BRP Inc. (DOO) Earnings Call Transcript & Summary

Good morning, and welcome to BRP's 2025 Analyst and Investor Day. Today, our senior management team will provide an update on the business and present our M28 plan and its key strategic initiatives. Before moving to the presentation, please note that today's presentation will include some forward-looking statements and future results may differ from those implied in these statements. The forward-looking information is based on certain assumptions and is subject to risks and uncertainties and invite you to read BRP's MD&A for more details. Now moving to the agenda. In the first portion of the presentation, you will first hear from Jose Boisjoli, our President and CEO; Josée Perreault, our CMO; Sandy Scullion, our President of Powersports; David Baker, our VP, GM, North America; and Steve Pelletier, our VP, GM, International. After this, we'll have a short break, and then we'll come back with Thomas Uhr, our CTO. Patrick Dussault, our EVP, Global Manufacturing Operations; and Sebastien Martel, our CFO. Then Jose will come back for the conclusion and the Q&A session. Also note that all the management team is in the room. So Stéphane Bilodeau, our CIO; Martin Langelier, our CLO; Anne Le Breton, our EVP, People and Culture; and Minh Thanh Tran, our EVP, Global Corporate and Product Strategy, are all in the room and will be available to answer questions at the end of the presentation. So with this, I'll turn the mic over to Jose.

Hello again for the people on the line. Good morning, very happy to share with us -- with you, not with us, with you, the new strategic plan, M28. And I know we are overdue. And to be honest, we've been ready for a few months. And in March, obviously, with the tariff, we felt that it was not right to launch a new business plan, there was too much uncertainty. But now, the business is more predictable, and we are happy to share with you our new plan, sorry. And I would say, if the macroeconomic and geopolitical situation is still like this, we're confident to deliver on this plan. Then you know us, most of you, you'd ask, who we are today, then we are obviously a diversified product portfolio, industry leader in innovation, established global distribution network, a global and modern manufacturing footprint and proven management team, and we will cover all this between this morning presentation. Now just to give you a sense versus the M20 -- versus the fiscal year '20, the pre-COVID and where we stand today. Basically, our -- with the COVID bubble and everything, our revenue increased by 36% and our normalized EBITDA by 32% despite all the volatility that we will -- that we've been through. And we have a solid foundation to continue to grow and outpace the industry, and we are here this morning to explain to you our plan. And I hope by the end of the morning, you will believe that what we do is achievable. Now a look back at M25. I cannot talk about M28 with now looking to what we have achieved in M25. And we introduced M25 in October 2019, and the definition was setting the course for BRP 2.0. After being 10 years private, it was the next wave. We have 4 pillars at the time. We had 4 pillar: Growth, Customer X, Employee X and Lean. And we had 6 different priorities and goals for fiscal year '25. And the financial target was to reach revenue of $9.5 billion and EPS of $7.50. That was in October 2019. Then obviously, COVID hit in the beginning of 2020. And we end up with EBITDA over $12 -- we reached EBITDA in the range of $12. Then in fiscal year '23, when we had $10 billion in revenue and $12 in EPS, we needed to do something, and this is what we've done in June 2022. We restate basically the financial target. We adjusted some strategy very likely, but we restate the financial target to $12 billion and $13.50 of normalized EPS. Obviously, in fiscal year '24 and '23, it was similar revenue in those range, and the business started to deteriorate or the market started to deteriorate in H2 fiscal year '24 and fiscal year '25. And when we look at -- if we look back to M25, it was a 5-year plan, and it was marked by, I would say, multiple important disruption, and many of them was a first in the world, I think. Then the COVID obviously hit in March 2020, creating a huge bubble, a blitz in demand followed by a supply chain issue. And we're all happy how our industry was popular at that time, but it created a lot of disruption, and we'll talk about it this morning. After that, we were hit by cyber attack. This is a BRP thing. The only thing I can say to you, we managed well, we restarted our factory a few weeks after. But to finalize all the recovery, it took us 6 to 12 months, depending on the area because cyberattack is difficult, and you need to leave it once to understand what it means. We -- the interest rate had the highest increase and fastest increase in the last 35 years. And that's affected, obviously, our customers. That's affected our dealers and obviously, that affected us, our cost of interest did go high. And finally is the geopolitical and macroeconomic. We all know that there is more conflict in the world right now than what we've been through in the last 50 years. And also the tariff situation was something that was not expected at one point. And as you see, we've been in the M25 in the 5-year or the M25 through a lot of very important disruption. And this challenging environment, and this is why here we're showing to you the North America market. Later on, Sandy will show you international. But basically, you see in the last 10 years and before COVID, from fiscal year '16 to, let's say, beginning of '21 fiscal year, the market was slightly increasing, Powersports North America. We had the COVID demand. After that, like many company or industry, we had the supply chain issue. We had the industry stabilization. And since, I would say, H2 fiscal year '24, the macroeconomic pressure impacting the industry interest rate created some disappointment into the industry. And obviously, it's affected our results. But in this context, and I remember in March 2024, we decided to -- and we announced in March '24, but we decided to reduce dealer inventory. We felt that it was not sustainable for the dealers and it was affecting the brand and dealer profitability. And basically, in March '24, we announced to you, it was that fund that we would deplete inventory and the goal was to deplete it by 10% to 15% over the next months. After that, we restate 15% to 20%, but it took us 18 months to reduce inventory. But today, and you have it on the left side, Today, if we compare to the end of fiscal year '24 to our inventory in Q2 in this year, our inventory for Powersports in North America is down by 31%. Now if you look on the right side of the slide, Powersports, not ORV, all the other product except ORV, you see our inventory is up 2%, but our retail is up 19%. If you take ORV by itself, our inventory is down 5% versus pre -- versus 18 months ago. And the retail is up 50%. Then the dealer right now have a very good level of inventory. And we believe that we are at a good place. And even in some product line, we'll readjust our plan going forward. But the point I want to make is we are where we wanted to be into the inventory depletion. Now obviously, the inventory depletion affected our results in fiscal year '25, '26 because we retail more units than we shipped to the dealers, and it affected our revenue, but also our normalized EPS, as you know. But basically, this is what -- if we had to summarize what happened during the 5-year of the M25, this is basically what we have done over the last 5 years, but it was the highlight, it was many important factor disrupt our business. Now despite all this, we continue to position our business for success. And this is what I want to highlight to you. First, and during my experience at BRP, when you're going through a tough time, the name to recover quickly is to refocus. Then when we saw in fiscal year '24, '25 that it was more difficult, we took key decisions, not easy decision, but we took key decision. The first one, we decided to exit Marine. We felt that it would be longer to recover, but also we're in a situation where we're small, then we decided to exit the marine industry. Now it's done. We reduced investment in electrification. We have said openly in the last few months, basically, we have developed a 9-kilowatt hour power pack that we're using on snowmobile 2-wheel and ATV. And basically, we had planned to develop a smaller power pack and a bigger water pack. We put all this on hold. And we've decided with the management committee to limit our investment in EV to $25 million a year. Then it's an investment. We need to understand who is that customers. We need to better understand the technology, how we can reduce costs. And you saw yesterday for the one who've tried the ATV, it's a very good product. Then we believe it will grow, but it will take some time. And we reduced or put on pause our investment in urban mobility program. And for the one that are in the room today, you saw some product that we were investigating. But for the time being, we put that on pause. The key benefit of all this is the focus. All the teams around the world are focused right now on Powersport. And the M28 basically, it's a 2.5 years plan. We are halfway in fiscal year '16 (sic) [ '26 ]. Then we have, obviously, we will announce our Q3 results in the end of November, beginning of December, but we are halfway during fiscal year '26. And we, here, M28 is covering fiscal year '27 and '28. And we'll come back on this. And the focus is winning on Powersport. Then everyone is focused on winning on Powersport, and we'll tell you this morning how we intend to do this. Now one thing also I want to highlight During the COVID, we invested to chase the demand. And basically, our factory have been modernized, more efficient than ever before. We have also extra capacity. And today, our factory are running at about 60% of their capacity. Then when the market regain volume, we have all the tools to be able to meet demand with minimum cost, minimum overhead. We need some time to crank up the suppliers, but we're ready to respond to the demand when it will come. Also in this, I want to take a few word, I want to take a few minutes because it's something maybe we didn't talk much, but made a big difference in our efficiency. We've done 4 key strategic acquisition and one will be new for you. But basically, we increase our capability for in-sourcing in key activity. In 2022, we acquired BRP Megatech. BRP Megatech is the old division of Kongsberg. It's based in Quebec here. But this is a company we acquired in 2022 and basically, they do the manufacturing -- PC design and manufacturing PC board. An electronic and mechatronic component. And what it is in real life, the commodo that we have on our vehicle is done by Megatech. The power steering on our vehicle is done by Megatech, design and production. And the IPR on the watercraft is done by Megatech. Then 80% of their sales was BRP, and now it's part of us better integrated within the company. The other one is Rotax Taiwan and Rotax Vienna. We hire a group of people in Taiwan that were doing part-time work for us. We created BRP Taiwan or BRP Rotax Taiwan. In Vienna, we acquired a company that was existing in Vienna. But basically, those people are expert in software design for EV but also combustion engine, then they are really increasing our capability to do in-house design of software. And the last one, BRP Vietnam, and this is an announcement this morning. Basically, we've signed a few months ago, an agreement for a manufacturing joint venture in Vietnam. Then BRP Vietnam is located in a city that is called Ðong Nai. It's an hour from Ho Chi Minh. And basically, it's a joint venture with our long-term partners, VPIC. VPIC, it's a supplier from us, and we've been doing business with them for 15 years. We are one of their big customers, and we sat down with them and established that joint venture. And the first product that will be manufactured in the joint venture will be the Ryker that we will move from Mexico to Vietnam, and that will be -- that is planned for Q4 next year. But obviously, today, Vietnam is lower cost than Mexico, labor costs and all this, longer to transportation. There is tariff involved. But you will see in the presentation of Steve you'll see in a few minutes, one of the big reason for establishing a JV in Vietnam is for avoiding tariff in South Asia, and we'll come back on this in a few minutes in the presentation of Steve Pelletier. Then this is for acquisition that we've done that is not has, I would say, has visible than when you acquired a company with product, but this has increased significantly our capabilities. Also, during those 5 years, we increased our market position significantly. Then we've gained 6 points between fiscal year '20 and '25, and 4 points between '22 and '25 when we restated our financial target. And this is giving the benefit that BRP today is the company in North America that is selling the most unit per dealers. Then you see here in gray all our competitor line. You see our yellow line. And basically, we pass from #4 to #1 in terms of number of unit by dealers. What is the effect of this is today, BRP is very important for dealers. We are the company where they buy the most unit for the OEM. And we know and we'll talk about it, we're bringing the best margin in the industry. Then this is something that we intend to continue to grow. But the benefit of all this is we are very important for the dealers. We want to take advantage of this going forward. R&D, and Thomas alluded to it. Basically, over the years, we invested 4% of our revenue in R&D. In fiscal year '25, '26, we're closer to 5% because our revenue declined, but we did not reduce our R&D spending. As you see on the chart, we almost double it, and the intent is to keep it at that level. And basically, the strategy that we have, there is more competition. There is competition coming from all around the world, and we want to continue to push technology and innovation to the next level. And for the one who had the chance to join us yesterday and today, you saw the product, you saw this morning our design capabilities. You saw this morning our engineering capabilities. You saw also how we do product planning, and we hope that we convince you that it's money well invested. We know what we do. Then as you can see, we set solid foundation to build on as we enter our next wave of growth. And here, basically, what we plan for the new plan. Then internally, we have a 10-year vision. And the vision is to create the unbeatable experience of moving you in every way. And this 10 years vision is built in 3 stage. And Stage 1 is M28. And we won't talk about Stage 2 and Stage 3 this morning. But internally, what we want to build is unbeatable experience. Obviously, it's experience with the product, but it's also experience with the dealers, experience with the service, experience during the whole cycle of ownership, which I think we can do better. And moving you in every way, obviously, it's on snow, water on land, but also satisfaction with the experience when you own a BRP product. Then I just want you to know that internally, we have a 10-year vision. But what we will focus on this morning is M28. And M28 is after the key decision that we took, is capture our full powersport potential. And in all this, to start with, we kept 3 pillars identical to what we had in M25. We kept Growth, same pillars. We kept Employee X that are at the center of what we do. We kept Customer X, and I think we've done not the best job in M25, and Sandy will tell you how we can do better in M28. And we kept Lean, but we have had Agility. because we realized in the last 5 years that in this new environment where things change overnight, you need to be very agile. And this is why we reinforced the fourth pillar of Lean by now being lean and agility. Then you can say it's a continuity of what we were doing in those 4 pillars. Now here, M28 for the people in the room, I will build the slide. Then it's capture the full potential of Powersport. Then the strategy and the target for fiscal year '28, and I will go over each of them briefly. The first one is to go full throttle to become #1 in ORV. Full throttle to be #1 in ORV. It won't happen in '28. But in '28, we want to return our market share to 30% plus in side-by-side and reach 25% in ATV. We've lost some share in the last 18 months because of our inventory depletion. Then the first step is to go to 30% plus market share in side-by-side and 25% plus in ATV. The second one is to gear up international. You will see Steve will explain what do we do to grow international to the next level. It won't happen in the next 2.5 years. But in the next 2 years, we want to bring international to $2.5 billion in revenue and build for the future. The third one is upshift the dealer and customer experience, customer X, Sandy will talk about it. Fuel the BRP heartbeat, drive value through speed and efficiency. And basically, we intend to reduce our time to market by 20% and also to deliver $350 million of lean value and Thomas and Patrick Dussault will explain to you how we intend to do this. A new one, Boost Defense and Specialized Vehicle. I'm coming back on this in a few minutes. And Rev Up our Product Competitive Edge, and Minh Thanh, Thomas and Denys explained this to you this morning. And the target is revenue of $9.5 billion and normalized EPS on $8. Then this is basically M25. Now we had a debate internally and the Board is working on it, and I want to say a few words on the CEO transition. The Board is working on it, and we are still on plan to have a transition at the end of the year. And I've been CEO for 22 years, and the Board can count on me to ensure a good transmission. I'm not plus or minus 1 month if there would be some delay. Now some of you told Philippe and Sebastien lately, not sure we're expecting a target at the investor meeting. But we felt, to be honest, that presenting a new plan without a financial target wasn't complete. And we know you -- you will all do your model anyway, and you will ask us to give you input to do this. Then after some discussion with the management committee and the Board, we decided to give you the guidance, the financial guidance and here why. First is M28. It's 30 months. It's not long, long term. And second is the strategy and its focus on Powersport. The strategy is defined. The next 2 years in terms of new product are not totally frozen, but are well aligned, then this is not much risk. And the focus for the next 2 years, 2.5 years will be to deliver on Powersport, and it will give a chance to the new CEO to take place to understand the business to adjust maybe some element in the next 2 years, but it won't be, we believe, drastic, but adjust the future. Then this is why we decided to give you the target. Maybe you don't agree, but this is what we've decided, but we believe that it was the right thing to do to give you a complete picture of the M28. Then the financial target, obviously, will be -- and this is from fiscal year '16 (sic) [ '26 ], our midpoint of the guidance and fiscal year '16 (sic) [ '26 ], midpoint of the EPS. But basically, it will be a growth in revenue of 7% CAGR and a growth in EPS of 33% CAGR, then we would go back by the end of fiscal year '28 to $8. And basically, this is the planning. And what we will present to you in the next few minutes is how we will achieve this. And this is our time to convince you that it's realistic. Obviously, always if the macroeconomics stay like this, and it's not perfect. But if there is no big conflict that is stopping something or crazy thing that is happening, we believe that this plan is very achievable. Then this morning, out of the key priorities, 3 will not be covered, and I will say a few words about it. Then the first one is Fuel the BRP Heartbeat. And obviously, the employee is at the heart of everything we do, and we'll continue to improve our health and safety journey. Today, we are about 0.5 in terms of event or accident coming in our plan. We all know that below 1 is very good, and we're very happy to be below that, but we're improving every year. And we will continue to basically hire the best people, give them a carrier growth plan and develop them, and this has been our success at BRP. The second one is Boost Defense and Specialized Vehicle. And on this one, it might surprise you, but we've been selling snowmobile and ATV and outboard engine, MFE outboard engine to Army for the last 15 years. And basically, we developed our snowmobile and ATV for NATO standard in Finland. And we've been selling a few units every year, a few 500,000 units. We never really talk about it. And in outboard engine, and we've kept that technology, we're producing from time to time MFE engine, Multi-Fuel engine, outboard engine for the U.S. Army. They can put jet fuel, diesel, gasoline, maybe vodka to power the engine and it's working. It's working. Then we've been basically supplying or in contact with some countries and army around the world, but it was not a big business for us. Obviously, with what's happening in the world and many countries want to invest significantly in this venue to defend their country. And we've been approached by many, many companies -- many country in the last few months because we are considered -- our products are considered light mobility. Then right now, we decided to put a small team together under the leadership of Thomas Uhr because those countries are coming out with the basic products stay the same, but some particularity that needs some R&D adaptation. And this is why we put this small group. We will beef up the group, but the small group will be under the leadership of Thomas. Today, I cannot -- and this is why we cannot talk about -- we cannot quantify what it could look like at BRP. We're just starting. But you can definitely -- and you will hear about it more and more in the next few weeks or months because it's something that we are more and more involved in. The other one is specialized vehicle. A lot of our dealers around the world are taking a Defender 6x6 with the long box or the Defender Pro, and they're doing specialized vehicle for Red Cross. I visit dealers in Germany who were doing -- they were taking a Defender Pro. They're putting an additional equipment for the Red Cross, selling it for EUR 70,000, and this is growing big time right now, and we want to better support our dealers and maybe do from the factory product for specialized vehicle. Then this is basically this priorities, Boost Defense and Specialized Vehicle. The third one is rev up our product competitiveness. You will see this morning, we have big objective for ORV. But we don't want to slow down in the rest either. Then you saw, again, for the one who are here yesterday and today, you saw -- you try our ATV and -- side-by-side. I hope we convince you that we have the best product into the industry. And you saw this morning our design, engineering and global product strategy, the way we manage our portfolio. Then I hope we convince you that we can continue even if we have high market share in snowmobile and watercraft, we can continue to do well in those business. Then this concludes my introduction, and I will pass it over to Josée Perreault, who is Chief Marketing Officer.

