DOOO - Earnings call transcript Q3 2021

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Operator

Good morning, ladies and gentlemen, and welcome to the BRP's Q3 FY 2021 Earnings Call. I would now like to turn the meeting over to Mr. Philippe Deschênes. Please go ahead, Mr. Deschênes.

Philippe Deschênes

Mone. you, Thank welcome quarter and conference for call Good fiscal to year third of 'XX. the morning, BRP's

Joining me this Executive morning are José Boisjoli, Sebastien Chief Officer; President Martel, Financial Officer. and and Chief

of would to uncertainties. you prepared certain move I statements made slides, subject invite that these. be be the will read remind you Also of the section. a to BRP's to we presentation will supporting Before a MD&A forward-looking remarks, I call, number at everyone the the like made find the listing to website that brp.com and for will call reference are during our to risks Investor during and on under Relations

that, I'll the with to turn José. over So call

José Boisjoli

joining Thank you, Philippe. Good morning, for us. everyone, you and thank

‘XX taken a for been manage know, measure As people. able very shutdown lifted, year have you Once our us. chain vigilant resume have we fiscal capacity, special our year to full were been protecting were temporary especially the and about to supply at volatile production has

over to increased we an be ensuring during I feel world. around and are we international health fortunate of time the it's dedication popularity like everywhere thanking products, of where and us not still It our period incredible and who would remarkable team this allow has of exceptional the start to instability. been by to safety our the people, suppliers Given the yet. occasion deliver our risen while results and dealers of the have to to continue

the to and interest allow powersport our continue lineup very industry aware, remains the high As are in worldwide. you us to outpace strong sector

line we units we some to were faced manage in them production are and our able Although plan. challenges, delivering with we

to Slide this financial turn quarter. of X Let's third highlight the for

Seasonal Watercraft quarter timing were by a due lower offset partially by the Year-Round sales production. for in of driven X% Personal Products, Products up of to revenue Our change

expected product a at strong XX.X% us much our drove better planned. demand profit than allowed reduce came margin than to richer consumer continued mix as and gross Our in the activity promotional

EBITDA per normalized up share to XX% up year. million, normalized $X.XX earnings a XX% Our quarter resulting over ended in last the of $XXX

and on up over we We expect the to are XX% now quarter XX% increasing positive this, to And end of guidance revenue $X.XX. based trend our continue to next X% expected to down $X to be beyond. EPS normalized year this a range with X% to

When of to shortage. the network strong quarter, retail the low, America being trend in and percentage. American earlier, at diversity As retail a -- led mentioned was up start demand retail quarter, retail the EMEA remained compared an mid-teen with and experience up due product industry growth also X% XX% our The powersports Asia-Pacific. XX% quarter the leading our retail decline quarter, of solid up I XX% products excluding portfolio was in year-over-year. XX% to that powersports in Watercraft to down to our the our its inventory Personal in Latin Only at of for the exceptionally North at American all-time which was North for inventory

industry. low our the at outpaced the in the respectively. was North ATV retail XX% Watercraft XX%. it about top strong already ended season across for now powersport the last growth the product growth up Snowmobile remind Again, and as Side-by-side note, down on you Looking results, delivered have that on and vehicle strong is the up a Slide XX% only to same solid for in of product Personal Ski-Doo and this season quarter, that very of by this a retail XX% was I XX% up was both high start X. is retail QX a up industry quarter year. on rest we American Three-wheeled good product of with portfolio. with retail with about line their low

due I beginning America the was markets mentioned, As in already an at all-time network both and low, of to this international quarter. the inventory the at in North being

pleased continues strength the of We our with industry very to are healthy this share gain which lineup, backdrop. in

consumer on trend retail delivered X Slide we business, to robust and powersports quarter are Now our industry. others seeing have growth. powersport current we in another the Like in of the and continued interest

following For QX, the our when is quarter. throughout a strong powersport pattern Watercraft, XX% excluding retail retail up Personal

the month the start observed years. saw quarter season year example, best we solid had growth both or XX% of who extend from have Based their recently, a This of to have in of entrants And the the in ORV snowmobile five were For we in best this growth. is that we industry October expand returner a term survey powersport. in customer, we decided new new estimate interest conducted coming entrants. on and buyer in

this XX% certificate XX% compared end the interest part, of something at last already is the Watercraft, year. due online, We sustained. strong October versus shown were March last year. can up are example for to season Personal website for to entire up vehicle in that product visit October consumer the off-road In the In Can-Am October of continued pre-season full customers be that strong feeling our is with consideration to optimistic level

trending at last level of our beginning the Vehicle is registration since note, twice daily Rider Program Three-Wheel also year November. Education We

be positioned to believe down. So the projected growing does With we consumer and retail slowing interest growth, interest capitalize this on well powersport. production aligned are current our the not in we to plan appear to

product the reach audience reach for new introduction. evolved We held XX% broader our exclusively about same an by very virtual. be Can-Am consumer us world to elements Sea-Doo. growing the third Turning These XXXX, audience. both Future quarter, around include were model the and popular, will to had of allow products many to events these two even Slide over same in to events global virtual our a at X, our one dealers for like time. one attendance for talk I traditional launch In would and recent to

our Regarding be utility popular box very the our of we introduction with segment the and product Limited with LONE in best very lineup long the in HVAC Defender LONE offering PRO package STAR, considered a cab and industry. our our to introduction, premium STAR PRO -- by side-by-side to enforced the Defender the having the

