BRP Inc.

Good morning, ladies and gentlemen, and welcome to the BRP Inc's FY24 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 Deschaines. Please go ahead, Mr. Deschaines.

Thank you. Good morning and welcome to BRP's conference call for the first quarter of fiscal year 24. Joining me this morning are José Boisjoli, President and Chief Executive Officer, and Sébastien 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 actual results could differ from those implied in these statements. The forward-looking information is based on certain assumptions and is subject to risk and uncertainties, and I invite you to consult BRP's MD&A for a complete list 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 Joseph. 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 24 as our solid production portfolio continues to drive strong demand globally. While the quarter started more slowly at the retail level due to the late arriving spring season, the momentum picked up in April. This allowed us to deliver another solid quarter at retail and gain further market share. From a financial standpoint, we continue our strong execution and delivered solid results that put us on pace to meet our guidance for the year. Let's turn to slide four for key financial highlights. Revenue reached $2.4 billion, up 34% from the previous year, driven by higher volume and pricing, as well as a more favorable mix. Normalized EBITDA grew 39% to $377 million, and normalized EPS increased 43% to reach $2.38. Turning to slide 5 for a look at our Q1 retail performance. The strength and the wide range of our transport offering continue to drive strong results. In North America, our retail sales were up 3% for the quarter or up 8% excluding snowmobiles. Remember that last year our snowmobile shipments were made later than usual in the season which led to usually high retail in the first quarter of fiscal year 23. This compared to an industry that was down low single digit. Our performance was also solid in other geographical markets, with retail up 14% in the MEA and 25% in Latin America. In Asia Pacific, our retail was down roughly in line with the industry. As shown on slide six, our retail progressively improved as we moved through the quarter. Retail declined in February and was relatively flat in March due to poor weather, as well as different timing of shipment for certain products, which make year-over-year comparison difficult, like I point out for snowmobile. However, the momentum picked up significantly in April, as weather improved and consumers reacted positively to certain retail incentives. The trend continues in May. Moreover, despite ongoing macro concerns, many indicators are pointing to healthy consumer interests for our industry, and more particularly for our products, such as continuous strong demand for lineups. For instance, we've just closed our snowmobile booking for the upcoming season, and pre-sold units to consumer ended up about 25% above our target. The financial position of consumer remained healthy, with lending application continuing to show FICO score above historical level. The influx of new entrants remained high at 28%. And web searches for different product categories remain higher than pre-COVID level. Now, let's turn to slide seven for year-round product. Revenues were up 42%, reaching $1.3 billion in Q1, driven by strong shipment of side-by-side and three-wheel vehicle, as well as favorable product mix and pricing. At retail, Can-Am side-by-side had its strongest Q1 ever, with the Commander, Defender, and Maverick X3 all gaining share in their respective markets. Our retail was up low single digits, but the momentum improved significantly through the period. April retail was our third strongest month ever, only trailing the first two months of COVID. As for ATV, our retail was down low 10%, limited by the ramp-up in production of the new mid-CC Outlander platform. This new platform has been very well received by our dealers and the media, which positioned us well to continue our momentum as the OEM with the highest market share gain in the industry so far this season. Looking at three-wheel vehicles, Can-Am retail was up low single digit. Early in the quarter, retail was impacted by the weather and by a product recall. It then picked up nicely in April with high teen growth, and the momentum continued in May. All in all, we are pleased with our performance in the three-wheel category, and we believe that we are well positioned heading into the most important retail period. Turning to seasonal products on slide eight. Seasonal product revenue were up 69% from last year, reaching $692 million, driven by higher volume of Sea-Doo personal watercraft and pontoon. Looking at our retail performance. In snowmobile, we've closed the 23 season in North America on March 31st, which we sell down low single digits, but with a 1% point market share gain, which further increase our historical record level. We also ended the season with the number one position in each segment in which we compete, including the youth category that we just entered last season. In Scandinavia, our market share also improved, gaining 4 percentage points by the end of the season. Also, as I mentioned, we recently closed our spring customer orders for the season 24 model, and pre-sale level in North America came in about 25% above target. The solid booking significantly improved our visibility on expected volume and sell-through for our snowmobile business. For this season, we have increased our seasonal product revenue guidance for the year, as Sébastien will explain in a few minutes. Looking at CEDAW products, While still early in the season, our retail for personal autographs is performing very well, up in the mid-30% for the quarter, and the solid trend continues in May. We are also seeing strong momentum in international markets, which retail up over 40% in Latin America and over 50% in EMEA. As for our Cidu Pantone, our retail was up significantly, even if it was a very small base. as we're ramping up the initial production during Q1 last year. To give you a better understanding of our momentum with this product, in less than one year, the CEDU switch has already reached the number two position in the U.S. pontoon industry for the last three months ended in March. This is a superb example of how we can disrupt categories by developing market-shaping products. As you can see, both our Sea-Doo personal aircraft and pontoon are performing well, heading into the peak retail season. Moving on to slide 9, with power support parts, accessories and apparel, and OEM engines. Revenue were down 17% to $285 million. The revenue decline is primarily due to lower repeat orders during the season, and lower sales volume this year due to timing as late snowmobile unit delivery last season had pushed related P&A sales to Q123. We still have good momentum with our P&A business as we continue to see positive trends at the retail level, notably for our studio personal aircraft and pontoon business, for which we have significantly developed the accessory offering in recent years. Moving to marine on slide 15. The revenue lag for marine continued to be tied to the ramp up of the new Manitou platform. While we were planning to be further along in our production ramp up, we have been dealing with the supplier issue for an aesthetic component that did not meet our standards. These resulted in a slight revenue decline of 3% compared to last year. On a positive note, the situation has improved and shipments have increased throughout May, thereby increasing product availability, heading into the peak retail boating season. Looking at retail sales, from an industry perspective, the boat category seems to have suffered the most from the late spring, especially in the Great Lakes region, which is a key market for Alumacra and Manitou. In addition, our retail performance was improved by the supply issue at Manitou, as well from lapping months during which we were still retailing a Lumacraft welded boat. As for Cointrex, retail was down in line with the industry. We are not pleased with the marine result this quarter, but I would like to remind you that we are still on track to deliver a strong year. With that, I turn the call over to Stébastien.