Good morning. So let's talk a bit about our customers. So in recent years, we've been really busy at building our customer base. So case in point, we've built a BRP business experience unit and year-to-date -- or year-to-date, since the inception in 2021, we've been adding about 2 million people or butts on seat that have experienced our product. And these people are mostly new entrants. We've also introduced new product introduction, new platforms, as you know, if you trusted yesterday. And we've also added a direct-to-consumer platform to meet the needs of our customers who want to acquire parts, accessories and apparel online. So today, we feel that we are really well positioned to gain our fair of market share in an addressable market of the power sport industry that we feel is today at 70 million riders. Since 2021, we've been adding 230,000 new customers every year. So since that date, we've added 1 million unique customers that have acquired BRP vehicles globally. And we feel that with those million unique owners, we built a good fan base that we continue engaging. Today, we have close to 8 million BRP followers. They're following us on all our social media platform for all our brands. And as you know, this has grown also substantially over the last few years at the same growth level as our ownership as well. Since 2021, we've added about 1 million followers, and it's engaged followers as well. In our industry, passion runs really, really high, and we have the most engaged followers than our competitors. As you can see here, our Sea-Doo followers are very much engaged as well as our off-road followers. And when I say they are engaged, that means they answer to our post, they emojis our post, they share their repost and whatnot. So this shows the fan engagement for BRP. So I want us to meet our riders right now. So we're pretty well balanced in terms of customer mix. Close to half of our customers we conquested from other brands. We have 32% repurchasers and our level of new entrants is at 21%. Obviously, we all know that COVID was a peak in the powersport industry of new people coming in. For BRP in 2021 as well as 2022, we had a high level of new entrants in all our categories. Today, the level of new entrants has gone back to pre-COVID levels. We also know that our new entrants are more vulnerable to the economic conditions right now. and we attest that with our softer retail sales of our entry-level products such as Ryker and Sea-Doo. But in spite of having a lower level of new entrants, we're compensating elsewhere. Since 2021, we've added more conquesting -- we're conquesting more from other brands. But notably, we also had a huge leap in terms of repurchaser since the last 5 years. So if you look at the customer, we had an inflow of new entrants in 2021, so that changed the demography of our customers. So reversely, as we go back to pre-COVID trends in terms of new entrants, our customer has aged a bit. Since 2021, our customer has gained about 3 years. It stands at 52 years old of average. Our customer continues to be completely male dominated. The majority of our customers come from rural and suburban areas. And the good news is our customer is wealthier than it was in 2021, and that's important. In fact, our customer right now is probably twice as wealthy as the median of an average wage in America. Our customer -- 1 in 2 of our customer earns $150,000 right now. It was -- that ratio was 1 in 3 back in 2021. So we're getting a bit wealthier since that time. It's also notable on the graph of the right side that our customers are less impacted with the economic condition. When you speak to our customers, they all feel and they all see the crunch in the economy right now, but they are most -- since they're wealthier, they feel much more -- much less vulnerable than the customers out there. So we've spoken about the overall BRP customers. Jose said just earlier that ORV was one of our focus. So let's start to focus or zooming on ORV. Right now, in terms of brand awareness for Can-Am, our ORV brand, we're gaining momentum, and we're closely bridging the gap with our main competition in terms of brand awareness. Also 1 in 2 of our ORV customers, we've conquested from another brand. That means that ORV owners of other brands have switched to Can-Am in the recent years. That's mostly enlarged by the enthusiast of our Can-Am owners. We know that right now, we're bridging the gap also in terms of NPS score for the SSV owner. So we're close to our main competitor. We surpassed a lot of our competition. We're not the leader yet in terms of NPS score, but we're soon bridging that gap. So we've asked our owners, all ORV owners, all brands combined, what do they associate BRP? What are we known for? And it was a resounding effect that BRP in ORV space is known for quality and power, not surprising considering our reputation in performance. But as you can see in the lower left quadrant, we're much less known in terms of utility and farming and ranching. So for us, this is a great, great opportunity. So every year, we do a brand association survey, same principle. We go ask the overall ORV owners out there, what they associated us with. So at that point in time, last year, 29% of ORV owners associated with Can-Am through ranching and farming. Same survey done a few months ago, that level rose to 42%, which is a huge improvement in leap of perception, and that means we've really nailed down a vector of growth for ORV in general. So we also in the ORV band have 1 in 3 of our ORV customers are repurchaser. What does that mean? That means an ATV Can-Am ATV owner will repurchase another ATV on a side-by-side in the Can-Am brand. But what it also means is that we have repurchasing within the portfolio of brand right now. Case in point, 22% of our Ski-Doo owners own the Can-Am brand, okay? And we feel that this is an important opportunity for BRP, given that we cover all playgrounds and we cover all seasons. We're probably one of the first OEM that can pretend or say that we cover all of that. So if you look at the space of the cross-brand purchasing of our customer, it grew 28% in the last 4 years. And we feel that we are scratching the surface, 29% growth of cross-brand purchasing -- and that's organic growth, that's us doing barely anything. So obviously if we push slightly that measure we feel like it should be a good focus in the next coming years. So as I bring you back to what I said at the beginning, our aim is to build a huge customer base. It's to build fans and engage our fans. To do that, we have an important marketing machine. We have over 150 ambassadors. We are present in more than 30 events with our customers. We launched last August a new brand platform for Can-Am showing that our brand is unstoppable. That's the platform we are pushing for the next few years. Also our brands are engaging. We're seeing a lot of traffic to all our websites for the brand. Traffic to our websites increased 28% this year alone. So obviously, we're going to continue pushing on that machine. It's really important for us to continue building our fans and continue engaging our fans because our ultimate goal is to build for BRP, a great BRP fandom. On that, I'll pass it to Sandy. Go ahead, Sandy.

