DOOO - Earnings call transcript Q4 2022

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Operator

Good morning, ladies and gentlemen. Welcome to BRP Inc.’s FY “22 Fourth Quarter Results Conference Call.

For participants who use the telephone line, it is recommended to turn off the sound on your device. I would now like to turn the meeting over to Mr. Philippe Deschênes. Mr. ahead, go Please Deschênes.

Philippe Deschênes

and its and results fourth ‘XX. Julie, conference for to call for quarter good you, welcome morning BRP’s fiscal Thank and year-end

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

at based the will implied subject forward-looking we statements results to made would to like certain section. made could Relations during certain a the of risks in and on and actual I brp.com be invite during The the website find Also on supporting differ remarks, to to Before prepared is is uncertainties, complete under I those consult everyone you and these can the and the remind these. will statements. information to presentation you for that Investor BRP’s reference that from slides, move call, be MD&A forward-looking the assumptions call and list our

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

José Boisjoli

Thank to our you you, fourth which Philippe. Good year, in us. concluded the with annual results highest an profitability X. with quarter reaching very Slide Please and revenue our performance, financial exceptional thank pleased joining for record I’m delivered history. morning, everyone, and turn

in our industry, Our team to pressure, line once gain market managing again. in the execution continue powersports to solid product share while demonstrating chain supply

on alike. and In fact, time the during Moreover, year, customers serve our project we’ve and on manufacturing and capacity dealer GDP better allow us our delivered expansion to budget.

capacity. our XX% personal of new Juarez added about added Our Querétaro watercraft expansion, of facility XX% In X about capacity. side-by-side

coming of market, well product chain which year, In the disruption. market short, turbulence delivered strengthened line. despite exceptional portfolio. extended the introduction Switch, the the shaping our of years. we’ve by in grow to several the our we introduced was product caused new industry-leading our addressable in to supply us addition, year In And an continue positioning the highlight Sea-Doo products We

high $X.X year. the Revenue profitability highlights higher our volume bottom year on on financial fiscal over financial new favorable for year We our to line several results the Likewise, height. was Slide historic of at Now all ended key both XX% X product the let’s our hitting delivered metric. billion, XXXX. turn and lines financial pricing. driven top record reached growth This as by across up line,

Our billion, was diluted normalized our a $X share of normalized grew guidance And between of EBITDA to XX% our earnings per up $X.XX, reach XX% $X.X and representing to being $X.XX. XX.X%. above range and margin

Powersports performance to for for retail Turning X Slide at share and the year. market a North American our look

by fiscal As XXXX for was you product. know, marked year our continued consumer demand

of this in However, our to the the coupled ongoing our context, meet limited ability low constraint, fully industry. supply allow demand. level to outpace our chain with To team network inventory, us fill

was for the down which industry was Our compared X% mid-teen. retail to year, down the

As share, about demand. we point solid with XXXX continued the our testimony the X% meet past over a percentage is XX customer a agility result, performance ended over year. of The gaining year six about point to and XX% year market about fiscal

at look performance. QX brief a our for X Slide to turning Now retail

retail Our XX% over we America, fourth our availability by be able sales were of the product revenue. outpace North representing industry to constrained in continue in the quarter. to Still,

exceeds gain the for components market prioritize snowmobiles segment available season. to also We’re that able outpace and retail the we of industry far utilization share as in into

and product combined Slide product design across the Let leverage A our X. this according to approach, allow different with portfolio, line modular comments our on seasonality. to on me elaborate further component diversified us

this illustrated have on the slide. We

can gauge range our As prioritize it we we which our to we the total type lines. industry team and back competitive will are In on especially the to us supplier, then to gauge you which observe, can chain advantage. a in come can across end, of outpace provides utilized product It our line with and In decide snowmobile have with we This that three product of mid different model retail terms collaboration constraints, approach needed high and the additional prioritized navigate installed our allow flexibility semiconductors. depending availability performance. be supply QX, of this on modular the is seasonality. current limited of the

reaching interest Slide not customer watercraft consumer snowmobile down. for to continuing personal record for deposits momentum The demand Turning on with is X. is slowing preseason Consumer and and level. powersports

season XXX%. XX, XX up over March of customers watercraft and North unit America, over personal are XX for in season certificate As up for are spring booking XX% snowmobiles

In interests signs is Switch a new of sustain Sea-Doo remain entrants, and and elevated seeing Can-Am continued of influx There are pointing vehicle with addition, preorders. traffic to are strong consumer level also off-road momentum there customer strong many in powersport. website

So continued we in all in well are all, to capitalize positioned on powersports. interest

XX a to to fourth Now Slide up year-round product. $XXX for let’s the turn quarter. Revenue million in were XX%

of brief a retail overview performance. provide North American me our Let

and in to lines, as the decision our production. slightly supply side-by-side Our snowmobile vehicles industry was including Three-wheel chain for lag prioritize by and limited disruption our QX ATV of retail product all it

outpace However, season industry. to date side-by-side the any ATV

capacity we in strong and to it by the momentum Three-wheel update production our are vehicle pleased product lagged well While early gain lineups. in seeing change quick in positioned project line the industry are continue in covering All market schedule are share, to side-by-side a we expansion snowmobiles. season, in on A vehicle. driven to with our still also is due all, the

provides completed compared We Juarez which fiscal with have to XX% ramp-up the X, XXXX. year capacity more of us

