DOOO - Earnings call transcript Q1 2023

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Operator

Good morning, ladies and gentlemen. Welcome to the BRP Inc.’s FY ‘23 First 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

Good first welcome ‘XX. quarter Julie. call BRP’s for the of morning you, to and conference Thank fiscal year

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

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

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

José Boisjoli

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

year to XX% after achieving accounting again we Our expected deliver financial succeed in despite and position put a than growth better XX% to for demonstrated XX% EPS us of outperformed solid in SIB. delivered the This terms for of strong guidance, to growth for in focused team of good recently on the industry which increase remain as disruption. our We revenue for call XX% environment. our supply results quarter completed the once performance tough and the retail a to chain a ability

solid shipment This QX. optimize to while highest in watercraft the production three-wheel $X.X personal billion of year. to financial availability. vehicle by are accelerate which of the resulted production X product key in Revenue watercraft highlights Still ability to component growth reached and expected in to three-wheel personal was side-by-side, our last off-road by QX, Slide shipment offset turn Let’s This compared vehicle for lower of of vehicle. and for based level certain on line prioritizing shows we saw the stable quarter.

supply our performance. some As put that expected optimization the tight better caused a on than disruption we in offset manufacturing pressure quarter. and to resulting anticipated, by expense pressure of inefficiencies management, in chain profitability Still,

Turning to retail QX performance. at for a look X Slide our

Our by availability we outpaced X. let’s put industry our the context, Slide that retail retail quarter. were as turn in down to sales XX%. North low remain an was X% our to limited product in America compared Still, sales the in down powersport industry performance To

decline not of our retail As the you ability chain. proportionate would product can retail does today’s in it the to to wholesale supply lack directly consumer is indicate demand. remind the reflects see limited like that Instead, on environment the slide, the I to you manage in availability.

and continue our line low. to to trend the Our wholesale we dealer this was coming with retail in QX in will quarters remain as in expect inventory

search While down any compared demand. Google for are about remain first X% our to to quarter is we year was signs our fiscal And not and Website traffic ‘XX compared year, ‘XX seeing slowing high. levels. retail of product last and up

up side-by-side as slowing tracking as product we last were and new ATV year, Our which XX% switch, are not preorder is a the down, not year. being customer include well preorder year-over-year. for which This preorder

preorder Excluding these, stable. were

see robust very for So to consumer all continue demand we all, product. in our

quick chain. update a the for X Slide on to Turning supply

costs availability and throughout points operate environment and higher in to we supply continue in are logistics dealing to with to volatile tight first we commodities. a QX. component expected, keep related chain mind, As Two

Second, the Asia putting situation on in pressure chain. is supply additional

retrofit supply alternative missing based situation, manufacture on the we plans them availability, parts. year. required, intact. Despite the components receive our to continue that when this pressure volatility, of for are source we and component unit year expect and remain To this production We throughout if the seek to the optimize continue a manage few

X year-round to were shift of let’s volume vehicle were driven offset three-wheel for X% second of side-by-side up a quarter, to production Slide strong product. vehicle, turn by product in to Revenue which by lower shipment Now, line the the as quarter. of $XXX first we that million

retail Can-Am In production sales well-positioned have prioritized additional the their ATV terms were at year. of QX the last the that benefiting solid product record down, line. its we for lineup quarter, from ever, X retail, that With compare production industry our also outpaced Both side-by-side product the sustain strongest had the strong are additional to and production season-to-date. with our lines capacity, we in and results and Juárez quarter that trend. capacity QX although the had fact

education On-Road as with well As our with initiatives for to which completion grow rider for months. we that percent we will vehicle more availability. are to the to sustain down the quarter product in And further mid-teen we we Women three-wheel more was different traction we than our program as shipment industry limited continue up All-in-all, strong three-wheel increase solid vehicle, due coming retail notably with momentum to of have Still, the year-to-date. our expand as see the community. are momentum positioned course in business,

million, to personal moved Seasonal volume disruption, fiscal more compared chain Due on result a of $XXX from quarter product have ‘XX the Slide watercraft. last revenues to Turning as supply year. XX% to year to second X. down product QX shipments lower of seasonal were been