Thank you, Josee. Let's kick it off. Let's kick off the strategic initiatives. I brought with me, obviously, David Baker and Steve Pelletier. And David is responsible for the North American market, and Steve for the international markets. So before we get into the specifics of the strategic initiatives, let me just remind you that we are operating in more than 130 countries worldwide through 2,700 dealers. And just to note, what you see on the left side of the screen is our diversification. More than 1/4 of our revenues come from international markets, so outside of North America. And that speaks, obviously, diversification, but also it speaks resilience. So diving into the North American industry, what you see on this graph, the line is actually the industry, Powersports industry and the bars are actually our wholesales. And I won't repeat what Jose said, but it was obviously quite a ride going through the different crisis that we had to go through, starting with the pandemic with the undersupply, then obviously, the supply chain issues and then the oversupply as we replenished inventories in the network, combined with somewhat of a slowdown of the industries in fiscal '24. We -- at the spring of last year, we had to make a tough decision in reducing significantly our shipments to protect our dealers, obviously. And I'm all saying this because the whole plan was to be in the position we're in today in fiscal '26, where except for snowmobile, wholesale will equal retail in our planning. And that's the value we're bringing not only for our dealers, but also for our investors and for BRP. Now when you look at international, it's a similar pattern that we've seen within the recent years. But this while absorbing the exit of Russia, we tend to forget this. And in terms of wholesale equals retail, it's pretty much in the same range, but you see less variation from international not by country as an aggregate international because we see right now countries that are struggling more, but there's China, there's Brazil and there's Mexico that are doing really well. And just a note, Mexico is now the second biggest ORV business outside of North America, so growing really fast. So very interesting. So again, back to spring of 2024, a little bit of a reality check with the inventories growing faster than expected. We had to take or put a time out to the shipments. And what we had in mind, obviously, was to protect our dealers. The dealer value proposition for us is key. This is what we believe, was a key ingredients of the growth of the last 10 years. So the intention was to reboost the dealer economics, make sure that they make money with our products and we differentiate ourselves by OEM profitability, and that was for us, key. But as we also grew very fast in the last years, we became a little bit more complex, and we made sure that we eased the way of doing business with our dealers, introducing new ways, simpler ways for the dealers to actually deal with us. And despite the slowdown -- the latest slowdown in the last 18 months of the industries, we did invest and additional resources directly supporting our dealers, both on the sales support, but also on the technical support as our business not only got more complex, but our vehicles have become more complex as well and the dealers needed the training, needed that attention to get back on track. So this is what was done in the last 15 months. And the whole point here is to how we set ourselves for the rebound. And this is why I say BRP at an inflection point. For those of you that were at the club in Boston, where we launched the Defender HD11, the 6x6, the 300 HP on the Switch and many other product news, by far, we are recognized by our dealers to be the most aggressive OEM in terms of product news. Nobody else came even close to the number of products that we launched on Boston. So this is certainly engaging the dealers big time. Like I said, in North America, except for snowmobile, we're on track in terms of wholesale equals retail. So inventory-wise, we're in a good position. Jose talked about it, especially on the ORV, and we're actually rebuilding some inventory as we speak. And thirdly is this dealer sentiment. When you make this tough call and when we decide to care about the dealers and caring about dealer profitability, protecting the dealers, but also our brands, this is the reward we're getting from the dealers. So sentiment from the dealer side. This is something, by the way, we do measure on a quarterly basis as we saw that sentiment going up significantly in the last 12 months, I would say. Now tackling the different strategic priorities, as Jose mentioned, Full Throttle to #1 in ORV. And I think I'll repeat it again. We are going for the #1 position. And -- but for the next 30 months, our target is 30% market share for side-by-side and 25% market share in ATV, and that's for North America. As far as gearing up for international, this is preparing the grounds for the next wave of growth. As you understand, there's a lot of wealth going Far East. Middle class is exploding in many regions of South Asia, but also in China. And although we're well positioned today, we have a strong network, we can do more. And Steve will explain exactly how he's going to prepare the grounds to be able to hit the ground running when we're ready to do this. So this is about preparing the grounds for the next 30 months. And I'll be covering Upshift the Dealer and Customer Experience, and I'll jump into that right now, and then David and Steve will follow through right after. So in terms of this importance of -- remember the M25, it was all about CX, but the dealer dynamic and how we manage CX is super important. And this is why we have a target for our dealers, and this is to be the undeniable OEM of choice for our dealers. If the dealers win, we win and increase our NPS, customer NPS. This is how we create ambassadors by 20% plus. This is our target in the next 30 months. So strategic initiatives, again, a lot around the dealer deploy our revamped network value proposition. And this is around profitability, ease of doing business and trust. These are the 3 key attributes that the dealers are telling us a few guys do this, you will win the business. Secondly, raise service excellence and aftersales operations to become the industry benchmark. And I'll cover that a little bit later more in details, but with our premium brands, now it's time that we get to the premium experience and service. And thirdly, enhance the ownership experience with relentless focus on converting detractors into brand promoters or ambassadors. And not to forget, we will continuously improve on the purchasing experience across all touch points. On that specifically, and this is -- internally, we say DX as a driver of CX. And there's the reason why we're saying this. It's because they hold 80% of the customer interactions. And to be honest, as an OEM, we've been focusing in the last 10 years on the purchasing experience especially in the context of digitalization. This is where we've put the most focus in the last 10 years. And as far as the ownership experience, which is actually measured in years, and this is how you build lifelong relationship with the brands, this was mostly in the hands of our dealers. And this is the shift that we're going to be making and the importance of what the dealer has a role to play in making that transformation. So how we're going to do this, and this is stepping back and understanding what we need to do with our network so that they can provide a consistent customer experience. First off is about elevating our brands. This is what we always do, invest in our brands, but also in the franchise value. So this is not about our profitability. It's also about the dealers' profitability. If they are successful and they're profitable, obviously, they'll be able to invest in our brands. And secondly, in exchange, we'll be asking for more. Josee talked about the fact that now we are the OEM that sells the most unit per dealer. We are in a position to ask for more, making sure that we transform our dealers in much better retailers. And that has to do with how we control the retail environment and how we control the service environment and so on and so forth. So when we do this, we believe we can become the most attractive OEM for dealers. And by the same token, this is attracting the best operators and the best investors in the field to carry our brands and to carry our brands, obviously, in the future for growth. Last but not least, this is probably the most important pillar of our dealer value proposition is how that translate into bringing this premium customer experience. So again, the overall objective, remember, DX is a driver of CX. We start with the dealers. We make sure that they can -- they're set up to be able to provide that premium customer experience. Now why is this important? What you see on the left is the quadrant. And we understand BRP. I think this is undeniable. We are playing in the premium product segment. Our brands are premium. But in terms of premium experience, as Jose said, I don't think we are doing a super job. And industry-wide, I think we can raise the bar as well. And this top right quadrant is about this white space that exists today in powersport. Nobody is there. But we believe we have the right to capture this and make sure we continue growing while obviously providing that premium experience. And the drivers for this is speed and responsiveness for service, ease of doing business. And obviously, service profitability and scalability at the leadership is very important. And at the end of the day, what drives customer lifetime value is buy more, refer more, stay longer in the category. And at the end of the day, it's going to cost less for customer acquisitions going forward. So on this, I'll pass the mic to Mr. Baker.