X, expansion at of of fiscal production ramp double facility. production the the The strong position gain that demand. the in addition, quarter from capacity first With two capacity, we XXXX. additional in of the up side-by-side to to a effectively start this remember is forecast In last that announced quarter, to we are year solid production Juarez which plans start Phase

billion. to $X Turning products products in on revenue Seasonal seasonal Slide XX% QX XX. up to were

market in while our this up February. record months at We Season is share American industry retail XX looking in high snowmobile. the by in is North percent, into in the low outpacing single-digit XXXX, Let’s North industry. the momentum and America low-teen it’s reached QX continued snowmobile percent, significantly start down a snowmobile

are also share success reached similar Europe, date. market to we record high Scandinavia in We experiencing where in season

new unit and To positioning significantly success as and momentum, new XXXX our Turning are well us spring the riders. Early in season is new and X we for as year to segment trend platform now snow models for sustain entrants strong, pace Gen continued booking lineup. and trail rev very our which model XXXX. well of available innovation in introduced deep designed younger in

watercraft. personal to Turning

the American retail industry about down North XX%. very early in season, is still the While

While Sea-Doo of to the network due inventory low-XX% and is retail our down to decision snowmobile lack production. our prioritize a in

which over seasonal XX% counter positive part, this segment are in XX in QX up in North surpassed the traction with XX% season, the market. accessories very for market preseason continued page Many on Sea-Doo revenue Slide retail engine. watercraft and is vehicle good very New XX% over trend strong have Zealand performing experienced with signs similar and to customer America. of in and The apparel look and OEM Powersports up at The a of and Brazil. market as Continuing a fourth increase point usage, by track $X level replacement higher sales. the an combined are quarter in so to and was well mark unit time. product pointing personal retail, strong Australia parts we seasonal for momentum business. a increased revenue with for certificate generates billion first However, in growth far driven share accessory due counter This gain

As you continued see, to ecosystem can proprietary popper. our link be

X% up to QX. marine. Now $XXX were turning million to Revenue in

scale. for sense, about of season In are America, year-to-date. retail but the running booking at maximum very quarter for up and complete. be year. is its XX% season at In Looking and the North capacity percent in performing Telwater are XXXX core will is in mid-teen retailer with we production all we a well, offseason, retail our Australia,

We that, Project will turn we I year over are this But brand. of new call Sébastien. summer the will the happen boats bold introduce the with with next when Ghost pleased engine leap XXXX performance model technology. With big the to our

Sébastien Martel

With of optimized the maximize our the José, customer also for to our we results available revenues units. execution utilization mark everyone. production the last you, and $X.X strong our billion components demonstrated they quarter Thank this, record up XXXX exceeded year. to $X as in completed for as with solid products quarter billion, we of on a continue assembly fiscal XX% over plan. the And good for reach morning, delivering We’ve and demand in experience completed time substantially fourth final first

XX% by unit expectations a higher up which year, higher at at $XXX normalized of last range. last guidance disruptions. profit driven up higher resulting share logistics, related our to decline came net costs expenses. and coming Our and in logistics $XXX operating million higher to in and level last a due million, pricing, million production of chain volume earnings above and came from slight gross a EPS in per costs and partly ahead resulted generated and were We year, normalized QX offset labor full This that $X from favorable normalized deliveries diluted income $XX diluted record commodities in of of year’s by EBITDA, year in normalized supply margin ended our XX%, from

balance we times. of generation With the revolver $X.X $XXX with notably X.X sheet, free the million, of flexibility. the net $XXX to Moreover, of sheet cash and strong robust flow bring end and results and financial ended cash year following quarter, quarter a our of a balance the the to of a ratio our further solid improving leverage to million for capacity no with the million $XXX available increase we the by strength the capacity total our billion, opportunity seize

in inventory network shipments up our to components inventory quarter. to by is Slide our driven Moving XX. dealer Year-over-year, network the XX%, of late strong situation missing on

QX of dealership to remains units from fruit of as comparison tail retrofitting elevated of allowed components the very strongest being XXXX. February well low or the terms inventory XX% retail. in a strategy to a fiscal Our fourth towards these to quarter Still end at down in network shipments is deliver the perspective of us historical bearing

Looking of demand even in replenishment and ongoing meaningful fiscal for supply XXXX late start to the until or given we expect ahead, any continued happen inventory the the products strong XXXX. fiscal in disruptions, do not chain

Page XX. slide the to on on moving guidance Now

our total to consumer for delivering we we that positioned notably are experience with interests continue are means network XX% low As operate very we to XX%. XXXX, in and it increase growth revenues with fiscal to to continue company inventory, well products, good expected

different PA&A in for Powersports parts vehicles, And sales notably Seasonal half brands expected and products between of boats you new production XX% revenue of robust expected between product and resulting the plant supported the introductions marine demand by additional Three-wheel growth. the products X. increase are our Project our of for new preseason the in by in lines. driven XX%, of for expected product the of snowmobiles orders introduction by XX% both by year-round grow with and a the primarily in the driven to increase to categories, also and driven are to year. product with XX% Switch Looking and revenues are side-by-side we accessories Juarez our the boat OEM XX%, are both ATV expected growing XX%, driven replacement at between use Engines the XX% high grow have and these between by momentum in with continued to are second introduction to lineup. lineup and each contribute Sea-Doo the PWC and as level interest Ghost XX%, and of with grow strong to of by expected by saw and higher capacity

to the XX% EBITDA is On XX%. side, our profitability normalized and expected increase between

