Good morning, ladies and gentlemen, welcome to the BRP Inc.'s FY 2024 first quarter results conference call. For participants who use the telephone line, it is recommended to turn off the sound on your device. I would now like to turn the meeting over to Mr. Philippe Deschênes. Please go ahead, Mr. Deschênes. Thank you. Good morning, welcome to BRP's conference call for the first quarter of fiscal year 2024. Joining me this morning are José Boisjoli, President and Chief Executive Officer, and Sébastien Martel, Chief Financial Officer. Before we move to the prepared remarks, I would like to remind everyone that certain forward-looking statements will be made during the call and that the actual results could differ from those implied in these statements. The forward-looking information is based on certain assumptions and is subject to risks and uncertainties, I invite you to consult BRP's MD&A for a complete list of these. Also, during the call, reference will be made to supporting slides, and you can find the presentation on our website at brp.com under the Investor Relations section. With that, I'll turn the call over to José. Thank you, Philippe. Good morning, everyone, thank you for joining us. I am pleased to report that we are off to a good start for fiscal 2024 as our solid production portfolio continued to drive strong demand globally. While the quarter started more slowly at the retail level due to the late arriving spring season, the momentum picked up in April. This allow us to deliver another solid quarter at retail and gain further market share. From a financial standpoint, we continue our strong execution and delivered solid results that put us on pace to meet our guidance for the year. Let's turn to slide 4 for key financial highlights. Revenue reached CAD 2.4 billion, up 34% from the previous year, driven by higher volume and pricing, as well as a more favorable mix. Normalized EBITDA grew 39% to $377 million. Normalized EPS increased 42% to reach $2.38. Turning to slide 5 for a look at our Q1 retail performance. The trend and the wide range of our powersport offering continued to drive strong results. In North America, our retail sales were up 2% for the quarter, or up 8% excluding snowmobiles. Remember that last year, our snowmobile shipments were made later than usual in the season, which led to usually high retail in the first quarter of fiscal year 2023. This compared to an industry that was down low single-digit. Our performance was also solid in other geographical markets, with retail up 14% in EMEA and 25% in Latin America. In Asia Pacific, our retail was down roughly in line with the industry. As shown on slide 6, our retail progressively improved as we moved through the quarter. Retail declined in February and was relatively flat in March due to poor weather, as well as different timing of shipments for certain products, which make year-over-year comparison difficult, like I point out for snowmobile. The momentum picked up significantly in April as weather improved and consumer reacted positively to certain retail incentives. The trends continue in May. Despite ongoing macro concerns, many indicators are pointing to healthy consumer interest for our industry and more particularly for our product, such as continued strong demand for our lineup. For instance, we've just closed our snowmobile booking for the upcoming season, and pre-sold units to consumer ended up about 25 above our target. The financial position of consumer remained healthy, with lending applications continuing to show FICO score above historical level. The influx of new entrants remained high at 28%, web searches for different product categories remain higher than pre-COVID level. Let's turn to slide 7 for year-round product. Revenues were up 42%, reaching CAD 1.3 billion in Q1, driven by strong shipment of side-by-side and three-wheel vehicle, as well as favorable product mix and pricing. At retail, Can-Am side-by-side had its strongest Q1 ever, with the Commander, Defender, and Maverick X3 all gaining share in their respective markets. Our retail was up low single digits, the momentum improved significantly through the period. April retail was our third strongest month ever, only trailing the first two months of COVID. As for ATV, our retail was down low teen percent, limited by the ramp-up in production of the new mid-CC Outlander platform. This new platform has been very well received by our dealers and the media, which position us well to continue our momentum as the OEM with the highest market share gain in the industry so far this season. Looking at three-wheel vehicle, Can-Am retail was up low single digit. Early in the quarter, retail was impacted by the weather and by a product recall. Picked up nicely in April with high teen growth. The momentum continued in May. All in all, we are pleased with our performance in the three-wheel category, and we believe that we are well positioned heading into the most important retail period. Turning to seasonal product on slide 8. Seasonal product revenue were up 69% from last year, reaching CAD 692 million, driven by higher volume of Sea-Doo personal watercraft and pontoon. Looking at our retail performance. In snowmobile, we've closed the 2023 season in North America on March 31st, with retail down low single-digit, with a 1 percentage point market share gain, which further increased our historical record level. We also ended the season with the number 1 position in each segment in which we compete, including the youth category that we've just entered last season. In Scandinavia, our market share also improved, gaining 