Thank you, Sandy. Good morning, everyone. First of all, I'll introduce myself. I guess I'm a new face for this crowd, but not new at BRP. I've been at BRP for 17 years, 14 of which I spent in the North American division. Prior to this role, I spent 3 years based out of Sydney, Australia, where I was General Manager for our Asia Pacific division. And I've joined North America back as the Vice President and General Manager for North America at the beginning of fiscal '25. So before we start, allow me to give you some perspective on our past performance. So what you see on the chart is the North American off-road industry per OEM. Obviously, the white -- the yellow line is Can-Am and all the other lines are players in the industry. So from fiscal '19 to fiscal '25 and fiscal '19 being the index point. A at the end of the day, Can-Am retail grew over 60% from fiscal '19 to fiscal '25. And then when we sum up the competitors to understand the industry average without Can-Am, Can-Am significantly outpaced the other OEM in the industry. But then if we take a further step back and we look at a horizon of 10 years, so from fiscal '16 to fiscal '25, our market share went from sub-10% to 25%. We went from being a third player in the industry to a solid second in the industry in fiscal '22. And all of this in that period that we delivered double-digit annual retail growth over those 10 years. But then if we zoom in from fiscal '20 to fiscal '25, Can-Am has closed the gap with the #1 position by 46%. And what I mean by that is that when you look at fiscal '20 and you calculate the quantity of units that was required for us to be #1 and then we look at where we finished fiscal '25 and looked at how many units is now required to be #1, the delta between fiscal '25 and fiscal '20 has shrunk by 46%. And obviously, all this is also because of the expansion of our lineup. It has been a key driver of our success. We've introduced game-changing products across different segments of the category. In full transparency, products that have shaped who we are as an organization. Over the last 10 years, we've gained valuable knowledge of the off-road industry, but also products that have shaped the industry itself, setting new standards in terms of performance, handling, build quality, design and fit and finish. But meanwhile, we've achieved this with limited addition of dealers. If you look at the left-hand side of the screen from fiscal '14 to fiscal '19, this was the initial phase of the dealer network expansion, and it was tied toward lineup expansion. But then from fiscal '20 until fiscal '25, we've gained 10 points of market share with limited addition of dealers. And today, there is a white space in the industry for us to fill a gap given our market share position. So when we sum all of this up, over the last decade, we've built an industry-leading portfolio of products. We've built an engaged and performing dealer network. But above all, we've built some momentum. And today, we're ready for next wave of growth. And as Jose and Sandy said, that next wave of growth for us is to reach the #1 position in the off-road industry, and let me walk you through this. And why off-road? The off-road industry is 3x the size of the other industries in which we play in. When you look at the left, the other products of the portfolio and in their industries, we come in, on average, 50% market share. When you look at the off-road industry at 25% market share, we see plenty of runway ahead of us. And today, as I said, over the last 10 years, we've gained knowledge in the off-road industry. So we have the capabilities, but also the resources to reach that #1 position in the off-road industry. So full throttle to #1, Jose mentioned the target for side-by-side is for us to regain that 30% market share. We've been there before in fiscal year '25, but we made the tough decision to cut production to reduce inventory at the dealers to protect their profitability, to protect their long-term engagement with BRP. Now that inventories are level set, we're not going to be standing on our back foot. And on ATV, our target is set a new milestone for Can-Am Outlander with 25% market share. And we have 3 key pillars. Number one, it's about optimizing our network coverage in the U.S. by adding 100 dealers in the U.S. Secondly, it's about gaining share of wallet in underperforming markets. And lastly, it's about winning in key underperforming segment with a competitive value proposition. In terms of dealer network expansion, we're targeting to grow our North American network by 100 dealers. And more specifically, this will be in the U.S. by the end of fiscal '28. 30 dealers this year, 40 dealers next year and 30 dealers in the last year of the plan. This should grow our U.S. dealer network by roughly 10%. And we're going to add those dealers focusing on the region where we're underserved by Can-Am. And the reason I'm saying this is that we want to improve our industry coverage while limiting dealer oversaturation. Sandy mentioned it, we want to make sure our dealers are profitable and viable. Therefore, we will limit dealer oversaturation. In terms of industry coverage, adding 100 dealers is expected to bring our industry coverage in line with the rest of the industry. In terms of dealer count, we're still expecting to maintain a dealer count despite the fact that we'll add 100 dealers below the rest of the competitors. Therefore, we'll be thoughtfully managing our network expansion to protect that dealer profitability. So therefore, we'll not open points at any given cost. Our second key pillar is about winning in underperforming markets. Let me share with you what we've done in the past. We've successfully deployed Growth plays initiative in multiple regions over the year. And the first growth play we had was in Texas. So if you look at the left side of the screen, yellow bar, our Texas market share. Black bar is the U.S. without Texas in terms of market share. And you see the evolution from fiscal '16 to fiscal '25. At the end of the day, at the end of fiscal '25, our off-road market share in Texas was 9 points higher than the rest of the U.S. And thereafter, we've launched 2 other initiatives, one in 2022 and one in 2023. In both of these markets, our market share outperformed the rest of the U.S. So therefore, we understand how to win in key markets, and we have a proven recipe to drive tangible results. So if you look at the top of the slide, it's Can-Am Off-road fiscal year '25 market share performance. We've divided the market in 3 categories: Underperforming markets, so this is our bottom 20% then completely to the right, our best-performing markets, our top 20%. What I want us to remember here is that in our top 20% of our markets or our best-performing markets, Can-Am market share commands 40% plus of market share. Whilst at the same time, when we look at our underperforming markets, we have less than 20% market share. Looking at the lower part of the screen where we see the industry size per market, in our underperforming markets, the industry size of those markets is 50% larger than our best-performing markets. So we see a substantial opportunity for us to grow by addressing our underperforming markets with our own recipe, which we call Growth place. And as well, we're going to focus on improving underperforming categories. So in the portfolio, on side-by-side and on ATV, we have products, which we call our best-performing segments that deliver today a market share well above our M28 target. However, at the same time, we have an important volume opportunity by addressing those underperforming segments and the average segments, and we will be focusing energy on that portion of the portfolio. And at our recent dealer event, we've done just that by reinventing the best-selling side-by-side with the launch of the Defender HD11, brand-new platform, brand-new engine. We brought value for money for our customers with the introduction of the Maverick X3 X, and we've introduced rough climbing capabilities to our flagship Maverick R. And then on ATV, the Outlander Back country has everything for the outdoor enthusiasts. We've overhauled our workhorse, the Outlander 6x6. And last but not least, we've introduced the first EV ATV of the industry with the Outlander EV. But product strategy is one thing, but we're also implementing commercial strategies. One of the major news that we did at our dealer event was the following. If you look at the left of the slide, which we call the RC SPORT Mid-HP, the segment, this is our Maverick X3 135 HP. We've reduced the price of that vehicle by $2,000. The MSRP today in the U.S. is $19, 999, and we've priced that vehicle on purpose head on with the category leader of that segment. And same can be said for the other segments. I'll touch briefly on the UTE REC Mid-HP. This is the Defender HD9, which saw a price reduction so that we are priced head on with the category leader. And then the UTE REC Mid-HP cab, this is the Defender HD9 cab now priced at $20,999, making it the most affordable full-size cab of the industry. So we're optimizing our model year '26 pricing to unlock volume opportunities. And to sum everything up, so full throttle to #1 in Off-road, a 3-pillar approach. Number one, we're going to increase our dealer count and improve our network coverage. So plus 100 dealers in the U.S., more or less plus 10%. We're going to expand our growth play strategies so that we address those underperforming markets. And we're going to bolster our lineup, not just from a product strategy standpoint, but also from commercial tactics to improve those underperforming categories. So the target is clear on side-by-side. It's to return to that market share of 30%. And on ATV is to set a new benchmark at 25%. So we're setting a solid foundation today to rapidly grow our market share by fiscal year '28. But most importantly, it's to sustain that momentum well beyond that point so that we become #1 in the off-road industry and Can-Am is known as the best-selling off-road brand in North America. On this, I'll pass it on to Steve.