‘XX industry. starting the at American with outpacing March, looking Lynx snowmobile our of at North snowmobile, end Now, completed its retail with the and the significantly Ski-Doo season lineup

in of points compete. one in position number the We segment market have gained which the for industry every percentage we season held market share and X

percentage to Scandinavia our and by so is demonstrates peak where market share season. up share our had success points also this gain We This X manage far chain season. supply similar in our retail during ability

season, our for solid drove traction consumers. As campaign with booking next spring

last for next Scandinavian year with year, of volume to We XX% expected have about XX% performance low at season. have very we This strong was of With unit. already secured the North in customer and which and network American ‘XX snowmobile high. preorder is to similar our positioned very a booking, solid all-time end level inventory the the well of season an are our spring

was all, season with Sea-Doo and a our the $XXX year. engines, we look shipments retail year demand Sea-Doo, chain. business deliver watercraft part, by to up late product strong and seasonal North retail world apparel in and remained market impacted while of demand XX% with to personal strong in to ‘XX market, continued watercraft quarter revenues interest. share for at pontoon In the solid of rest positioned Powersports All year compared as were very down put throughout perspective, more our are Brazil it Asia-Pacific, low the Turning the about the Slide a counter XX year, accessories as to and for first constrained last limited very quarter. well fiscal American quarter quarter percent high ‘XX. regions. compared To Still, into supply and the up retail the and million in the production we of up up start to by to around both was strong level ramp customer was OEM another in driving availability was with season our of personal good certificate, with the in is a Continuing off gains consumer precision in on XX% things

to higher benefit of parts. to which the from continue growing vehicle fleet, a volume replacement lead We

lineup accessories by well Our LinQ be continued offering. driven received ecosystem the to

MP&A. on to shipments stable offset was revenue Moving of favorable lower both was a marine Slide more million as XX, by $XXX at mix product

inventory sales it is sales, producing fully retail in availability. and retail in sales. season, still has the seeing In just retail Also Australia, at on shipment reduced Looking is single-digit in but the and product focus network. percent the was volume very as DV down welded boat to we ended the season at retail it to had to Alumacraft, models. due we limited Manitou a mid boat Telwater In short-term, decided decline early stop boating limited

up Looking prepare Ghost be launch, doubling for are optimizing we generation for of dealer the in Notably, the engine, operation. upgrade This Lansing, facility Alumacraft capacity are reorganizing this our manufacturing should maximize St. event year with site at Michigan, production hand boat, focus we with in engine. in expanding to boat plan ramp we the next of shifting ahead, for Peter Manitou the be we to fiscal end its our year. To early the higher August. capacity by which are will including introducing our our Ghost for with nearly And a completed production those ‘XX.

step are With benefit. customer I it to excited next strategy. turn call over will bring this believe the We about for our We very significant that, Sébastien. marine

Sébastien Martel

morning, everyone. good and José, you, Thank

performance. retail deliveries our on quarter, anticipated, wholesale ability first the and supply our challenges increase As weighted which our ongoing during the impacted chain to

However, better-than-anticipated better lower tight to allowed us management of operations, mix and product a deliver expenses profitability.

quarter the ending stable were at last $X.X for versus billion. year, revenues Our

normalized million anticipated, of share Our of products of sold down generated in due and ending a normalized assets. XX.X%, net down less less mix due resulting expenses. higher products was decline The volume, of additional earnings but came a efficient XX% gross operating last and primarily favorable income the $X.XX, comparison in of level a favorable profit to to our EBITDA and of at which lower from in costs last a caused at per impact to than chain $XXX QX. sold year’s our margin $XXX income was challenges, supply year’s million, less stronger use normalized in net mix was and We

support the while cash operating little quarters. impact as better cash the and it million free was a From in to in by we is our offset bottom production made quarter CapEx retrofit last line but working we growth inventory. notably negative we for of higher pricing flow dealers, more the allowing investment and perspective, our to with requires it capital $XXX several us million as important, inflation, investing continue cost over the than adjustments we $XXX As business, had projects, in as serve continued strategy, had our in the which flow on our a customers

inventory years late strong XX% by very comparison over shipments year-over-year, the being ‘XX. the historical notably in from network inventory Slide fiscal off-road to to XX%, down Moving status levels of first in network and a up XX, on perspective to is for Still, of our low quarter, vehicles. dealers ‘XX our quarter components remain driven missing inventory the

our take our do for headwinds, demand we place strong any meaningful the has ongoing inventory replenishment chain this continued supply not view and expect and product not the changed, year. Given to

year guidance at all, essentially for XX the the our on the looking an in all Slide plan for and year, guidance. in remains initial Now production update profitability expected for with line our

SIB, reaffirming EBITDA. Taking our normalized last normalized resulting revenues in $XX.XX, year. is of the to recent from a delivering therefore, over to target share XX% completion are, XX% XX% and representing XX% in guidance into our XX% growth $XX count EPS to growth of We account growth now of the XX% our lower to

now remains those our supply While view compared added we having full a to to with the chain costs spending. environment guidance, year disruptions expected deal mostly for When offset throughout continue by initial to year. relating be expect to challenging are lower the our fiscal chain the supply to intact, promotional