4 percentage point by the end of the season. As I mentioned, we recently closed our spring customer orders for the season 2024 model, presale level in North America came in about 25% above target. These solid bookings significantly improve our visibility on expected volume and sell-through for our snowmobile business. For this season, we have increased our seasonal product revenue guidance for the year, as Sébastien will explain in a few minutes. Looking at Sea-Doo product. While still early in the season, our retail for personal watercraft is performing very well, up in the mid-30% for the quarter, and the solid trend continue in May. We are also seeing strong momentum in international market, which retail up over 40% in Latin America and over 50% in EMEA. As for our Sea-Doo Pontoon, our retail was up significantly, even if it was a very small base, as we're ramping up the initial production during Q1 last year. To give you a better understanding of our momentum with this product, in less than one year, the Sea-Doo Switch has already reached the number two position in the U.S. pontoon industry for the last three months, ended in March. This is a superb example of how we can disrupt categories by developing market-shaping product. As you can see, both our Sea-Doo personal craft and pontoon are performing well, heading into the peak retail season. Moving on to slide 9, with Powersport parts, accessories, and apparel, and OEM engines. Revenue were down 17% to $285 million. The revenue decline is primarily due to lower repeat orders during the season and lower sales volume this year due to timing as late snowmobile unit delivery last season had pushed related PNA sales to Q1 2023. We still have good momentum with our PNA business as we continue to see positive trends at the retail level, notably for our Sea-Doo personal watercraft and pontoon business, for which we have significantly developed the accessory offering in recent years. Moving to Marine on slide 15. The revenue lag for Marine continued to be tied to the ramp-up of the new Manitou platform. While we were planning to be further along in our production ramp-up, we have been dealing with the supplier issue for an aesthetic component that did not meet our standards. These resulted in a slight revenue decline of 3% compared to last year. On a positive note, the situation has improved and shipments have increased throughout May, thereby increasing product availability heading into the peak retail boating season. Looking at retail sales. From an industry perspective, the boat category seems to have suffered the most from the late spring, especially in the Great Lakes region, which is a key market for Alumacraft and Manitou. Our retail performance was improved by the supply issue at Manitou, as well from lapping months during which we were still retailing Alumacraft welded boats. As for Quintrex, retail was down in line with the industry. We are not pleased with the marine result this quarter. I would like to remind you that we are still on track to deliver a strong year. With that, I turn the call over to Sébastien. Thank you, José, and good morning, everyone. The first quarter essentially played out as expected, as we delivered solid financial results driven by the continued strong demand for our products, which we were able to meet by leveraging our production capacity in a more favorable supply chain environment. Looking at the numbers, our revenues for the quarter were up 34% versus last year, ending at $2.4 billion. We generated $624 million of gross profit, representing a margin of 25.7%, up 60 basis points from last year, driven by the more efficient use of our assets resulting from volume increase, a favorable impact coming from pricing net of inflation, and lower turbulence costs as we operated in a more normal production environment. Those benefits were partly offset by inefficiencies on the marine side due to the longer production ramp-up of the new boats, higher sales programs, increased interest rate on floor plan financing, unfavorable foreign exchange rate variations. While our overall gross profit margin upside was limited by Marine during the quarter, it is worth noting that our Powersports growth profit margin was very strong at 27.3%, up 160 basis points from last year. Continuing down the PNL, we generated normalized EBITDA for the quarter of CAD 377 million, representing a margin of 15.5%, up 50 basis points from last year's first quarter, despite suffering 110 basis points headwind from FX. Our normalized net income reached CAD 192 million, resulting in a normalized earnings per share of CAD 2.38 for the quarter, up 43% versus last year. We generated CAD 141 million of free cash flow, providing us with the financial flexibility to take advantage of the current weakness in the share price to do buybacks. In fact, we have deployed about CAD 110 million towards share repurchases so far this year, and we expect to continue being active in repurchasing shares as we still have about 2.4 million shares available under our NCIB. Moving to slide 13 for an update of the network inventory situation. As expected, the improved supply chain environment allowed us to better leverage our production capacity and increase our throughput in Q1, further supporting network inventory replenishment. Our network inventory now stands only 4% up from the first quarter of fiscal 2021, a very comfortable level when you consider the significant growth of our business since then, driven by market share gains and the introduction of new product lines. Our mix of inventory is very healthy. The end