Good morning, everyone. Pleasure to be with you. First of all, let me introduce myself. Steve Pelletier, I'm the General Manager for the International business at BRP. I've been with BRP for over 21 years. My first 12 years at BRP were in Finance. And then I evolved into the sales side at becoming the General Manager of Europe, Middle East and Africa. And then 4 years later, I became the General Manager at International. So it's a pleasure for me to be here. Let me start by highlighting a bit the strength of our international model, our network and our network coverage. Outside North America, BRP operates through 2 complementary business channel, the dealer direct model like we have in North America, but also a distributor model that allows us to penetrate markets that have less volume in certain part of the world are more complex to penetrate and requires less investment. And together, they gave us a very good presence in more than 130 countries with 1,100 points of sales. This level of coverage, very few in the powersport industry can match. It gives us a true competitive advantage, combining global reach with global expertise. And it's a foundation that supports growth and resilience, like Sandy mentioned earlier on. But that's not all. Building on that network strength, our geographical and product diversity is another major differentiator. We now operate across 3 main regions: Europe, Middle East, Africa, Latin America and Asia Pacific, and we offer the full range of our product portfolio in each one of them. This balanced footprint pretty much means that one region struggles with either economic downturns or climate headwinds, the other can actually offset it. And you'll see that later on in the presentation. It gives us stability, flexibility and a global growth engine that very few competitors can replicate rapidly. But dealing at international brings its sets of challenges in a global footprint like that. And this is what makes my job actually very, very interesting. We operate across 2 hemisphere under the pressure of regulatory frameworks that actually can affect the playground in which we operate and the product that we can offer in some of these playgrounds. And this is why you see programs like responsible rider being important, the launch of Maverick Sports with ABS. Our ORV products in Europe have ABS brakes to bypass some of these regulations. And that is an important part. However, when you look at it, then despite these challenges, our international business remains a tremendous source of opportunities. In many of our markets, it's not just about gaining market share. It's actually developing the powersport industry as a whole. And with the teams that we have and the ability to maneuver and adapt in this environment, it positions us very, very well to capture these future opportunities. So what I've described is actually the backdrop of M28 for us. And Sandy alluded to that. M28 is our road map to build capabilities required to capture growth beyond fiscal year '28. Our strategy will focus on accelerating our growth in Asia, maintaining our very strong momentum in Latin America, like Sandy talked earlier, establishing a manufacturing... [Audio Gap] The first region to be faced with the economic challenges that we have. But also we combine this with weather conditions that were not optimal for our seasonal product. But even through this, we are holding a very strong market leadership position in seasonal product, and we're actively developing the untapped potential in the utility ORV market. EMEA is the more mature region that we have, but it's one that is poised for rebound, especially in the seasonal product. And our increasing focus on customer experience, like Sandy alluded to, and the utility segment will be a key differentiator in what's already a competitive segment. Moving on to Latin America. I've mentioned that EMEA is a more mature market, but Latin America right now is our growth engine internationally. It's our fastest-growing region, fueled by very strong performance in Mexico and Brazil, which is backed by a solid team, local team, but a highly -- a high-quality dealer network in both of these countries. Actually, when you look at Mexico, and Sandy talked about it earlier, has quickly developed a very robust ORV business, while Brazil is excelling in developing the seasonal market through PWC. And by sharing the knowledge and sharing best practices between the 2 countries, we're able to accelerate the growth in both countries and in both categories. And the opportunity that lies ahead for us are still very promising as we continue to expand our network and developing regional initiatives to continue to develop the industry or the powersport industry. And when you look at our network, here, you see some of our dealership in Mexico and Brazil. They are modern, professional and fully aligned with our brand image. And these partners are a cornerstone of our success. They bring BRP experience to life and a major reason why we continue to outperform year after year in these regions. Now if we move to the other side of the word with Asia Pacific, the growth in that region has actually been tempered by a slower economic situation in Australia and New Zealand. Australia and New Zealand were probably the first 2 countries to start slowing down a few years ago. Even so, in that region, we have built solid and established network that gives us a leadership position in seasonal product and a strong position in ORV. In Australia and New Zealand, we'll continue to focus on the PWC market, but also the utility ORV segment, where our products are perfectly matching the local usage and terrain over there. But at the same time, in Asia Pacific, we need to continue to develop the potential in emerging across Asia and ensuring that APAC remains a key contributor to BRP's future growth. And if we look at Asia, specifically, excluding Australia and New Zealand from previous page, you see that the growth story becomes even stronger with a growth rate of 11%. We're actually building strong foundation by developing a premium network and service levels that deliver a high-end consumer experience aligned with our brand standard. At the same time, we're creating the industry itself by democratizing the access to our product by developing new playgrounds, introducing new business model with partners such as rental operators or white glove services experience that help new customers actually discover our products. And when you look at the overall macroeconomic or macro environment that Sandy alluded to earlier on, it supports that growth trajectory. Government in some countries are actually investing in domestic tourism and leisure, which is perfectly aligned with the portfolio of products that we offer. And with a rapid expansion of the middle class, where the number of households able to afford our products will keep increasing for years to come, it provides significant opportunities for us to continue to grow over there. So our strategy to Asia is really focused and clear. First, we'll develop a high-quality network of dealers or representative that will represent our brands. Second, we need to drive awareness of BRP, our products and also the powersport industry. Third, we'll be partnering with local authorities and stakeholders to develop sustainable playground, but also a supportive framework around it so that it's sustainable for many years to come. And finally, by deepening our understanding of consumer to create products and experience that truly match their needs. Together, these pillars define how we will lead the premium powersport industry in the markets such as Asia. On the next page, you actually see example and here, tangible proof of what we're doing in China. Our newly opened leaderships in that country. They actually showcase the professionalism, consistency and brand experience. To us, they're more than just point of sales in that country. They're actually ambassadors of BRP's premium positioning and a key part of gaining the customers' confidence. If we move on to what Jose talked about earlier on about the manufacturing footprint in Asia, specifically in Vietnam, this is a key enabler of our growth strategy in Asia. This will help us overcome some key structural challenges that we face with long lead time, high transportation costs and high duties. In certain countries, import duties can represent up to 50% of the value of the product. So we needed to find a way to reduce that and the manufacturing footprint in Vietnam will help us. And this is why we actually chose Vietnam strategically. Vietnam is at the center of many free trade agreements in Asia, but beyond Asia. And it's going to give us a tremendous asset that we'll be able to leverage, continue to grow and give us a significant competitive advantage from a cost perspective, speed to market and market access. This is a chart that I like because it shows the diversity of what we've been doing over the years at international. And you see there that our approach has allowed us to double the international business despite various headwinds. And you see Russia there where we lose -- we lost the business in Russia almost twice with everything that has happened over the years. But we were able by developing new markets and strengthening market position where we are to alleviate some of these bumps or headwinds that we face. And this track record actually proves that our model works, and it gives us the confidence to continue scaling across all regions that we're doing business at international. In conclusion, we've talked about the numbers, but BRP International actually stands on very solid foundation. An experienced and agile team, a powerful global network and a clear mission to build capabilities that will carry us far beyond fiscal year '28. We've shown we can grow, adapt and lead in a complex environment. And with Mission 28, we're now positioned not just to grow faster, but to shape the future of the powersport industry worldwide. Thank you, everyone, and I'll pass it on to Sandy to conclude.

All right. So I think what you just saw is the power of the refocus on powersports and the depth of the plan going forward speaks the investments and so on. I just want to make sure that we go back to the 3 strategic initiatives, ORV by far the biggest opportunity. I hope David convinced you that not only we have a vision with this plan, but we're actually hitting the ground running with proven approaches on the commercial side. And on the Gear Up International, this is probably the best kept secret of BRP. Obviously, in the next 30 months, we will grow that business, but the better is to come post fiscal '28. And all of this around this focus on the customer creating this lifetime value, but focusing on the dealer because they own 80% of the touch points with our customer, I believe, is the right thing. So all in all, we believe, is a very solid plan. And on this, I believe we'll take a 10-minute break. [Break]

Good morning, everybody. I try to get your refocused after the break, and we do this with speed and efficiency. Patrick and myself want to use the next couple of minutes to show you what we are intending to do at BRP in order to drive value through speed and efficiency. Our target in this initiative for fiscal year for our M28 is accelerate time to market by more than 20% and deliver more than $350 million of lean value. For this, we have 4 strategic initiatives that we are following. As you can see, we want to accelerate our time to market and to reduce development costs with our new product development process. We want to optimize the utilization of assets and our net working capital captured. We want to achieve consistent results on our key productivity and cost KPIs. And we want to strengthen our culture of continuous improvement for all of us at BRP going forward. For this, we prepared a couple of examples. And as we are under the Lean and Agility pillar, I want to be very lean, and I reuse the slide that I showed to you 3 years ago. Because the metrics of cost is not really changing. And what we changed and what we refined big time is the initiatives that you see in yellow below. We want to show you, Patrick and myself, we want to show you some examples for modularity, product design, material cost savings and for labor cost efficiency. And I start with one very important thing that already starts in design and in the conceptional design of a vehicle of a product, which is the modularity, the family or platform fit of a new product. What you see here is our new ATV that we introduced 2 years ago. We started to introduce it in the mid-CC platform. We -- a year ago, we introduced the big high-CC platform, and there is more to come. But all this is within one platform. And between all of these products, we have a modularity of single parts that is bigger than 70%, which makes it for us very easy to do cost effectively different variants of this platform. The most expensive portion in our products is still the powertrain. And the whole propulsion system in these units is also extremely modular setup. So just between the 2 engines that we are using in this platform, it's a modularity for more than 80%, which is quite unusual when you see that these are completely different engines with a wide spread of power and displacement. So 80% gives us an opportunity to react on different market developments in the future, very flexible. And all what I'm showing here is also true for our electric ATV. On the electric ATV, the same level of modularity on the propulsion system side and on the vehicle side. Another example that I have here is that we call it internally XCU. So it's a flexible computer that controls engine gearboxes and vehicles. This system, it's electronic hardware. The most expensive piece of it is the software. Software and electronic development becomes more and more important and is a big portion in development time, in quality, but also in cost. And therefore, we started years ago to standardize this in standardized modules, and this is such a standardized modules. In the past, you buy this from a supplier. The supplier delivers you the hardware and you get the software developed by a proven supplier. Today, we are doing the software portion in-house. So all the specific software that we need for the different product lines is done in-house, and we are using the same standardized hardware that we can buy very -- to a very fair price on the market. And you can see on the table on the right side, we are in the process of rolling this out. So more than 90% of our vehicles will have this controller, which is a huge saving potential and makes it only possible to have this electronic and software features on our vehicles that we would not be able to develop for each vehicle individually. The next one is a relatively simple example. It's a material change that we did. So we changed the -- it's called the rear knuckles or the piece that holds the wheel, and we changed it from forged aluminum to forged steel. This is an annual saving of $3 million. Now you could say, $3 million is not that thriving. If you have 10 of such activities, you already have $30 million. And this comes without customer disadvantage. And it's actually the opposite. We are also improving our carbon footprint with this decision. Another example is the lighting. When you look at the front of our vehicles, our vehicles looking -- first of all, they are beautiful, of course, but they are looking different. Each vehicle looks very different. But we are using one standardized LED module for all of this lighting. With this, we are getting in completely different levels of volume for this lighting element, and we can -- first of all, we get a very good quality. And secondly, we get it on a very good price because for our supplier, we are interesting with this volume that we created with this modularity. In this case, it's a saving in the range of $5 million per year. This is a complicated example. Let me explain this a little bit. In each product, if it is electric steering, if it is the IVR brake on our Sea-Doos, if it is an electric product there, it's obvious, we have electric motors or we have parts in there that requires magnets. Magnets are built -- the standard magnet today, the high-efficiency magnets, they are built with seldom earth. Seldom earth is mainly controlled, 80% plus is controlled worldwide by China. And actually, there was an update yesterday. It's getting worse. China is using this instrument also for controlling who gets what in this market. It's a huge lever. What are we doing here? And what is the advantage of having a flexible, agile organization? So we are capable of sourcing magnets from different suppliers as the ones that we originally have in our plan. We are able to adapt our own internal designs so that these new magnets are fitting, which gives us the opportunity to react very fast on demand -- on supply problems that we see due to some changes in the legal environment. And long term, this is the short-term reaction on the right side, long term, all these little black pieces that you see on the inner circle, these are the magnets in an electric engine here as an example. And there are techniques available and we are working on them to either reduce the magnets to use magnets without seldom earth content or to get completely rid of magnets in electric machines. So this is the midterm to long-term solutions that we are working on to reduce our dependability from this. So an example how to react to supply chain limitations. I already talked about time to market. One main element in the time to market is the time that we need for our new development process. And this time, we did some intensive benchmarking, and we developed our process. We streamlined our process so that we are targeting a reduction from more than 20% for the from decision of a new product until it hits the market, so until we have start of production, which is quite significant and makes us more agile in the future. And as a secondary outcome, we are also reducing our cost, and we are able to reduce also product cost with this because we are much closer to production and time-wise, much closer in what we are doing in the development work. With this example, I'm handing over to Patrick, who gives us some examples from the operations side, please.

