Good morning, ladies and gentlemen, and welcome to the BRP Inc.'s FY 2024 second 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, Julie. Good morning, and welcome to BRP's conference call for the second 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, and 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. So with that, I'll turn the call over to José. Thank you, Philippe. Good morning, everyone, and thank you for joining us. I am pleased to report that we have delivered a very solid quarter, driven by continued trend in consumer demand for our lineups and the ongoing support of our dealer network. Solid execution of our plan led to an impressive market share gain and record result for a second quarter. Given this strong performance and our positive outlook for the rest of the year, we are increasing our normalized EPS guidance to a range of CAD 12.35-CAD 12.85. Let's turn to slide 4 for key financial highlight. Revenue reached CAD 2.8 billion, up 14% from the previous year, driven by higher volume and pricing. Normalized EBITDA grew 13% to CAD 473 million, and normalized EPS increased 9% to reach CAD 3.21. Turning to slide 5 for a look at our Q2 retail performance. Our product portfolio continued to gain traction with consumers, leading to significant market share gain. In North America, our retail sales were up 41% compared to an industry that was up mid-teen%. Given our retail performance, this implies that BRP accounted for most of the industry growth in the quarter. We were also very strong in international markets, with retail up 23% in EMEA, 36% in Latin America, and 33% in Asia Pacific. Looking more closely at the numbers, we see that demand for our products remains robust despite ongoing macroeconomic concerns. We just had our strongest second quarter ever at retail, except for the first few months of COVID, where we experienced significant inventory depletion. Not only was our retail up 41%, but it was up 37% versus Q2 of fiscal year 2020, showing continuous gain. With this strong performance, we reach record market share for side-by-side, ATV, and personal watercraft. All of this with retail incentive below pre-COVID levels. We believe those results are driven by the evolution of our customer profile over the last four years. The influx of new entrants remain high at 39%. We also continue to see high FICO score, and the average household income from our customer survey is 40% higher than pre-COVID, at slightly above $160,000. Those customers are looking for more high-end product, which explain our momentum in this category across our lineups. Bottom line, the typical BRP product buyer remain in very good shape financially. This put us in a favorable position entering the second half of the year. Turning to slide 7 for an overview of key products introduced at our BRP Club, held in Atlanta 2 weeks ago. This year's club was one of the largest ever, with 5,300 total participants in person and virtual. The highlight was the launch of the Can-Am Maverick R, our flagship model in the sport category. It bring a new dimension to riding with an industry-leading 240 horsepower engine, industry-first dual clutch transmission, a unique suspension geometry, and lots of enhanced technology. With this new offering, we are well positioned to gain market share in the high-end sports side-by-side category. This was not the only product news, as shown on slide 8. We improve our entry-level offering with the first major evolution of the highly successful Sea-Doo Spark since its introduction. We also launched many new side-by-side models, notably the Can-Am Defender XT HD7, as well as the Can-Am Maverick X3 RS Turbo, the industry most affordable mid-HP, 72-inch wide side-by-side. These models offer a lot of value at price point that reach a wide range of consumers. We also continue to push innovation in the premium segment, which has seen the fastest growth in recent years. We introduced a full range of high-end models, such as the Manitou Explore MAX 300 HP pontoon with dual Rotax engine and the larger MAX Deck. The Sea-Doo RXP-X and RXT-X with 325 horsepower, and the Sea-Doo Switch Cruise Limited. We also added a touchscreen with Apple CarPlay to our Spyder models. These additions represent a historic level of product news, which will help us to gain more market share and grow our addressable market, while further improving our margin profile. All our new products were well received. The order process is ongoing, volume is as expected, and the mix is currently trending slightly better. Now let's turn to slide nine for year-round product. Revenue was up 8%, reaching CAD 1.5 billion, driven by strong shipments of side-by-side vehicles and ATVs. At retail, Can-Am side-by-side had its strongest Q2 ever, with retail up high 20% and solid growth in all segments and price categories. We also finished the season with a 6-point market share gain to reach the high 20% range in North America. With this performance, we are very close to delivering on our M 25 objective of reaching a 30% market share by the end of fiscal year 2025, but of course, we will not stop there. Moreover, for the first time ever, Can-Am side-by-side reached the number one position in Canada with a market share in the high 30%. As for ATV, our retail was up mid-30%. This performance was notably driven by strong growth in the mid-CC segment, reflecting the success of our newly introduced mid-CC Outlander platform. Also, ATV also closed its North American season with the strongest share gain in the industry, passing the 20% mark for the first time ever. We are pleased with the momentum of our off-road business, and with recent product introduction, we are in a good position to continue outperforming the industry. Looking at three-wheel vehicle, retail was down high single digit compared to an industry that was up high single digit. While consumer interest remained high, the Ryker's retail performance was softer in the quarter. As seen across the industry, buyers of entry-level product are more hesitant to purchase at the moment. Meanwhile, the Spyder F3 and RT model, which are higher end, had solid growth. With the upgrade on the model year 2024, we are well positioned for next season. Turning to seasonal product on slide 10. Revenue were up 30%, reaching almost CAD 900 million, driven by a higher volume of snowmobile and Switch pontoon, as well as favorable pricing. Looking at our retail performance, we had a very strong quarter for personal watercraft, which retailed up about 60%. Again, an easy comparable a year ago. Remember that we had limited product availability in the network during Q2 last year. Still, this performance was exceptional from a historical perspective. In fact, our season-to-date retail is the strongest in the last 15 years. These results demonstrate the strength of our lineup and our ability to create new segments with models such as the WAKE, FishPro, and Explorer Pro. These products bring new entrants to the category, which drive industry growth. And with our new product introduction for 2024, we are well positioned to sustain our momentum. As for our Sea-Doo Switch, our retail was up over 200%, and we have the number two position in the U.S. pontoon industry over the three-month period ended in May. This is a great example of how we can disrupt category by developing market-shaping products. Finally, for snowmobile, we are currently in the off-season. We are confident for the peak season with a high level of unit pre-sold to consumer. Moving