of the season inventory for snowmobile, while higher than last year, is still below historical levels, putting us in a good position for season 2024. Unit availability is much better than last year for Sea-Doo, PWC, and pontoons, and for three-wheeled vehicles as we head into key summer retail season, which should help support strong retail into Q2. For off-road, while there are some areas of the lineup where we still need to improve unit availability, such as the new ATV platform and some higher-end SSV models, we believe that we are near optimal level in terms of overall network inventory. All in all, with the improvement made in recent months, we are now better positioned to serve our dealers and customers and seize retail opportunities across the product portfolio. Now looking at slide 14 for an update on the guidance for the year. As I already mentioned, the first quarter essentially played out as expected. The demand for our product remains healthy, with retail momentum improving in April and May after a spring season that was late to come. The supply chain environment is more favorable, allowing us to better utilize our production capacity and reduce turbulence costs. The pricing actions we took over the last year are now more than offsetting the inflationary pressures on costs, providing a margin tailwind, and the competitive landscape and promotional environment is trending in line with our expectations. As a result, we are reaffirming our guidance for the year with only slight adjustments to account for the better than anticipated snowmobile bookings and longer than planned production ramp-up for the new Manitou boats. As such, our objective remains to deliver 9%-12% growth in revenues and 9%-13% growth in normalized EBITDA. Going down the PNL, we have adjusted upward our depreciation expense guidance to reflect the impact of FX variations and reviewed downward our share count to account for the buybacks done so far this year, both elements offsetting each other. As such, we are still in line to deliver a strong normalized EPS between CAD 12.25 and CAD 12.75, which would be a record year for BRP and another strong step towards our M25 objective of reaching CAD 13.50 and CAD 14.50 of normalized EPS by fiscal year 2025. We still expect to generate north of CAD 400 million of cash from working capital this year, which should lead to very strong cash flow generation. Zooming in on the 2nd quarter, our plan calls for a normalized EPS that is expected to be flat versus a record Q2 last year, as we expect continued growth in the business to be offset by higher depreciation and financing costs. On that, I'll turn the call over to José. Thank you, Sébastien. I am pleased with how we began fiscal 2024. Our results demonstrate the strength of our diversified portfolio and ability to reinvent product categories. For the remainder of the year, we anticipate demand for our product to remain healthy, and we will continue to focus on executing and optimizing efficiencies to deliver on our guidance. As we have proven many times since becoming a public company 10 years ago, almost to the day, our team's strength, agility, and resilience have allowed BRP to grow significantly and outperform the industry. As shown on slide 16, our revenue more than tripled over that period. Normalized diluted EPS grew eightfold, and our Powersports market share almost doubled. The achievement that make me particularly proud is that our business with dealers quadrupled, and we became the number 1 industry player worldwide. In addition, we have created significant value for shareholders with a 368% share price appreciation. As of the anniversary date, we also distributed $2.7 billion in capital through dividends and share repurchase. In conclusion, our strong fundamentals are positioning us well to deliver another solid year in fiscal year 2024 and to gain further market share in the marine and powersport industries. Moreover, we believe we can sustain our momentum over the mid to long term, given many new products in their early stage of growth, a solid pipeline of product introduction, and constant progress on our journey towards electrifying our product line. As usual, we are hosting our dealer event in August, and you are invited to join us in Atlanta. I thank all our employee for another strong performance this quarter. I also acknowledge the support of our dealers, who made us the leading OEM in the industry. On that note, I turn the call over to the operator for questions. Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the one on your touchtone phone. You will hear a 3-tone prompt acknowledging your request, and your questions will be pulled in the order they are received. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from James Hardiman with Citi. Please go ahead. Hey, good morning. Thanks for taking my call. Coming out of the fourth quarter, you had given us some pretty good context. Maybe I missed it, but how are you thinking about industry growth? I think previously you were talking about a flattish industry. Then I guess within that context, I'm assuming based on everything that you've said, you still think that you will see significant share gains this year. Maybe walk us through any updated thoughts on either of those assumptions. Yeah, obviously, we're happy with how Q1 went, especially the tail end of Q1 and the beginning of the Q2 from a retail perspective. Our assumptions are still the same as when we initially established guidance. The expectation is for a flat industry this year. Obviously, the growth coming from new product introductions, some of