In slightly terms a in costs EBITDA continue expect last higher quarter to resulting the the we incurring to compared single year. year-over-year, during to digits should down for lower-than-anticipated be of low flat normalized which second quarter,

up catch of deliveries shipments retrofits the call to to receive to José. that, as have in. to strong on be producing quarter. will retrofitted the the turn with based continue second units able substantially our However, is we we I component our be and the And On and especially half that fourth with the in year, completed suppliers visibility will on come in expect today, the necessary product components plan

José Boisjoli

for supply, outpace continue advantage our the to high level outpacing product Thank resulting slightly supply you, pleased performance solid our are Consumer to our competitive delivered us I this healthy Sebastien. environment. ahead To our of remain despite conclude, demand we’ve and chain that preorders. modular agility the industry. continuing in with retail allow interest first products diversification, results key quarter In expectations with design context, of manufacturing am as volatile and

generated first has notably we has initiatives, our media. of was The from Can-Am dealers on the had significant strategic the marked launch continued key which quarter consumers, also interest two-wheel progress electric by vehicle very and – successful teaser,

later introducing expansion full this to boats run delivered a our project engine and on and taking system ready look Our marine strategy. Ghost capacity plan, to forward are with have projects we forward we leap new the and at in big our been summer propulsion

deliver and ability the these in the our supply at we chain to Looking record Still, challenges remain confident the we of rest pressure year, another expect through manage throughout year. year.

and MXX Looking Day beyond, an update for the positioned sharing and growth our Analyst on strategy to deliver to targets We sustainable well at and XX of financial forward business. we XX Florida. are our June look in Investor

our dealers launch our to reiterated conducting reducing product CSRXX recently manner. operation, you and and includes responsibility corporate Marine the we our to social sustainability and we to morning be sustainable Salt dealer commitment integrated. operation be and this of big their targets will It positive which This on of look and hosting Additionally, and Lake XXXX. report, August powersports, will centered City, further ensuring carbon which footprint tangible feedback our first daily with to our and Utah. X released our program, person. around February in in a communities the relating getting first X be our sustainable our forward also will invite event impact lives for dealer commitment standards I in-person seeing since was detail. to I high ethical a Also, employees, with review for to in our the but event a a

wish call for in that dedication possibly everything our On orders, over dealers very and can this note, I the time, and the meet their patience support. doing operator our turn to for supplier to our hard they I to thank our questions. and Lastly, their employees for work all for busy

Operator

question Baird. ahead. Kennison Instructions] [Operator go Please comes first Your Craig from from

Craig Kennison

supply demand that it shortages take for to could trends Hi, But you retail question. if the would good of the better you seem get your control of my that be in like curtail does morning result out to that thank going much on I and economy and product and get seem trends taking point there’s Fed the be there. more to something inflation. larger needs basically do

we’re search how and clearly economy, in is you signals web just of your slowdown. a getting trends and that what with seeing I’m you’re approval all the curious of broader some traffic So the reconcile your with which

José Boisjoli

Craig, factory customers, our first feel the our trying much pump, our see we the cannot, plan the impact honest, can. household meet we much because this, as results Then quarterly in dollar morning, on look all we our some and the gas customer to than don’t competitive rates it don’t trying right our do customer this is not income obviously, But at are higher review so all the then season. so challenged big Cancellation of customers yearly see be very don’t is it’s see good. year demand to the scheme. getting now to slowing last the far our reduction our demand. as so price Good to on has the maybe demand. had right we’re and down full when preorder we the And impact. Interest way with Their we our similar impact. in Nobody before, we division run the team, we fuel is at average, still but they If in big we like time. of price higher, unit. we the are retrofit at production, and continue The to but

so doing a job the manage volatility. far, supply And are chain to to team great the

Craig Kennison

Great. Thank you.

Operator

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

José Boisjoli

I you, Robin. don’t hear

Robin Farley

quarter A expecting improve year. language chain during to Two here thanks. And Yes, that. going continue about QX. One your be disruption. outlook ago, it’s QX, the to like the supply around to it it about talked now questions. is throughout sounds Sorry you in

expectation, over the like always two the worsen being right? continuing been if than don’t of or quarters, I idea much your it worse just if feels to much in So be also couple is sort quarters because that last that’s that that seeing there you’re of would within longer a conservative – sounds know it it’s things you’re improvement. was now It that. outlook And

not does that completed clarify might also chain? that Thank on want is from just So share in primarily – repurchase is worse the later share And that looks just authorized just supply this just the for year? repurchase repurchase, clarification that. to do your then and that you EPS raise just already the – much wondering I what you’re share have is you seeing guidance, include a quick how that you.

