BRP(DOOO) - 2020 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue increased by 15% to $6.1 billion, primarily driven by strong growth in Year-Round products [8][21] - Normalized EBITDA rose by 22% to $804 million, resulting in a normalized earnings per share of $3.83, a solid growth of 24% over the previous year [8][21] - Gross profit margin for Q4 ended at 23.7%, an increase of 150 basis points from the previous year [20] Business Line Data and Key Metrics Changes - Year-Round product revenues increased by 18%, driven by higher volumes of side-by-side vehicles [12] - Seasonal product revenue decreased by 6%, primarily due to lower volumes of personal watercraft sold [14] - Marine category revenues rose by 19%, driven by the acquisition of Telwater and higher volumes of outboard engines sold [17] Market Data and Key Metrics Changes - North American powersports retail sales increased by 15%, outperforming the industry which grew in mid single digits [9] - Retail in North America was up 12% overall, and 21% when excluding snowmobiles [10] - Latin America saw a retail increase of 19%, driven by strong side-by-side and personal watercraft sales [10] Company Strategy and Development Direction - The company aims to maintain a diversified manufacturing footprint and product portfolio to adapt to market changes [7] - Focus on innovation and technology to create market-shaping products, as evidenced by the introduction of a factory-built two-stroke turbocharged engine [15][16] - The company is following a "buy, build, transform" strategy in the Marine category, indicating a long-term growth approach [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertainty due to COVID-19 but noted that the direct impact on business has been limited so far [6][26] - The company will not issue full-year guidance for fiscal year '21 due to the fluid situation [26] - Management is proactively implementing measures to protect financial flexibility and is monitoring the situation closely [18][27] Other Important Information - Free cash flow for the fiscal year ended at $225 million, with capital expenditures below guidance at $331 million [21] - The company has drawn the full amount on its $700 million revolver facility to ensure liquidity [66] Q&A Session Summary Question: Dealer inventory trends and flexibility on orders - Management indicated that dealer orders remain firm in North America, with no cancellations observed yet, but acknowledged potential future challenges due to dealer closures [33][34] Question: Production adjustments and stress testing scenarios - Management stated that while all manufacturing sites are operational, some may reduce shifts or temporarily close based on demand [35] Question: Financial relief for dealers - Management noted that dealers are in a better financial position compared to the 2008/2009 crisis, with only 4% considering closure [39] Question: CapEx flexibility - Management indicated that CapEx could be reduced from over $400 million to potentially low $200 million, focusing on essential projects [43] Question: Retail demand impact from competitors - Management reported no slowdown in retail demand despite increased competition, with strong retail performance continuing [70]