Thank you, Thomas. Good morning, everyone. first time we meet. So just introducing myself quickly, 29 years with BRP, always in the field of -- different field of manufacturing. Core of my career has been in designing and implementing the current manufacturing footprint. Today, in charge of global manufacturing since the last 3 years and part of the management committee since January last year. So let's then have a look on how manufacturing is going to contribute on creating this link value. So our plan is based on 3 pillars. First one is about strengthening our culture of continuous improvement, then boosting our performance through focus on operational excellence and cost reduction. And thirdly, strengthening our position on digital and AI-driven optimization. So if we start with culture in manufacturing, continuous improvement has always been part of what we do. But in the last decade, a lot of our focus was around growth and managing capacity. So starting in 2024, we saw that we needed to quickly change from a mindset of growth to a mindset of lean. And the only way to win when you focus on lean is to make sure that you find your way to bring all of the employees starting from shop floor to leadership being part of those value creation and waste elimination program. So this is what we did, and we had quite a lot of success in the recent years. So this is based on this that we were able to deliver on M25, and it's going to be the foundation on which we're going to build to work on the M28 value creation program. So the way we did it is we gave teams real visibility and ownership on cost driver. So the way we attack it is we took the cost per unit of every product being produced in every factory, and we broke it down to hundreds of granular element. And then what we did is we identified the cost driver, which impact all of those subgranular elements. And we sit with all the leadership, production supervisor, manager, again, all site functions across the global footprint, and we train them on how to define better those cost drivers and what are the levers that they do have in their daily job, right, that they could trigger in order to influence those drivers and generate cost reduction. So we started that 1.5 years ago, and the momentum is very interesting and somewhat exceeding my own expectation. So we're having a lot of Ideas coming from every level of the organization, thousands of ideas. And I just took 3 of them just to have a little bit of a representation of what's going on. Obviously, we need to classify them because we have thousands of them coming from the shop floor, some of them coming from the office and some of them which are more transformational. So just using one example of this employee forklift driver in our Mexican plant. His job is to pack some welded part to be sent to Canada in a warehouse for parts and accessory. So raised the hand as a supervisor, knowing better a little bit of what he controls in terms of cost. Why am I using brand-new boxes to ship parts to a distribution center for which they're going to be repacked anyway instead of using the ones that I'm throwing away on the compactor, right? It seems very simple as an idea. We did some testing, then we get the go ahead, implemented this, and we save $15,000 per year. And now the same employee is working on recycling pallets to do the same thing. So just one example, one employee, think about what could happen when you have thousands of them and you scale it on a global scale. Professional employee engineer working on the laser cutting process, understanding his cost driver, nitrogen is one of the main cost driver he's having in the process he manages. Went on the Internet, talked to the manufacturer of the equipment, came out with the idea to say, "Hey, why don't we move from nitrogen to dry compressed air in order to run the process." Did the business case, we implemented the solution, $700,000 of saving per year, 3 plants, time 3 plants for just a little investment. So again, just not impacting the cost driver, just improving or reducing the level of gas, but just canceling or not avoiding the use of gas completely. So last example, manager in transportation, understanding his budget and his driver realize that we're paying a premium cost when we ship containers to international market because our products are classified as of this material. Why? It's because we're having some residual gas remaining in the tank, right? Can we remove it? No. Paradigm, sat with engineering, with method engineering inside our factory, find ways to remove residual gas, we save $5 million per year. So again, when people and the whole workforce in every level understand that lean is not about working harder, it's about working smarter and you scale it up to thousands of employees across the globe. It not only generates millions of savings, but it will help us to shape our culture. So having ideas is one thing, but sustaining them is the challenge. So the way we do it is to make sure that once the employees are having the full accountability on finding the solution and implementing them, we make sure that we do take the time and the quality time to recognize them, okay? So is it via through the daily walks or the weekly or monthly meeting or quarterly celebration, we do take time for them to understand that what they do matters, and it's having a lot of impact. So if you look at the Net Promoter Score today, we're having a Net Promoter Score result, which is 2x higher than the average manufacturing industry in North America. So this contributes to create a purpose for all the employees coming to work and engaging themselves into continuous improvement. But we're not stopping there. So we're trying to amplify this using some of the AI tools that are available nowadays. So we started to define how we should tackle this big old world of AI into manufacturing. So what we wanted to do is to make sure that we're extremely pragmatic in the way that we attack it to start with. So we just identified some areas where we could do some proof of concept on making sure that we do solve concrete issues that we're having on the plant. So again, just using one example, you see in the middle, those -- going back to those tube cutting. But pretty interesting process because you're having more than 700 part numbers coming from more than 32 profiles, but we're feeding 3 plants in a piece throughput system with more than 14 million cuts per year. And at the end, every tube link, you scrap a portion of the tube that goes to scrap. But with the amount of tube we're consuming, we're generating more than 3 million of scrap per year. But to try to define the best cut pattern with an engineer and Excel spreadsheet, it's extremely complicated. So sitting with Stephane's team and the data team and the AI team, they supported us to build this application. And now we're just using it, and we're able to reduce our scrap rate by $700,000 per year with a very minimal investment. So we're learning how to use those tools to generate savings in a simple matter, but we're progressing pretty well. Now we're using it to -- we're having a project going on. We're using AI to optimize our mix pattern on the assembly line of the snowmobile line. So more than 100 workstations with more than 400 SKUs to find the perfect mix, again, it's super difficult. So with the AI, we're able to generate a visualization of what's the best mix. And we're implementing it, and we're going to have more than $100 million of saving in the next few years again. And now we're working on load optimization for finished product distribution, and we're just starting. So again, the point is we're scratching the surface at this point, but we're moving in the right direction, and it's pretty much promising for us going forward. So this works not only in delivering cost savings, but also on helping us to deliver a pretty good level of KPI result in terms of operational excellence. So if you look on the chart, starting with safety to quality, to productivity, to people, today, we're at the strongest operational momentum we had in the last decade. So another proof of when the culture is there and the focus is there that we're being able -- we are able to generate a lot of great momentum on the manufacturing front. So if I then step back and look at the global picture, coming back to Thomas' introduction, the whole value creation pillar at the corp level, the good thing is we're having a lot of momentum. So if you just look at where we are as of now today in fiscal year '26, we're on the path to deliver more than $150 million of savings only this year. So this is already a good step forward into this mandate of delivering $350 million. So we're on it. 50% of the year, like Jose said, is behind us, but we're already having a good portion of the objective, which is already met. So in conclusion, well, the goal is pretty straightforward for all of us. It's to deliver sustainable, substantial margin improvement by fiscal year '28. And how we're going to do this? Well, we're having $1 billion of growth coming to us. We're having asset capacity, which is available, and we're having quite a lot of different strategic initiatives, both on engineering, procurement, supply chain production. And if we bring all this together, we're very confident we're going to be able to meet on expectation. So that concludes my presentation. Thank you.