on to slide 11, with Powersport parts, accessories, and apparel, and OEM engines. Revenue were up 14% to CAD 294 million. We continue to benefit from our growing product portfolio and vehicle fleet in use, which led to higher replacement part and accessory sales driven by the LinQ ecosystem. We expect a softer second half than originally planned for our P&A business, as we anticipate dealer to destock inventory, mainly for the Sea-Doo Pontoon and three-wheel vehicle lineups. Looking at our recent acquisition, a key highlight was the introduction of Pinion Motor Gearbox Unit, commonly called MGU, which combines a full power electric bicycle motor in our industry-leading gearbox in one compact package. This promising technology got excellent review following its introduction in June, notably winning the prestigious Eurobike Gold Award in Frankfurt. Now moving to Marine on slide 12. Revenue were down 5% to CAD 125 million, reflecting a lower volume of boat shipment. The revenue decrease is due to the slower than expected production ramp-up of the new Manitou platform, namely because of a supplier issue for an aesthetic component which limited product availability. This issue has now been resolved. Looking at retail sales, from an industry perspective, the boat category has seen weaker demand so far this year. Demand was affected by higher financing costs and poor weather in many markets, especially in the Great Lakes region, which is key for both Alumacraft and Manitou. In addition, our retail performance was impacted by the supply issue for Manitou, and we still had lapping months retailing welded boat for Alumacraft. For Quintrex, retail was down in line with the industry in Australia. Given the slower production ramp-up for Manitou and softer industry trend in the boating sector, we decided to realign our plan for this year, focusing on FY24. While the year has not unfold according to plan, we are encouraged by consumer reaction to the new boat, and we remain confident about our strategy for the marine business. With that, I turn the call over to Sébastien. Thank you, José, and good morning, everyone. We once again delivered solid results in the second quarter, driven by robust top-line growth, fueled by the sustained strong demand for our Powersport lineups, which continues to translate in market share gain and growing momentum with our dealer network. Our focus on efficiency also paid dividends as we ended the quarter with lower than anticipated turbulence costs and operating expenses. These elements, combined with stronger than expected revenue growth, allowed us to offset inefficiencies on the marine side to deliver results slightly ahead of plan. Our revenues for the quarter were up 14% versus last year, ending at CAD 2.8 billion. We generated CAD 698 million of gross profit, representing a margin of 25.1%, up 40 basis points from last year, primarily driven by the favorable impact of pricing net of cost inflation and lower turbulence costs as we operated in a more normal production environment. These benefits were partly offset by inefficiencies related to the marine businesses, increase in sales programs, which remained below pre-COVID levels, higher interest rates on floor plan financing, and unfavorable foreign exchange rate variations, which impacted margins by 180 basis points in the quarter. Continuing down the P&L, we generated normalized EBITDA for the quarter of CAD 473 million, representing a margin of 17%. Our normalized net income reached CAD 255 million, resulting in a normalized earnings per share of CAD 3.21, up 9% versus last year. Our free cash flow generation was also strong at CAD 387 million, driven by a strong operational performance and positive working capital contribution. With a healthy balance sheet and the expectation for future cash generation in the back half of the year, we are well positioned to continue investing in growth projects for the business while retaining the financial flexibility to continue returning capital to shareholders. Moving to slide 15 for an update on dealer inventory. Our network inventory is in a good position, striking the right balance between having sufficient product availability, all the while operating more efficiently with a lower number of days of inventory compared to historical levels. In fact, our network inventory is only up 24% versus pre-COVID, while our retail volumes have grown 49% over that period, driven by industry growth, the addition of a new product line, the Sea-Doo Switch, and more importantly, significant market share gains. We still have opportunities to further improve availability on ORV while continuing to work through the remaining inventory for summer products as the season is winding down. Looking ahead, we will continue to diligently manage our network inventory to ensure that we are well positioned to seize retail opportunities while continuing to operate more efficiently, to limit the cost of inventory for both us and our dealers. Turning to slide 16 for an update on our guidance. We are entering the second half of the year in a strong position, having delivered strong financial results and retail performance in H1. With just five months remaining in the fiscal year, we are well positioned to deliver on our guidance, which calls for a solid year for year-round and seasonal products, as our lineups are driving strong consumer demand, and the positive response to our recent product launches reinforce our confidence in the ability to sustain our market share momentum in H2. The competitive and promotional environments remain in line with our initial expectations, and we now have better visibility into our shipment plans, thanks to a strong booking of pre-sold units in snowmobile, and as we will be filling initial dealer orders for multiple new products we just introduced. As such, we are comfortable reaffirming our year-round and seasonal products revenue guidance ranges. As for Powersports, P&A, and OEM engines, we are adjusting our guidance to reflect softer trends in accessory orders as dealers are working through more elevated levels of inventory in the network. Similarly, for Marine, we are revising our guidance to incorporate our decision to realign our shipment plans for the year to focus on positioning the business for a solid season 2024. Following these adjustments, we expect our revenues to grow between 7% and 10% for the year. Continuing down the P&L, since our last guidance, the supply chain environment continued to improve. Consequently, we now anticipate incurring less turbulence costs than initially projected. This adjustment and an improved product mix translates into additional 50 basis point improvement in our gross profit margin for the year. Combined with our better-than-expected Q2 results, this margin benefit offsets the impact of lower-than-anticipated shipments for P&A and Marine. Therefore, we are reaffirming our normalized EBITDA guidance with a solid growth of 9%-13%. This, when coupled with the benefit of a lower share count resulting from the buybacks we have completed at this point, yields a normalized EPS guidance of CAD 12.35-CAD 12.85. Additionally, within the context of our realigned marine plan for the year, we have decided to postpone our boat capacity expansion in Mexico by 12 months. This strategic decision, combined with timing of investments and other projects, allowed us to reduce our CapEx guidance by CAD 100 million, now ranging from CAD 650 million-CAD 700 million. This CapEx reduction is expected