the our expect XX%. as between a and margin, on Zooming any on to EBITDA potential normalized account future count a normalized growth representing end slight for XX. profitability, contraction we the that does of to of not in for repurchases. share $XX.XX Finally, our $XX.XX, Slide guidance share X% illustrated year EPS Note calls

starting Mexico improved has product few mix, points, over level strong and the our margin of of favorable of the were XXXX. a efficient as manufacturing these has These fiscal driven were and ability last fact, basis costs operating additional produced in volume on second by elements our been leveraging our felt half chain inefficiencies in growth offset our most normalized almost XXX growth ongoing supply partially low In disruptions, from in expenses. sales by resulting and leverage program, gain the the footprint years, to which EBITDA mostly by only factories, of

a surcharges costs, to as and headwind it offset with the not increases to costs. cover remained margin increases While these price potential additional we such have on price additional our proceeded margin percentage do

volume XXXX our benefiting fiscal to impact from we and continue expect footprint. to ahead of positive mix and and beyond, manufacturing leverage the Looking

that on return OEMs However, point and start a will program plan we certain substantially supply rebuilding them see as a chain sales fiscal XXXX we these full to of we continue strategy are we inflationary cautiously completed pressure will Moreover, us at units when components for our disruptions ongoing We do inventory. assume and year. do to more weigh building impact to expect activity retrofitting expect elements as some that the received. utilizing

we business. is While our perspective. margin revenue a With calls normalized believe XX% our it fiscal this, is a longer-term that and less EBITDA about is from from a margin this accretive for a standpoint, sustainable strategy in profitability level guidance XXXX, for efficient

Slide the the of half split half the normalized for turning year. look at expected the between Now second first EBITDA XX to a and

fiscal more being expect XXXX second of with be to XX% XXXX the normalized to fiscal half in generated our similar of the We year. over EBITDA

year, where In pressures, as operate first we we terms we of start such inflationary Omicron-related strong from through of and year resulting year-over-year supply were in of as notably our a limited. EBITDA expect last pressures the to down be disruptions quarter XX% the normalized lap to XX% quarter the first range, very chain growth, and

PWCs be We’re planning product as mix SSVs planning QX also also impact in we’re expecting ship QX. are our in higher end – to and to we negatively

predict, and start starting their expect more are environment. as roles Omicron-related issues and with to difficult are to based have comfortable While plan on lapping strong the we information QX, we impacts to we chain challenges today, these a our supply return subside, comparable the and in

Finally, of Slide looking to at our on return XX. capital shareholders

we to prioritizing rapidly business returned free our notably repurchased always capital and and shareholders. over returned as and the dividends strength last balance investments way solid our business know, believe X.X the business actions of capital years, recent years, managing over strong million are announced And $XXX as XXXX. enhance in dividend these morning positioned billion in given $XXX XXXX bid. recipe our allocation fiscal And are we same we capital organic of diligent to the million business excess of we shareholders. in on shares. is generates significant decisions, have of you We $X.X issuer launch This shareholders outlook to the the our our over a million applying continue over sheet, cash return the our the and share our buybacks the As to fiscal and in in flow have why to provide this well returning we a a substantial increase the capital been and in of XX% form allocation we seven grew per

the the planning the taking Day targets be our not business On will will I call actions growing to we to in financial We an in José. we continue look updated forward June. to as providing did with we Investor years, these MXX coming that, are in-person you not ability over if in believe turn and

José Boisjoli

you, turn Thank XX. Sébastien. Slide to Please

and I highlight from the announcement customers I anticipated made which been conclude, and network. our regarding Before highly to Can-Am, expected we this want dealer exciting has morning

the reclaim to day, electric our we an we under brands. confirm shifting thrilled family motorcycle wheel electric an the I’m a and Can-Am market enter with are two the motorcycle industry electric, saw iconic launching of opportunity to to we With every motorcycle offering.

developed new mind. with different riders Our being many are product in

in be to to models the these expect mid-XXXX. market available We

will estimated year. motorcycle, first have family new address firmly introduction. This market and are in American the new past XX% this in grow North to two-wheeled global with about times per representing market. the units many we we entering With industry, European products XXX,XXX of an so done a of product the intend like We

fiscal we strong technology team results. with for to disruption. further we market. it successfully product addressable know-how, footprint, again. What’s brand robust an our confident this able chain ability achieve line, We called manage to do leveraging are our by we’ll supply to conclude, expanding our generating To are XXXX known our our and demand proposition We’re our dealer our these have manufacturing product value Thanks new and growth solidifying are we to for more exceptional year and and

We expect to year this another on year build momentum XXXX. for record and deliver fiscal

EPS. Our between in guidance ranging and XX% calls diluted for normalized solid growth X%

as portfolio, pressure. chain of supply to more achieve this can in half the now marine, are Omicron in from and product early the fiscal XX creating the year, under Querétaro cycle, first in on last we half guidance prove would start already and product year consumer capacity increased of for challenging, variant will the we months. several the However, upcoming back significant impacted expected and sustained That production be confident additional the at about strong part to inventory lifetime Juarez including X powersports our the of year replenishment supplier and the interest based XXXX Juarez recent our the introduction, XX of is to said, in which

We additional the brands, are the to strong capacity. given manufacturing well and our positioned benefit industry, from production outpace agility

multiple to to forward fiscal you with and sharing We have more In growth XXXX beyond. detail addition, suspend June. in look year in we levers

loyalty. employees for turn suppliers collaboration and I Finally, to for period, would the On customers dealers note, over that call will to our our challenging like resilience and their their operator during their relentless question. for this and I thank all effort our for the