Well, thank you very much, Thomas, Patrick. Congratulations to both of you. Congratulations to your teams. I am sure everyone can appreciate the huge impact that the focus you have on continuous improvement lean has on our profitability and the financial performance of the organization. And what I like about this is it's not finance pushing on the teams to drive lean and efficiency. It comes from within and even the operations teams are pulling on finance to support them. So I'll cover a few slides on financials. But before I go into the M28 objective, I do want to cover a bit of the history. Obviously, since our IPO, we grew our business significantly, and this came from solid execution on many fronts, product, manufacturing, marketing, commercialization, really, when we look at what we've accomplished, obviously, we're extremely proud. We've also been agile in some of the periods that we faced, and you will remember the COVID period where we've had to find creative ways to get products much quicker to the consumers, to the dealers. This obviously allowed us to deliver, I would say, industry-leading profitability and financial performance during the COVID years. And 18 months ago, with the experience we have in the business and the knowledge we have of how to manage an operation like ours, we were the first OEM to pivot and decide to reduce deliveries in the network. One, obviously, we're doing it for the dealer value proposition because they were facing high interest charges with more inventory, higher MSRPs, but also because we know that the quicker we react, the quicker we adjust the operations and rightsize the business. When the industry stabilizes, it makes our performance much easier. And when the industry grows as well, while we're there, we're also able to grow and not focus on managing older inventory in the network. And yes, our industries were hit harder in the last few years. And when you look at this graph, it compares industry for each product category pre-COVID and also during the peak of COVID. And you see our industries down flattish to high double digits. Personal watercraft, 3-wheel impacted as well with high interest rates because we have entry-level products. Yes, our profitability was impacted, lower wholesale, more discounting and certainly some margin erosion coming from less efficient use of our assets. But when I look at our EBITDA margin, we've maintained a margin above pre-COVID levels. And again, focus on how we run this business. Yes, our mix is stronger purposefully. We're able to drive rich mix in all of our product categories, but also we grew our side-by-side business over the years, which certainly helps as a side-by-side is a very profitable business from a margin point of view. Sandy, Thomas talked about unlocking efficiencies in the business, and that remains a priority, but we've obviously delivered some efficiencies over the last few years. And you saw this year, we already have $150 million. And the other element, and Jose covered it earlier this morning, is refocusing on the powersport business. It is a more profitable business than the traditional marine business. And therefore, by us refocusing on the core powersport business certainly helps in driving better EBITDA margin. And as we operate in an environment where our production volumes are lower than the capacity we have, you can appreciate that when volume goes up, the overall profitability margin as well will follow. Cash generation, for those of you who've been following us over the last several years is also very much who we are. And even in a period where the industry is softer, deliveries are softer as well on our side, we're able to generate solid free cash flow last year, above $300 million for the first 6 months of the year, almost $250 million. And since fiscal year '20, we've returned over $2.5 billion of capital to our shareholders. We've reduced share count by over 30% and so obviously, providing strong returns to the whole investor base. Our framework for managing the balance sheet has not changed. It's been in place now for over 15 years since the great financial crisis. We are prudent managers of our balance sheet. It also allows us to obviously focus on the business. So management attention is directed to managing the business and not managing the balance sheet when we hit a softer market or softer industry. And also managing maturities is very much part of our framework. You all saw our press release last week where as customary, we've extended the maturity on $265 million of our Term Loan B debt. We also took advantage of good market conditions and dovetailed the reimbursement of USD 200 million debt with more leverage to negotiate repricing on USD 1.5 billion. That is going to help this year by $0.10. So if we're going to -- if we were to issue guidance today, we'd increase the guidance by $0.10 and a $0.30 impact for next year. So obviously, quite meaningful as we look ahead. Now coming to M28. You've seen this slide before this morning. So getting to $9.5 billion of revenue and also $8 of EPS. How do we get there? We'll cover the revenue items first. And what I like about this plan, and again, for those of you who have covered BRP over the last several years, this is a bottom-up plan. So people in this room are accountable to deliver this plan and not just people in this room, but people in the whole organization are accountable to deliver this plan. It's a bottom-up exercise. And the first big pillar is just retail equal wholesale. We've been undershipping versus retail in the last 2 years. And once now our inventory is stabilized, we've reduced inventory by 20% year-over-year at the end of Q2. So just having wholesale equal retail is certainly a big tailwind and then executing on the ORV plan. We're not looking to grow market share by 10% in the next 3 years. It's a 3% increase in market share, side-by-side coming back to where we were during the COVID. I think you saw and you can appreciate the building blocks that we have behind this plan. It's not fluff. It's real tangible elements that we are tackling from DVP, from network expansion and also improving the overall consumer experience. International, Steve gave us a good overview of the international business. Some of it is already happening this year, bringing our international business to a $2.5 billion. We have obviously a secret sauce. We have the know-how, the competencies. We've been in the international market for a long time. We know how to deal with the various complexities that we face in all of these markets. and therefore, being able to deliver this is certainly something that is within reach. Growing in the other business, we're not planning for any industry growth other than, let's say, a 1% increase in the side-by-side business industry. But the other industries, we're planning for flat industries, minor market share increases. Obviously, as we grow the side-by-side business, and I often say this, I'm a huge fan of side-by-side. Why? Because there's a lot of square inches on the side-by-side, and we can attach a lot of accessories, especially our link accessories. And that obviously will drive good top line, but also good margin. And lastly, pricing. So we have pricing built for '26. This is the only pricing that we have in the plan. And also as we operate with leaner inventory and as the whole industry is going to operate with leaner inventories because that's the message that everyone is transmitting. Obviously, we'll operate with lower programs to bring us to the 9.5%. On the EPS, well, the 2 -- the first 2 buckets are covered by the revenue top line elements. We expect that tariffs will be part of the commercial environment as we go forward. And so we've built a tariff headwind in our plan. You've had the pleasure for those of you in the room of trying our products, you were able to compare products, previous generation to new generation. Over the last 10 years, we've added a lot of technology in our products. In the next 10 years, we'll be adding a lot of technology as well. We need to invest in order to do so. But the good news is we'll be able to offset a lot of that with our lean initiatives. And then we have the customary financing, depreciation and taxes to bring us to the $8 of EPS. But this is not the end. Obviously, where could we bring our business toward a mid-cycle industry level? David, Steve covered what are we doing with our network, with the dealer value proposition. We're going to be benefiting from these initiatives down the road. We're going to get the full potential. So obviously, we want to continue growing on ORV. And what if the powersport industry recovers to what it was in pre-COVID, as I mentioned, we're not planning for any industry growth in the other products, except for a modest increase in side-by-side, and that is certainly another tailwind that we could experience. And obviously, as we grow top line, we will also be benefiting from an EPS growth, and we could foresee an EPS number of $10 after the M28 target has been delivered. And so with this, I will turn it over to Jose for closing remarks.

Sebastien. Like I said this morning, this meeting was definitely overdue. I'm happy that you could pass some time with the management team, and you see that like Sebastien explained, it's a real bottom-up plan, then very happy that you took the time. I hope over the last 2 days, we convinced you that we have built a solid business that is positioned to deliver growth. Many of you, after we exit Marine, we pause urban mobility, we're saying, where are you going BRP,ow you will grow with your high market share. I hope we convinced you that we have a plan, and we intend to optimize our position into the powersport industry. Obviously, one of our strength is our diversified product portfolio and our brand. And again, competition can copy our product. but did not copy a brand. And the idea is to continue to push technology innovation, but also to bring the brand to the next level, something that is very difficult to copy. It takes time to do this. Thomas explained to you our R&D capacity and then also by visiting the design studio for the one who are here this morning, and very happy about what we have built so far, and we have a team that are dedicated, passionate about what they do and are able to continue to push innovation and technology faster than what we're doing in the past. Our dealer network, our established dealer network in North America and in Europe. But what is interesting in Asia by starting from fresh. You start with the whole product portfolio and you have super nice dealer network and dealer showroom, then very happy about where we are in our dealer network expansion. Manufacturing footprint, I mean, state-of-the-art ready to state-of-the-art, and we have capacity to react quickly if the demand is increasing and happy about the JV in Vietnam. I think it's a first step in that direction. But I'm convinced that to serve better the South Asia, that will be key mid- to long term. And last but not least, the management team. You had a chance to mingle with everyone. I just want to say that it's a very experienced management team. And without me, it's still 19 years of seniority or experience in the company, then BRP is in a very good end. Then that will conclude the presentation, and we'll open up for the Q&A. Sebastien and I will be in the front, and Philippe will call the management committee if it's -- for other people. Sorry, I missed 2 slides. This is the 7 priorities, well aligned, but I just want to tell you that we met -- we've been working on this for more than 18 months. We had discussion with the Board who obviously challenge us that we're all aligned with the management committee and the Board. We met a month ago all the VP and Director of BRP in Montreal for 3 days to explain where we're going. We have a webcast tomorrow morning at 9:30 to download to all manager and up. And before the end of the October, every single employee in the company will know about this. And when we are focused, typically, we deliver.

Thank you, Jose. So we'll take questions from the room. Anyone has a question, please state your name and the firm you're representing and we'll go ahead. Robin? There's a microphone.

Robin Farley with UBS. Just wanted to go back to your market share targets. Where do you think -- at what point do you cross to being #1 in ORV? I know you're saying sort of above 30% and above 25% in ATV. And then also your expectation for market growth. I know you said seasonal would recover because it's below normal, not much growth. Did you say something specifically on ORV? I'm sorry if I missed that, your expectations for the market growth for ORV.

I'll take with your first question. Being #1, it's not a 50% market share, at least #1 [indiscernible]. And in terms of industry assumptions for the -- we'll call the other than side-by-side, our industry assumption is flat industry. For side-by-side, we have low single-digit.

Benoit Poirier from Desjardins. Just in terms of EBITDA margin profile, you've reached a peak of 19% during the COVID, and there was 21% if you exclude Marine, supply chain issues were impacting negatively by 400 bps. So right now, when I look at the $8 of EPS, it implies roughly 15%. I'm looking at the utilization rate that is at 60%. Just wondering what we could think longer term about the potential EBITDA margin, if there's an opportunity to maybe rightsize the footprint given the kind of the midterm outlook you provided today?

Yes. Well, obviously, our rightsizing the footprint is not something we want to look at as we are in the middle of trade negotiations. I often say this is not, let's say, the pulp and paper industry or the cruise line industry where assets need to be running 24/7 in order for us to make money. Even running with, let's say, 70%, 75% capacity utilization, we'd still be able to generate strong returns. I do believe that a 17% EBITDA margin mid-cycle is something that we can achieve. You're right. When you look at COVID period, excluding Marine, we were at the 21% EBITDA margin, and we had huge headwinds coming from inefficiencies. And so the management team is aligned around this number. And certainly, post M28, we'll certainly want to achieve that target.

James?

James Hardiman, Citigroup. I wanted to dig in on inventories a little bit, specifically ORV and maybe tie together some of the numbers that you've given us today. If memory serves, inventory turns were in decent shape prior to the pandemic. And you guys talked about how, I think, retail for ORV is up 50-plus percent and inventories are down 5%, right? So job well done. It seems like inventory turns have gotten a lot better. And if we think about sort of going forward, retail is going to be growing, right? And so typically, you would need to wholesale more than retail to keep that turn number fixed. And then if I layer on top of that, the idea that you're going to be adding 10% to your dealer base, right? So on a per dealer basis, inventory turns are going to go even higher. So maybe help us square that with the idea that wholesale is going to equal retail for this planning period. Is there an opportunity maybe for some channel fill? Obviously, that would be upside to your $8 number, but maybe help us think through that.

Yes. We -- obviously, we look at inventory turn in days internally, and we look at it by region. We need to be careful because the dealers don't look at it that way. They look at their interest bill. On that slide, you don't forget that the value of the unit have increased significantly and the high -- the mix have improved significantly. Then for the dealers, even if our days of inventory is significantly better, their inventory in dollar is still not higher at probably lower than pre-COVID, but still they feel a bit -- it's higher than the number of days improvement that we have done. And I think it's something that we need to balance. Our goal is wholesale, we call retail. And it's -- we need to balance it. And at the table last night, we had discussion about you've been supporting the dealer, you want to protect your brand. What's the fine line between inventory and what we call the great pressure in the [indiscernible] for the dealers. We believe that what we have in our plan makes sense. We really believe that wholesale equal retail makes sense. But if some dealers are not ready to play, we'll need to find a way to push. And -- but this is the fine line that we need to define in the coming months. But we know we don't want to be the good guy that is not winning. We want to be the -- we invest a lot in the business. We push. We want to have our fair share of every single PMA, and that's what we're aiming for. But it will be something we will adjust depending on how things will evolve.

So you made the point about the dollar value of that inventory being higher just given interest rates. And I'm sure inflation has played a role in that as well. So I guess, is there an opportunity? Let me ask it this way, what are you assuming in terms of interest rates over this planning period? And if rates come down materially, could that be sort of the thawing point as we think about dealers being more willing to go back to some normalized sort of inventory level?

Well, that's why we're planning for a flat industry. So we're assuming an interest rate environment that is consistent with what we are experiencing today. So if it changes, the wall it's for the good or for the bad, we'll adapt, hopefully, for the good.