which we've done already with the new ATV, some will come in August. Also sustained market share gains, especially on the side-by-side segment and the ATV segment. Overall, the industry and or the retail is trending in line with our expectations. Got it. That's helpful. On the inventory front, pretty flat retail with a few years ago, despite some significant increases in your own retail. How should we think about, is there any remaining replenishment opportunity here, or should wholesale generally track with retail? Another way to ask it, as we think about inventory turns, you know, those seem to have come in pretty meaningfully. Is there any way to think about this from an inventory turns perspective and what the right number is there? Thanks. Yeah, generally, we're happy with the overall level of inventory, especially going into retail, peak retail season for personal watercraft, pontoons, and three wheels. We're super happy with what we have there. We believe that's going to drive good retail in the second quarter. There are a few pockets of opportunities on the ORV side, where inventory is needed. Obviously, the new ATV platform that we just launched and also a few high-end models on side-by-side, where dealers are raising their hand to have more inventory. Generally, as the business grows, we will see the absolute number of dollar value of inventory grow and units grow as well, because coming with higher market share. Obviously, if you compare our wholesale to retail, well, obviously, ASPs are higher as well, than. Benefiting from pricing. You'll see a higher wholesale growth, and you'll see a retail growth in the next nine months. Makes sense. Just to clarify, if I were to think about this in terms of units, from here, the expectation is that wholesale units would be pretty similar to retail units, or is that not a good assumption? Wholesale will be slightly higher than retail as we obviously grow the business. Number of days should remain similar. Got it. You'll see a minor impact, on the top line. Yeah. Positive. Makes sense. Thank you. Thank you very much. Your next question comes from Dan Su with BNP Paribas. Please go ahead. Hey, guys. Thanks for the question. Maybe on the PNA, it was down 17% in the quarter. You mentioned some timing effects, but the guide of 3%-7% growth was maintained. Any other kind of shifts we should think about over the rest of the year, and are there any kind of inflection points, like maybe in third quarter? Yeah, any kind of thoughts on the PNA? Yeah, Q1, PNA down, some of it is driven by timing of shipments of snowmobiles last year. They were shipped much later in the season. That drove higher PNA sale, probably accounts for half of the PNA variation that we saw this quarter, just timing of snowmobile year-over-year. Also, when we look at what the dealers have on hand last year during the COVID period, everyone had a fear of missing out, people ordered more inventory. They wanted to make sure they were not running out. What we are seeing is that the dealers, now that there's a more stable supply, they are rebalancing their DSOs and managing the business with lower inventory. I think Q1 was also impacted by, we'll call it inventory adjustment on the dealer side. Overall, when we look at the overall attachment rates on the PNA, it's good. Obviously, we have exciting product introductions coming later this year that is also gonna be tied to PNA and accessory introductions, which is gonna drive growth for the rest of the year. Okay, thanks. Then I wanted to ask, maybe it's a little more housekeeping, but there was, in the other expense line, there was, FX contract, cost of about CAD 17.3 million. I guess, like, what is that expense? Why not exclude that, or I guess, adjust it out similar to the other kind of FX impacts on the P&L? Well, the euro was more volatile in Q1. That obviously drove some... Unfortunately, it went the wrong way, and so that drove some a loss on foreign exchange. The majority of it is revaluation of balance sheet items, monetary balance sheet items. Then first, for a few weeks, there was a mismatch, which kind of amplified the that volatility. We've obviously made a few adjustments. I'm not expecting that to impact our business as much going forward. Certainly the euro, the strength of the euro in Q1 did have an unfavorable impact on the- Okay. remeasurement of some balance sheet exposures. Right. I guess it's fair to say that's more of a one-time kind of impact. It doesn't mean that it cannot happen going forward, but as I said, we've made a few adjustments to how we look at these exposures, and so I'm not expecting as much volatility going forward, even though the rates would could vary as well. Okay, thank you. Your next question comes from Jaime Katz with Morningstar. Please go ahead. Hi. I hope you can talk a little bit about what you guys are seeing with the holdup in marine parts, and, you know, how you guys have gotten more clarity on what the rest of the year is gonna look like, given the disruptions that have already been seen. Yeah, good morning. First, the marine industry is probably the industry, like I said in my remark, that is the most affected by the late spring. Just to give you some numbers, obviously, as you know, there is not much, the data on marine is not as tight on Powersport, but I give you some numbers. For the first 3 months of the year, the pontoon industry was down 18%. In the Midwest, where is the very, very strong area for Manitou, the marine industry was down 35% in Michigan and Minnesota. In April, was also down 18%. The marine industry is still affected. Aluminum