to further reinforce our already robust free cash flow generation for the year. Finally, before turning the call back to José, I want to highlight a couple of elements. First, as evidenced in our normalized EPS guidance bridge on slide 17, the adjustment in our marine plan for the year has a negative impact of CAD 0.60 on our guidance. Despite this impact, our capacity to elevate our normalized EPS guidance underscores the resilience of our diversified portfolio and our ability to deliver operational efficiency. Furthermore, as we strategically position our marine business for a strong season 2024, you can appreciate that a successful year for that segment, coupled with continuing momentum in powersports, could yield substantial benefits for our results in fiscal 2025. Secondly, our guidance calls for a very strong second half of the year, as you can see on slide 18. Although our top-line growth may appear limited, I would like to remind you that we are lapping a period in which we had about CAD 1 billion worth of inventory replenishment, making it a difficult comparable. Nevertheless, our results for the second half of the year are expected to be very strong from a historical perspective, reflecting the solid momentum of our powersport portfolio and the underlying strength of the demand for our products. In terms of cadence, we expect to generate roughly 45% of the remaining normalized EBITDA for the year in Q3, resulting, as usual, in Q4 being our strongest quarter for the year. On that, I will turn the call back to José. Thank you, Sébastien. I am pleased with our performance so far in fiscal 2024 as we continue to significantly outperform the industry. Our strategy is simple: We focus on delivering industry-leading innovation across a diversified product portfolio, and we team up with the best dealers. This gives us access to a wide range of customer base across all markets and regions. Our ability to execute has delivered exceptional results over the past eight years, as you can see on slide 11-20. We have gained market share almost every quarter during that period, and we are now the number one OEM by a wide margin in terms of average unit retail per dealer. Looking ahead, we will continue to execute that strategy. The record level of new product introduced at Club positions us well to continue our growth and remain the industry leader. As for the remainder of the year, we expect demand for our product to continue driving our market share momentum, and we will stay focused on executing and optimizing efficiencies to deliver a record year in terms of top and bottom lines. In closing, I want to thank all our employees 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, should you have a question, please press the star followed by the one on your touchtone phone. If you'd like to withdraw your question, please press the star followed by the two. If you're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Mark Petrie from CIBC. Please go ahead. Good morning. Thanks. I wanted to ask first just on the sort of competitive dynamics in the industry. Obviously, there's a healthy rebound in sales volumes versus sort of constraints last year. But I guess just, you know, commentary on sort of the competitive dynamic. And then I know the sales programs are higher, but still below pre-pandemic levels. So is that just higher than what you sort of initially embedded in guidance, or is it just higher from last year? Thanks. Yeah. Good morning, Mark. I'll take the question on the, on the sales program. They are trending in line with our expectations. Yes, the floor plan cost is higher because of interest rates are higher, but from a retail incentive point of view, we are trending according to plan. You might recall that we said we would expect about a 200 basis point headwind coming from retail incentives this year, and, that is currently the, the assumption we're working with, so no changes there. On the other question, Mark, there is not much change in the dynamic into the industry. All OEM are getting better with the supply chain. And basically, what I believe make us different than the others, is our focus on technology and new product and pushing a novelty, innovation. And on top, what is positive and we see more now, the stability, but the customer's profile. As I mentioned in my remark, the household income of our customer have increased by 40% since pre-COVID, and those customer are shopping for high-end product, where we are good at. And I think no big change in the dynamic of the industry with the other OEM, but I think what make us different is what we've been good at, pushing innovation, technology, and coming out with new product in new segment, and in more premium product. Okay, thanks. I wanted to ask about sort of the strength across the price points. I mean, you called out Ryker as sort of underperforming relative to Spyder. But curious if that's also the case in PWC, where obviously you have a range across price points. Is that the same dynamic? It's a bit different. Those two products are entry-level products, but the Ryker customer is more, I would say, a mid-range household income. Sometimes those customers are definitely more concerned with the macroeconomic and the inflation and all this. The Watercraft Spark customer is more high household income. It's people who have typically a cottage on the river, the lake, and they buy two Watercraft for their family. Then it's a different profile. Same type of product, entry level, but different profile in customers. Okay, understood. And then maybe just one last one. So you mentioned the supply chain as sort of a 50 basis point tailwind in the second half. Is there still an opportunity for this to be a tailwind in next fiscal year, or will you be lacking stability by that point? Obviously, this year we are getting a huge benefit from a better supply chain. And I'd say also the teams are very focused on coming back to more normal operations, and they've outperformed our expectation. We have solid people running all our plants, and so, most of the benefit is gonna happen this year. I might expect a bit of a benefit next year, but a significant part is being materialized, which is a good news this year. Yeah, understood. Okay, thanks for all the comments, All the best. Thank you. Your next question comes from Robin Farley from UBS. Please go ahead. Great, thanks. I wanted to ask a little bit more about the sales promos that you highlighted, kind of being tied to interest rates that, you know, partially offset some of the margin improvement. But can you give us some color around the mix of your buyers that are paying cash versus financing, and how that kind of compares to pre-COVID? When we look at the overall trends from our financing partners, there is not a significant change in terms of proportion of who's financing versus who's paying cash. So we're still in the range of, with our partners, about 30%, but we know that dealers have arrangements with their local credit unions and banks, and another 30% is being done through retail financing there as well. So about 60%-65% is done through retail financing, the other is cash. But we are seeing higher FICO scores versus pre-COVID, and that obviously is being highlighted, as José said, through the average household incomes that are higher as well. But the acceptance rates are in line with pre-COVID and with COVID. And we don't feel that our retail partners have tightened on the credit as well. Thank you. And then, just one