BRP Inc.

All participants, please stand by. Your conference is ready to begin. Good morning, ladies and gentlemen, and welcome to the BRP Inc.'s FY20 First Quarter Results Conference Call. I would now like to turn the meeting over to Mr. Philippe Deschenes. Please go ahead, Mr. Deschenes.

Thank you, Maud. Good morning, and welcome to BRP's conference call for the first quarter of fiscal year 20. Joining me this morning are Josee Boisjali, President and Chief Executive Officer, and Sebastien Martel, Chief Financial Officer. Before we move to the prepared remarks, I would like to remind everyone that certain forward-looking statements will be made during the call that are subject to a number of risks and uncertainties. I invite you to read BRP's MD&A for listing of these. Also during the call, reference will be made to supporting slides, and you can find the presentation on our website at brp.com under the Investor Relations section. So with that, I'll turn the call over to Jose.

Thank you, Philippe. Good morning, everyone, and thank you for joining us. I am pleased to report that we are off to a good start for fiscal year 20. Despite challenging weather, especially in Northern US and Canada, our product line continued to drive strong consumer demand, which resulted in another quarter of robust retail growth in most of our market. We continued executing well on our plan, notably as we've delivered a very successful launch of Riker, completed our side-by-side capacity expansion and came to an agreement to acquire Tellwater, the leading manufacturer of aluminum fishing boat in Australia. Our financial result came in line with our expectation and we are increasing our guidance by five cents to reflect our NCIB done and our strong pack sales in Q1. Now let's get into the highlight of the quarter, starting with the financial result on slide four. Our revenue for the quarter were up 17% to reach $1.3 billion, primarily driven by continued growth in year-round product. Our region contributed to the growth with revenue up 19% in the United States, 12% in Canada, and 17% for international, primarily driven by a very strong performance in EMEA with a 26% revenue growth for the quarter. Our normalized EBITDA was up 16% to 147 million, resulting in a normalized earning per share of 54 cents, up 4% over last year. Despite unfavorable weather in the northern portion of North America and some dynamic political and economic environment in certain parts of the world, such as the Middle East and countries like Argentina and Mexico, We continue to deliver strong retail growth and outpace the industry in most of our markets. Our retail sales were down 13% in Latin and up 14% in North America, 18% in EME, and 5% in Asia Pacific. Now on to slide six. As I mentioned, weather was a big factor in North America, especially in the northern portion of the US and in Canada, where we experienced a cold and wet spring season. This led some consumer to delay their purchase and as a result, our retail sales suffered as you can see from February and March. Sorry, as you can see for February and March, particularly in the snow bell, but saw a rebound in April. For the quarter, our power sport retail in the snow bell, excluding snowmobile, grew 15%, whereas in the sun bell, where weather was generally more favorable, our retail grew 21%. On a positive note, we saw retail improve as weather got better late in April, and this trend is continuing so far in May. Looking at the retail by product line on slide seven, all our product lines saw solid growth in the quarter, notably led by the three-wheel vehicle, which was up over 110% driven by the introduction of Riker. Meanwhile, side-by-side ETV and Watercraft all saw robust high single-digit growth and Snowmobile had a good end of season with retail up mid-single digit. All our industry grew in the quarter despite unfavorable weather conditions and we continue to outpace the competition in both side-by-side and ETV. Watercraft is currently at the beginning of the season but showing positive growth. This shows that our consumer base is healthy and that the demand for product remains strong. Now looking at side-by-side performance in more detail on slide eight. We are pleased with the continued success we have experienced with side-by-side this season. 10 months into the season 19, our retail is up high 10% and we are the largest market share taker in the industry with strong gain in both the utility and sports segment. The customer pull for our lineup remains strong and we had difficulty meeting the demand for the Defender due to the planned two-week production shutdown at our ULIS II facility. We are not satisfied with our high single-digit growth. I remind you that we are lapping a strong mid-30s digit growth for the same period last year. This year, we were affected by a combination of bad weather, our production shortage, but also strong promotion from some of our competition. We saw the trend improving late in the quarter as we had access to additional production capacity, with retail growing high theme percentage in April, and this continued to be strong in May. With the additional capacity and the solid pipeline of product introduction we have for the year, notably with the eighth new side-by-side platform coming up next week, we are confident in our ability to continue to drive solid growth going forward. Now let's turn to slide nine for the year-round product highlight. Revenue