Operator

Mark Instructions] from comes Please ahead. question from first Thank Our CIBC. you. go [Operator Petrie

line open. is Your

Mark Petrie

about fiscal the structural How do for this outlook. more sort margins I year compression morning. think discussion opportunity you regards and through is talk dynamics versus pricing? in of to much we today the then supply temporary follow-up progress with year? market to of as just the Good and How the just of longer-term much the you XXXX could wanted that is to with Yeah. you the chain? with on what regards the is the think And then

Sébastien Martel

build a about next to from us, probably a for When look I tailwind more the out and XXX going expect for some margin morning. to talk decline up point network. margin. we good like increase programs volume, XXX I being be in we in positive basis Yeah, is volume coming did as about point inventory year, talked The conservative basis

And so That’s about from programs sure basis efficiencies, about basis of there. XXX the coming we that’s of the be right XXXX, fiscal that then set structural obviously, want headwind. XXX event to points point will we the of are level make a inflation And for believe and with for us headwind most and us.

done pricing, well anticipate year reflected to in do guidance. and our And In further we adjustments adjust January, terms of pricing the we’ve in pricing next as come obviously model change. that’s

second X% anticipate for quarter usually do be higher we that standard So X% price the obviously price year, we than Usually, that to happens higher account period. increase, inflation. this late the the but in will a increase

Mark Petrie

Understood.

highlighted that terms continue in if talk of guys And you you’re ups I new availability. of been there’s to just the Okay, customers, from think But wonder some on entering downs think, could existing limited product powersports mostly with what you see José, seeing I helpful. about new sort the just based, cohort that’s industry. that strong growth you entrants customers or and

year for pre-pandemic year, last this your sort perspective versus versus levels? what’s either or So of

Sébastien Martel

and secure then purchase a there change. versus not entrants, trend and honest, remaining, Again, year, we it’s the for successful last though, the my preorder up much new customer it the repurchase above before. see sooner than delivery. not it’s the very my presales with much XX% are to deposit ready XX% is customers don’t be saw than year, to tracking existing the is too more saw, unit much customer like we’re to secure and about change watercraft is ready notes, in ever then was XX% Good still their never and more about give – customers. we then morning, to last And year change snowmobile except we’re year, I – in is existing XXX% a historically is tracking One Mark. more To last before above –

Mark Petrie

wish appreciate I the best. and the Okay, comments you all understood.

Sébastien Martel

Thank you.

Operator

Our next UBS. from Farley from question Please ahead. go comes Robin

line Your open. is

Robin Farley

what about engine then refer fiscal calendar you how you the electric amount become XXXX when let’s introduction electric need and the think probably basically, One any of of think the was bike questions. you something Great, And specifically combustion you’ve be back about percent think XXXX, market we that retail about that is if Thanks. dealers restock the way need about question way in what like as by on XXXX? talked or in, about today bike sort to or levels. market, new should second XX% be, to just that thanks. quantify And Two you that help think to of amount the in or talk – there that is whatever also about the versus those go to How will could electric? that that talks shipments market of restocking big we normal that inventory down being can is? that just is should doesn’t Or market addressable us a calendar say, all shipments would to XXX,XXX kind of motorcycles might how you pre-pandemic? I kind the

Sébastien Martel

morning, I’ll Good José question will one. take the and take Robin. first second the

how of the inventory. the the industry big it Obviously, for restocking a to opportunity On I the opportunity, replenish well. opportunity BRP simple to our restocking an worth look has it market of terms, in as at put has just there grown when opportunity, a is is. wholesale revenue. about – share quarter’s But it’s That’s grown big

to that in next happen as fiscal to and said, Most likely, it’s – is I XXXX. when year year happen? So going going

turn I’ll to José. it over that, with So

José Boisjoli

product our at we’re market, we’re I note then Robin. and will the introducing morning, good America products. and the faster first shift beginning family is industry reason. North are it’s said, basically, electric units is we to might that then that a of North motorcycles in just line product Europe being This in that make today. few combustion other believe then motorcycle European a industry my with and America morning, the year. Yeah, than family sure, we I XXX,XXX it’s targeting bit addressing to the what in said And first a That of And this repeat will intro, about what

America, approach or countries fifth. electric the wheel. very have run plan combustion Europe, continue addition power that line. the all that leveraging is our it’s intend two-wheeled grow. would two vehicle. products our That North wheels. good then we’re motorcycle easier felt are the for drag happening X to could it’s those this, downtown And it’s lineup say, new our us, on to And if like existing product I in would right a, existing product There sees carry of than the your the a to First, in up footprint. above Celsius, to brand, believe many – might of And the obviously, you we any it’s what’s motorcycle And obviously, was way restricting know-how, highlight electrify. Can-Am can on to and the with We to – less is also Then dealer access two access car the manufacturing all to the city open to for most I developing industry, we to the dealer it this but modular because we network, rechargeable our our that This patient. do Can-Am pack cars. with leveraging would thing again dealers in happen is launch engine was to could project

Robin Farley

think it’s percent XXXX? internal electric if that percent ballpark engine a there of Is what’s What what you be very even combustion by would markets? today of

José Boisjoli

On a a Yeah, to this those there quite The right is Robin. is is a before. is are fast friendly, it, Obviously, in in for lot customer – to and some But to we front off of the coming one We that accept then good be we predict. on and the difficult and of opportunity restrictions we of fast than people ever data do trend the very electric want wave now more much spreads. this hard is don’t electric, sure believe very the many want consumers right a of first tough ride the in this. then thing offering is make see us. acceleration there will more question, are that terms country top to very of to in how car have it it to benefit we

Robin Farley

you Okay, very great. Thank much.