follow-up. You talked about the higher demand, your higher customer income level, and obviously a lot of demand at the higher end. Can you talk a little bit about what's happening at the entry level and whether it is a share shift to maybe some lower-priced OEMs, some other imported product? Or is it, do you think just overall, just less entry level? You know, in other words, is it more of a share issue or a size of the pie issue at the more entry level? Thanks. I think it's obviously the inflation that we've been through in the last 18 months and the pressure on the macroeconomic and the uncertainty is scary for people who are buying entry-level product. Could be scary. But you know, our job is to make sure that we are competitive in the entry level. And you know, we're focusing a lot on the premium because that's where we shine. But we still have, you know, Sea-Doo Spark and Ski-Doo MXZ Neo below $7,000. We have many, many side-by-side model and Commander and Maverick between $13,000 and $16,000. And the Switch, which is an entry-level pontoon at below $24,000. Then, what we're trying to do is always keep good offering in the value product and pushing, again, technology and innovation for the high-end product. Then we want to have the- the wide portfolio of product to make sure that we please everybody. Positive thing, like I said before on the previous question, is the trend of the customer change in the last few years, and it's benefiting us right now. Okay, great. Thank you. Your next question comes from James Hardiman from Citi. Please go ahead. Hi, good morning. Thanks for taking my call. I wanted to dig into the inventory situation a little bit. Obviously, you talked about your inventory being up 24% versus, you know, 49% increase in retail. I guess and it sounds like you're comfortable with where you are. I guess, why is that? And ultimately, you know, why, why is there not a greater opportunity to replenish inventories? And then, I guess sort of a second part of that question. In the prepared remarks, you talked about how some dealers were working through elevated levels of inventory. It sounds like it's not your inventory that's elevated, but help us sort of connect those two comments. Well, we've always said that coming out of the pandemic, we wanted to run our dealer networks with less inventory. We've set up, a lot of OEMs have set up as well, and dealers say it as well. And so we've been very focused on making sure that we have enough inventory so that the dealers have the right product offering when the consumer walks in, and they can close the sale rapidly and get the unit to the consumer rapidly. We also have flexibility in our ability to quickly deliver units to the dealers if they need them. And so our goal is to make sure that we have that right level. I'm actually happy to see that, again, dealers are saying that they have the right level of inventory, they're able to meet consumer demand, and we're managing it diligently. I mean, we are cognizant as well that interest rates are higher, so why put more inventory in the network, create more costs for us, more costs for the dealer network if we don't need it? Ultimately, what we are driving for with the dealer network is not to create great pressure where they're focused on our units because they have them in the yard, but because they're making more profits selling our units. One way of making more profits is by having the right level of inventory so that they don't pay unnecessary floorplan. Just maybe to add to Sébastien's, I just came back from a club where we had the many discussions about this with dealers. Even for sure, if you survey a dealer, they will tell you they have too much inventory, but they look at it in dollars. And we look at it in units, and again, I said it in the remark, but our inventory level right now in the network is 24% higher than pre-COVID, but our retail is 50% higher than pre-COVID. Plus, you have higher-end product, and you had all the price increases that we have done in the last four years. Then for sure, the dealer, when they look at it in dollars, they don't like it with the interest rate. But if they want to support the growth and retail, and be able to supply to the demand, this inventory is needed. And we look at it in number of days, and we are below pre-COVID. Got it. That's helpful. And just to clarify, the billion-dollar headwind that you're lapping against, in the second half of last year, that's versus a zero this year, this year's second half, presumably. Or I guess maybe put a better way, the days on hand, you expect to stay pretty constant as we move forward, maybe not quite a 1-to-1 wholesale to retail, because, you know, retail is obviously growing. But is there any offset to that $1 billion, in the second half of this year versus the second half of last year? Or is it or is your retail gonna have to grow by that much more just to get to sort of flattish, flattish sale? Well, if you look at the what the implied growth is for the back half of the year, obviously there is that inventory replenishment that we did last year. About 60% of that was for seasonal products because of timing of shipments for personal watercraft and switch. But when you look at the implied growth for year-round products based on the guidance, you're talking about a growth of 11%-16% growth. That obviously comes from the market share gains we've experienced over the last few years, the recently introduced products that we've done at the club. Obviously, better pricing, better mix as well, and also by strong deliveries of ATVs as we've launched a brand-new platform. But I'll remind you that in the last three years, we've gained three points of market share in side-by-side, and obviously, that momentum is fueling wholesale delivery and retail deliveries as well. That's really helpful. Thank you. Your next question comes from Xian Siew from BNP Paribas. Please go ahead. Hi, guys. Thanks for the question. Maybe first on the CAD 0.80 better than 90 days ago in terms of the raise to guidance. Can you maybe disaggregate between mix, turbulence costs, and operating expenses? And then maybe within that mix improvement. Like, what do you think is driving that, and how much do you think that continues until, let's say, like, next year? Like, does mix continue to be a positive driver for the next couple of years? Thanks. Yeah, well, about 40% of the CAD 0.80 adjustment comes from mix. As José alluded to in his prepared remarks, we are seeing a healthy, financially healthier customer buying our product. These customers are looking for high-end products. We've recently launched the Maverick R. We'll call it the next level in technology for the sports side-by-side, and that obviously is driving very strong margins. But from a utility point of view as well, the customers are asking for fully enclosed side-by-side with HVAC. And we've made adjustments in our production capacity in order to be able to deliver these units and meet customer demand, and that obviously is helping the mix favorably. Okay, got it. And then maybe on seasonal, you know, you did better than the, than street expectations, but guidance was kind of held for the, for the year. Were there any shifts to consider? And are there any kind of margin impacts we should think about? No, we were expecting a very strong second quarter for seasonal products due to better deliveries of personal watercraft and Sea-Doo Switch. Again, last year, because of supply chain, it was a tough quarter, and so now things