BRP Inc.

Good morning, ladies and gentlemen, and welcome to BRP Inc's FY25 second quarter results conference call. For participants who use the telephone line, it is recommended to turn off the sound on your device. And I would like to turn the meeting over to Mr. Philippe Deschaines. Please go ahead, sir.

Thank you, Sylvie. Good morning, and welcome to BRP's conference call for a second quarter of fiscal year 25. Joining me this morning are José Boisjoli, President and Chief Executive Officer, and Sébastien Marcel, 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 uncertainty, 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, Philipp. Good morning, everyone, and thank you for joining us. Our financial results for second quarter were essentially as expected and reflect our focus on reducing network inventory to support our dealers. However, the macroeconomic environment and high interest rates continue to put pressure on consumer demand. As a result, the demand has declined more than anticipated, while promotional activity has intensified. In this context, and given our commitment of safeguarding our dealer value proposition, we have decided to further adjust our production schedule for the year, which is reflected in our updated guidance. Let's turn to slide four for key financial highlight. Revenue reached $1.8 billion, normalized EBITDA was 199 million, and normalized EPS was 61 cents, generally in line with our expectation. We have made great strides to reduce network inventory, which is down 13% so far this year, progressing towards our objective of a 15 to 20% reduction by the end of fiscal 2025. As for retail, our North American passport sales were down 18% from a strong second quarter last year, as the industry experienced weaker consumer demand, as you can see on slide five. We are operating in an increasingly challenging economic environment. Market conditions were in line with our plan through April, but deteriorated in the second quarter. Although these conditions are impacting many of the regions where we operate, it has recently become more challenging in North America, our key transport market. On the plus side, we have been more proactive than most OEMs at reducing network inventory and this was received positively by our dealers. Having said that, OEMs with high level of inventory have been more aggressive with promotion, which has impacted our market share this quarter. Looking at retail performance for the quarter on slide six. Overall, retail was down in the teen percentage, lagging the industry in North America, EMEA, and Asia Pacific. Meanwhile, it was up 18% in Latin America, driven by a very strong performance in Mexico and Brazil, where consumers are highly engaged with our SEDU and Can-Am brands. Given our focus on bringing network inventory down, we were anticipating some market share loss, namely for side-by-side. A few words on our personal watercraft market share decline. Last year, you may remember that our main competitor had supply issue, which turned out to our advantage. The fact that this situation is back to normal, combined with the current industry weakness, had a larger than expected impact on our retail this season. Turning to slide seven, we are pleased with our result in ORV for the full season, as we've delivered record retail performance up 8% in an industry that was flat. We gained about two points of market share in side-by-side vehicle, passing the 30% mark for the first time. We also performed very well in ATV, gaining one and a half points of market share. With these achievements, we have closed the gap with the number one position in the industry in terms of ORV unit retail per dealers. In the current environment, we expect further short-term market share volatility. However, with our recent product launches and momentum with dealers, we believe we will continue to gain share in ORV for the coming season. Let's turn to slide for a highlight of our recent dealer event held in California. It was one of the largest ever in terms of product news with over 3,000 participants in person and virtual. We announced the availability of our highly anticipated Can-Am Pulse and Origin all-electric motorcycle lineup, making our re-entry into two-wheel space. These models leverage our own Rotax e-power unit, which also propels our electric snowmobile and will be used in future VRP electric products. In terms of the next step, we will be hosting several media events, training our dealers and hosting VRP customer events throughout the second half of the year. We intend to become a global leader in that space, with true innovation designed to simplify the riding experience for new riders and introduce electric motorcycle to all. But this was not the only key news of our dealer event, as you can see on slide nine. We bolster our Can-Am off-road lineup, introducing the four-seat version of our top-of-the-line Mavic R. This extension was highly anticipated as multi-passenger model represent close to 60% of sales in that category. We also introduced our all-new Outlander ATV platform in the high CC segment, representing the first major platform upgrade in that segment in about 15 years. This new platform has been very well received, just like the mid-CC last year. As for three-wheel vehicles, we've launched the all-new Can-Am Canyon, our most rugged ever in this segment, purpose-built to increase accessibility into the growing adventure terrain market, which has doubled in recent years. The Can-Am Canyon will target three-wheel riders of all skill levels. On the Sea-Doo side, we further built on the FishPro success by introducing the FishPro Apex, the most powerful personal aircraft in that segment, and the Switch Poundtoon Fish Edition, the first ever in that category. These models cater to a very large potential consumer base with over 220 million recreational anglers worldwide. The product launches at our dealer event demonstrate our commitment to innovation and position us to continue gaining market share in the future. Now, let's turn to slide 10 for more detail on our year-round product. Revenue were down 33% to $1 billion, primarily due to reduced shipment. At retail, Can-Am side-by-side was down high single-digit percentage, slightly more than the industry, as we're facing a very strong quarter last year and aggressive promotion from other OEMs this year. However, we continue gaining share in the utility category, driven by the ongoing success of our high-end defender cab. As for ATV, retail was down low single digits in the quarter, in line with the industry. We are still seeing solid traction with our new outlander platform, which delivers market share gain in the mid-CC segment. looking at three-wheel vehicle our retail was down in the high 20 percent slightly lagging the industry we continue to see stronger performance at the high end of our lineup while the riker our entry-level product is affected by the economic pressure on target consumers turning to seasonal product on slide 11 Revenue were down 40% from last year to $542 million. Our retail and personal watercraft declined in the mid-20% due to weak industry trend and reduced market share, as explained a few minutes ago. Entry-level products were more impacted, but we performed well in the high-end category. At this stage, we expect to finish the season with more inventory than planned. The switch was down high 30%, suffering from generally weaker trend in marine, and lapping a strong quarter last year, supported by early introduction momentum. Moving on to slide 12, with power support part, accessories and apparel, and OEM engines. Revenue were down 12% to $258 million due to lower sales volume. P&A sales continued to benefit from our growing fleet, especially in ORV, offset by weaker demand for snow-related products and lower accessory sales due to softer retail. Turning to marine. Revenue were down 54% to $57 million due reflecting lower boat shipment volume. Looking at retail sales, Allumacraft was up about 40%, while Manitou was up high 20%, as we were lapping a low retail volume period. As for Quintrex, retail was down mid-single digit, in line with the industry. With that, I turn the call over to Sébastien.