Operator

question from ahead. Next Martin Please Stifel from GMP. go comes Landry

Your open. is line

Martin Landry

of Sébastien, Hi, XX% everyone. XX%. your question, growth down first the if to on good and My growth be morning, possible of revenue guidance break to wondering I’m it’d units between pricing?

Sébastien Martel

your or? that question only is Yes,

Martin Landry

No. another question. No, I have

Sébastien Martel

about terms next in increase from a introduced compared coming about pure there have you have you pricing pricing, of When for year, year full year, X% to this

Martin Landry

okay. So,

XX.X%. believe I It’s sustainable EBITDA implied a future around guidance before for that COVID, much then, margin XX% for that which you level were you And basis fiscal a XXXX. you. Thank EBITDA on had helpful. you higher go-forward in your that’s mentioned years. It’s how Okay, that your margins than see

if profitability? are explains could the that takes the for in difference, your the and what puts uptick you wondering us So bridge that

Sébastien Martel

And obviously, to manufacturing is, Slide has go – you business one if but this pre-COVID. XX, I which Yeah, also, our was it also to several there shared footprint grown changed. compared obviously, has morning, our footprint the what are Whitsundays, main our

improve through a sales environment We COVID, came with and to better operations. that more will huge of obviously the are going and Mexico, around is cost have leveraging in the that programs. opportunity we continue margin learnings us applying operations, There the third And think, overall that were also, efficient our grown lot provides Mexican forward. a I we of out element,

of And managed a that better coming so inventory as sustained basis you dealer many when be points of from as I margins the retail able at will managed in OEMs, look that a these have few well with one drivers main guess, would the XXX elements their to types programming these businesses. past, network, a them And be at other volume the was came drive better more, that environment, been three big there’s growth. the And would a, of sustain well. the margin

we’re something benefiting obviously that’s So from.

Martin Landry

Thank helpful. results. that’s you, Okay, and the congrats on great

José Boisjoli

Thank you, Martin.

Operator

next Kennison go Our Craig from Baird. Please from question comes ahead.

open. is line Your

Craig Kennison

questions. Thanks Hey, my for good morning. taking

Looking at recession policy. to a war, your of since bank pages you consumer the enter if say trends I management? got secondly, they’re you’ve change oil, have troublesome headlines, in of the central guess inflation, war? key any we least playbook then And world and the do seen are first, outbreak then recession, for certainly what

José Boisjoli

Craig. Good morning,

First, see our change since behavior customer product we didn’t interests or any beginning the in line. for

we interest on of a rate you didn’t inflation, combine rates number. is obviously, snowmobile warranty of from our customers customer know, – coming any yet minimal it’s nobody for we in The average you Then for of increase season, of that’s translates a for the stopped rate for your cost season. Then customer, price, As low season But low. see a the quite I’ll season. interests. price, ATV when in lot increase that it. about But customer But XX% spend fuel then the is the costs people $XXX and quite fuel some like a more give any ownership liked this, is a you impact is XX%, price, in high. data. The not average impact on customer on on a talk is $XXX. the – of and $XXX are you about inflation snowmobile but all Russia. slowdown this A fuel customer fuel. to delivery this if $XX Then

Sébastien Martel

were pure Then than obviously, as very happened of point put recession. to shut so a have no when the a don’t we’re to ago a on to I diversified at operations to the have low powersport you just promotions the about you view, there and years X.X different company off units XXXX, industry inventory if the at in overall balance well. XX at dealers, we’re balance with in we drastically question that obviously, network. business, much environment, need in sheet last very look a continue as From Obviously, so leverage to able That And what more your low much times. means you’re a is strong talk recession, XXXX. we ship sheet

entry product that also in more terms price product there XXXX. of are line, points, weren’t level have that Our there we or back product in XXXX different lines, models offering

Our Mexico view, point efficient business I other diversified point well lot of is international. Two with key in that our it’s footprint of and a and the leverage And in last $X over the of in a from offers our us point manufacturing opportunity as terms points, guess billion geography as obviously, lineup. revenue well manufacturing. with

super super, good a that have lineup We is competitive. very

expect as as good, for so in we then very if happen. that player And continue to innovations a the industry, come is that market, believe we strong, were we outpace very demand that the would introduced out it a would the we’ve recently recession to

Craig Kennison

think an business for the helpful. fully indication Thank it’s just could then what very when what business your versus might profile margin at? you core motorcycle you give you. that And That’s on electric performs mature be maybe follow-up strategy, of a the

Sébastien Martel

product it’s degrees business going believe it’s entering we multiple profitability. all we’re we’re lines. because to businesses, obviously, business the we into have, this in versus of obviously, we a not good believe opportunity And us all have they one, varying into other underperformer our an be product opportunity. because entering for lines, what’s this and Well, And profitable

our are We brands. some leadership, supply or leveraging or obviously footprint of chain or the

And be – electric opportunity to our for with past, with the as know, combustion electrification And we’ve and we’re of doing said, insourcing an products. technical know-how, you done the same so engines, thing are in internal the that we’ve provides as as we us cost-efficient.

this that provides cost competitive us so to a in order own advantage you obviously, also usually with – better know-how, profit. And you’re make

So overall, we’re it – us could sizable opportunity. about it’s And be down the opportunity a for excited road. the

José Boisjoli

will to like we good come difference. wow, intend add and up product some that make we customers, you that would to also And a Sébastien, I us, came it’s know innovation. push we with technology the idea a feel I will believe with we mean, to opportunity. the we

Craig Kennison

Great, thank you.