We push also ride. strengthened providing improved best at with all industry’s of introduction provides an system, to which equal power the an even a VISCO our more mud XLOK, wheels button, lineup ATV the of four the agile four-wheel LOK drive

As acceleration performance XXX perfect rider with redesigned RXP-X R a which for year control completely leading holds Ergolock the the lineup industry includes System, Sea-Doo, includes and the position. in our model inspired ‘XX which

display, by We industry’s product level providing experience wide received first display, launch of more. very control enabled Bluetooth solid. were with booking took music, the app was to on-board also These introductions the well inch the color of navigation, and and the media LCD X.X dealer full full next weather and the the very

X Now Product to than sold let's during transit driven the turn despite XX% year program for Slide up Revenue increasing our units to by to due the inventory expected be the replenish lower production mentioned international volume over sold quarters. units yard and are last of sales the were as coming Year-Round our QX numbers was in produced richer call. lower highlight. These our many of Meanwhile, slightly to units mix. being

months period. months American four ATV the and been industry of The ‘XX by XX% lineup continue the side, season is utility retail into retail high the XX%. Can-Am sold up up more is segment is side-by-side four gaining especially for the demand the low side our into off-road we season could is low up in also have North with is to And very retail industry supply The believe ‘XX, share also strong. over up side the On able had high them. units same we Can-Am additional XX% XX%. we

manufacturing to operation ground having on the expected in Mexico, is ready new of fall be for The as capacity. our by progressing broken XXXX. We construction planned side-by-side production and side-by-side of project is XX% have facility

XXth vehicle. percent. retail ‘XX ended Now looking with three-wheel at low-teen American up the three-wheeled the season on North industry October The

three-wheeled Can-Am business. successful for schools three-wheeled Once was vehicle season XX% was period, This retail in vehicle industry. share Our the and motorcycle both low three-wheeled our very vehicle over same the up gaining were to new rate allowed Program attract to have potential units now we conversion continued with used Rider And to customers. better-than-anticipated over over Education our XX,XXX and XX%. two-wheeled many a reopen, of course completed

Women for experiencing has over We as Mentorship the held Can-Am X,XXX This pleasure and coverage the also help launched We and the members and through of Forbes barriers have such active back education. to women designed been Rolling from highly inclusivity have significant riding is engaged program that Stone. given overcome already the magazines Program. traditionally program

successful with season. have XX% last going and we Ryker feedback as more potential almost from to over definitely half a from under key the The almost our attracting market. and total being of third And than forward. as participants pleased We women, We're XX entrants base, positive Over the been attracting younger three-quarter group in Ryker traction are compared year. of has new with growing well another buyer diverse had program and the at also slightly XX% finally, communities good with compared rider age are season. Ryker to very customers a one-third this diverse successful its more customer last addressable of received

to way for to new are to we the continue our business. initiatives, different and grow these the entrants With sport paving join

Turning production Seasonal Slide a primarily lower XX. offset volumes Personal to in Product Product lower year. sales revenue versus partially due program. The down schedule X%, to for by change were Seasonal last on were Watercraft shipment

Watercraft also the the mid-single-digit. Personal retail, North mid-single-digit industry with season. for percentage Sea-Doo at on looking Now, retail was retail ended 'XX XXth, American up season up September

one in good platform, up also in every markets Latin XX% recreational and counter-seasonal in Zealand, still success the off segment to America. which the Australia/New were the in start now the Sea-Doo North season leads new position high a America. took the in mid-XX% the in of industry number With in segment Sea-Doo up and GTI is

the products, Given XX% the low, in production an for last we by down year. experienced from ended network these QX, down shut the inventory with at we demand strong all-time compounded season

low are our of certificates, trend a strong next expecting the year. level consumer inventory With these for we and strong Watercraft Personal business in performance

despite high available a early period, retail percent. industry North up American still Ski-Doo over in while the network. the snowmobile, of season, at the up in is lower Looking inventory retail level the same is XX% mid-teen

for with have a as driven Revenue appear retail parts, diminishing, vehicle schedule usage our lineup 'XX. XX%, revenue, for sale our season is PA&A powersports, engines, a holds increased by to that we and result accessories apparel higher with we snowmobile accessories strong The higher of have not increased paying for from in accounted has were same production for phenomenon focus likewise we does This volume the mid-January the to placed observed of unit be Continuing us. OEM extend by at decided and parts, consumer. demand product LinQ and look on until Given of up replacement and accessories apparel. have coming parts our guidance.

