BRP Inc.

Good morning, ladies and gentlemen. Welcome to the BRP Inc. FY21 fourth quarter conference call. For participants who use the telephone line, it is recommended to turn off the sound on your devices. I would like to now turn the meeting over to Monsieur Philippe Deschenes. Please go ahead, Monsieur Deschenes.

BRP's conference call for the fourth quarter and year-end results for Fiscal 21. Joining me this morning are Josee Boisjoli, 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 and that the results could differ from those implied in these statements. Please note that the forward-looking information is based on certain assumptions and is subject to risk and uncertainties, and I invite you to consult BRPs and DNA for listing of these.

also during the call reference will be made to supporting slide 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 Josee thank you Philippe good morning everyone and thank you for joining us fiscal year 21 has been a very unusual year as we went through a period of temporary production shutdowns followed by a surge of consumer demand for our product which continue to this day While this dynamic put pressure on our people, our suppliers, and our dealers, everyone rose to the occasion to make the most of this opportunity while ensuring the health and safety of our team everywhere around the world. I would like to thank them for their hard work and dedication throughout this period, which allow us to deliver outstanding results with exceptional retail sales growth and a record normalized EPS. Let's turn to slide four for a more detailed look at key highlights for fiscal year 21. During the year, we proactively manage the impact from the pandemic by protecting our employees and preserving our financial flexibility. To reduce our cost base, we focus our capex plan and enhance our liquidity position. We also deliver exceptional retail growth across all our product lines by supporting our dealer network through a surge of customer demand, as well as attract and nurture an unprecedented level of new entrants to the industry. Operationally speaking, we successfully executed a rapid production ramp-up after the temporary shutdown of our site and managed our volatile supply chain tightly to limit disruption and deliver on our plan. and we can't forget the wind down of the Evenru.board engine product to refocus our time and investment on our bold brands. In parallel, we continue to invest in our future growth. We broke ground on the construction of a new side-by-side manufacturing facility in Mexico, introduced multiple models across all our product lines and invested a record amount in R&D. All in all, will deliver an exceptional year despite the turbulent caused by the pandemic and prepare the company for the future. Now let's turn to slide five to review the financial highlight of the year. Our revenue for the full year were down 2%, primarily due to the temporary suspension of our operation earlier this year and the wind down of the Evenrude outboard engine production. Despite this top line pressure, We managed to grow our normalized EBITDA by 24% to end the year at $1 billion and our diluted normalized earnings per share to an impressive 41% to reach $5.39 above our guidance range. We were able to achieve this record result due to our team's agility to quickly implement initiatives to mitigate the impact of the pandemic while at the same time taking advantage of the surge in consumer demand. Turning to exceptional retail performance for the year on slide six. We started the year with a strong retail momentum growing at a pace of about 15% which was accelerated by the onset of COVID-related restriction. We experienced a surge in demand as many consumers turn to our product, including a higher than normal influx of new entrants to the industry. Interestingly, the level of new entrants increased to over 30% this year compared to the normal 20% we typically experience. All of this led to a 25% year-over-year growth for our power support product retail in North America. What is even more impressive is that all our product lines experience the same dynamic at varying degrees. Excluding personal watercraft, which was the most affected impact by the production shutdown, our power support product generated 30% increase in retail. Turning now to the fourth quarter on slide seven. As you can observe, demand remained very strong in Q4 as up as we outpace industry growth in most markets. PowerSport retail growth accelerated in North America with retail up 30%. Demand for snowmobiles was extremely strong. In fact, we started to run out of inventory in certain regions in January which affected our overall retail. Excluding snowmobiles, our retail is up 41%. And retail was also strong in international markets as product availability improve, delivering retail growth of 9% in Latin America, 11% in the MEA, and 20% in Asia Pacific. Turning now to slide eight for a deeper dive into North American retail by product line, which represent over 70% of our consolidated revenues. Again this quarter, we've delivered solid growth across the PowerSport product portfolio. Side-by-side and ETVs both experience strong consumer demand, with retail up in the mid-30 and 40% respectively. Three-wheel vehicle and personal watercraft are both off to a strong start of this season, with retail up in the high 30 and 90% respectively. And we are having a very good snowmobile season, posting a second consecutive quarter of over 20% retail growth, despite product availability affecting our growth at the tail end of the quarter. We are very pleased with the strength of our lineups which continue to drive strong consumer demand. Turning to slide 9 for an update of our inventory and production capacity. As you can observe, our dealer network inventory is down 67% compared to the same period last year. In order to improve product availability and reach our long-term market share objective, we are ramping up production and investing in additional capacity. Recall that we are in the process of building a third side-by-side facility in UIS, which is expected to provide us with an additional 50% of capacity. The project is progressing as planned. and the production ramp-up is scheduled by the end of third quarter. We are also moving forward with investment in our Querétaro facility for another assembly line providing us with an additional 30% capacity for personal watercraft as well as for Project M motorized haul. The Project M motorized haul will be assembled in Querétaro but the