide reasonable assurance that:

● material information relating to the Company has been made known to them; and
● information required to be disclosed in the Company’s filings is recorded, processed, summarized and<br>reported within the time periods specified in securities legislation.
--- ---

An evaluation of the design and effectiveness of the Company’s disclosure controls and procedures was carried out under the supervision of the President and Chief Executive Officer and the Chief Financial Officer. Based on this evaluation, the President and Chief Executive Officer and the Chief Financial Officer concluded, as of July 31, 2021, that the Company’s disclosure controls and procedures were ineffective as a result of a material weakness identified in the Company’s internal control over financial reporting, which is further described below. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Management’s report on internal controlover financial reporting

The President and Chief Executive Officer and the Chief Financial Officer have designed, or caused to be designed under their supervision, such internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.

An evaluation of the design and effectiveness of the Company’s internal controls over financial reporting was carried out under the supervision of the President and Chief Executive Officer and the Chief Financial Officer. In making this evaluation, the President and Chief Executive Officer and the Chief Financial Officer used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control – Integrated Framework (2013). Based on this evaluation, the President and Chief Executive Officer and the Chief Financial Officer concluded, as of July 31, 2021, that the Company’s internal control over financial reporting was ineffective as a result of an identified material weakness.

Management determined it did not design and maintain effective information technology general controls (ITGCs) in the areas of user access security, system change management and job processing for certain information technology (IT) systems that support the Company’s financial reporting processes. Management concluded these deficiencies in aggregate resulted in a material weakness. As a result, automated controls and manual controls that are dependent on the completeness and accuracy of information derived from the affected IT systems were ineffective because they could have been adversely impacted. There were no material adjustments to the Company’s audited consolidated financial statements for the period ended January 31, 2021 and prior, however, as a result of the material weakness identified a possibility exists that material misstatements in the Company’s financial statements would not be prevented or detected on a timely basis in the future.

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Management will continue to design and implement certain remedial measures throughout Fiscal 2022 including the design, review and appropriate modification of access in the affected systems, in addition to monitoring controls to prevent and detect inappropriate or unauthorized access or activities. In addition, various aspects of the logical access process will be automated to reduce the possibility of manual error. Management will also work with control owners to improve the quality of evidence retained to support the operation of change management controls.

The Company has and will continue to take actions to remediate the material weakness, but the weakness will not be considered fully remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. No assurance can be provided at this time that the actions and remediation efforts will effectively remediate the material weakness described above.

The President and Chief Executive Officer and the Chief Financial Officer do not expect that disclosure controls and procedures or internal control over financial reporting will prevent all misstatements. The design of a system of internal controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that the design will succeed in achieving the stated goals under all potential future conditions. Nevertheless, management has designed and implemented controls to mitigate this risk to the extent practicable.

Notwithstanding the material weakness, management has concluded that the Company’s unaudited condensed consolidated interim financial statements as at and for the three- and six-month period ended July 31, 2021 present fairly, in all material respects, the Company’s financial position, results of operations, changes in equity and cash flows in accordance with IFRS. There were no material adjustments to the Company’s audited consolidated financial statement for the year ended January 31, 2021 and there were no changes to previously released financial results.

Changes in internal control over financial reporting

There were no changes in the Company’s internal control over financial reporting during the three-month period ended July 31, 2021, that have materially affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting.

Dividend

On September 1, 2021, the Company’s Board of Directors declared a quarterly dividend of $0.13 per share for holders of its multiple voting shares and subordinate voting shares. The dividend will be paid on October 14, 2021 to shareholders of record at the close of business on September 30, 2021.

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 Facilities 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.

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Risk Factors

For a detailed description of risk factors associated with the Company, refer to the “Risk Factors” section of the Company’s MD&A for the fourth quarter and the fiscal year ended January 31, 2021. The Company is not aware of any significant changes to the Company’s risk factors from those disclosed at that time.

Disclosure of Outstanding Shares

As at August 31, 2021, the Company had the following issued and outstanding shares and stock options:

● 42,954,979 multiple voting shares with no par value.
● 37,719,188 subordinate voting shares with no par value.
--- ---
● 4,668,663 stock options to acquire subordinate voting shares.
--- ---

Additional Information

Additional information relating to BRP Inc. is available on SEDAR at www.sedar.com.

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EX-99.3

Exhibit 99.3

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, José Boisjoli, President and Chief Executive Officer of BRP Inc., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of BRP Inc. (the “issuer”) for the interim period ended July 31, 2021.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in Regulation 52-109 respecting Certification of Disclosure in Issuers’ Annual and Interim Filings (c. V-1.1, r. 27), for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (2013 COSO Framework) published by The Committee ofSponsoring Organizations of the Treadway Commission.

5.2 ICFR – material weakness relating to design: ****The issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the end of the interim period

(a) a description of the material weakness;

(b) the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

(c) the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

5.3 N/A

6. Reporting changes inICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on May 1, 2021 and ended on July 31, 2021 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: September 2, 2021

(s) José Boisjoli
José Boisjoli
President and Chief Executive Officer

M.0. 2008-16, Sch. 52-109F1; M.0. 2010-17, s. 5.

EX-99.4

Exhibit 99.4

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Sébastien Martel, Chief Financial Officer of BRP Inc., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of BRP Inc. (the “issuer”) for the interim period ended July 31, 2021.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in Regulation 52-109 respecting Certification of Disclosure in Issuers’ Annual and Interim Filings (c. V-1.1, r. 27), for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (2013 COSO Framework) published by The Committee ofSponsoring Organizations of the Treadway Commission.

5.2 ICFR – material weakness relating to design: ****The issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the end of the interim period

(a) a description of the material weakness;

(b) the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

(c) the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

5.3 N/A

6. Reporting changes inICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on May 1, 2021 and ended on July 31, 2021 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: September 2, 2021

(s) Sébastien Martel
Sébastien Martel
Chief Financial Officer

M.0. 2008-16, Sch. 52-109F1; M.0. 2010-17, s. 5.

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