fishing boat, the industry was down for the first three months of the year by 17%, improved in April to 7%, down 7%. Again, Minnesota, Wisconsin, Michigan, worse than the industry. This is the environment that we are in. Our retail, we believe with Alumacraft, that we are, it's a question of timing and seasonality, but we are in good shape. Manitou, obviously, we still have the problem with the supplier for an aesthetic parts. But I have to say now, the supplier is able to follow production, and we have BOs with that missing part in the yard, in Lansing, and we will pick up retrofitting the BO ourselves in May and June. This would stabilize, and it's late into the season, but not too late because the spring affected the retail. Okay. Maybe this is a little nitpicky, but I think in the prepared remarks, you guys had noted that you were on track to achieve the M25 EPS goals. I don't think you guys articulated that you would specifically reach the revenue goals that had been laid out there in the past, and I assume that was just an omission and not just caution on what we're seeing in the environment. Can you clarify that? Thanks. Well, obviously, as we've said in the past, we've always been very focused on growing this business, growing a profitable business, and that's the number one priority. Top line is obviously the driver of that growth. Our plans are still very much in line with the M25. Could there be adjustments in terms of which product line delivers, the revenue target? Absolutely. Overall, we're very much in line with the target. Excellent. Thank you. Your next question comes from Jonathan Goldman with Scotiabank. Please go ahead. Hi, good morning. On one of the slides, you showed your unit growth from February to May. On the May numbers, you know, obviously some significant growth there. Can you provide some color on how much of that is a catch-up from earlier in the year? Also how much may be attributable to industry growth versus share gain for May? Yeah. This is a difficult question. I will try to give you some color. If we look at the Powersport industry overall, our retail for Powersport in April, if you compare to last year, we were up 37%, but if you compare to pre-COVID, 26%. You could say here some maybe catch up. What is interesting, this was April. What is interesting in May? In May, the retail was up 47% versus last year, but 42% versus pre-COVID. There might be some catch up in there, but I don't think it's significant with what we see so far. No, that's very helpful. Thank you for that. The second one I had is on expenses. Looks like SG&A was up 35% year-on-year, which is the same as revenue growth. Can you discuss if there's anything unusual in the quarter, or can you break out how much of that SG&A increase is attributable to growth, investments for growth, or just the business is getting bigger? What other sort of drivers behind that SG&A tick up? Yeah, your latter point in terms of business being better certainly is an element. Obviously, we are investing in technology, and that is an investment and comes with obviously higher dollars. But when I look overall for the year, on an EBITDA margin, the target is to deliver about 17% EBITDA margin, and we'll see an improvement of probably 50 basis points coming from gross margin and a headwind coming from operating expenses of about 50 basis point. Some of that is a greater R&D expense, some of it is a greater marketing expense, and some of it is SG&A as well. Just to clarify, you said 50 basis points tailwind from gross margins and -50 basis points from OpEx, netting out to even? Yep. Perfect. Thanks for taking the question. Thank you. Your next question comes from Robin Farley with UBS. Please go ahead. Great, thanks. I had two questions. One is just a follow-up there on your margin commentary. Just thinking about, you know, your top line scoring at a double-digit rate and just thinking about, you know, whether the supply chain has kind of gotten back to what you would say is normal at this point when we think about margin comps. Just with that double-digit revenue growth, should we be thinking about other things like, as, you know, pontoons grow, if that's a lower margin business than ORV? Like, are there sort of segment mix issues that we should be thinking about with your margin that would be offsetting, you know, the benefit to margin that we'd think from the double-digit revenue growth? Thanks. Hi. Good morning, Robin. Obviously, we're happy with the margin improvement, especially on the powersports side. When I look at the drivers of the gross margin in Q1, last year, we did get a benefit coming from an insurance claim with the Maui Fire. That was last year, a or this year, a headwind of 100 basis points. When I look at volume mix and fixed cost absorption, that's a positive 100. Mix was a bit negative, not that significant to your question. The big, the big tailwind we got this quarter is finally, we're getting ahead of inflation, so all the pricing action we took over the last several years are now more than offsetting the inflation and also turbulence costs, so that's a 400 basis point tailwind. As planned, we have more retail incentives out there. That's a 130 basis point headwind, higher interest rates on the floor plan financing, a slightly higher number of days as well. That's another 100 basis point headwind. Marine was a 70 basis point headwind, and then the other elements impacting margin for about 40 basis points as a headwind is depreciation, FX, and warranty. Overall, bringing us to the 25.7 gross margin of this quarter. Okay, great. Thanks very much. My