Operator

Our from BNP Please ahead. Xian next question from Exane. Siew Paribas go comes

open. is line Your

Xian Siew

then mentioned for catches And up limited fiscal on you’re and help about that, thinking XXXX some next that share maybe quarter. some in share are Hi, for You maybe you how year. about volume some you thinking all Maybe within then you the your strong gains. the sales have for How XXXX? expectations. on what for that XXXX? But here. guess, availability I guys, details. for expectations resale for Sean fiscal categories or that are market – hurt, Thanks Maybe in

José Boisjoli

of on which ability market give so belt, for unit which line in QX. the of we in the getting and our are then share North retail, in the at In watercraft the an America the QX that demand need now, presales the supply peak gain in the in in a right – gain, on more example. share you season, favor depend our into I product to product market the watercraft snow because snowmobile high quarter North Then defend snowmobile because the don’t we’re

to you could the the cannot the are we Then that’s careful Now Then snowmobile starting retail see gave on I next supply obviously, extent answer and the shifting with family you gain. product line. we’re production the top this market lot industry and give look growth the the need done but more the obviously, by shifting it better morning your question. XX depends could QX, in in the you be line, have. we will in type obviously I And why constraints of That’s for to not the is a by the watercraft. from share I to for months, And shared prioritize Then probably explain on quarter the example product we term, planning what versus need at chain gauge planning because QX. the market by reflect we’re idea. of to this line,

Xian Siew

it. many how guess to you I retrofit? how more but in kind retrofit the more them year makes that quarter units then that think on driven adding more, And of I are you’re gave evolution parts. out maybe nice And many how the by as maybe? terms a sense. the retrofit, you there about you know then the do units Okay, of this increase Yeah. – had got that in

Sébastien Martel

slightly in using in the on on it the product the line of for there QX. QX strategy revenue. you it expecting to of But the not for an the magnitude quarters Well, year. give to continue that will what the that depending will units that and We unit, revenues impact it we I’m meant about was month. It’s and were it, on impact just above retrofit our vary appreciation ability the that of retrofitting retrofitted that’s QX, in to X% vary quarter-to-quarter. much accelerate the

José Boisjoli

lot easy theater again, to part our reducing But we have the is easier to then when is ship the factory and our that’s run deliver this a and capacity. versus serve have dealer dealer a you retrofit, that to ship is to missing it we repairing their we season to prefer And component because prefer do at way of to that and customer reducing maximum strategy orders. their customer a the to a the strategy to the the unit that unit production faster, this in

Xian Siew

it. Thank you. got Okay,

Operator

from Morrison go comes question next ahead. from Our TD Securities. Please Brian

is open. Your line

Brian Morrison

of thanks much. softballs, Hey, A José. very couple

break can at ORVs down point that just this Just product in retrofits, by within mostly those time? line? Is

José Boisjoli

ship It peak are – we in personal – varies we the watercraft season.

dealership, be missing something that vary. it’s going refitted components it’s So ship if and the we’ll personal could watercraft, watercraft, to on we’re at

Brian Morrison

got in then I do think of be should still working And XXXX, I’m volumes, the terms you will expect what big $XXX I CapEx tailwind. And in you wandering a that if this dollar million in fiscal pretty unwind your year? capital, to look Okay. range?

José Boisjoli

this should tailwind that $XXX million. million you working of range the year, in to a the range $XXX expect going it yes, be in cap CapEx, probably should For yes, forward. And,

Brian Morrison

Okay. And a of to Or in a question geographic this Europe to there kind to alluded just your to is XX% Is events. going with revenue? of change your then morning, last still world what’s is your outlook? forecast – just that previous with question, you allocation? be XX% any Like

José Boisjoli

units. less to Ands other we’re we’ve obviously, was Russia need of obviously, Russia or X% and from business – that probably markets than guidance, of of we’re these it, our to decision a $XXX our – reallocate of million. revenues, the market year. a to so expecting X% our Well, million units to news lot that the exit $XXX good reflected be are to able call not over this But $XXX is million, and revenue generated in

pause from to not financial impact So decision our Russia. we’re shipments expecting in negative a

Brian Morrison

you million All three then and switches should kind how $XXX right. target cadence just is And that of years still there and over linear? get the of

Sébastien Martel

the target. still It’s

Brian Morrison

you. Thank

Operator

Altobello from question go Please Joe Raymond from next Our ahead. comes James.

Your line is open.