José Boisjoli

is Then price on stabilizing, I this start chain. no then I on if Then on will EPS. Sébastien about issue positive. supply the there give talk Microchip take the planned the And side, question commodity the difficult. remained big picture supply and chain, has availability will is to you the

what And And sometimes but cannot. with sometimes substitution, QX. happened you you is can in Watercraft this find

When This in Logistics in production you for airfreight around talked in disruption China in can surprising is be were with a to but zero-tolerance. us but created difficult a March, the more lockdown vessel, planning difficult bit our container the we solution. shipment a we have HX. of facility. you to some with also manageable. and was improving to for always have world QX the Then Now problem HX was COVID suppliers. you, we when What

Now will the improvement believe way but overall, said, to difficult, a we be it a also will we maybe being QX will that in some have good be year. situation. that we but manage remain that we’re difficult believe QX, difficult, planning we That QX difficult. see for

why we industry overall, manage situation. footprint that’s a labor QX. in are believe, seasonality, overall I because the believe manage positioned then design With the the we we and product the versus of we in modular availability our And a chain to well the good. in our are product to can Mexico, is the Then outpaced supply line, of product we favor situation challenge good other.

Sébastien Martel

the it far what year, could what On not this done we for year. it guidance part and does of EPS reflect so potentially your the do reflects remaining only we’ve adjustment, yes,

Robin Farley

you. Thank great. Okay,

Operator

comes GMP. Landry from question go next from ahead. Martin Your Please Stifel

Martin Landry

Hi, morning. good

You talk a your do supply about lot constrain that chain capacity.

bit if year? during wondering your of you terms are remainder capacity can the utilization for the was the utilization capacity I you quarter. a So us assuming a little in of your picture also guidance of what in give of And

José Boisjoli

snowmobile was XX%. of down. side Watercraft we’re because production capacity, The full was by running Yes. different at shortage. ATV about side, was Supply capacity.

remaining Our capacity. XX% – for all year plan is product the of for about whole line the

Martin Landry

Okay. And like it be or... what or you capacity? full something like Would would that consider XX%

José Boisjoli

you operate let’s consider capacity when capacity. is say, we XX%, Full XXX%. above XX%, that But full

Martin Landry

Okay.

rates Okay. are And continue wondering is question cash? us you we’re they where units I expected and to sold to rise, other rising of seeing maybe are my remind was rather your can which than the credit using if proportion interest what’s

Sébastien Martel

all with I of say partners the or about the agreements units that Yes. with must financed that XX% we are to dealer. we have either sell through the XX% partners local

so they what and we pre-COVID about thing item, so FICO overall last XXX in the And view. than is close X range encouraging normal financing from of at that hovering as big used a finished is XXX one year, to years that were transaction. a ticket that continuing the at higher and were point of it scores, trend it’s look we the when is ago the But We is are credit obviously, tool is pre-COVID. scores now rating a

well. financially seem buying So products to obviously, people that be better as are our off

Martin Landry

Okay. do to your the impact a you rising volume go-forward have basis? on And an expect rates on

Sébastien Martel

about – cost we’re talking $XX,XXX, the when low item, it’s of $XX,XXX. above yes, but look big a items it’s relatively overall at And still are rates the Well, financing. you ticket

to payment it they the decide consumers not make the when So product. monthly the a significant impact does have on finance that

Martin Landry

results. on congrats Okay, your thank you and

José Boisjoli

Thank you, Martin.

Operator

ahead. Please next Your from George from Doumet Scotiabank. comes question go

George Doumet

Hi, good morning, guys.

spoke preorders a José, on on think, like-for-like I about basis. being flat X, you Slide

would maybe maybe demand about under – or bit, and expect are you weaker a you be thoughts up And the what bit just geographies patterns little little are maybe maybe wondering, categories, hoods seeing what we’re expected? than talk there? a that to your Just on what stronger

José Boisjoli

Then we we just America watercraft, our delivery different Obviously, on and to the secure very now allocate or X sense, a new disappoint in basically my competitor. their to that is more is ready allocation they I we here that the unit. high, months. months, if to down all-time they able XX% and the was ATV their allowed season is Then on months at happy to units. happy. said the No. give introduced There of North the America for side-by-side, didn’t X X not the We snowmobile money our would next their basically, say pre-sell pre-sell happy with dealers presales And Scandinavia, produce would because it’s what customer XX%, Switch this Then we we’re for very, This call happen. snowmobile, will XX%, an point only last pre-sell because season high. of consumers. the the lineup North And is and are They a something are the trend. sold we’re like sold overall, snowmobile, our February order, XX% action with to was give last in to put to year, Scandinavia. on customer in we you when again, snowmobile not high. a all-time historically, script, an I something we report if they allow new receive very are to the out we those like mean, all-time them. was customers first, then in we than a preorders, we’re the consumer to to on – XX% change it about like we Like that show do – production only snowmobile And Switch, in to in very level. XX%,