XX% of Peter's, plant. retail in and the Evinrude to of Looking positive period, the operation at availability, due for Marine. since by the St. outboard have engine level, our mid Minnesota retail continue a were Alumacraft Revenue into growth. driven limited in we Arkadelphia Telwater retail momentum down delivering saw XX% during the the both this down Manitou decline At been wind consolidating and quarter, a product facility closed line. slight

transform making Sebastien. of more turn call with our With that, on the boat forward are detail marine we initiative. pleased industry. with on the our are to We you the over sharing the to soon We brand performance our look latest will strategy and to I progress

Sebastien Martel

strong robust as quarter, and and richer results than lower you, than for good plan our mix. anticipated our on benefited demand Thank sales achieved for which production product we third program led morning, the anticipated continued and products, very everyone. José, from delivered the a We

reached level third our third last a $X.X over revenues up Our quarter quarter. billion, record year's for X% at

variations. Our gross pricing partly by programs, unfavorable a rate and XXX foreign by mix, impacts and margin ended at favorable sales from driven volume, basis offset increase, point XX.X%, representing exchange

quarter the million, EBITDA as result expenses, This operating margin normalized COVID we profit driven in implemented impact. lower EPS to improved in The free this year by and we $XXX also in XX% a million of up earlier have from billion performance translated resulted was of the financial balance cost year. saving adjusted with last solid the on Our bolstering $X.XX, mitigate $XXX gross a our flexibility, quarter, generation to measures sheet. the flow up the normalized XX% a of $X.X cash ended as strong cash

by product at in Slide on Looking geography our category revenue details and more XX.

primarily was quarter apparel the and in growth categories. parts, accessories, by revenue driven our Year-Round mentioned, José As engine and and OEM Products product

inventory breakdown, XX% international production Canada, X% due United allocated regional increase good to were and revenues of very portion many in down was yard the to of low rebuilding in regions. our States X% up having up a the why is our level in terms in international In in of inventories. yard This in quarter

XX, pricing favorable higher $XX Slide year quarterly for for operating and tax was net million elements normalized about These $XX million. partly expense mix, from our to $XX Turning lower $XX of offset income last for volume, impact expenses driven and million by program million. up and sales by normalized financing costs were

by decline our our driven XX% inventory continued inventory Turning for our our remained at Slide XX the North quarter, low a of network this year-over-year to yard position. at products. network XX% levels demand Both and American and for respectively, inventory a exceptional look with

of growth last year year flat declines compared shipping are business have the already line ORV of by we meet as inventory, Again, products. the is and upcoming have snowmobile our terms demand units we decided which to our and extend In for of exception year is in the and season. inventory versus we actions for production the all 'XX Personal seeing taking for to increased to manage are why necessary started with schedule weeks our Watercraft. three-wheel network the strong production products more last model few a speed This the

that equal over are update in competing OEMs now were of terms as back to on we network continue as the we footing And fast will confident the were XX. our And of rebuild more and As already maintain the that a Slide we quarter, on market share. of introductions, gaining product inventory, our we saw inventory we pace industry. guidance last most outpacing

product that ahead will our continued we our these programs the from a third for better Our our consequently the expecting to demand and expectations, significantly consumer we in Accounting resulted well strong the profit came lower quarter continue richer year-end of gross which richer QX program which results expectation guidance, fourth by sales results results in sales introduced margins. a and quarter, driven better anticipated than of our benefiting are and and last lower products, for in we be now strong mix than August. initial levels mix

to up production expect also X% factors, mentioned, based than guidance X% that down range impacted X%. down just revenue XX% elements, of outboard terms our Also, a the for now of XX% and engines, on extension In in to PA&A company between continued impacted upward normalized to and by the as we to other Products, XX% are to resulting revenue the X% for engine total XX% in is down positive results the EBITDA wind the from XX% down down Based I PA&A to revenue schedule, the normalized been X% X% year, for elements reviewed X%, in Marine by of to X% has has ranges grow XX% X% our the our OEM now This of significantly $X EPS guidance business. strength improved grow expected snowmobile business. the remember to is to for X% it of expectation our $X.XX. to these on for and Year-Round a and same to which down you Seasonal Products, and up guidance

Our as guidance to coronavirus. time still the uncertainties we than wider the usual this range remains of face for related year

our virus range. costs, our suppliers that to place could production lower dealers immune which in are demand, protect measures the economy, we While wider on we our to could the represent have potential the and the or reduced hence lead employees, increased put strong risks to not

be As impact second you can to we more does what of with the similar appreciate comprehensive the spring. guidance saw could confinement reflect not that wave, a measures measures implemented last

to invest back We these to the these has necessary the call this, return provide in business, business initiatives us course outlook preserving operate given issuer Directors bid of reinstatement the the quarterly sheet normal uncertain our Finally, approved I of shareholders, while the fourth the balance starting for positive and the quarter. of our continuing of allow believe will our strength long-term our the launch dividend in the and turn in to while the flexibility to With to growth. financial our enhance times we the José. Board

José Boisjoli

Thank you, Sebastien.

continue very line surge in this you XX% And to hard growth during pre-COVID, the all demand opportunity ‘XX positive, year at period. maintain with was was working are recall it fiscal has we for up of mid-single-digit. As our The product offered to us growth an at in industry in this a that retail major trajectory pace. end

Although from we achieving and new interest customers. far is existing we growing, balance remain and a recognize positive. the are still over, pandemic we is between good Consumer

Our to industry due and globally share lineups therefore continue attention to shaping to gain innovation. gain our ability introduce market

Our is strong And an support upcoming good next we quarters. increased to growth. a in replenishment our cycle at in the year, we additional a all-time with this be have planned And low. inventory position capacity will

not in has higher our with required situation able plants Given this, each year like continue deliver guidance to optimistic have that we the have incredible and interest been Without people we end of I us. we demanding around schedule from maintain ever combined the offices fiscal well-positioned new year and COVID world, all the on to would for than of are feel to would the note. personal our a are for we consumer ‘XX. to the

company successful will the fortunate to over turn of And thank their operator their And dedicated on the have the for innovative our best ends. the careful is call and in industry. I note, we to the and that resilience A to question. operation. diligence, of heads So and to wish many for our are their I management employee result

Operator

Thank you. [Operator Instructions].