Joe Altobello

guys, Thanks. Hey, morning. good

few as get to that’s mostly I cadence a particularly progress the some and well? Just on throughout trying decline there revenue, I’m to if guess, outlook. questions what is talked in revenue first, EBITDA you the how understand you the QX for EBITDA a impact year? going margin-related, a about sense in for or is QX? Can is

José Boisjoli

Some of it is revenue-related as well.

impacted had Obviously, with year, We price But increases to which chain obviously, had compared in as a by well. we compensate, year. revenue revenue. supply last the deliveries line flattish – by what but should expect be to impacting probably we’ve mix last few

Joe Altobello

the then sounds in secondly, what well? maybe implied it’s And the declined mostly chain. of it’s And secondly, assume in there commodity seeing terms this it like in Is I ERP-specific helpful. is as quarter? unpack some this that’s Okay, not QX, you’re supply EBITDA there industry-wide,

José Boisjoli

But of of XX% and And say, beginning reflect components, some on the the were the year, some of that to is like will why created hit capacity. whole supply is this which you QX. beginning the their QX will affected. in give we in happened variant was at, operating a let’s a how by what the guidelines our And Asia mainly of into few supplier, Omicron be

Joe Altobello

commodities, right? inflation? the taking any you to Are up it’s But commodity Okay.

José Boisjoli

In basis XXX the, earlier, from it’s efficiencies about as commodities coming I had said a this in points I impact year. my question and

Joe Altobello

Great. Thanks, guys. it. Got

Operator

George from Tome Scotiabank. next ahead. Our Please question comes from go

Your line is open.

George Tome

Congrats XXXX? incurred Good value supply for we’ve a can quarter outlook. maybe costs the that fiscal chain morning, in guys. you and Seb, in of dollar terms strong on quantify

Sébastien Martel

pull just my I’ll do, to easy out pretty is math numbers. the obviously, Well,

overall inflation look or efficiencies, coming you from I’d impact basis If inefficiencies. at cost and impact XXX from it the points at call margin coming

George Tome

Okay. ahead. Go

Sébastien Martel

the happen, in And probably would of year, months it them of the tempered inflation. was last Earlier terms I the obviously, more year. say, eight most in in of

George Tome

can the it. XXXX fiscal of with some future or headwinds margin unfavorable coming were I mix from programs you look And kind got Okay, to restocking, pressures beyond guess, the face maybe if back? of can sales quantify we and you

Sébastien Martel

expecting to that increase. Obviously, point we’ve of expectation we’ve a negative I’m with lot benefited probably basis impact is I’m my and Obviously, mix impact years that’s expecting a on environment. a next not promotional to in going significantly low XXX introduced to have so negatively. mix, from year, we’ll after. richer And programs products new come us continue to the

George Tome

to many for for $XXX Okay, to you years José, terms thanks. of that you guys maybe Switch, is and that million think revenue number? that when in you we’ll care out venture maybe how put need there in when And – put goalposts out a attain

José Boisjoli

introduced million to when there. But tracking like targeting and be I within we’re North said, Switch, be we’re we of $XXX years, three to

George Tome

a Thanks guys. awesome. lot, Okay,

José Boisjoli

you. Thank

Operator

from Markets. go ahead. Poirier Capital Please Desjardins Our comes question next from Benoit

open. is line Your

Benoit Poirier

morning, congrats good the everyone, good and quarter. HI, for

could back the you average down see talk on where will sizeable electric revenue the about How overall? could five share it selling to price the be? you and about the Any market market, coming the opportunity three do potential to thoughts Just years road?

José Boisjoli

off thing And there not Benoit, And delivery of in product could in color will you other two-year analysis. come. expect too much not this. XXXX. one by disappointed in one of in the units region, need North to that but time. if phase I market this other would other – it is, and competitive a can sales give couldn’t we be in started North we again, We mid advance be affected product phase Yeah. and the America America was mid-XXXX, billion-dollar market all strategy is XXX,XXX – say on family But family don’t of we is year. What be can in Europe, in the we that introducing for yet. We product and do to are two-year European will the don’t know production family we introduce first then better won’t, reason, for Obviously, mid-XXXX, start and are we

Benoit Poirier

Okay, manufacture, And units disclose would get José? great be to color. you okay, where will those that’s willing

José Boisjoli

Querétaro. Yeah,

Benoit Poirier

at Okay. your look obviously, that’s PWC, of now we are some troubled peers if peers some And in XXXX. there –

peer were in announced able XXXX. gain and You costs one biggest to your some of XX% market production that of share for production

you’ll So could be upcoming views season? differentiate for gain the in able you talk whether market from your about the bit a grab little peers and how to share PWC further

José Boisjoli

as will extremely would try and much season the introduce from doing popularity. now then is well. it. in that we exciting great of I in is Watercraft as many to opportunity. as period we popular. physically very and that’s the and backorder, few it. production. presale, factory run goal to run ago, our than if supply – or minutes then on at a more that there said, many either I so to is different to been units strategy market have their prefer they That’s have the of XXXX fall products, extremely a – right some competitors have And XXXX depends is demand units capacity. Querétaro year PRO can retrofit capacity are the a XXXX our Benoit deliver Like lot But season for now, maximum top a the I and them retail the benefit product new strong is fiscal watercraft reducing we share the our say our benefiting as On other and is product, FISH it, in our with maximum because a ability we say to can we our would retrofit And so then of done we we’ll dealer who Right of strategy

Benoit Poirier

what the a SIB, Okay, if going and that’s fiscal great. deployment, cash your end generation And still, upcoming free you’re say, capital year strong NCIB sheet. to would last question flow balance obviously, very with to XXXX, I for into we with take year account respect

leverage still you level the and capital So longer-term? allocation whether about thoughts the any target the would two is time

Sébastien Martel

a of continue have we sheet range As And to operating we we’re shareholders. times. strong yes, good mentioned, within financial a X returning to as capital flexibility obviously you’ve balance said, and comfortable X.X

As this in confidence is we deliver. announcing confidence step saw to SIB have good we of a you we’re today is have that the in this. growth business, And indication Obviously, that in that we well morning able with the direction. SIB the as good a believe

Benoit Poirier

for time. the color. great Thanks That’s Perfect.