George Doumet

out sales COVID, for bit last did we program. one you some to And headwind the through are? sales can those little like also beating a programs maybe better think last margin Séb, think talk basis thanks. what call, one Okay. XXX spoke I for That’s retail helpful, manage called points, maybe you I to And you just learnings

a be of Thanks. next drag? year, to kind is or maybe that at look expected less similar you If

Sébastien Martel

the – XXX Good in March, about we we decline about margin talked points. this morning. When the talked back year basis expect margin

expectation obviously, but on guidance of in not XXX, saving, in sales XXX above is deterioration a the with by volume efficiencies by higher be XXX we a obviously My terms points that would so And basis expectation. impacted unchanged, sales by programs favorably remains headwind – going program in we that by to what by will on low Based that, potential and inventory and XXX. but year is network, happen, supply with efficiency. of today see higher chain programs it’s the inflation expectation this from not our the the that be offset by saving

it, call COVID, this there’s retail programs So in tools obviously to that From regionally. learnings year. are basis XXX manage the points your from efficiencies better available

from incentive And they and attribute targeted well on line basis, so how are teams be efficiencies. able a level, as more product a better and efficient using the skew that’s to driving analytics, programs regional in a

George Doumet

for your thanks Okay, answers.

Operator

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

Xian Siew

Hi, the for guys. question. Thanks

able get help how I of but curious, I’m I the to of increasing of capacity helping, to incremental kind that’s talked maybe some supply and Juárez are about that facility guess, use components think some you where is? given there. out chain how You more the

José Boisjoli

few a Yes, things.

the one with air Trail, now, were high. different This having the the fact Maverick one factory a the complexity is that of We the complex. the focusing were And Defender. you of of we’re is the Exchange, complexity Maverick on we cabin side the the producing Maverick Maverick Defender, and have two conditioning. and into Sport, everything the Before one the the the platform, models producing on there Then factory, had have super the you utility utility. base lot

other believe this facilities we’re platform, even The we terms right believe improved terms has in of time has sport quality. first one we running efficiency. and improved of those XXX%, two not focusing in And is if on and this and at efficiency the the

Sébastien Martel

two the just missing when these incomplete components one, units, – three chain. units. that are on supply And some maybe or on And build color we it’s it’s

well road, So to want to them we XX%. we by say, XX%, and is the work supply able increase when the XX%, with down chain

from proactively, X troublesome, the XX% the get Tier ramp do components make year, You’ll and they and obviously, our up suppliers, and more we we’re know with substantially source the these of that it in components, so when which a that well. don’t to suppliers we’ll X get so or Tier these working units. we sure components production, completed necessary whatever, are units. If goods we to XX and that supply a they’re we And XX week, week as flexibility have XX them able retrofit with get of their

José Boisjoli

retrofit two instead the Also factories units both in a factory us one. of chance gave to more

Xian Siew

helpful. an on got That’s maybe sounds on the that the Okay. are. ones progress point And really the end and that at on we boost maybe a making then update of you’re towards the retrofit, where It outstanding like nice are you’ve quarter.

shift flowing So of timing terms out maybe two. was are through that any about the think there between there less there? How should in we

Sébastien Martel

Yes.

able a to my help said and obviously, the going QX, I which of to early weeks in it’s in allowed these quarter. dealers, components to in remarks, quarters few second ship the us the few units did prepared to and get As last the on we be work quite retail components the they’ll

that up shipped If would actually, inventory weeks, be these the we our in XX%. you XX% few components exclude instead down last of

And so get with back the said, throughout a be But we’ve year as guess I to retrofit done we very inventory more we of level. level will normal good progress. the until high again, that a situation, expect we running

Xian Siew

Very you, it. guys. helpful. got Thank Okay,

Operator

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

Joe Altobello

in, question, guess I of Good guys XXs low Obviously, guys. industry big you the you are ‘XX? terms the in morning. down as industry mentioned Hey, was Thanks. for picture. What first baking this fiscal quarter.

