BRP Inc.

Good morning, ladies and gentlemen, and welcome to BRP Inc. Fiscal Year 25 Third Quarter Results Conference Call. For participants who use the phone, 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, Mr. Deschaines.

Thank you, Sylvie. Good morning, and welcome to BRP's Conference Call for the Third Quarter of Fiscal Year 25. Joining me this morning are José Bojali, 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. Additionally, know that following the announcement of the initiation of the process for the sale of our marine businesses, these businesses are now presented as discontinued operations. Therefore, all periods presented in these relays reflect continuing operation only unless otherwise noted. Also know that you can find today's 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. The third quarter was marked by disciplined execution of our plan, which allow us to deliver results above our expectation, driven by the timing of snowmobile shipment and tight management of operating expenses. Our retail performance has anticipated, reflecting a challenging market dynamic due to soft industry trends and high level of promotional activity on non-current units from other OEMs. We have remained focused on reducing network inventory and we are pleased with the solid progress made so far. Based on retail trends, we are on track to deliver on our objective for the year. Before going further, I want to say a few words on our decision to sell our marine businesses. After careful consideration and given the current dynamic of both the marine and para-sport industry, we have decided to double down on our core para-sport activities. We aim to focus our effort and investment toward this business to capitalize on growth opportunity and continue to position BRP for long-term success. Consequently, we initiated the process for the sales of our marine businesses, namely Allumacraf, Manitou and Tellwater. We continue operating in the normal course of business, but as Philippe mentioned, we are now reporting our results on a continuing operation basis and our guidance reflect this new reporting structure. You will understand that since the sales process is ongoing, we cannot comment further on today's call. Now, let's turn to slide five for key financial highlight. Revenue reached $2 billion, normalized EBITDA was $264 million, and normalized EPS was $1.16, all above expectation. One of the key highlights of the quarter was the progress made on our network inventory reduction plan, as you can see on slide six. This plan was one of our priorities this year to protect our dealer value proposition. We have made significant strides toward our 15 to 20% reduction objective by the end of this fiscal year. Inventory is down 10% so far, given the timing of snowmobile shipment this year. More importantly, in ORV, it is down 22%, achieving our objective one quarter ahead of plan. We have also seen noticeable improvement on three-wheel vehicle, personal watercraft and switch pontoons. This put us in a favorable position to capture market opportunity when the industry rebound and to foster long-term profitable growth. Turning to slide seven for an update on the global power sport market. The third quarter was consistent with trend observed since the beginning of the year. In North America, our power sport retail was down 11%, in line with expectation, with Canada continuing to outperform the U.S. market. From an international perspective, EME remained generally under pressure, with our retail down 19%. Latin America continued to grow at a rapid pace, with our retail up 21%, driven by a strong performance in both ORV and personal watercraft. And, Asia-Pacific saw mixed performance depending on the country with the retail flat on average. Overall, these counter-seasonal markets have a better start to the summer season than expected. Turning to slide 8 for a look at North American retail performance by product lines. As expected, we experienced a decline in ORV as limited availability of non-current units resulted in market share losses and a soft start to the snowmobile season, which is typical after a year with unfavorable snow conditions. Meanwhile, personal watercraft had a better end of season than anticipated. Let's turn to slide 9 to circle back to the ORV market dynamic. As you can see, about two-thirds of side-by-side vehicles and close to 90% of the ETV industry units retail this quarter was non-current. This dynamic is the result of intense promotional activity by other OEMs who had higher level of non-current units. In our case, we had limited non-current availability, which resulted in short-term market share loss. However, we gained share in the more profitable current unit, driven by our newly introduced product and the overall strength of our lineup. We expect this dynamic to persist at least through the fourth quarter, but our strong performance with current units gave us confidence that we will regain market share when the inventory position of other OEMs normalizes. Now let's turn to slide 10 for a look at the launch of our Canon electric motorcycle lineup. The team has been busy raising awareness with consumers and the media, preparing the dealer network for the official start of the 2025 retail season, and showcasing the product in key events such as ICMA, the largest motorcycle trade show in the world. I attended the show, and I was pleased to notice the excitement for technology and innovative design, as well as the fit and finish of our Can-Am Pulse and Origin motorcycle. The launch is well underway. We are approaching our targeted number of dealers globally. Production is ramping up in December, and shipment will start at the beginning of fiscal 26th. We look forward to our first season in the electric motorcycle industry. Now let's turn to slide 11 for a more detailed look at year-round products. Revenues were down 12% to $1 billion, primarily reflecting redo shipment. At retail, Can-Am side-by-side was down mid-single digit, slightly lower than the industry due to the non-current dynamic. However, we continue gaining share in the utility segment, led by the ongoing success of our high-end defender cabs models. As for ATV, retail was also down mid-single digits. We have gained about 4% point of market share so far this year in the mid-CC segment, driven by the introduction of our new Outlander platform. As a reminder, we have also introduced this platform in the high CC segment in August. Looking at three-wheel vehicle, Can-Am completed its 2024 season in October with retail down high 10%, outpacing the industry, which was down about 20%. While the season was more challenging than initially expected, we are pleased with continued market share gain that solidified our position as the industry leader. Turning to seasonal product on slide 12, revenue were down 29% to $616 million, primarily reflecting lower shipments. In snowmobile, we proactively reduce production level given higher inventory following last winter unfavorable snow condition. Our retail is performing in line with the industry early in the season despite lower level of non-current inventory compared to our peers. We are confident in our ability to outperform the market given our innovative lineup as well as our loyal and passionate customer base. As for PWC, we ended the season with retail down in the high 20% range, lagging the industry as our competitor returned to normal production levels. Despite this situation, our retail was better than anticipated at the end of the season, which we concluded with the number one position in the industry and a market share above pre-COVID levels. However, since our retail performance for the whole season was below initial expectation, we ended with more inventory than planned, and we will reduce shipment for the upcoming season. As for the silo switch, we ended the season with retail down mid-40%. as we were lapping the strong success of our first full season last year and facing a soft pontoon industry this year. We're looking forward for a more normal season 25 for Switch. Moving on to slide 13 with power support, parts, accessories and apparel and OEM engine. Revenue were down 6% to $303 million, primarily due to lower shipment of snowmobile P&A, given higher level of inventory in the network after last season. Our ORV parts business continued to increase, driven by growing vehicle fleet, while accessory sales have been softer in line with unit retail. With that, I turn the call over to Sébastien.