Release Date: December 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- BRP Inc (DOOO, Financial) delivered results above expectations, driven by the timing of snowmobile shipments and tight management of operating expenses.
- The company made significant progress in reducing network inventory, achieving a 22% reduction in ORV inventory, one quarter ahead of plan.
- BRP Inc (DOOO) reported strong performance in Latin America with retail up 21%, driven by ORV and personal watercraft.
- The launch of the Can-Am electric motorcycle lineup is well underway, with production ramping up and shipments starting at the beginning of fiscal '26.
- BRP Inc (DOOO) reaffirmed its guidance for the year, maintaining a positive outlook despite challenging market dynamics.
Negative Points
- BRP Inc (DOOO) experienced a decline in North American powersports retail by 11%, with EMEA retail down 19%.
- The company faced a challenging market dynamic due to high levels of promotional activity on noncurrent units from other OEMs.
- Revenue was down 18% to $2 billion, primarily due to lower shipments and higher sales programs.
- The company ended the season with more inventory than planned for personal watercraft, leading to a reduction in shipments for the upcoming season.
- BRP Inc (DOOO) anticipates continued market share loss in ORV due to limited noncurrent availability, impacting short-term performance.
Q & A Highlights
Q: Can you provide any directional perspectives on your three powersports segments as we look ahead to fiscal '26?
A: Jose Boisjoli, CEO: We are planning for a flattish industry overall with current market dynamics. We are well-positioned with our product line, especially in the off-road business, despite losing some market share due to less noncurrent inventory compared to competitors. We expect good retail performance in the snowmobile season and plan to rebalance watercraft inventory next summer. The parts and accessory business remains resilient.
Q: Given the renewal of your NCIB, how active might you be on the return of capital front?
A: Sebastien Martel, CFO: Historically, we've been active in buybacks, but we'll want to see how trends develop, especially with the tariff situation, before deciding on buyback activity. We prioritize investing in the business while managing the balance sheet diligently.
Q: How do you view the potential impact of tariffs and what mitigating actions might you take?
A: Jose Boisjoli, CEO: We are closely monitoring the situation and have a history of managing through trade and tariff requirements. We have optimized our manufacturing footprint and supply chain to be efficient and meet customer demand. We will adapt to any changes in the geopolitical landscape as needed.
Q: What is the outlook for dealer sentiment and inventory management?
A: Jose Boisjoli, CEO: Dealers recognize our efforts to reduce inventory and appreciate our approach. We need to deliver on retail for snowmobiles and watercraft. Dealers are in good health, well-capitalized, and we support them with inventory management and floor plan financing.
Q: Can you discuss the launch of the electric motorcycle and its expected impact?
A: Jose Boisjoli, CEO: We are pleased with the reception of our electric motorcycle, despite the timing. We are on track with dealer sign-ups and production. The first year will have limited production, with plans to grow from there. Sebastien Martel, CFO, added that the incremental headwind could be $20 million to $30 million next year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