Our first UBS. is go Robin from from Please question Farley ahead.

Robin Farley

wanted a retail. about to Great, thank bit little I you. just ask

that very had that August and shown but bit September still had a in July. slower a little growth checks after July rates very Our good big month than

incredibly And in the could about October an us I'm after and of September. November? then August any was Just then growth to October curious to and the obviously can can Thank so have kind pull next next, that if much acceleration to in year your you. it be about a about the comparison? the you'll I restocking So trying forward that availability? base having next that think in increase just the October won't maybe kind about just growth retail Or it just reasonable and But lower how growth. give and how thoughts here, may that, your rate that strong think whether be of there's year Was of longer-term? drive growth some -- you so is have shipment after into insight that till think product

José Boisjoli

That's loaded Robin. morning, question. a Good

-- XX% a good an our this happy all is slightly for I an below for for retail to month, October, height, year, and XX retail between numbers growth winter. if But very, September third with off Just I retail summer a in August, low-single-digit. XX%. industry because lack had of XX% only is you overall, transition October. very sequence, EMEA November go America in and And the days despite slightly the October to first worldwide the very quarter, is XX%. XX%, above the if I being then because And product was start. for September, despite up inventory, worldwide investors, in And our always good that’s that's a of that our strong -- is is retail mean below slightly last was very every then growth November of some November. mid-single-digit, North you whole with think. the we we're very I interest the month, know That I is mean, gave in up growth give of is the QX.

two. retail because a was of dealers, the And we for were why you confinement, us, feel conservative. top, gave new Alumacraft, the product next And or know that happen are a say they it, snowmobile month all their And the us better of product at year. low with when confinement for then quarter out the when well end year just to And shutdown the factory what out norm ran transfer in when our year. the Three-wheeled to we we I down somewhat vehicle, this complete you but think will Marine, we're our to was will dealer XXXX. be the of is safety stopped three it all shut next we ORV, shut And I'll weeks. of out the about school for believe because learned COVID of in that inventory. factory of it say were planned on cannot IO our But ran we we the positioned by have there and for operate all Now of fall this, better. last we from next we continue and in six factory additional I next like side-by-side for of hope new if Peter. be for were and down employee. is will of the plan context about middle that's and think in year. But closed closure season if of we were mid-March, our equipped an down suppliers Arkadelphia our into -- to us St. two stopped looking things And had in wave mid-April, after And in we peaked end mid-March, in don't Watercraft, product, the -- very year shut for July, months. of months. riding

Operator

you. Thank

Steve is ahead. Markets. RBC Please from question Capital go Arthur Following from

Steve Arthur

of couple a questions. Just quick

structure Just looking a cost the sense on first, forward.

settling was made as You pretty some spring, heavy in. the COVID cuts in

have I that in margins much of many And you've gross on how the through to QX or Just costs had back -- part guess you wondering can and think how of bring the [outlook]? of impact now? towards those

Sebastien Martel

in Yes, QX measures earlier strategically we decided we've of benefit the QX good is we that morning, Obviously, Steve. from in put invest place With initiatives. business some year. in to the how in and the did this cost saving trending,

continue so QX. be expenses José And we'll to, year-over-year. to trend year, expecting for year expecting with saving our well I'm not to up for obviously continue in I'm investments. And that very expectations this as And of positioned alluded investment cost next next comes obviously are good. that

So we'll continue seeing that rate increase Evinrude a of but one of savings thing to shutdown million I about $XX want basis. to permanent that million remind is $XX with the overhead bring on will

going obviously year results. that's So for to as year, benefiting our also this results benefit but well. It's next our

Steve Arthur

it's see interesting And measures, cut. about the cost wasn't that R&D to

fact, to I opportunities? to ahead some this QX. of up level? stay is with you market time share at in looks looking In more kind accelerate likely XX% in guess investment, invest was might like about it your normal year-over-year that that it X% around Or

José Boisjoli

success driving know, in key been you terms of several is to our as Well, innovation It’s business. last gains our in the years. share what's market

last with cut we've pretty we to our reduce that's do investments. last So that thing over the recession years want were thing to is happen, been to we if few to the open want a and last investors R&D drastically the

we continue revenue. of will the you And the of levels third run able And at we’re to making terms is to And that see percentage next in investments the quarter. in that. so in year, our it protect been historical expectation we've

Operator

from Craig from question Please ahead. is Our Baird. Kennison go following

Craig Kennison

the It channel. your relates in to inventory

I issue. channel think that never been the due more it's the to has possible scarcity profitable

scarcity a basis? like been advantage way as catch if are to Just for particularly feels it dealers I'm the sustain and preserve an in your BRP improve a of profitability you this me, can better you up But on around? time To it dealers can you demand, sustained to that that's that of some wondering profitable.