other question is just on the demand side of things, if you can just help us think a little bit about what's going on. You know, obviously sounds like it certainly improved through the quarter. Any color on sort of higher end versus lower end demand from the consumer or utility versus rec demand? Just kind of any color like that. Thank you. Yeah. First, if we look at the... Obviously, as you know, we are stronger in premium product than in deliver product, but I give you some color on the Spark and the Ryker. On the Spark, to be honest, no change. The Spark need is typically 30% of our watercraft retail in Q1, we compared that to the last five years, basically, this year it's in line with the previous year. Ryker is about 50% of our retail versus the traditional Spyder, it's, again, comparable to what we had in 2022, 2021, 2020. Last year, we were missing. some traditional three-wheel vehicle, I think it's, you cannot compare to last year. For Ryker and for Spark, the mix versus the other product line is stable. If you look now at the industry, you know, in the ATV industry, we're not very strong in the mid-cc and other segment, we stronger and higher. The high CC is stable at 20%, the mid and other are stable at 80%. Side- by- side, there is a change. Side by side, in term of premium, the industry grew from about 35% premium in fiscal year 2020, to 60% so far this year. It's a big change for side by side, going from higher end product. What is helpful, we are basically our side-by-side business, 70% of what we sell is premium. This is the big picture. Look, we don't see big change in watercraft, three-wheel and ATV. Definitely a shift on side-by-side, where the market is going more high-end. Lucky for us, we stronger on that product category. Yeah. Fantastic. Thank you. Thank you. Your next question comes from Fred Wightman with Wolfe Research. Please go ahead. Hey, guys. José, I just wanted to go back to last quarter and sort of entering the fiscal year. You called out a few different things to monitor for the industry. One of them was momentum and used. I'm wondering if you could sort of give an update on that. You had talked about dealers might be carrying some higher cost inventory and what that might do for retail. I'm wondering if that showed up at all, in the spring, sort of X, the weather benefit- Yeah. Timing? Yeah. Obviously, we don't have much data. It's anecdote that we have from the dealers on this, but price are starting to go down on the used, which I think is helping the whole retail situation. Typically, a customer come in, if there is a good trade between his used machine and the new one, then the wheel is moving. I think the dealer were holding to high price for used for long period of time, and now it's starting to be more, I would say, normal. Okay. If we think about strong early snow indications, but if you look at sort of dealers with higher inventory levels, higher floor plan rates, are you seeing an impact on dealer orders? Are people sort of adjusting the size, adjusting the cadence of when they would be ordering sort of products versus what you were seeing a year or two ago because of sort of where floor plan rates are? I mean, we monitor it by days of inventory, and the dealer also are looking at the dollars. On the dollar side, like Sébastien explained, we're selling more premium high-end product. The dollar is going up per unit. The other thing is we've gained significant market share since the COVID situation, and it's normal that we need more inventory to support the continuous retail. Dealer are obviously watching their line of credit. On the other hand, the snowmobile order was better than what we had anticipated. What is very interesting, close to half of our production is already pre-sold to consumers. That is, we feel we're going into the snowmobile season with a very good visibility of what's going on. We take ATV order every month for delivery in the next three months, and so far, dealer, most of the time, are ordering above the recommended order because Can-Am is having a good traction at retail. We all heard about those macroeconomic concern, but the dealer who are on the front line, are quite positive about the business. Okay, thank you. Your next question comes from Joe Altobello with Raymond James. Please go ahead. Thanks. Hey, guys. Good morning. José, I just want to go back to the comment you just made to Fred, about the softness you're seeing in used pricing. I certainly understand, you know, why that would drive used retail, but could it diminish demand for new products as that price gap between new and used widens here? I mean, I don't believe it will affected the new product. I think there is enough novelty in the new product that the customer will go for the technology and all the novelty that we bring. This is, you know, something that we're very good at. We are good to come out with a novelty that excite the consumer, and the good example is the snowmobile. We came out with the second year of the MAX Gen 5, and we had very, very good traction with the new model we introduced. I think we are in a very good position. My comment to Fred on the used, I think to get the wheel in motion at retail level, you need the trade-in, and dealer need to accept that, they buy the used maybe a bit higher than what pre-COVID, but lower than few months ago, and this get the wheel in motion. Maybe if I just add a bit of color. O bviously, the big hedge that lies with the used market is that there's been material price increases over the last 2, 3 years. MSRPs are much higher than they were 2, 3 years ago. Someone