BRP(US:DOOO)2020-11-25 20:39Financial Data and Key Metrics Changes - Revenue for Q3 FY 2021 reached $1.7 billion, up 2% year-over-year, with a gross profit margin of 29.1%, representing a 220 basis point increase [7][29] - Normalized EBITDA increased by 30% to $349 million, resulting in a normalized EPS of $2.13, up 41% from the previous year [8][30] - Free cash flow generation was strong at $228 million, with cash on the balance sheet totaling $1.3 billion [30] Business Line Data and Key Metrics Changes - Year-Round Products revenue increased by 11%, driven by a richer product mix, while Seasonal Products revenue decreased by 8% due to changes in production schedules [18][22] - Parts, Accessories, and Apparel (PA&A) revenue rose by 15%, attributed to strong retail sales and increased usage [26] - Marine revenue declined by 25%, primarily due to the wind down of the Evinrude outboard engine line, although retail for other brands showed mid-30% growth [27] Market Data and Key Metrics Changes - North American powersports retail was up 16% year-over-year, with a 29% increase when excluding Personal Watercraft [9][12] - Retail growth in Latin America was 16% and 22% in Asia-Pacific, while EMEA experienced a 9% decline due to inventory shortages [9][10] - The North American three-wheeled vehicle market saw retail growth of low 20%, with significant participation from new entrants [20][21] Company Strategy and Development Direction - The company is focused on capitalizing on strong consumer interest in powersports, with plans to increase production capacity and introduce new products [14][15] - A new side-by-side manufacturing facility in Mexico is under construction, expected to enhance production capacity by 50% [19] - The company aims to maintain a balance between new and existing customers, leveraging innovative product introductions to gain market share [42][74] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about sustained consumer interest and the ability to manage supply chain challenges effectively [13][39] - The company has increased its year-end guidance, expecting revenue to decline by 1% to 5% and normalized EPS to grow by 31% to 37% [8][36] - Management acknowledged potential risks from COVID-19 but remains confident in the company's ability to navigate these challenges [39] Other Important Information - The company has reinstated its quarterly dividend and launched a normal course issuer bid, reflecting confidence in its financial position [40] - The company reported a significant increase in new entrants to the powersport market, with 34% of buyers being new to the industry [12][73] Q&A Session Summary Question: Retail growth trends in recent months - Management noted strong retail growth in August, September, and October, with October showing a slight acceleration despite being a transition month [47] Question: Cost structure and future expenses - Management indicated that while cost-saving measures were beneficial, expenses are expected to rise in Q4 due to strategic investments [52] Question: Inventory management and profitability - Management confirmed that low inventory levels are benefiting dealers and the company, with plans to manage inventory levels carefully moving forward [56] Question: Market share gains in side-by-side vehicles - Management attributed market share gains to pre-COVID momentum and effective production management during the quarter [60] Question: New customer demographics and retention - Management highlighted that new entrants are diverse and include many professionals, with a focus on converting them into loyal customers [90][91]