José Boisjoli

here, be it's for Seasonal almost XX-month we a because quite X, go -- months and are difficult, snowmobile, retail months we’re on Good Then, probably per the advance. in in product line. that in we'll we're back will lines. I And morning, the this it X three-wheel season include given to basis Craig. first basically to is orders don't And Watercraft Product and would us and producing those to product I short, for X think pre-COVID produce because situation producing

on Product this the Now story. another is and side-by-side, Year-Round like ATV

for the that. XX%. the and is we going competition about dealer plan also could by mid-term, aggressive, happy inventory everyone to to everyone long-term, We us think will is You're the everyone But and lower I share. Mid market totally benefiting be will situation fighting right, than fighting the pre-COVID. market short to forward share. it depend pre-COVID is low back see reduce because to the we'll inventory how Then when is for go

Craig Kennison

dealerships in meaningful When And actually units show online in Mexico, to a new capacity with would respect way? your in that of next year. up production comes in the those fall

José Boisjoli

will week. When the right In production running away. be be following the will we delivering

Sebastien Martel

QX inventory. year, impact end So on our by the of next see the you’ll

Operator

go Following from GMP. Stifel ahead. question the is from Please Landry Martin

Martin Landry

a -- really it just was your gained the like understand have is market I'm of quarter. Was the scarcity to during of demand seem your to what it own products with Or from in in You significant retail share side-by-side trying products? better at driver? strong competitors? way

José Boisjoli

managing plan. I think our up I But bumpy. to QX are lineups are minimal production manage think capacity and to pre-COVID. very we with on is is had situation. of run facility very have the supply we days those full Right ramp team Martin, able to in pre-COVID. we’re and a gaining than better agile capacity good see, admit now in good momentum already ability our some to at facility There to bit our a delivering share very we manage chain deliver to competitor. from our is what run very, at I And but some probably the with We our difficulty, it's interruption. those or was

Martin Landry

to Okay. production production from And us Are earlier year demand? catch you year what are are you're historical color what quantum to versus turning production at Can going up you your increasing give to as standpoint a low. to a do this starting and inventories more Watercraft? you last by Watercraft, to for

José Boisjoli

of we shut non-current next in create the the quickly. you in Watercraft, when peak is producing per look of pipeline April, year. give we And shape booking but started sure down up level we Martin, of have empty, shutdown a down those this that next for to in the the are dealer we to at we good unit capacity. season, disappear advance a since you Just it's that production. at solid year September. network we for the if factory, and May is retail model we X the till time production the after July, And less factory than make very not then After dealer, in empty very we believe the the peak. that some restarted were end running our full we’re that year Then we be restarted for say And and for in the the sense shut will factory setting production, will June year ‘XX the in because we the factory inventory,

story. retail year Next

Martin Landry

adding you're any last how more year? versus sense capacity there Is of, much

José Boisjoli

give terms you Yes. of to Well, you here. out -- -- just in just help

probably the XX%, of situation, terms season year next finish retail usually with the years good in we In XX%. inventory of

to of that so to XX% replenishment And call demand. XX% that increase in for meet a production inventory just would

Martin Landry

right Plus seeing the demand so. we're extra now

José Boisjoli

XX% we inventory again, the call. adjust to XX%. the on which side, production flexibility to it's say have to too schedule, seeing, early demand, but But just extra our we're today The I'd

Operator

you. Thank

following Our ahead. Please from from go is CIBC. Mark Petrie question

Mark Petrie

called know on but price color in Could quarter? the of quantify the and out outboard the the factors and removal you most full just you bridge maybe margin activity, specifically other business? from that and being I I more provide the just a could realization any and benefits including lesser bit guess, gross promotional pushing a higher of you mix factors,

Sebastien Martel

big on are a quarter effect the benefit Yes, programs saw when rule. obviously, coming this from programs. we timing provided for programs And there's these the accounting

these programs for unit. the we provided of were Some ship when

needed. the programs strong QX. these low QX in back inventory, And of with So and obviously demand, not level the were and

I released. year a at were looking provisions these basis. prefer full So

year, performing. So better first the provide with the gross you months how nine margin comparability to as so of we'll is the

point is So pricing we added basis employees Production with basis The XX from points full well, XXX a basis and XX absorption as have on about XXX. shut pay down operations have points, the because costs, for overhead for and call programs engine what COVID negative negative nine about months nine outboard sales we well. months cost the is a XXX favorable mix to margin. exit the months of then full we volume points. is two as impact basis of And have restructuring, gross is for so we to of favorable

we points. So on year, as part from see next continue a be basis from of believe indicated, year, obviously overall reduction to we'd impact that programs for XXX coming And benefit as for you promotional good next lower early activity. we'll like that that able of to

Mark Petrie

going I going to in is 'XX, revenue My kind along And fiscal that for your half year other in sort of how that, it how think typical 'XX? that alluded helpful we question the you should But about first the seasonality fiscal replenishment be that's regards next lower sort to of of about programs? to revenue change and of with the margins as think was of promotional of the guess and margins. cycle with just how seasonality to we