Sébastien Martel

how year, this because call down well. industry a quarter, to one were the were other go mentioned, to minus are down It’s teens. minus back XXs, performing was We low QX dependent tough This as Joe. X%. if morning, you Good it’s results, the very on as I we X%. And low OEMs down

how really other we of performing will we’re So performing to through But uncertainty. retail. navigate which way it’s found and to chain question the OEMs how a overall have well, drive supply a seem industry as are

And are well. this should wholesale strong calling for, our in in obviously, translate us obviously, guidance year. We for as this retail good

Joe Altobello

Okay. Understood.

coming confidence revenue churn point your EBITDA out guide, it reduce that’s quarter, two Just QX been In of given of year visibility, your has your outlook has more yet a obviously, on guidance, was pushed in this that kind sounds into better. not to terms that event, the at last things effectively get that that this quarters? guide like Does like the changed. your least started in thinking QX,

Sébastien Martel

demand, strong overall an order inventory. we have level book, the from strong consumer from low dealers, order obviously, strong of book Well, a

see event we year. in produce and So, are an be guidance confident that’s months, months, the get which them on two But output if absolutely. obviously, But to our working for ability, components. sure units to are the we beyond there influences from in very full these deliver we we dependent to we get that make our suppliers, today, three sold control, what we months, many high, confidence. proactively is our four with the ability But are obviously them could our in

Joe Altobello

guys. Thanks Okay.

Operator

ahead. from Your Benoit Please Poirier go from next comes question Desjardins.

Benoit Poirier

everyone. morning Good Yes.

a guidance for XX%. expected made does year? normalized I XX%, EBITDA back comments EPS full earlier not wondering the into it question, QX could in to the in timing about just led am you stronger just raise issue? mostly flow the QX Is down wondering EBITDA First be than versus what And why beat

Sébastien Martel

the tightly, so, tight OpEx better an obviously, management. we less managing view, expenses of from Benoit, point finished operations coming from quarter Well, are we and

from a So, And a timing view, that’s element. and mix one, the was of a also more point also other the favorable that’s timing element. side-by-side

was not we the the adjust it guidance. the that’s feel reason right do time So, why to

Benoit Poirier

Okay. Perfect.

should in more And working capital the thought release inventory your was I any year, talk given light the happen made – big for we wondering year. And for movement about coming the inventory you your year, about a the about in of might Okay. comments expect comments quarter? full could the working or which no potential expected replenishment on the to next we the just capital for if capital working expect release the

Sébastien Martel

Yes.

did we bit quarter, you As in a working invest the first quite capital. saw in

of questions We said to and investments we expect some as at remarks run of in prepared our answered. working high we capital the levels

this cash supply chain I a coming so of as next cap am from not a Obviously, hopefully, reduction normalizes. would year expecting And working release year. the flow happen

Benoit Poirier

the Perfect. to any issues And electrification Ghost? impact Project strategy ability your about – the chain and thoughts supply how Okay. the deliver

José Boisjoli

No impact, Benoit. this Project production Ghost going is in fall.

And years. time. supply get have which chain obviously the still electrification, in hope no that there. we – will And better issue are We X I by planning the

Benoit Poirier

Okay. much. Thank very you

José Boisjoli

you. Thank

Operator

go ahead. Spak next from Capital from Your question comes RBC Please Markets. Joseph

Joseph Spak

a then the inflationary Thank of of And of incurred in I growth, the volume? the of that quarter, how cost price between offset? you. – you just price-driven. know X.X the you lot us that much of points you price breakout Maybe and said Can give the organic in quarter that was did

Sébastien Martel

That was look compensated I overall our XXX down margin running turbulence points obviously, at had costs by points. plants for chain XXX. quarter. basis the a supply was XXX from points. When negative basis the in not And at basis the we were full is Pricing the and capacity. XXX we inflationary Mix unfavorable margin bridge,

So, obviously, XXX about basis minus points. less efficient for

Joseph Spak

Okay.

talked are actions little of you than The so of the compensates you bit needed? additional potentially supply expected. you place longer And have put lasting in for to-date that, pricing a there chain issues about some sort or

Sébastien Martel

for compensate should it. It

as what point surcharge is another done about year a X% look well, ago. talked have quarter, of X%. which MSRP increases a about last at we you view have And by versus from pricing I If we

that So, the and hit the costs as being increase. that for well turbulence it, with X%, are year. cost inflationary the offset And that call pricing we grows should

Joseph Spak

term you continued because your on perspective from but financing And are costs Okay. rates? cost. Is believe know most in you financing but current also which maybe rates, rates, a more from variable. one embedding I in a different of hedges just or net you have did that just are mark-to-market raise on the place, a And your facility, I then is rise

Sébastien Martel

so compare versus and also the I level in use March, the that’s capital issued use. did a not the higher obviously, of cash guidance to for we When we back No. working in SIB, factor

back will the we revolver than more what were March. we in using So, be planning

that. on cost that reflection So, we of did a financing is the adjustment

Joseph Spak

that greater revolver So, of revolver? use the of it’s just or not cost in an a increase

Sébastien Martel

bit greater majority a Maybe but the usage. of correct. variation That’s comes cost there, of from the

