BRP Inc.

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

Thank you, Julie. Good morning, and welcome to BRP's conference call for the second 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. 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 Jose. Thank you, Philippe.

Good morning, everyone, and thank you for joining us. I am pleased to report that we have delivered a very solid quarter, driven by continuous trend in consumer demand for our lineups and the ongoing support of our dealer network. Solid execution of our plan, led to an impressive market share gain and record result for a second quarter. Given the strong performance and our positive outlook for the rest of the year, we are increasing our normalized EPS guidance to a range of $12.35 to $12.85. Let's turn to slide four for key financial highlight. Revenue reached $2.8 billion, up 14% from the previous year, driven by higher volume in pricing. Normalized EBITDA grew 13% to $473 million, and normalized EPS increased 9% to reach $3.21. Turning to slide five for a look at our Q2 retail performance. Our product portfolio continued to gain traction with consumers, leading to significant market share gain. In North America, our retail sales were up 41% compared to an industry that was up mid-10%. Given our retail performance, this implies that BRP accounted for most of the industry growth in the quarter. We were also very strong in international market, with retail up 23% in EMEA, 36% in Latin America, and 33% in Asia Pacific. Looking more closely at the numbers, we see the demand for our product remain robust, despite ongoing macroeconomic concern. We just had our strongest second quarter ever at retail, except for the first few months of COVID, where we experienced significant inventory depletion. Not only was our retail up 41%, but it was up 37% versus Q2 of fiscal year 20, showing continuous gain. With this strong performance, we reached record market share for side-by-side, ETV, and personal watercraft. All of this with retail incentive below pre-COVID levels. We believe those results are driven by the evolution of our customer profile over the last four years. The influx of new entrants remain high at 39%. We also continue to see high FICO score, and the average household income from our customer survey is 40% higher than pre-COVID, at slightly above $160,000. Those customers are looking for more high-end products, which explain our momentum in this category across our lineups. Bottom line, the typical BRP product buyer remains in very good shape financially. This puts us in a favorable position entering the second half of the year. Turning to slide seven for an overview of key products introduced at our BRP Club held in Atlanta two weeks ago. This year's club was one of the largest ever, with 5,300 total participants in person and virtually. The highlight was the launch of the Can-Am Mavic R, our flagship model in the sport category. It brings a new dimension to riding with an industry-leading 240-horsepower engine, industry-first dual-clutch transmission, a unique suspension geometry, and lots of enhanced technology. With this new offering, we are well positioned to gain market share in the high-end sport side-by-side category. But this was not the only product news, as shown on slide 8. We improved our entry-level offering with the first major evolution of the highly successful Sea-Doo Sparks since its introduction. We also launched many new side-by-side models, notably the Can-Am Defender XT HD7, as well as the Maverick X3 RS Turbo, the industry's most affordable mid-HP 72-inch wide side-by-side. These models offer a lot of value at price points that reach a wide range of consumers. We also continue to push innovation in the premium segment, which has seen the fastest growth in recent years. We introduced a full range of high-end models, such as the Manitou Explore Max 300 HP upon 2 with dual Rotax engine and the larger Max deck, the Sea-Doo RXP-X and RX-TX with 325 horsepower, and the Sea-Doo Switch Cruise Limited. we also added a touchscreen with Happel CarPlay to our spiders models. These additions represent a historic level of product news, which will help us to gain more market share and grow our addressable market while further improving our margin profile. All our new products were well received. The order process is ongoing, volume is as expected, and the mix is currently trending slightly better. Now, let's turn to slide nine for year-round product. Revenue were up 8%, reaching $1.5 billion, driven by strong shipment of side-by-side vehicle and ETVs. At retail, Can-Am side-by-side had its strongest Q2 ever, with retail up high 20%, and solid growth in all segments and price categories. We also finished the season with a six-point market share gain to reach the high 20% range in North America. With this performance, we are very close to delivering on our M25 objective of reaching a 30% market share by the end of fiscal year 25, but of course, we will not stop there. Moreover, For the first time ever, Can-Am side-by-side reached the number one position in Canada with a market share in the high 30%. As for ATV, our retail was up mid-30%. This performance was notably driven by strong growth in the mid-CC segment, reflecting the success of our newly introduced mid-CC outlander platform. also etv also closed its north american season with the strongest share gain in the industry passing the 20 mark for the first time ever we are pleased with the momentum of our off-road business and with recent product introduction we are in a good position to continue outperforming the industry looking at three-wheel vehicle Retail was down high single-digit compared to an industry that was up high single-digit. While consumer interest remained high, the Rikers retail performance was softer in the quarter. As seen across the industry, buyers of entry-level products are more hesitant to purchase at the moment. Meanwhile, the Spider F3 and RT model, which are higher-end, had solid growth. With the upgrade on the model year 24, we are well positioned for next season. Turning to seasonal product on slide 10. Revenue were up 30%, reaching almost 900 million, driven by a higher volume of snowmobile and switch pontoon, as well as favorable pricing. Looking at our retail performance, we had a very strong quarter for personal watercraft, which retailed up about 60%, again an easy competitor a year ago. Remember that we had limited product availability in the network during Q2 last year. Still, this performance was exceptional from a historical perspective. In fact, our season-to-date retail is the strongest in the last 15 years. These results demonstrate the strength of our lineup and our ability to create new segments with models such as the Wake, Fish, and Explorer Pros. These products bring new entrants to the category, which drives industry growth. And with our new product introduction for 24, we are well positioned to sustain our momentum. As for our CEDU switch, our retail was up over 200% and we held the number three position in the U.S. pontoon industry over the three-month period ended in May. This is a great example of how we can disrupt category by developing market shipping product. Finally, for snowmobile, we are currently in the off-season. We are confident for the peak season with a high level of unit pre-sold to consumer. Moving on to slide 11 with power support parts, accessories and apparel and OEM engines. Revenue were up 14% to 294 million. We continue to benefit from our growing product portfolio and vehicle fleet in use, which led to higher replacement parts and accessory sales driven by the LINQ ecosystem. we expect a softer second half than originally planned for P&E business as we anticipate dealer to destock inventory mainly for the Sea-Doo pontoon and three-wheel vehicle lineups. Looking at our recent acquisition, a key highlight was the introduction of Pinion motor gearbox unit commonly called MGU, which combines a full-power electric bicycle motor in our industry-leading gearbox in one compact package. This promising technology got excellent review following its introduction in June, notably winning the prestigious Eurobike Gold Award in Frankfurt. Now moving to Marine on slide 12. Revenue were down 5% to $125 million, reflecting a lower volume of boat shipment. The revenue decrease is due to the slower than expected production ramp-up of the new Manitou platform, namely because of a supplier issue for an aesthetic component which limited product availability. This issue has now been resolved. Looking at retail sales. From an industry perspective, the boat category has seen weaker demand so far this year. Demand was affected by higher financing costs and poor weather in many markets, especially in the Great Lakes region, which is key for both Alumakalaf and Manitou. In addition, our retail performance was impacted by the supply issue for Manitou, and we still had lapping months retailing welded boat for Halumakaraf. For Quintet-X, retail was down in line with the industry in Australia. Given the slower production ramp up for Manitou and softer industry trend in the boating sector, we decided to realign our plan for this year, focusing on season 24. While the year has not unfold according to plan, We are encouraged by consumer reaction to the new boat, and we remain confident about our strategy for the marine business. With that, I turn the call over to Sébastien.