Sebastien Martel

in Something current greater percentage QX. Personal for the talked shipped results to was which towards I've model Same there's we going going year. of be three-wheels. a the in thing more fact units Watercraft, already be that about the are next are to pushing year QX production

the bring opening compared in half year, to in should had we're the that of second the early year, higher our going in numbers. So Obviously, next historical we be up of plant. to part new what profitability the

rapidly. So the there’s added these volume, going to higher costs be that believe bit cost. to more with offset be we'll But able a we quite

Mark Petrie

a well retail supply some Okay, leading thanks. recent about José, level. you And talked the to outperformance performing on chain pretty and of in maybe your months,

that this issues know say to haven't mean, in had that, you are issues any you have really any you the that I just cautious point general. on to to QX? supply material in I is regards chain? with But guys So had

José Boisjoli

that to supplier manageable good do done had re-freight job or we difficulty. continue. situations overall. accommodate this foresee all had But very a had to to life. that's time. parts will daily it's reschedule We And manage We is who it. team what our a the has where And But the we overall,

Mark Petrie

one last sorry, just And one of clarification.

I think the were of you new XX% said industry or to BRP? entrants that's buyers in QX, to new new

José Boisjoli

the and last and we give here QX -- analysts, but We in I are colors. The who XX%. it I first, X,XXX many number the for our to have just we surveyed survey first with XX% XX it's will time vehicle People August, do we interest and quite historically, this last and days have -- Yes year know July, because more them survey and purchased didn't QX I nine then any because you entrants a investor And of participants this any to you October, high this we done colors in we've in here compare some don't survey, was give industry new September surveyed about country. colors. new. year,

someone survey, and and we're had we out will but wondering we and we new we to to had was industry. BRP numbers feel new now will lot continue many category of entrant in new lot new because new post-COVID? indication brand. our Watercraft BRP decided XX%, customers. the XX% smarter, participants those that experience but is buy What for new more XX% XX% of an means to new more getting Now, question, was to XX% That to positive with entrant, of even Out XX% were to the a X,XXX and of who XX% us? ATV. powersport to dig the And totally we they are repurchase. that's of testimony loyal on gain is was that we and and with pretty encouraged quite very feel the the growth ability have those an entrant and new market customers put of experience share, remain Then First, also emphasis a because confident a a were

Operator

Thank you.

is Katz go Jaime Morningstar. Please the from Following question ahead. from

Jaime Katz

customer what a sort the seeing North inventory on little demand of Europe you curious about as the Obviously, there? same drag a as bit behavior acted there? I'm which levels, Thanks. in seeing So on is seeing constraints are some was But throughput. environment that there are you and different economic America guys you given are the from

Sebastien Martel

if in our inventory were picked the which us recall QX QX. to at we the Well, in were softer was obviously QX Scandinavia. up start lessened yard of end season to Europe. demand saw a Demand they being well. in confinement continues the off the strong. in in It QX demand for and in business more as you And numbers, confined strong we is strong had rest resulted Snowmobile lean very of be measures good Europe for is QX, because outlook in

Europe not consumers. So we're seeing material any North American and differences between

José Boisjoli

thing I’d area. to is in any this comments, -- And feel don't and an it's very remote be slowdown differentiation, only for The add off-road don't see we Sebastien that is as activity there. really we snowmobile will perfect

Jaime Katz

so new was impact, go a of Toronto you around? efforts about not same talk how and can last that Thanks. it's are are perceiving such the bit round there enough And or the lockdowns in Excellent. as the magnitude mitigate maybe you to sort the it little not then whether of

José Boisjoli

what's think virtual. that the need and our are right they But but able Business stopped a even They that don't able lot in now, a like different doing for first to not it's to despite And respect, And no many I was obviously, Toronto, business. running. this, to still example, even I had us, and in more Europe. of lately, our dealership have that's measure, the been creative saying affecting in learned happening dealerships in first all lockdown retail operate way. why were dealer lockdown, being in we've many were dealer my remark

Sebastien Martel

-- And not almost in lockdown as seeing economic seeing it was we're comprehensive we're were the year in spring. and theaters, as where fourth restaurants, in movie this being can plants an but the so saw appreciate, closed, quarter, the you we and now spring, stores as

Operator

Derek Following from from question go Canaccord Genuity. is ahead. Please Dley

Derek Dley

-- you of this that couple with follow that like loaded already, one. commented questions I just wanted to given were asked. I'll a

you that there increase demand Is we any could year to plan out five a seen here. mean, laid get early? about ago? year Just EPS to that given your the changes [$X.XX] year you've a that I

José Boisjoli

EPS Listen, say the MXX. question the definitely there we situation stable, your it’s now, right restate that will we that cycle direct When too that that not it is and it you. it's MXX, all we're low all is customers. than surge have that of but growth to believe will is the about $X be you having early present not record to -- restate been tell Let's Then opportunity, there in was There for inventory new to the a that too that a more was the MXX. now early at bit OEM. or sooner right of

Derek Dley

a case of what promotional then any really of in at the environment, just is now? just in of out discounting like, seeing happening kind all floor, door? it there as terms terms of it's hits is Or you're right the And product