Joseph Spak

Okay. you. Thank

Operator

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

Cameron Doerksen

more I revenue the Wondering how you of year. bit little morning. out, products, seasonal Good Thanks. talk Yes. the guess a I to play if the could about the is going remainder guess for

in guide I QX. had XX%, but negative you is XX%, up think the year-over-year obviously,

of implies of products. for sort a second seasonal year the of half huge sort really it So,

going to can you a how are So, maybe bit you get number. that talk just about to

Sébastien Martel

at Yes. Good towards higher, be It BRP, growth part much but more is and QX a remaining be personal obviously, year-round you watercraft the will QX QX. Obviously, will the the to of in be between strong year, QX. snowmobile when personal QX morning. the overall XX% deliveries. and revenue of for XX% and range with in also strong for probably seasonal. look the going growth watercraft –

to more it So, we be and expect QX skewed QX. towards

Cameron Doerksen

to get extent available sense dealer driven on the a am might some guess that’s just idea just I levels dealer the a have, I on some what are – you what’s No, position kind the where be it’s worst mean stand big the of an inventory, by relatively performance dealer. to helpful. guess question position? maybe as you – I I you of in of And competitors? level. your of Do better Okay. to retail relative at at trying the the inventory a the

you you stand where to your do relative of idea have So, an of peers? kind

José Boisjoli

the the we about are same competition. pre-COVID, level than Us, are we XX% versus we believe at but

Cameron Doerksen

very helpful. Okay. That’s Thanks much.

José Boisjoli

you. Thank

Operator

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

Fred Wightman

the in that’s I as to Hey you pretty similar quarter shipments much component saw about just comments mean late on guys. Good to I morning. the wanted looks language last pretty follow-up what quarter. the The unchanged. well.

actually market an gains we this uptick retail sort and well? as of should quarter share wondering in are Just outsized expect similar if you seeing if

Sébastien Martel

deliveries than perspective, QX. better this on is quarter wholesale is, a from expectation the Well,

out starting the lot watercraft, obviously, they a them. what to we personal consumers will so and and at the at the numbers of for And very the we delivering quarter receive look happy – that’s are waiting the in be quarter, with When obviously May is are good. Obviously, retail quarter, are some start their available. inventory they are for of that

Fred Wightman

of you was and about included slides. in what way like comment what guys Is or versus in history? a quarter’s have entrants a just Perfect. give data new you And you any for slides there are it then new in plan didn’t anything on recent points entrants could seen you while there look seeing sort now, but this have

José Boisjoli

Yes.

give years, entrant, about Then we than it, to previous the it’s X mix. Historically, you summary. new if just Just entrant look you a it in years. you were X to give low XX% at QX we a at XX%. line, new look same last sense, a by XX%, it’s product But product if

it what it’s line, than the at look new X product you years. is entrant snowmobile is mix. watercraft the happened at XX%. If of low and same question just look is close When to product product level last when line, we historically by by three-wheel And in it a

Fred Wightman

Perfect. Thanks guys.

José Boisjoli

Thank you.

Operator

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

Brian Morrison

understand alternative provide Slide second in your your chain to securing other into follow-up there go visibility ask But for targets, supply supply big say, are Yes. you within Good into half. for on insight are a chain the when maybe those seeking back key you order want the components? sources, challenges. question what morning. some just have components, are you supply I a to and to challenges. X just which And I meet can timely heightened

José Boisjoli

help. some to you cluster. is it’s And working Then the watercrafts, working overall. And sometime, if you a in you to and more to a was alternative. three then for the specific versus the shortage more mean, alternative. example. is we basically, design we component Then we supplier, In competition, or I we visibility shortage when direct of world basically, us find even in first, advantage a now to our problem difficult. hand-on-hand for we Tier have and microchip, Then an suppliers, X we suppliers good when didn’t that have of our modular fact a to if try watercraft. quite have supplier, try we QX, have sometimes The believe we and our on The give replacement. some together it’s fact with know, ATVs, working put advantage, find your that we work Tier the to have that that a visibility. it’s because I assemble can this it’s find problem, a a helped consultant have and those and companies had microchip Tier competition. for one available X seasonality, alternative. commodity, we side-by-side have have will think a the cluster an an a versus us we don’t we but with let Then generic have Then have our communication that Then on are of this easy our I it’s advantage a good microchip, I with have Yes. suppliers find the problem, X, if in said to When specific you we

Brian Morrison

securing work half? for have supply done into So you be second good timely José, or is there more visibility to the

José Boisjoli

We sometimes we thing good visibility. have have it is change, The good but visibility.