are back to normal seasonal pattern. That obviously is a big plus. And so the implied revenue decline in the back half of the year is really mainly related to the timing of deliveries compared to last year. But all in all, we're very happy with the season we had on seasonal. Sea-Doo Switch was the first real year of deliveries. Obviously, the demand was very good and the performance of the Switch was also strong, from a retail point of view and from an industry point of view as well, but nothing to highlight specifically other than that. Okay. Okay, great. Thank you. Good luck. Your next question comes from Fred Wightman with Wolfe Research. Please go ahead. Hey, guys. Good morning. I just wanted to come back to the dealer inventory number, and I totally get that it's below the retail share performance, but in the past, you guys have given sort of a bridge between seasonal products and then also year-round products. Can you give us an update on sort of where the dealer inventory levels for both of those categories stand today, either on a year-over-year basis or next to 2019, however you want to talk about it? Well, when I look at the overall inventory position, what I'd say is for year-round products, we are comfortable with the inventory we have for both ATV, as we've started shipping the new model. For side-by-side, as I said, we have opportunities to increase deliveries, especially on the utility, full enclosure cabins, side-by-side. That's a product that's in high demand. Spyder, very strong on the traditional Spyder. We're good there. We have a bit more Rykers, and that obviously will, we've put a plan in place to make sure that we get through that inventory in the next quarter. From a seasonal point of view, we finished the season where personal watercraft is gonna finish in a month. Very happy with the season that we had. Good levels of inventory coming out of that season. And the Sea-Doo Switch, strong season in some markets. The Midwest was a bit softer than what we were expecting, so we have a bit of inventory there that we are working through, and we've put promotions as well in those regions to make sure we get the model year 2023 retail and get ready for model year 2024. Okay, and then just to follow up on sort of the marine business. I mean, you guys are cutting the outlook, you're delaying or deferring some of the capacity expansion. It's just a pretty big change versus a couple months ago. So can you just give us maybe an industry lay of the land as far as what changed and maybe why you think it was so much different than sort of the what seems like solid demand for year out? If you talk about the industry, obviously the weather was not the best. We didn't have the best summer to start with. After that, many customers finance their boat 15-20 years, which is a very long period. And obviously the interest rate that climbed over the last 18 months affected or people delay. Then when you have a combination of interest rate going up in the summer, that weather is also some customer prefer to delay their purchase, then this is for the industry. For us, what happened, and you know the story, I mean, I don't want to talk too much about it, but we were a victim of the cyberattack last fall. The operation in Marine was the last to be reintegrated. After that, we had that supplier difficulty, and when we started to really ramp up with good volume, the production in May, dealer were already have high inventory of other brand, and at the end of the day, we were pushing too much. Then we decided to slow down for season 2023 and refocus everything on season 2024. Why we are happy overall is first, the product is well received. The, the product that we shipped in season 2023, we have introduced the dual engine 92, that was very well received by the dealers. at club two weeks ago. The factory is now up and running, and we are re-engaging the dealer and realigning all this for season 24. Then it's a question about this, and obviously, the factory in Mexico, we pushed by one year. We've lost basically a season, because of the industry and our we were behind our plan, and this was just the logical move to do. Makes sense. Thank you. Your next question comes from Cameron Doerksen from National Bank Financial. Please go ahead. Yeah, thanks. Good morning. Just trying to get maybe a little bit better handle on what you're seeing in the retail. I mean, obviously, it's still, you know, very strong for you. But I just wonder if you can maybe talk about how retail kind of performed through the quarter. Was it fairly steady throughout? And then what have you seen so far, I guess, in August? I mean, obviously, you're facing a much tougher comp in your fiscal Q3, but maybe you can just talk about retail trends so far in the third quarter. Then the retail, as you. If we look at the year, retail was soft in February, March, but picked up very good in April and continued through the whole summers. And I know that some of you were concerned about the model year 2022 three-wheel and watercraft, but we've been able to sell most of them, and we're very happy the way the season unfold. For the third quarter or what is our expectation, and I don't want to go into too much detail and get into the habit of providing guidance every quarter for what's coming. But overall, we are in a good position for the second half because on the off-road, you know, we have the new Maverick R, we have the additional Defender entry-level product, the additional entry-level product on the X3. And when I say entry-level product, in the side-by-side category, which is high-end, we have the ATV mid-CC platform that is extremely well received. And the snowmobile lineup, as we've said, about half of our production is already pre-sold, and we feel very good about off-road and snowmobile. Obviously, you can expect in H2, lower retail for watercraft and three-wheel, because last year we shipped the 2022 in Q3. Then when we look at the overall, we are planning the industry to be flattish. Us, when you consider all the product line, some reduction on watercraft and three-wheel and an increase in off-road and snow, we targeting to be around mid-single-digit growth for H2. Okay. No, that's very helpful. And just secondly, just maybe switching gears, just want to talk a little bit about the EV rollout. I guess, at the club, you kind of described that, you know, the final product that you're going to introduce on the electric side is gonna maybe be delayed by about a year, and there's been some, I guess, challenges in developing the technology. Can you maybe just talk a bit about, you know, what the challenges are that you're facing there, and just how the EV rollout and then development is going? Yeah. First, Cameron, I would like to remind you that we're developing our own technology, and we're developing our own battery pack, motor, inverter, charger, software. We believe by doing this, all of it by ourself, we will have better integration and performance than buying components that you need to put together, and it will be more cost effective. Doing this, it's about people and supplier, working with supplier. This is going on. There is overall some delay, but it's not— We had planned for some delay in some areas, but— I just want to remind you that last year, when we disclosed the Rise and the two-wheel motorcycle, we said to the dealer that the product would be available in 2024. Some dealer, because we had some prospect dealer, mainly from Europe and Atlanta, wanted to see who is