final assembly of the pontoon will be done at our Sturtevant facility in the U.S. Both projects are progressing as planned and the production ramp-up is expected to start in the fourth quarter. This capacity expansion initiative will allow us to grow and seize market share opportunities supporting the achievement of our growth objectives. Now let's turn to slide 10 for the year-round product. Revenue were up 8% driven by a richer product mix in side-by-side and lower sales program partially offset by a lower volume of three-wheel vehicle. We shifted some of the production of three-wheel vehicle into fiscal year 22 so that we could extend the production schedule for snowmobile to seize the strong demand opportunity this winter. Recall that were producing the Spider F3 and RT and the Ski-Doo snowmobile on the same assembly line in Valcourt. On the retail side, seven months into the season 21, the North American side-by-side industry is up in the high 20%. Can-Am side-by-side is gaining share season to date, especially in the utility segment, with retail up in the low 30%. We also perform well in international market as the inventory availability improved with retail being up about 40% in EMEA and in the high 20% in Asia-Pacific. For side-by-side, we recently introduced an all-new commander platform for model year 21. The product was well received by both the media and our dealer network. This should allow us to resume market share gain in the rec-use segment a category in which we had been losing ground in recent years due to our aging offering. Turning to ATV, the North American industry is also seven months into its season 21 and retail is up in the high 20%. Can-Am is gaining share season to date, especially in the mid-CC segment with retail up in the low 30% over the same period. We are very happy with the momentum we are seeing in the ETV business. Now looking at three-wheel vehicles. Very early in the season, the North American three-wheel industry retail is up in the low 10%, while Can-Am three-wheel vehicle retail is up in the high 30%. We are ready for another good season with a very solid go-to-market plan. We continue to drive solid momentum with the media. The product continues to attract a diversified consumer base, notably experiencing incredible momentum with women. We are focusing on inclusion and education to attract more women to the sport. I encourage you to go to our website and watch our new Women Off On Road video, which was launched a few weeks ago. I am very proud of this initiative. Finally, The Rider Education Program registration continued to trend above expectation. We have a very good plan for a successful Season 21. Turning to seasonal product on slide 11. Seasonal product revenue were up 24%, resulting from higher shipment of both snowmobile and personal watercraft, as well as from lower sales program due to a strong retail environment. Now looking at retail, 10 months into its Season 21, The North American snowmobile industry is up in the high 10%. Our Skido lineup continues to outpace the industry, with retail growth that is up in the low 20% over the same period. As a result, our market share continues to grow, reaching a new record level. Looking at the international market, our Skido and Lynx lineup are performing very well in Russia, outpacing the industry. with retail up in the high 20%. In Scandinavia, the industry is down mid-single digit due to the late arrival of snow, but retail accelerated in February and we are outpacing the industry. Also, we recently held our virtual product introduction event where we introduced our model year 22 Ski-Doo and Lynx lineups. One of the key highlights of this product announcement was the introduction of Lynx, the first new snowmobile brand to the North American market in decades, bringing an exclusive new alternative for snowmobile riders with three high-end Lynx models. These premium models provide a different riding experience and should attract a new type of rider to BRP. They will only be available as pre-sold order in spring and will be offered as a premium brand. As a reminder, in Scandinavia, we have over 60% market share with our combined Ski-Doo and Lynx product lines. The Lynx introduction is a new growth opportunity for us and marks an exciting new chapter in snowmobiling history, with the fifth brand now available in North America. We also strengthened our Ski-Doo lineup with the introduction of the SmartShock technology, as we have done with the 3X last year, The addition of two new turbo engine options and the return of the Maxi muscle sled for this year only. With these additions, we believe that our line-up is very well positioned to have a successful Season 22. Turning to personal watercraft. While still very early in the season, the North American industry retail is up in the low 70%. Sea-dew retail is up mid-50%. Slightly lagging industry growth since we ended last season with record low level of inventory in the network. As we improve our product availability, we started to outpace the industry in Q4. The trend is also very good in counter seasonal market, which went up mid 20% in Australia and New Zealand and up over 30% in Brazil. Current trends are very strong and on top, We have unprecedented level of customer pre-season certificates. In fact, as of today, over 50% of Sea-Doo are already pre-sold to consumers in North America. Continuing on slide 12 with a look at power sports parts, accessories and apparel, an OEM engine which experienced a similar trend as vehicles. Revenue were up 19% driven by a higher volume of P.A.N.A. coming from a higher replacement parts revenue due to increased usage of products and strong unit retail that generated a lot of accessories sales. The focus on our link ecosystem is paying off. Now looking at marine, revenue were down 17% impacted by the wind down of the even route outboard engine. At the retail level, Tailwater is in the core of its retail season in Australia and is performing very well with retail up over 20% for the quarter. In North America, we are off-season but our booking for the season 21 is completed and will be running at maximum production capacity until the end of July. We are pleased with the performance of our boat brand and the progress we are making on our strategy to transform the marine industry. The wind down of Evinrude is now completed and we are focusing on our boat brand with accelerated investment in new technology and innovative product as well as project M and GOES. With that, I will turn the call over to Sebastien.