José Boisjoli

we either dealers these announced -- spring support incentives promotions I fly the the some provide units of in a units, we Well, et mean, cetera. to as significantly so a there's still are retail lower always incentives there's bit back had obviously, effect. our for for the the that But is in And historical. -- spring, there's we door, or no amounts Obviously, than promotion. we wholesale on financing, out spend which

sometimes quarter for basis points. there's but again, bit, you So as saw the was a the XXX impact

So it's years. prior a versus material decrease

Operator

from Markets. ahead. is question from Capital Please go Gerrick following Johnson BMO The

Gerrick Johnson

takes to XX%, we the which in quarter one was not down But from Your a that the How and of physical here. about expense year-over-year? about event, did the operating discussed occur we some contribute annual club big haven't did savings expense much talked of puts standpoint. terms

Sebastien Martel

a it's million, but it's million. not it's again, it's, material $XX expense, Well, $XX not

million. impact. it club So But than less obviously $XX had -- an is it's

we as So obviously, pipeline, historically. year, continue And you to I not But I remain level last want math. continue for were the want same QX by were probably low? to not expect product. fueling creating year. we we can why to -- come and expenses to to Well, that to we said, club consumers events do interest will dealers where And back obviously, the will next the our be expect

marketing be to will that redirected other of some initiatives. so And money

Gerrick Johnson

you the ride Okay, well, events I keep hope and analyst investor intact.

and These to here. art three two big U.S. on macro two vaccines the very other highly election, the announcement than have of another There questions more other are and one -- question. been that One look is the Moving effective. science is events.

tunnel that of there has outlook? not year end there perhaps, -- they change being a Number on at the the state got they is that is looking? I we’ve light here, if impacting So the what's a changed But are How next that are on mean, the how are Trump of dealer one if at two, and in of how here, all? outlook And -- there here overwhelmingly light state How is their the U.S. the supporters call end side, election. there. at I'll for any a number tunnel the there? beyond? your

José Boisjoli

impact for mean, parties, On will I some much adjustment, to election there both any the but to a impact. we long this U.S. with don't able able direct, us think that within deal are there. with work U.S. administration. been be there any time, we we've see And we business and mean is and for don't

distributed On obviously, take be the the happy time. before But massively world, it’s that some around it vaccine will happening. vaccine, very will the

industry, us, then recover, the to pretty that as surge if I had be momentum specialists to growth will that that's And years momentum take as end had for that in the because this and other like those look see good opportunity that industry, we that existing will an of of to my thing reduced. we of we All there the that is, summer for But remarks than we And a It's again, job it at at max I you the customers. pre-COVID. morning, then I leisure entrants are of this had, saying this our you you mentioned lifetime us. continue make front a threat. surge our more why maybe is -- gambling, the do. maybe not are a But customers. more The new airline, hotel, three And and might those like we will bit believe -- the customer have in be bit runway reduce the new customers. explained we know the

Gerrick Johnson

over working customers loyal here. are of Yes, But of And customers that those kind a who have like people are one okay. thing you earners, wrong you these then just talked your maybe initially new professionals was I lot more got traditional experience new of about, customers less from to the think usually and time, that some I different think they're this new money perhaps get home much of but the brand. and the probably lifestyle, higher income thinking

of new less more? customers you sort think of customers those new retention perhaps or those So how maybe do you and are about modeling

José Boisjoli

we SPARK. give we Then And customer customers last well in Sea-Doo see see as sales new a make product we Well a that opportunity. the and lifetime to to learned we’ve customers. with those Ryker be XX%. new And XX% attract to this was won't the the was with was And to year SPARK growth line, deal to again, how new we've just to pre-COVID, them. customer of We with this surge SPARK as and are we the new them perfect, instead but customer. continue tooled XXXX. to an use you It believe able to threat, XX% was Sea-Doo introduced pre-COVID -- year, sense, over been

Operator

from Cameron following from is National Financial. question Bank Doerksen The

Cameron Doerksen

just flow me. sheet Let questions -- a cash me from of balance couple

the just First capital. working on

end working a big positive far You’ve I we it as just far here that what had fiscal mean, I looks should a pretty year am to trend might wondering cash? use wondering just am in of capital? on QX, expect XXXX. be the like how as so I draw

Sebastien Martel

international where be so use yard was there's end inventory, are the compared in at able but related were Obviously, year QX inventory expecting to QX those of the low a working we to the inventory of in cash cap. yard Yes, yard, it going to still to we in rebuild ago. probably rebuild it's to

be no in work done could there higher North America we there's to inventory. So and work even with of more levels

So in quarter. the all-in-all, year, still also is full be fourth going capital the to a CapEx generation for high good

fourth So consume in quarter. should we cash the

Cameron Doerksen

I artificially first we it's Okay. depressed level, up sequentially. it And sort more the was I back QX year? a been on just quite normal couple kind payables, think the quarters of mean, bit in of Are of to

Sebastien Martel

XX We back that where QX. tend of at probably normal of working to end trend that's of are levels. we Yes, days the AP and we are to

Cameron Doerksen

debt on down you early? us I cash? it some not in ability the And limitations mean, you pay can I sitting on be you've high, just mean guess a just on great. update I scenario cash if I to wondering I far to Okay, us what latest got best -- $X.X what there think good can is on your guess do. position, it’s But -- I just be very probably the update in position guess. the to the on Maybe remains there as as billion it's --