who brought a product 2 or 3 years ago, that price is protected from the inflation that the new products have had. Yes, the gap is widening more than it was during COVID. That gap almost went to 0, but it's still a very, very healthy gap because of the MSRP increases we've seen over the last 2, 3 years. Okay. That's helpful. Thank you. Just to clarify on the acceleration in retail that you guys saw in April and May, were your share gains in those two months similar to what we saw in Q1? Was it concentrated in any particular categories? All I can say is we're obviously happy with the retail growth that we saw in April, May. We're happy with the performance. Things are trending in line with our assumptions for the guidance. Okay. Thanks, guys. Your next question comes from Benoit Poirier with Desjardins Capital Markets. Please go ahead. Good morning, everyone. Just when we look at your dealer inventory, you're almost toward the end of the ORV season. Could you talk about the ORV inventory and maybe your overall inventory? How much would be considered obsolete and therefore requiring some sales programs? Good morning, Benoit Poirier. We're comfortable with our ORV inventory. On side-by-side, we have good momentum in the retail level, and you... The end of the season, you know, it's July, August, and after that, you have a transition that lasts a few months, and we believe we are in good shape with our side-by-side inventory. Good product news that will come in August. On the ATV side, if there is something, we've lost some retail because the inventory tool is too low. We are in a transition with the new platform, and it's a bit always tricky, though. You have, like, 3, 4 months where you try to ramp down the old one and you ramp up the new one. We are on plan, but the dealer will see high volume coming their way in June with the new platform. If I have something comfortable with side by side, everything is on plan, and on ATV, the inventory is probably too low, and that's why our retail was a bit soft. I believe that when the network will be fulfilled with the new platform, you will see our retail gaining momentum. Okay. And just, you mentioned that the sales program were a little bit higher than it has been in the past. Where are you versus normal level? Maybe on the supply chain, I think it impacted your margin close to 400 basis points. Given the improvement in supply chain situation, have you been able to capture the full 400 basis points, or are you maybe just halfway through the margin recovery coming from supply chain? Yeah, I will take the question on the sales program. Just to give you a sense, on watercraft and pontoon, the Sea-Doo pontoon and watercraft, first, today, we have nothing on model year 2023. We have some program on model year 2022, but it's slight program. What we have out there is a 2-year warranty plus either 2.99% interest rate for 36 months or 4.99% for 60 months. If a customer would like to finance the machine, it would pay probably 7% for 5 years. We are in line with the competition for model year 2022. On ORV, we are weaker than our main competitor, but again, ATV, we have some program on model year 2022, mainly because of the old platform that on the mid-cc category. On side-by-side, it's the same thing. We have some program in mind, model year 2022, and a few on model year 2023 that are entry-level unit. At, at the end of the day, we are not. I mean, it's significantly less aggressive than what we had at this time of the year pre-COVID. That's how I would qualify our, the... my comments on the remark about the slide program. Maybe you want to comment on the- On the turbulence and inflation, as you, as you reminded us, yes, it was a 400 basis point tailwind. It's probably 50/50 between turbulence and the positive effect of inflation. There's still some inefficiencies that we could further reduce, and that's the plan for the rest of the year. From a retail incentive, we're still below pre-COVID, significantly below pre-COVID. Again, we did, yes, we did put more programs, especially on the interest side, where we subsidize the rates, but we think it's the right thing to do. It has an impact on the retail momentum. Okay. Thank you very much for the time. Thank you. Your next question comes from Craig Kennison with Baird. Please go ahead. Good morning, thanks for taking my questions. You've addressed a lot already, but wanted to ask about your dealer body. How do you evaluate the financial health of your dealer partners, just, you know, given the potential for an economic downturn? Well, as you know, we partner with Huntington Bank on the floor plan financing. We work hand in hand with them in constantly evaluating the health of their dealer, how much credit can they take, the terms of inventory. It is a daily operation with our internal credit team and their credit teams in order to make sure that, we monitor the health of the network. It is something we pay very close attention to, and in the end, it's the, there's, it's a balance. Dealers need inventory in order to be successful, in order to drive top line. Obviously, we don't want to have them too much inventory, so it becomes an issue from a floor plan cost. We are quite active on that front, and we have constant discussions with our different floor plan partners around the world to make sure that we find that right balance. That's very helpful. I guess the second question on just the affordability dynamic for consumers. I'm wondering if you ever look at it from a monthly payment standpoint on a like-for-like unit. Curious, you know, you've got rates moving higher, but, you