BRP, what are the rest of the lineup, and we wanted to be very clear with the dealers. We could have decided to show the spec, the prices, the allocation, and our plan for network fulfillment, but we felt it was too much information against the competition. We said very clearly, "All the detail will be unveiled at next summer, and delivery for both the Rise and the two-wheel will happen in the fall of 2024." We're not delaying by one year. You could debate, some were expecting to have it earlier in the summer, but we are basically overall on plan. Okay. No, that, that's helpful. Thanks very much. Thank you. Your next question comes from Craig Kennison from Baird. Please go ahead. Hey, good morning, and thank you for taking my questions. It's been a good call. I wanted to ask on the credit side, do you have an understanding or a read on the percentage of your buyers that are exposed to student loan repayments in the U.S.? No, I don't. I know it's been on the, I guess, the news feeds recently, changes to student loans, but no, we don't have that visibility. Craig, what percentage have outstanding loans? ... Okay, and then maybe just then said more broadly, I'm wondering if, if there's a way to measure affordability in terms of monthly payments, if you look at, you know, a similar unit this year versus maybe pre-pandemic, how much more expensive is it per month relative to, like, the income of your consumer? And, you know, do you see that, consumer getting pinched, in the climate, we have today? Yeah. Good morning. I will give you an example of the Sea-Doo Switch, because we're expecting the question and obviously for ourselves to better understand the dynamic. But many of the buyer, buy boat finance 15-20 a year. And if you take a Sea-Doo Switch, and we took a model Switch Sport, 21 feet. If you were financing, and again, the rate could vary, so depending of your score, but high level, if you were financing a Sea-Doo Switch in January 2022, your rate was 7%. If you were financing your Switch in January 2023, this year, your rate was 8.8%, and in August, your rate was close to 12%. The difference between, let's say, January 2022, it was around two- or three hundred and fifty dollars, and it was $100 more in August 2023. Then you can debate $100 for someone who really want a product, it's, it's some will justify it, but when you commit for 15 or 20 years, it's a long payment. And I think the rate increased so much in the last 12 months that some customer are reflecting if they will buy or not, and that's why, that's what affected, I believe, the boat industry. That's a really helpful example. Thank you. Your next question comes from Martin Landry from Stifel. Please go ahead. Hi, good morning, guys. Maybe just a follow-up to that. You know, the powersports industry has been very resilient when you compare it to the boating industry and also when you compare it to the RV industry. Is that resilience just related to price point? Is that it? Is that the main explanation why the powersports industry is not seeing much sign of weakness versus other industries? The big difference between powersport and marine is, in the powersport, typically, the people who finance will be 3-5 years, then your commitment is shorter. The other thing is, the OEM are. It's easier for the OEM to subsidize or to do a sales program to support the customers. I give you the example for us. Today, we have, depending on the product line, for model year 2023, we have some offers will vary from 2%-4% for 36-60 months. This is very different than the example I gave into the marine business, a boat, where obviously the rate is higher, the period is higher, and it's more difficult for the OEM to justify the subsidizing. I think this is a big difference between the two industries. And Martin, if I could add one extra element there. If we look at what has happened to MSRPs in the last, we'll call it the last 4 years, since the onset of COVID, we saw much higher increases in MSRP in the marine and the RV sector than we've seen in the powersport sector. And I'll just give you an example. If I look at personal watercraft, model year 2020 to model year 2024, we've increased pricing by 17.4% in the US. Whereas the boating industry has increased pricing by over 40%. And so that obviously makes the ticket item much higher for marine than for powersport. And I think that's one factor that's also helping the powersport industry. Okay. That's, that's good color. That's helpful. You know, maybe on changing gears to your guidance, you know, your back half guidance implies strong EBITDA margins, I think higher than 18%, according to our math. And Sébastien, you touched in your opening remarks, you know, heading into fiscal 2025 with strong momentum. You know, just trying to understand, you know, those strong margins in the back half, is there a seasonal tailwind here, or can these higher margins be sustainable long term? Well, customarily, we have usually higher margins in the back half of the year. Two, three is a quarter where we have strong margins. Mix is very strong in snowmobile, and also we're expecting very strong mix in side-by-side. And as I said, the teams are, and I like it, the teams are overperforming from an operations point of view and from a procurement point of view, which is also driving good savings, which will be there next year. And as you know, next year is our M 25, anniversary date, and so, where we have ambitious financial objectives. And our plans are still very much in line with the M 25 objective. When you look at what we have delivered since we've done our investor meeting last June or last year. On the side-by-side side, we are just shy at that 30% market share objective that we had given ourselves, and especially with the recent product introductions. That will obviously drive continued market share gains. ATV, we finished very strong this season with 20% market share, and there's gonna be continued momentum as we've just started delivering the new platform. We finished the season with record market share in snowmobile and personal watercraft, so that obviously bodes well for next year. Sea-Doo Switch, we always said we want this to be a $500 million business. This year, we will be at $500 million. So again, continuation next year. So everything in Powersports is in line, and even better than our planned. Again, if I want to put things into perspective, if you look at the last 12 months, we've gained about 6 points of market share in the Powersport industry. Every point of market share we gain is about CAD 190 million of revenue. And so with the recent product introductions, the momentum, the brand, the dealer engagement, we are well positioned for next year. Marine, softer than expected, but we are obviously making the necessary steps to position it well for next year. The Lean is going very well, as I mentioned. The modular design is paying off, and we have a greater proportion of vehicles being produced in Mexico. So all in all, if the industry remains the same, and consumer demand is maintained, we feel very comfortable with our plans for next year, Martin. Okay, that's helpful. Congrats on your results. Thank you. Your next question comes from Jamie Katz from Morningstar. Please go ahead. Hi, good morning. I hope you can just dissect your outlook on growth margin a little bit more, just on, you know, the ability to take pricing, the premiumization of the mix, and then, how much more of the logistics tailwinds are left to help hold that metric