BRP(US:DOOO)2024-09-06 16:39Financial Data and Key Metrics Changes - Revenue for Q2 2025 reached $1.8 billion, with normalized EBITDA at $199 million and normalized EPS at $0.61, generally in line with expectations [4][16] - Network inventory was reduced by 13% year-to-date, progressing towards a target reduction of 15% to 20% by the end of fiscal 2025 [4][18] - Gross profit was $377 million, representing a margin of 20.4%, down from the previous year due to lower production volumes and higher sales programs [16] Business Line Data and Key Metrics Changes - North American Powersports sales declined by 18% compared to a strong Q2 last year, reflecting weaker consumer demand [4][6] - Retail performance was down 10% across North America, EMEA, and Asia Pacific, while Latin America saw an 18% increase driven by strong sales in Mexico and Brazil [6][11] - Year-round product revenue decreased by 33% to $1 billion, primarily due to reduced shipments, with Can-Am side-by-side sales down in the high single digits [11][13] Market Data and Key Metrics Changes - The overall retail market in North America is expected to decline mid to high single digits for ORV, low to mid-teens for snowmobiles, and slightly above 20% for watercraft and three-wheel vehicles [23][27] - The company gained market share in the ORV segment, with record retail performance up 8% in a flat industry, and a 2-point increase in side-by-side vehicle market share [7][19] Company Strategy and Development Direction - The company is focused on reducing network inventory to support dealers amid a challenging economic environment and high interest rates [3][18] - Recent product launches, including the Can-Am Pulse and Origin electric motorcycles, signify a strategic re-entry into the two-wheel market, aiming to become a global leader in this space [8][10] - The company plans to continue investing in R&D and innovation to maintain dealer relationships and brand value [21][34] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the macroeconomic pressures affecting consumer demand and the need for cautious planning for the second half of the year [3][19] - The company expects a sequential improvement in Q3 for revenue, normalized EBITDA, and normalized EPS, despite the overall challenging environment [20][21] - Management remains optimistic about long-term growth potential, emphasizing the importance of supporting dealers and maintaining a strong product lineup [21][41] Other Important Information - The company has adjusted its guidance for the year, expecting revenues between $7.8 billion and $8 billion, normalized EBITDA between $890 million and $940 million, and normalized EPS between $275 million and $325 million [19][20] - The promotional environment remains high, with expectations for continued promotional activities into the next year [38][62] Q&A Session Summary Question: How does the company know it has cut enough inventory? - Management indicated that they are monitoring retail trends and adjusting their approach based on observed declines in consumer demand [23][24] Question: What are the revised expectations for industry sales in North America? - The company expects ORV sales to decline mid to high single digits, snowmobiles down low to mid-teens, and watercraft and three-wheel vehicles down slightly above 20% [27][29] Question: What is the company's outlook for fiscal year 2026? - Management stated it is too early to provide specific guidance for fiscal year 2026 due to ongoing macroeconomic uncertainties [59][60] Question: How does the company plan to manage operating expenses moving forward? - The company plans to maintain relatively flat operating expenses while focusing on cost improvement initiatives and efficiency [63][65]