BRP(US:DOOO)2024-03-28 18:14Financial Data and Key Metrics Changes - Revenue for fiscal year '24 increased by 3% to reach $10.4 billion, a record high for the company [19] - Normalized EBITDA remained stable at $1.7 billion, while normalized EPS decreased by 8% to $11.11 [19] - The company generated a record free cash flow of over $1 billion for the year [19] - For fiscal '25, the company expects revenues to decline to between $9.1 billion and $9.5 billion, with normalized EBITDA projected between $1.37 billion and $1.47 billion [10][11] Business Line Data and Key Metrics Changes - North American power sports sales increased by 8%, outperforming the industry growth of about 1% [20] - Retail performance in the fourth quarter showed a decline of 10% in North American power sports, primarily due to late shipments and unfavorable winter conditions [22] - Seasonal products revenue decreased by 28% to approximately $950 million, driven by lower volumes sold [28] - Marine revenue fell by 32% to $84 million due to lower boat shipments as dealers were cautious about inventory [33] Market Data and Key Metrics Changes - Retail in EMEA and Asia Pacific markets saw declines of 5% and 25% respectively, while Latin America experienced strong growth [24] - The company’s retail performance in North America was reported to be 35% higher than pre-COVID levels [21] - Snowmobile retail was impacted by unfavorable winter conditions, leading to a decline in the high teens percentage range [30] Company Strategy and Development Direction - The company plans to adopt a more cautious stance in planning for fiscal '25, reducing shipments to protect dealer value [10] - A focus on innovation and product introductions is expected to drive long-term success, with new electric models being launched [42][43] - The company aims to reduce network inventory levels by 10% to 15% to support dealer profitability [39] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a softer consumer demand in certain international markets and a weaker industry trend in marine [9] - The company remains confident in its future, citing a strong product pipeline and the ability to adapt to market conditions [43] - Management expects fiscal '25 to be a transition year, with a focus on managing inventory and maintaining market share [13][41] Other Important Information - The company announced a 17% increase in dividends for fiscal '25, reflecting strong cash generation [12] - The company’s dealers are facing elevated inventory financing costs due to higher unit values and interest rates [39] Q&A Session Summary Question: Medium-term outlook for BRP and the industry - Management discussed the current year sales and earnings compared to potential new run rates, indicating a cautious but optimistic view for calendar '25 [47] Question: Revenue decline in guidance - The revenue decline was primarily attributed to snowmobiles, with management providing context on the size of the snowmobile business [49] Question: Capital allocation and free cash flow - Management confirmed expectations of generating around $750 million in free cash flow and discussed capital deployment strategies [73] Question: Pricing and competitive environment - Management noted that while inflation is impacting costs, they are adjusting pricing strategies to remain competitive [76] Question: Financial health of the dealer network - The financial health of the dealer network is reported to be good, despite higher interest costs [132]