Sebastien Martel

but the time what not especially that uncertainty -- scenario, take very obviously, to before with is but a vaccine in, it'll is position some we everyone its it's said the it's we way, already -- immune. be as best the on good -- Yes,

on being prefer in short we cash. being than So situation this

well. reinstate to decided we've our NCIB saw, you dividend as As the and

deployed those there’s some going be cash to to efforts. obviously So towards going that's be

is short-term, the raised that We for an X% you in May. back million reimbursement, $XXX May, to there debt on extra In early expiration as of repayment penalty we in terms of all a agenda. -- know, it not debt is comes

debt So until debt reimbursements. to May, potential at our look intention not is

Operator

from following is Capital from question Desjardins The ahead. Please Benoit Poirier go Markets.

Benoit Poirier

on new potential your could products agnostic about question, you current maybe brand more and customers? entrants, with whether to you compare come are they back the when to talk them the Just Gerrick sell

José Boisjoli

Benoit. morning, good Yes,

to snowmobile just vehicle where advance when a experience. off-road marketing that's Uncharted to them Society investors, are in, and again, minutes they we now an an to new product launch afraid lines. the lines. ago, of sure, now Gerrick as few They them opportunity. attract team see lines. in to customer that and expose again, we sales different pleasure forward runaway be maintain the a is of to We marketing to I a other an entrant many product riding other And and our that team or them the right rent job the Then we positive other can try saying And to Watercraft as to came For hard other focus new and you to that of or a them expose to for industry going like it's and our is to the the them on see product this working those expose follow area, with coming why team to we and expose the opportunity. about what was

Benoit Poirier

lack products a low of driven you better high by by entry was margins, it Okay. impact end -- talk And the Sebastien your on toward was products? when driven about or it customer mix driving preference

Sebastien Martel

to high the that obviously of will and the products, the bring scarcity the produced us for Well, we units maximum and inventory believe the given demand to selectively dealer. profit we

to the more So a the the by richer richer produce consumers. our mix, driven we've made mix that demand because from decision mix higher a is obviously products

Benoit Poirier

Could it furthermore? greater could And product that something we maybe think introduction accelerate project goals through it's you some accelerate pandemic, visibility the BRP? given about project maybe when and vehicles, does electric so impact the how or

Sebastien Martel

the you, certain next on had as We visibility did turned on we -- shared in I change the the when and that a pause yearly the we on Obviously, continue significant as But for programs. do now no on we'll projects basis. we for on the switch And with and a greater put back year, producing we these year plans. products COVID innovations happened.

José Boisjoli

remain competitive. We coming very have believe that plenty while to we that

Benoit Poirier

bigger optimal And terms When Okay, we for deployment, should the given the we visibility the X level? currently or leverage. maybe increase lower growth the thinking to So capital at feel perfect. pandemic, comfortable to in have? times of look How optimal be be we the what right you given about maybe do one opportunity, now, me. seems level last

Sebastien Martel

-- about In terms talking of CapEx? are you

Benoit Poirier

terms of Sebastien? In debt leverage of it net ratio terms EBITDA,

Sebastien Martel

comfortable X And were as Okay, times, quarter -- We at we X past times we well X in significantly said leverage. the the again finished times we we're below times. IPOed, at operating when below leverage. X

are be with will cash sitting of today, part we're see going So how But on to discussions said I as bit we that things and turn having it the out. prefer a more Board.

We is position. good plus a times. that lucky a these Having in in a flexibility flexibility cash uncertain huge are plus we're is huge

Operator

you. Thank

Our question is Badishkanian next Wolfe Please from Research. ahead. Greg from go

Fred Wightman

Hey guys. It's actually Fred for Greg. on Whiteman

low quickly up Just Retail was XXs snowmobiles. in the on quarter.

I signs quarter's up call, think on talked retail last the about XX% were had you plus. early

production what So, your extend changed decision can how fits you to just that about talk period? and the into snowmobile

José Boisjoli

it's feel business. that some year to momentum. comfortable last we a happened the snowmobile this And And are the numbers, small. Christmas, out of continue we're at will will hearing need the with to good hearing at right it increased And dealers Good right now year, morning. we Christmas, because and sometime had customer, we be of units What be that remind than more of ratio then product need out. and happy with -- a high. unit, shipped dealer the to the a careful But receive season just can numbers they momentum this by we you very year. you this till beginning in snowmobile the deliver again, now, are and when we're expect year, time PDI at pace then Then extremely they be very

Operator

you. Thank

questions further to to registered over meeting turn I'd Mr. this back now have We the time. like Deschênes. no at

Philippe Deschênes

BRP. Mone, in opportunity to I March. earnings to for again, want Thanks quarter look safe fourth everyone, good a you interest everyone thanks, happy speaking day. forward and and thanks to Great, season, your holiday for you all have our us for with the take again joining we and and call morning wish in and this

Operator

disconnect for your ended. this now Thank thank we you has you. at participation. The conference lines Please your time. And

BRP (DOOO) 25 Nov 202021 Q3 Earnings call transcript