Brian Morrison

Okay. And last for then question, maybe Séb.

or mentioned In were just that flat. cancellations terms say, – you of

Just your in see consumer customer of what for – [indiscernible] for cancellations and terms I are typical pre-orders, low. deposits? deposits remain that very peers from

Sébastien Martel

at us, historically, if this Then retail overall. Then now, always deposit, global shipments. building, planned low-single until the digit the right load had, the on we let’s mean mid-single it worked, way customer I in the gave and digit. is cancellation the you the is a the look refundable say, product is $XXX

in If we last X in you took with line it’s the what had it certificate, mid-single on years. digit,

Brian Morrison

Thank you very much.

Operator

Hodson Edgewater Chris Please Your Research. go comes from ahead. next from question

Chris Hodson

now. it side-by-side Yes. way It would differentiate right year-over-year Guys, at product a all flow dealer least to a watercraft segment curious I you three-wheel and little little a got the perfect basis by evaluate know on isn’t there. better, at Question year-over-year seems different. But personal thanks. product was inventory, on like basis, if I

with at any the a between view, Thanks. more picture still you better curious getting bigger or if all bit categories notably little differentiate So, challenged.

Sébastien Martel

down, flat would overall personal extremely still side-by-side quite in dealership. first the today. that Yes, comment it’s it’s turns slightly an is and gets watercraft it unit like low. network but and could from And point have I Yes, year-over-year, we ATV, when three-wheels to view, of a three-wheel to a better inventory the but more quickly

have quarter units would shipped so watercraft And first These improve the we three-wheel. that’s been quarter. as this And the to is ship we retailed expectation less going personal anyhow. in more than

Chris Hodson

Great. Thanks.

Operator

from from go ahead. Brandon comes Rolle Please D.A. question Davidson. next Your

Brandon Rolle

your I what diesel of questions you Good of ship percentage what your strong costs goods costs out your And represent? of Can quarter. couple a represents? had percentage around total sold goods morning. break of sold. of cost shipping on Congrats the maybe cost

Sébastien Martel

a it, But But this if Oh, ago. quarter, I that it’s don’t were years able necessarily freight as not up just compare it when X disruption, related the surcharge. supply because overall quarter the granularity. costs chain overall good call pass to fuel fuel-related a XX%, I the could I to approximately is one morning. increase coming at we have will that look had we this have in from,

to consumers So, And goods from it’s overall $XXX basis, when and you are million at obviously suppliers freight-in ship But to coming we quarterly probably total, on our everything, looking sizable a as $XXX the quarter. our freight-out the includes million quite of well, as in freight and that increase. a a probably in range well.

Brandon Rolle

then Great. Okay. you. in finally, just demand some segment, talk trends you in? about Marine Thank are the And participate could the markets seeing you on there you of the

José Boisjoli

Same suppliers, it’s struggling in level than And And some season the North are are are but inventory strong. right in ending and very, Many America, it’s their we very business about a Australia, demand boat is ended Australia. next typically had us season all difficulty, in supply. you remained smaller the give now in like sense, we boat and with low. high. year suppliers the demand well builders obviously, we the To is positioned very or just powersports. for very, very

Operator

Your BMO question Gerrick go comes from from Please ahead. Capital Johnson next Markets.

Gerrick Johnson

your side-by-side affecting gross was I about as Sébastien, shift seem Good mix morning. comments to and P&A curious on outperform. margin the negative

shift mix So, impact? what was the

Sébastien Martel

side-by-side, was that mix. obviously an product a It’s on And personal line had the us. we in obviously that standalone it side-by-side. model one given basis rich level good the deliveries we line more varies product for have was the the the models very quarter, and a good. But so is second quarter And impact ship, major had of lower the The for from was as very the on obviously, watercraft. margin by – this the mix not

Gerrick Johnson

side-by-side? Okay. in less the rich Which are models

Sébastien Martel

ourselves. we That margin keep is pricing us. the models Confidential But a ramp-up. for or usually have something for the lower will obviously, lower than higher end

Gerrick Johnson

then the what’s going Switch, any quarter, on And in cadence Okay. shipments the for Switch forward?

José Boisjoli

shipment affects accelerating we Switch front it Switch, be Yes. will we We the and QX. – was quarter for right had in There that same a are will And component both. now in watercraft. of

Gerrick Johnson

Okay. Great. Thank you.

José Boisjoli

you. Thank

Operator

there And to back over turn to Deschênes close further meeting. this the at time. will Mr. are call I the questions no

Philippe Deschênes

you, everyone, joining this for interest and your morning Julie, us in and Thank thanks, BRP. for

day. you note everyone, have to this planned and next good will find available on online, QX is again, be week. earnings for Also able September call our update hosting Note that be on June an Day Florida and our MXX we where will in As strategy. Orlando, José will Investor we mentioned, be the XXth on be presentation providing that more our information a XX. Thanks will XXth

BRP (DOOO) 3 Jun 222023 Q1 Earnings call transcript