up? Thanks. Yeah. Obviously, we had a very good growth margin in the second quarter. When I look at the puts and takes of the margin, obviously, pricing net of inflation was a big driver. That was a tailwind of 170 basis point offset by programs. We set our expectation for the year was 200 basis point headwind. This quarter was 170 basis point. Floor plan costs are higher as well. That's a headwind of 100 basis point. And in terms of turbulence, we're looking at 250 basis point tailwind. Big tailwind in Q1, big tailwind in Q2, that's gonna taper down in Q3 and Q4, as even last year, Q4, we saw benefits from turbulence costs. But overall, in line with our plan, plus adjustments we've made in the guidance. As we mentioned, we had FX, which was a headwind for 180 basis points in the quarter. So, obviously, strong growth margin, strong EBITDA margin, driven by again, the great mix, products that command these margins, and as well, great operational efficiency from the teams. Are there any inefficiencies that will stem from pushing the facility out that will weigh on gross margin next year, the building, the build-out of that marine facility? Thanks. Not significant. When you look at the cost to build a plant, yes, there's some operating expenses associated with it, but it's when you look in the grand scheme of things, not that material. Thanks. Helpful. Your next question comes from Joe Altobello from Raymond James. Please go ahead. Thanks. Hey, guys. Good morning. Just want to go back to your comments regarding M 25. You mentioned Powersports is trending well, Marine, not so much. And you mentioned you're pushing back capacity expansion by 12 months. Is it safe to assume that we should think about the Marine M 25 targets as getting pushed back a year as well? And how's your long-term outlook for that segment changed at all? Yeah. If you remember, in the M 25, we were targeting, by the end of fiscal year 2025 to be at CAD 1 billion. It's too early to say if what will happen next year. I think we need to wait to see how the industry will unfold beginning of the year, the boat show and all this. But you know, for me, this is short term for the Marine. The vision that we have is working. It's just a matter of execution this year, and we will realign for next year then. I think it's too early for the CAD 1 billion in M 25 or fiscal year 2025 for Marine, but it don't change the overall picture like Sébastien described for the overall BRP M 25 objective next year. Okay. It's helpful. And maybe just a quick question for Seb. I want to better understand how you see overall gross margins versus OpEx playing out this year. I think the prior expectation was gross margins would be up 50 basis points, OpEx up 50 basis points, and so they sort of offset. But it sounds like, you know, that's still the case on the gross margin line, but we're looking to see maybe some lower or less of an increase in OpEx. So I'm curious if I have that right and where that's coming from. Yeah, the initial estimate when we issued guidance was that we'd get a tailwind on gross margin of 50, and we'd get a headwind on OpEx of 50, so net flat EBITDA margin year-over-year at 17%. Now, with the revised numbers, gross margin, it will be a tailwind of about 100 basis points and we'd get the tailwind from OpEx of 50. So- Tailwind. Pardon? Tailwind. Yeah. So, that would be for this year, delivering strong EBITDA margin this year. Okay, great. Thank you, guys. Your next question comes from Luke Hannan from Canaccord. Please go ahead. Thanks, good morning. I'll start off with a quick one, Sébastien. I believe you said last quarter that for the year you expected a working capital tailwind of roughly CAD 400 million. I may have missed it if you mentioned it earlier in the call, but do you still expect to see that level of tailwind for the year? Yeah, we've generated strong cash flow, free cash flow since the beginning of the year, over CAD 500 million for the first six months, total free cash flow, with minimal working capital benefit. As I said, we're still running with, higher levels of inventory, I will call it safety stock. But obviously, with the good results that we're seeing from the supply chain turbulence, the expectation is that we will be able to achieve our CAD 400 million working capital benefit, at the end of the year. Okay. And then a higher level question here. I appreciate the commentary earlier in the call, José, about the market share that you've been able to gain in SSV, and particularly in Canada. But I guess just taking a step back and from a higher level, structurally, when it comes to the competitive dynamics or anything else inherent to that product line specifically, is there any reason why longer term, you wouldn't be able to achieve a market share in SSV similar to what you have right now in snowmobiles and personal watercraft? There is no reason. You know, we're going step by step. On the M 25, the objective was to reach 30% market share. We almost there, and we will pass that 30% next year. And after that, with the momentum that we have and the product innovation, there is, we will not stop there, like I said in my prepared remark. And for us, you know, it's always a bit, like I said, in some investor, many investor is asking: "Why are you gaining so much versus others that are not able?" But as we said in 2015, when we introduced the Defender, we wanted to convey a strong message about our commitment in the side-by-side industry, and that's where we committed of a new model every 6 months for the next 4 years. That message convinced many dealers to convert more space to BRP. And with our capacity to come out with innovative product, pushing technology, pushing design, combined with that commitment, it was like a big wheel that did start in motion. And today, the wheel is really in motion. And I believe that, with our continued push on product and helping the dealers and working with the dealers, to continue to grow, this is what explains the success. Then definitely, I will not comment this morning about any specific number for any dates, but I can assure you we'll not stop at 30%. Great. Thanks for the commentary. Your next question comes from Brian Morrison from TD Securities. Please go ahead. Hey, good morning. Thanks for all the clarification comments. I have one further question to clarify, though. Seb, you mentioned in slide 18 in your prepared comments that you're lapping H2 fiscal 2023. There's CAD 1 billion in inventory replenishment. How much of that was inventory replenishment revenues in fiscal 2023? How much do you estimate will be in fiscal 2024? And how much is there to go in the second half? I understand that retail unit sales are well in excess still of the increase in inventory at retail. As of today, Brian, I'd say we're pretty much done on inventory replenishment. Obviously, there's going to be some seasonal elements where we might find, okay, there's a snowmobile that's going to be there at Q3 more than last year. But from an overall business point of view, there, inventory replenishment is not a tailwind for us. Growth in inventory will come with growth in market share or growth in industry, but not from putting more units at the, at the dealership. Okay. How much replenishment was there this year and last? Well, last year was CAD 1 billion. We probably did CAD 250 million at the beginning of this year. In fiscal year 2023, I'd, I'd have to check, but not that significant. Probably, the- Same as this year. Probably same than this year, yeah. But