know, inflation has waned a bit, and dealers probably are offering much sharper prices than when there was no inventory. Just what is the consumer looking at from an affordability standpoint? You know, are we at some inflection where, you know, their monthly payment may not be going up anymore? Yeah, when I look year-over-year, obviously, with the rise in interest rates that we've seen in the last 12 months, or if for a like-for-like product, or a consumer buying a product a year ago and buying a product today, the consumer would pay 8% more on a monthly payment. That factors in inflation, interest rates, et cetera. Yes, it's higher, but on the other side, now we are offering promotions, that's certainly helping to drive retail. On a $300 monthly payment, 8% is something that is something the consumer looks at, but probably not significant enough to pull them away from executing on the purchase. Great. Thank you. Your next question comes from Brandon Rollé with D.A. Davidson. Please go ahead. Good morning. Thank you for taking my questions. First, just quickly, when would you be able to start your buyback, this quarter? As soon as next week is certainly be something that we could start doing again. Okay. We have till the end of November to do the buyback, so there's a quite a long window to execute on the buyback, Brandon. Okay, great. Also on the promotional side, I think, you know, you guys have started increasing support to dealers in April and May and obviously saw strong market share gains. Do you see, you know, your competition potentially responding with increased promo to respond? You know, could that cause you to go back to pre-pandemic promotional levels this year? Far, we don't see an escalation of programs. on the watercraft, our main competitor, we are about in line with our main competitor, below historical programs level. Off-road, obviously, the leader in the industry is a bit more aggressive than us, but it's lower than what it was pre-COVID. Okay, great. Just finally, on market share dynamics, obviously, the Japanese competition still doesn't have necessary inventory in the channel. How much of their absence in the channel is contributing to your market share gains? That's a very difficult question, but I would say, I believe that our market share gain last year came from our first, our strategy about, you know, building units that was almost completed and retrofit them when we received the part, either in our factory and at the dealer level. This gave us a head start versus some of our competitor who reduced production. Second, the strength of our lineup. Our lineup, and again, I'm biased, but our lineup are the best in the industry, and we have a complete product portfolio. We have product for all season, which is very helpful for the dealers. It's all this that, I believe, explain why we have so much momentum at the retail level. Okay, great. Thank you. Your next question comes from Brian Morrison with TD Securities. Please go ahead. Yes, good morning. I want to understand the margin cadence throughout the year. Q2 sounds like it'll be sub 17% EBITDA margin again, so below in the first half. The second half waiting and the forecast improvement in the back half of the year, is this a mismatch of timing of the offsetting benefits and headwinds? Is it scale, or is it the need for Marine to improve? I understand the weather impact in Marine, can you just talk about the demand pull for the new Manitou Marine product? I'll let José cover the Manitou, and then I'll cover the cadence, if that's fair? Please. On the Manitou, as you know, we are sold out to the dealers. Basically, the dealer orders everything we can produce. To be honest, we reduce our planning for model year 2023, from now till summer, for production. So far, what we hear from the dealer is retail, the new pontoon is very popular. I think the new Manitou with the Max Deck, you know, the fact that you have an open space, you're gaining 4 ft in the back, you have an open space, you don't have the engine in your way, it's a big, big benefit. I would say, very happy that we, dealer and consumer, react to the product. From just a margin profile, similar to what we saw probably last year, in terms of the EBITDA margin. We historically have had a higher EBITDA margin in the second half of the year. A lot of it driven by mix, but some of it driven by timing of operating expenses. Probably consistent to what we've seen in prior years, Brian. Nothing significant. Okay, thank you for that. The SnowCheck's up 25% relative to your target. Can you just provide a comparison relative to pre-orders last year? It sounds like it's probably flat. It's below last year in term of production, unit that are sold in percentage of production. Like I said, about close to 50% of our production is sold, pre-sold to a consumer. This is the third best year in our history. Obviously, the COVID year were exceptional because the fear of missing. It's the highest year in, I would say, a more normal, non-COVID, year. Very, very happy with the snowmobile season. All right, appreciate that clarification, José. Thank you. Ladies and gentlemen, as a reminder, should you have a question, please press star followed by one. Well, thank you very much, everyone, for joining us, this morning and for your interest in BRP. We look forward to speaking with you again for our second quarter conference call on September 7. Thanks again, everyone, and have a good day. Thank you. Ladies and gentlemen, this concludes the conference call for today. We thank you for participating. As for you, please disconnect your lines.