José Boisjoli

Thank you.

Sébastien Martel

Thank you.

Operator

from go from comes Genuity. Our Canaccord Derek Dley next ahead. question Please

line open. is Your

Derek Dley

outlook. a Hi, great quarter and I’ll congratulations echo and on

historically, the next range revenue. up Just Or in sort been R&D expect percentage will something of a spend, as that the it’s Should as it motorcycle project? relates X.X% we similar year? be to electric with X%, of going the

Sébastien Martel

margin, very margin. of We from to year should what from the have when overall a percentage gross will operating and similar we XXXX. that look decline something EBITDA next revenue, at an in in similar expect come expense, should be you year as overall But very fiscal

Derek Dley

I And of – the I the tough Okay, – this in calling then and for that’s supply relent chain one, you terms guys is are helpful. just in of a to but in issues back is know terms some seeing half three of that’s be mean, the Are on the you incremental year. today? kind giving you confidence the the going that of quarters the case? of to hedges what improvements back year,

José Boisjoli

is there difficulty semiconductor that now Then is but and ups The now, some always more right it’s say, is difficult. right more would main manageable. the semiconductor. I rest downs, remain

supplier But better. will year transit it is the of other get the will get fall And main half believe XXXX. get that supplier unplanned. that of XXXX. not it shortage better our sometime – the difficult better one of and is a semiconductor it supplier believe of the why time bit back this container is believe because Our our is We key in will calendar that in

Derek Dley

very much. Okay, Thank great. you

José Boisjoli

you. Thank

Operator

Our from Please go Cameron Bank ahead. National Financial. next question Doerksen comes from

open. is line Your

Cameron Doerksen

chain morning. concerned Yeah, incremental cause Ukraine that semiconductors I that supply Or you’re, concern? I the the suppliers Russia? thanks. guess, any and from you there is guess about? supply there incremental is see Good the chain mean, I any question. on between risks in for there to around European I risks just that are follow-up any, Is this guess just to war

José Boisjoli

that Russia seems the now was manage supplier and it at to Yeah, big issue talk either But least by about of have far, first, supply have right in of producer we no or positive. neon, know caused And Ukraine, a and big to semiconductor neon so Russia seems lot Ukraine. obviously, company we company. – electronic and for that’s to then a found Ukraine no that. Then it ways supplier people

Derek Dley

But my obviously, just on there’s, startups motorcycle, build electric these to second just other And a perfect. of Okay, quite the the, question, manufacturers motorcycles. to going few some back trying mean, and I guess, I you of EV touched sort points.

So what I you can to which to bit BRP in pretty going just be looks detail wonder right now a more, little maybe market? a is crowded differentiate if market, that

José Boisjoli

won’t Can-Am, at much disclose obviously, we too And this morning.

electric that believe the of product believe industry. we portfolio will electric of found become pack the again, that record us, a are new And, I like for is record motorcycle – innovation dealer existing we a we – and Ryker, brand, power Can-Am continuing year leverage We product the footprint, makes for the into believe, before And a network us, motorcycle our product the it’s with out with like sense. to the line And other the for product come will power to this again, electric mean, ways some leveraging, But we ton proven, that SPARK, like it’s two legitimate our Switch. is, Then our shipment. track motorcycle an product manufacturing power benefiting will additional build interesting know you in-house. mean, Sea-Doo developing into OEM industry, product I track you’re we’re modular we done pack the lines. build

Derek Dley

across the obviously, the to Okay. of I introductions portfolio? And This I product timeline products out electric plan your your several here. mean, that years. follow-up, product next is still original guess expectation obviously vehicle it versions for that your But keep the you’ll roll is announcement basically electric just first to was all over to

José Boisjoli

will line model be product the Yeah, our of electric XXXX. by end offer will some –

Derek Dley

great. very much. Thanks Okay,

José Boisjoli

you. Thank

Operator

from ahead. Our Wolfe next Fred Please Wightman question go comes from Research.

Your open. is line

Fred Wightman

this guys, inventory Hey, commentary. wanted follow-up to finished on semi just I

that think you dealer any I quarter, sort chance again that could the quarter? Is from do last like this look finished us a number would to of that there the units. reported gave semi what with inventory you bridge

Sébastien Martel

of occurred the that we obviously, we back little lot of a very the unfinished. Obviously, able in that was ship dealership what had is were if Yeah, QX. in inventory half components to

these give range, year components would to if color, we the been of a in instead some XX% over had Just up not have shipped dealership, in you XX%. inventory the down the

it retail in February. availability. retail play month had big, helped obviously, in inventory had point as said, February a obviously in from of big So a QX And I it a terms as past of record this view, we

Fred Wightman

Perfect, guys. Thank you.

Operator

have Mr. We I the turn to back questions. for Philippe remarks. call further Deschênes over no to closing like would

Philippe Deschênes

this We’ll to to X, look in we call you, hope us and day. forward for have conference with first quarter everyone, and and Thank have everyone, our upcoming on Thanks joining again Super. thanks, a your in at for June you with morning good you speaking and Investor again, interest for us June. later Day our DRP.

Operator

today’s concludes conference you gentlemen, your participation. call. this for Ladies Thank and

now may disconnect. You

BRP (DOOO) 25 Mar 222022 Q4 Earnings call transcript