BRP(US:DOOO)2023-03-23 19:15Financial Data and Key Metrics Changes - The company generated record normalized EBITDA of $528 million for the quarter, representing a margin of 17.2% [3] - Normalized net income reached $309 million, resulting in a normalized earnings per share (EPS) of $3.85 for the quarter, ahead of expectations [3] - The company ended the year with over $200 million in cash and a healthy net leverage ratio of 1.5 times [3] Business Line Data and Key Metrics Changes - Retail sales in Q4 were significantly up, with snowmobile bookings tracking to pre-COVID numbers and website traffic above pre-COVID levels [4][5] - The used market has slowed down, with dealers maintaining high pricing on used units, but retail sales for used units have decreased [6] - The company has doubled its production capacity for side-by-side vehicles, with Juárez 3 Phase 1 and Phase 2 increasing capacity by 60% and 50% respectively [22][23] Market Data and Key Metrics Changes - The North American powersports industry was down low-single digits in 2022, with expectations for stable industry growth in 2023 [36] - The company expects the industry to remain flat year-over-year, which would represent a decline of low-single digits from pre-COVID levels [120] - New entrants in the market are reportedly up 40% compared to pre-COVID levels, with a significant portion of these customers indicating they intend to stay in the industry [38] Company Strategy and Development Direction - The company plans to continue investing in innovation and R&D to gain market share in the marine and powersport industries, particularly in side-by-side vehicles [17] - The focus will shift back to execution and efficiency as the supply chain stabilizes [17] - The company aims to maintain a strong normalized EBITDA margin of at least 17% in the coming years, supported by structural improvements and a richer product mix [113][116] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth despite mixed signals in the industry, citing low unemployment rates and good access to credit [7] - The company anticipates solid quarters throughout the year, with expectations for revenue growth of 9% to 12% and normalized EBITDA growth of 9% to 13% [105][124] - Management noted that while the macroeconomic environment poses challenges, the company is well-positioned due to its diversified product lines and improved cost structure [68] Other Important Information - The company plans to allocate between $750 million to $800 million to capital expenditures, focusing on growth projects with attractive expected returns [127] - A dividend increase of 12.5% has been announced, and the company plans to be active in share buybacks [128] Q&A Session Summary Question: Insights on consumer demand and market dynamics - Management noted that retail sales were up significantly, with strong snowmobile bookings and website traffic above pre-COVID levels [4][5] - The used market has slowed, but high pricing is being maintained by dealers [6] Question: Competitors' sales programs and market share - Sales programs are not as aggressive as pre-COVID but are more than last year, with no significant new programs from newer entrants [18][20] Question: Capacity and production updates - The company has doubled its capacity for side-by-side vehicles and is currently running at 80% capacity due to supply chain constraints [24][22] Question: Market share protection and competition - Management expressed confidence in protecting market share due to strong product offerings and dealer momentum [27][28] Question: Industry growth expectations - The company expects a flat industry in 2023, with confidence in maintaining market share and revenue growth [36][43] Question: Working capital and cash flow - The company anticipates a cash benefit of over $400 million from better management of working capital [71] Question: Margin expectations and promotional activities - Management expects to hold onto at least 100 basis points of sales program savings despite some promotional activities [80] Question: Inventory levels and channel fill opportunities - The company is currently about 20% below pre-COVID inventory levels for ATVs and expects to fill the pipeline by the end of Q1 [86][88]