obviously- Okay the bulk was in the second half of last year. Right. And then on slide 17, you said there's lower shipments of PA&A, primarily due to Sea-Doo Pontoon. Can you just reconcile that with the strength of the Switch? Was it just a pre-build because the product was in its infancy last year? Well, last year, as you know, we, we underdelivered in terms of, Sea-Doo Switch Pontoons. And so dealers - we underdelivered units, but we delivered, dealers had ordered the parts and accessories, so they had quite a bit of inventory on hand. And so this year, they were able to cycle through their inventory, get it to the dealers, but they still have a bit more inventory, and so dealer levels are higher from a P&A side. And, and so they will be adjusting their dealer inventory and therefore ordering less from us. Okay, simply timing. Okay, thank you very much. Your next question comes from Tristan Thomas-Martin from BMO Capital Markets. Please go ahead. Good morning. Just one question for me. How are dealers approaching holding inventory or maybe ordering over their off seasons any different, given how elevated floor plan costs are? It's a bit funny. If you talk. I was again with powersports dealers and marine dealer two weeks ago, and if you talk to dealer, like I said in the question before, they don't like the inventory in dollars and the interest. But at the same time, you know, when we take an order, it's like a discussion between your growth and what you're planning and the basically orders in line with our expectation. That's why we said the volume is in line with the expectation, but with a richer mix. Then it's a bit funny. The powersports dealer right now, most of them complain about the interest bill at the end of the month, but they still understand that to support the growth, they need to invest in working cap. Yeah, and the other thing is that dealers do trust us, that we'll make the right decisions. One thing is important is that we do support the inventory in the first 60, 90 days, when the unit is shipped. So obviously, that is a burden that they do not have, and we have, and we accept it. And the other thing is, in the past, if we've ended a season with too much inventory, we've always been there to step in and support the dealers with their floor plan financing. And that's something that we've done, and that's something that we will continue to do with, if a season would end up to be not as good as expected, and they'd have more inventory. So there's a level of trust there that exists between us and the dealers on that side. Okay. So they're complaining more, but they're not changing their habits. Got it. Thank you. Well, for sure. I mean, they've lived the perfect world. For two years, they had no floor plan financing costs, and so they forgot what it was, and now they have inventory, which they're happy because they are... That allows them to sell. But there is obviously higher interest rates and higher floor plan that comes with it. And so there is a sticker shock, but it's a cost of doing business. It's like meals at the restaurant, more expensive, but you still go. Sounds good. Thank you. Your next question comes from Michael Swartz from Truist Securities. Please go ahead. Good morning, and congrats on the strong, strong results. Just one quick one for me, maybe on the snowmobile front. I think you mentioned 50% had been pre-sold, the same figure that you had mentioned last quarter. Have you seen, like, any early signs of cancellation, or is everything setting up, setting up well from a strong season in your point of view, especially with one of your competitors saying that they're going to exit the market? No, no sign of. Every year you have some fallout, though, and some cancellation, but I didn't heard any dealers saying that this year was worse than previous year. Snowmobile customer are different than the others. It's, some will save money, and that's the last thing they will cut in their budget, because it's a passion, and we believe we're in good shape for the snowmobile season. Appreciate the color. Thank you. Your next question comes from Jonathan Goldman from Scotiabank. Please go ahead. Hi, good morning, guys, and thanks for taking my questions. Most of them have been answered, just two housekeeping ones. José, you talked about possibly exceeding the 30% market share in side by side next year. I just wanted to, if you can revisit the capacity that you have, in side by side currently and coming online, what market share could that support over the next two years or year and a half? Oh, that's a good one. First, we have plenty of capacity for next year's season. We will not reach the maximum of our capacity. As you remember, we build Juarez one, Juarez two, sorry, in two phase and Juarez three in two phase. We have plenty of capacity for next year, for sure. And now we even looking how we could tweak and maybe optimize the capacity between, within those two factories. I think there is ways where with small investment, you can even increase the capacity above what we had planned two years ago. Perfect. That's helpful. And then just, I guess one for you, Sébastien. On the reduced CapEx guide by CAD 100 million, does that change your thinking around capital allocation for this year at all? No. We're still gonna be generating strong free cash flow even before the reduction of CapEx. And obviously we've been active with buybacks. We still have about 900,000 shares to buy back under the NCIB. But the priority, as we've always said, is investing in growth, and any excess free cash flow will be used to obviously return it to shareholders, which we've been very good at doing in the last few years. Okay. Thank you. That's it for me. Ladies and gentlemen, as a reminder, should you have a question, please press the star followed by the one. Your next question comes from Brandon Rolle of D.A. Davidson. Please go ahead. Good morning. Thank you for taking my quick question. Just circling back to the fiscal year 25 earnings targets and revenue guidance, could you just speak to your level of confidence to hit those targets? I feel as though, there's a view out there it's gonna be impossible for you to hit even the low end of that, earnings range. I know you talked about the market share gains, but just overall, where could there be some downside to the current guidance, and are you still comfortable hitting those earnings targets? Thanks. Well, as I said, to Martin's question, when we look at all the positive that has been happening, there's been a lot, we're ahead of plan, on a lot of the elements. And again, if the consumer sentiment is to remain as it is today, we strongly believe that the M25 target is achievable. Now, if there was gonna be a soft landing in everybody's calls or a recession, obviously we'd revisit our plan. But, I mean, we can't manage the business one foot on the gas and one foot on the brake. And today, when we look at the great momentum we have, there's no reasons why we could not achieve the target next year. Great. Thank you. There are no further questions at this time. I will turn the call to Mr. Deschênes to close the meeting. Thanks, everyone, for joining us this morning and for your interest in BRP. We look forward to speaking with you again for our third quarter conference call on November thirtieth. Thanks again, everyone, and have a good day. Ladies and gentlemen, this concludes your conference call for today. We thank you for joining, and you may now disconnect your lines. Thank you.