were up 19% for the quarter, driven by the introduction of the Can-Am Riker and a higher volume of ETV sold. On the retail side, 10 months into the season 19, the North American side-by-side industry is up mid-single digits. As previously mentioned, our side-by-side retail is up 18% over the same period. We continue to experience solid momentum, especially with the defender, which is gaining market share around the world. Turning to ATV, the North American ATV industry is also 10 months into the season 19. and retail is down low single digit. For the same period, Can-Am ETV is up high single digit, notably gaining share in the more profitable high CC segment. Now the three-wheel vehicle business. Six months into the season 19, the North American three-wheel motorcycle industry is up low 40% range, primarily driven by our Can-Am three-wheel vehicle lineup, for which retail was up over 120% for the same period. We are seeing exceptional traction with the Riker. It has generated over 1 billion media and online impression worldwide so far and our website visit and build your own site are up over 140% and 560% respectively compared to the same period last year. The Riker Demo Tour is ongoing across the US and is gathering a lot of interest with over 8,000 participants registrations so far. Riker is also doing well in Europe and across all international markets. It is still early into the season but we are pleased with our momentum and we are well positioned ahead of the summer season. Turning to seasonal product on slide 10. Seasonal product revenue were up 7%, primarily driven by a favorable product mix for personal watercraft. In terms of retail, the North American snowmobile industry ended its season 19 with retail up low single-digit percentage. Ski-do retail was slightly down for the season. Our performance can be summarized by lower non-current availability in the network versus the competition, and Bad Timing with very uneven snow conditions throughout the winter months. Still, we ended the season on a good note and we are in a good position for the upcoming next season. Our network inventory is well balanced and we had the highest level in five years of spring unit booking, which are pre-sold units to consumers. The strong results are testimony to our solid line-up. In Europe, Skido and Lynx continue to perform well late into the season, with this quarter retail up 18%. Globally, despite the winter conditions, we are pleased with the results as our lineup remains the clear industry leader around the world. Now, personal watercraft. The season ended strong in the counter-season market with double-digit retail growth in the quarter for Brazil, Australia, and New Zealand. In North America, early into the retail season, the personal watercraft industry is up high single-digit season to date. Sea-Doo retail is also up high single-digit over the same period, with strong demand for our higher-end models. All signs are positive as we head into the peak of the retail season in North America and Europe. Continuing with a look at Parasport Pack and OEM engine on slide 11. Revenue were up 19% in the quarter, driven by solid growth in the snowmobile part business, resulting from the extended riding season due to the late spring and the higher volume of accessories for three-wheel vehicle, side-by-side vehicle, and personal watercraft. Another highlight of the quarter is the early success we are experiencing with Riker accessories, which are trending about 50% higher than target per unit sold. A key contributor to this performance is the Riker Design Lab, which is being well received by both dealer and consumer. Our accessories business is growing at a fast pace, driven by the growth of vehicle sales, but also by the ingenuity of our accessory lineup, which deliver high value for our consumers. An example of this is our length system. which facilitate the mounting of accessories on the vehicle and allow the use of accessories across multiple product lines. Now looking at the marine category on slide 12. Revenue were up 33% in the quarter driven by the acquisition of Avimacaraf and Manitou which were partially offset by a lower volume of outboard engines sold. Ten months into the season 19, the North American outboard engine industry is up low single digits, with even road retail down low 10%. This decline continues to be affected by the same trend, with industry growth driven by the package business, where boat and motor are sold together. This is one of the principal reasons we made our entry into the boat business. For the retail of our boat brands for Q1, We estimate the retail of Manitou to be up around high single digit and the retail of Allumacraft to be flattish versus last year. We are satisfied with those results as both companies go through a transition phase with their dealers who are responding positively to our strategy. Finally, we announced earlier this month our intention to acquire 80% of Tillwater the leading manufacturer of aluminium boat in Australia. This acquisition is another step in our marine strategy of buy, build and transform as we continue to develop a critical mass through the acquisition of high quality boat OEMs with the objective of transforming the industry through innovation and becoming a leading global marine company. I would like to remind you this is a mid to long term strategy but with a high potential. On that note, I will turn the call over to Sebastien.