BRP Inc.

Good morning, ladies and gentlemen. Welcome to the BRP Inc's FY26 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. Philip Deschain. Please go ahead, Mr. Deschain.

Thank you, Joelle. Good morning and welcome to BRP's conference call for the second quarter of fiscal year 26. Joining me this morning are José Beaujolais, 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 result 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 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 Jose.

Thank you, Philippe. Good morning, everyone, and thank you for joining us. We've delivered better than expected results in our second quarter in an operating environment that remained challenging. At retail in North America, we have gained further market share with our current Can-Am models, but as expected, we've lost market share in the non-current due to our low inventory. With a 20% year-over-year reduction in network inventory, we have reached proper level across all our product line except snowmobile. From this healthier base, we are well positioned to benefit from our newly introduced product to gain additional market share. During the quarter, we also announced a definitive agreement for the sales of Manitou, which is expected to close in the coming weeks. Now let's turn to slide four for key financial highlights. We ended the quarter with revenue of $1.9 billion, normalized EBITDA of $213 million, normalized EPS of $0.92, and solid free cash flow of almost $100 million. we are pleased with our result considering that Q2 is usually a transition quarter as we start introducing product for new model year. Looking at slide five, our North American power support retail decrease 11%. Canada continue to perform better than the US with a 4% growth given by ORV as Can-Am side by side had a record quarter. This growth was offset by a 15% decline in the U.S. In international market, Latin America continued to stand out through rapid and sustained growth. Retail was up 22%, led by a solid performance in ORV. In Asia Pacific, our retail grew 5%, representing a first increase in about two years, fueled by momentum in China. Meanwhile, demand remained generally soft in EMEA, with retail down 13% in line with the industry. Overall, we are encouraged to see that global industry trends have slightly improved from previous quarters. Turning to slide 6 for a look at our retail performance by product line in North America. Our passport retail declined 11%. As in previous quarter, Can-Am ORV market share was affected by a leaner level of non-current unit and high promotional activity by others OEM. In three-wheel vehicle, personal watercraft and switch pontoon, retail was weak early in the quarter due to soft trend and unfavorable weather, but condition improved in July and early August. Turning to slide seven. for highlights from Club BRP held in Boston earlier this month. The event was a success with close to 4,100 participants in person and virtual. We introduced several new models and upgraded across our lineups, including many industry firsts. Once again, we stayed true to our commitment of pushing technology and innovation to wow consumers. The highlight was the launch of the new generation of the Can-Am Defender. This vehicle received a ground-up overhaul, further solidifying its position as the most capable, versatile and reliable utility side-by-side on the market. The new Defender remained best-in-class in terms of technology, towing and cargo capacity, while also offering riders the largest cab in its category. The Defender was already the best product out there, even with its original 10-year-old platform. Now, with this new generation outfitted with the most advanced technology, we are setting an entirely new standard in the industry. We are in excellent position to continue gaining further market share in that segment that represents over two-thirds of the side-by-side industry. Reactions to the new Defender were extremely positive. Dealers' sentiment for the product was very good, while media who had the chance to test it were impressed and issued very positive reviews. I encourage you to read them. But that's not all. Let's turn to slide eight to look at some of other product news. We expanded our electric vehicle offering by launching the Outlander Electric, featuring industry-leading towing capacity, impressive off-road performance, and a very quiet riding experience. It uses our e-power unit, which also propels our electric motorcycle and snowmobiles. This is another demonstration of how we leverage our modular design approach to optimize development costs across many product lines. In addition, we further surprised our dealers by introducing multiple model upgrades and enhancements. We've launched the Outlander MAX66, designed to be the hardest-working ATV in the lineup under extreme conditions. We added rock-crawling capabilities to the Mavic R lineup with the XRC package and updated our Mavic X3. In three-wheel, we continue the evolution of our lineup with new modern coloration. As far as Sea-Doo, we introduce new connectivity features and improvement to the entire lineup. We also ramp up the switch pontoon experience with a highly anticipated 300hp engine on some models. We have also announced the repricing of some underperforming model, which was very well received by our dealers. As you see, We are the OEM who introduced the most product news for model year 26. Now, let's turn to slide 9 for a more detailed look at year-round product. Revenue were up 13% to $1.1 billion, driven by higher ORV shipments following last year's inventory reduction plan. At retail, side-by-side was down mid-single digits. we underperformed due to high level of discounting on non-current units by other OEMs. We continued to outperform in current units, ending the 25th season with more than three points of market share gain, driven by our Maverick R Max. In ETV, retail was down low single digit in the quarter, in line with the industry. That said, we gained over three points of market share in current units for the season, fueled by our new outlander platform. As for three-wheel, retail was down mid-20%, as entry-level consumers are struggling to get approved for financing. A few words on our electric motorcycle. Sorry. The ramp up of our retail sales is not as expected in the context of a slowdown in global EV adoption. However, it's still early. We are proud to have set the bar high and put our electric motorcycle at the forefront. The excitement around these new EV has been felt in North America and Europe as a result of our efforts to generate media and consumer awareness. In addition, To further build the demand and drive traffic in dealerships, we have announced price reduction in response to market feedback. We aim to leverage our past investment to grow this industry, make our motorcycle accessible to more riders, and position ourselves as leaders. Turning to seasonal product on slide 10. Revenue are down 13% to $470 million mainly due to a planned reduction of personal watercraft shipment. Our inventory is trending in line with pre-COVID level, which is creating a more favourable environment for the arrival of our model year 26. Looking at retail, trends remain weak for marine products in North America. Personal watercraft sales were down 15%, slightly lagging the industry. Switched pontoon retail was down mid-20% as the industry is still going through a correction period. Sea-Doo had a better performance in international market, with sales holding steady in Asia-Pacific and growing low single digit in Latin America. Moving to slide 11 with part accessories and apparel in OEM engine. Revenue were up 7% to $305 million, as dealers replenish their parts and accessories inventories. Finally, we continue to bring new parts and accessories through our LINQ system for customization, which will further stimulate this business. With that, I turn the call over to Sébastien.