One last thing, James. Obviously, the goal for fiscal year '28 is 30% plus side-by-side and 25%-plus EPV, but we'll not stop there. Our goal is to become #1 in off-road like we are on snowmobile and watercraft. And the team knows that we have no way of -- if we don't embark the dealer in our plan, we have no way to win, and we'll find ways to win.

Craig?

Craig Kennison from Baird. I wanted to get back to the market share topic. I believe your market share calculations exclude CFMoto and other brands because they don't disclose the data you would need to calculate that. But how do you frame your outlook and your vision of gaining share in the context of all of those players? And then maybe if you would just address how USMCA and those negotiations might play out to impact the competitiveness of those players?

Yes. I'll take the first part, and Jose can take the other part. For us, you're right, industry data does not include CFMoto, but they are a player in the North American industry. And so when we look at our financial planning, obviously, it's volume-based. And so if CFMoto enters the industry, and reports the data, it will not change our unit volume plan, and it will not change the financial plan. The market share number might move because now the industry is going to be better, bigger, they're going to be included in it. So the market share number is going to move. But in terms of overall units that we expect to retail, that should not change.

On the USMCA, USMCA is working quite well. And I was 2 time in Mexico City in the last month to meet people from the government of Mexico, Canada, United States, but also to meet different industry. And basically, we are to proof that USMCA is working. All our product manufactured in Canada and in Mexico and in U.S. meet obviously USMCA. And we -- our content because the USMCA minimum content is 60% North America, then we are buying more from North America, the 3 countries. And we're buying less from Asia, less than 10% of our goods are coming from Asia. Then we are proof that USMC is working. And we met -- we are obviously involved deeply with different industry and the 3 government to give our input. And right now, the sentiment of most of the people is USMC will be reconducted. It could have some adjustment, positive, maybe some slight adjustment. But right now, the assumption is that USMC will be reconducted because we don't know more at this point. And again, BRP have been in business for 80 years. We always found ways to adapt our manufacturing footprint, our supply chain quickly. We just need some time to adapt and stability in the roles, which we don't always have in the last few months. But we are confident that we'll find our ways when the USMC is reconducting with some change that could happen. And this is what we have in our plan at this time.

Martin.

Martin Landry from Stifel. Sebastien, in your mid-cycle EPS target of $10, what is your assumption for excess cash flows? If you take into account share buybacks? And if not, is there a possibility for share buybacks?

Well, in terms of capital deployment strategy, we are not assuming any changes in how we've deployed capital in the future versus how we've done in the past. And obviously, mid-cycle getting to $10 of EPS will be generating significant free cash flow. That will give us the option to either grow the business through M&A, if that's what we decide to do or continue doing buybacks, which has been very good for our shareholders. But our plan does not factor in any share reduction coming from buybacks. It's at a constant share count.

Joe?

Joe Altobello, Raymond James. In terms of the ORV growth strategy, you mentioned improvements in underperforming markets and improvements in underperforming categories. They're obviously underperforming for a reason. So I guess, first, why is that? And second, how do you turn that around? I mean it's easier to them done, I think.

Give it to Sandy or David.

Yes, I'll answer that one. Obviously, when we look at the performance of the market, like the underperforming versus the overperforming, what we're doing right now is really on our approach of our growth plays, we'll go market per market with our proven formula. Obviously, there are some dealers today that are holding the franchise and are underperforming versus their peers and we'll address these. But also, we need to realize that today, we have a complete lineup. The days that when we've appointed some of these dealers, probably they were not at the right location. So we'll look at all of these. So the entire mix of the focus, adding new dealers and the complete lineup will help us address the underperforming markets in the off-road industry.

[indiscernible] In the presentation, you've mentioned that you will lower prices on certain value proposition SKUs. Historically, how effective BRP strategy on cutting prices has been what's your batting average, so to speak, in tougher times to gain shares while cutting prices?

I can take this one. We've had this situation a couple of times even in different markets. And we did this in ATV 2014 to 2016. And obviously, it has to do with how we position the product. And in certain of these categories, we pushed pricing a little bit too high. And like David said earlier, like on the Maverick X3, this positions us exactly head-to-head with our competitors. So this is about managing mostly what you saw is more on the entry level packages. And for us, these are important volumes we need to get to. And with the level of market share we have in these segments, there's, I would say, much less to lose, much more to gain. As we have our capacity at 60% utilization right now, it's important that we grow volume for Patrick and the plan. So all of this together, we believe, is going to be a successful adventure. And the feedback -- the early feedback we're getting from dealers right now is very positive on that end. So very confident.

Tristan?

Tristan Thomas-Martin from BMO. Kind of a follow-up to Paul's question. How are you thinking about kind of the promotional strategy in M28, particularly related to like monthly payment affordability? Could you call out model year '26 price increases, but then also leaner promotions? So are you going to see an increase in kind of the average monthly payments to the consumer? And then kind of second part to that question, if some of your competitors get more aggressive trying to offset some of their own price increases, would you let them do that? Or would you try to chase them to kind of remain in parity?

Well, on your first question, the benefit that we're seeing from promotions in the plan is going to come from less noncurrent inventory, which are discounted a lot more. So less from a, let's say, interest rate cost for the retail financing, but much more noncurrent units require more discounting. And then obviously, from a retail financing point of view, we always want to be competitive with the offering there. Obviously, we have many tools in our box in order to compete. It could be extended warranty, it could be retail financing, it could be cash offers. And we'll, again, be nimble and adapt in order to make sure we have a compelling offer for the consumers, make sure dealers also have something to drive traffic in their dealership. And if we need to tweak, we'll have that flexibility. But again, our assumption is that we're not counting on reduced interest rates to reduce our promotions.

Mark Petrie with CIBC. I had a question just with regards to dealer experience and customer experience. So maybe that's for Sandy or David. But it would be helpful, I think, just to hear about maybe 1 or 2 of the most impactful changes that you're making to your process to sort of drive that? Or is it more a matter of just bringing those underperforming dealers to what the sort of best-performing dealers are doing? Or do you need improvement across the network?

It's a little bit of both. And I mentioned that a little bit in the presentation where the business has become more complex for our dealers. The technology, what you've tried yesterday in terms of technical support has gone more complex as well. Combine that with the COVID days where training was limited to webcast versus physical training for the dealers. So there's a big portion of it on the service side where we need to come in and obviously, physically with the dealers and mechanics and their certified technicians raise the bar, be more responsive on our end as well and finding the solution. But the same applies as well in terms of product training, right? We assume because we launched a unit at the club that everybody knows about the technical aspect of the units. But if we're going to be fighting to be #1, we need the salespeople on the floor at the dealers to really understand these products. so they can actually feel comfortable selling them as well. So it's not only for the, I would say, the underperforming dealers throughout the whole network. Obviously, we have always this 20% of our network that is doing a really good job, but the intention is to raise the bar everywhere.

Cam Doerksen from National Bank. Just a question, I guess, for Seb on CapEx expectations over the next number of years. I mean you've got lots of excess capacity in the plants. But presumably, you're going to still have new product development. So maybe just talk about the trend that we should expect over the next few years on CapEx.

No significant change versus what we have in the guidance this year. This year, we're calling for $410 million of CapEx ballpark, that's what we should be seeing in my presentation, I talked about continuing to push innovation and innovation is costing money and costing CapEx. That's where most of the money will be put to work.

Xian Siew at BNP Paribas. As ORV becomes a bigger part of the business, can you just talk a bit more about what that means for your margins and how that can kind of change the margin profile?

Well, as I mentioned earlier when I talked about our EBITDA margin versus pre-COVID, side-by-side is certainly a driver of this. Again, I don't want to repeat myself too much, but I love the side-by-side industry because there's an opportunity for segmentation, fragmentation. And we're good at this. Minh Thanh gave you examples this morning as to how we came up with creative products that meet specific consumer needs. Well, there's that demand for the side-by-side industry as well. And usually, when you're able to make these specific targeted products for consumers, you're able to price for it because that's what the consumer really wants. And so obviously, as we grow side-by-side, that is certainly going to help to drive growth in EBITDA margin.

And also, it's the product line that has one of the best for attachment of accessories by the dollar of accessories per unit is high, a lot of square inch like you like to see.

[ Gerrick Johnson ], Seaport Research Partners. Polaris recently came out of the 500. It's about 30% less expensive than your least expensive Defender. So is that a portion of the market that you're not going after? What's your outlook on the lower end of the market?

But at this point, Gerrick, I mean, we're looking at this, but we have better projects with better return on investment on subsegment, creating new segment or investing more in the high end than going into the low end. I'm not saying we'll never go there, but it's not part of the next 2 years, 2, 3 years to go there because we have better way to continue to grow and improve in higher value segment.

Me again. So just a quick math question, Seb, as we think about 2028, sort of share buybacks and interest -- share count and interest, is it sort of where we are today?

No change in number of shares outstanding and interest rates as they are today.

Post the transaction.

Post the transaction. $0.30. We'll take that one.

Yes. And then I've been really impressed with how we've sort of focused on the long term during this meeting. But to throw a bone to our friends in New York, maybe let's talk about near-term trends a little bit. Obviously, those of us that do any channel checks have picked up on some nice improvement in August and September. And even, I don't know, I'd be curious to hear about October. But I guess, a, have you seen -- how would you characterize the strength in terms of retail units? And then b, should we sort of temper our excitement given sort of the promotional environment and how that could impact dollar sales and/or margins?

I would say for -- obviously, we cannot comment on Q3, though we want to be careful on this. We don't have industry numbers. But I would say the trend continue to be good. Then basically, that's where we're going. In terms of -- right now, with all the new products we introduced, all factories are ramping up on those new products. And basically, on off-road, we are on allocation. We gave to the dealer, here, you should order for the next 3 months, so many units. And if it's not enough, give you -- give us your wish list. But with the wish list, we cannot react within 2 or 3 months. Then basically, we are on plan for the remaining of the year. We will try to maximize it if we can, though we're still taking orders. But basically, retail is doing well with some plus and minus like typical. And on the wholesale, very happy about the booking with the new product, the reception of the new product, but don't expect us to bust the bank by the end of the year because there is a reality in lead time. But it's doing -- business is predictable, and we're very happy where we are.

And as we said during the Q2 call, Q3 retail market share is going to be more gnarly because there's still some noncurrent inventory from other OEMs that are being fleshed out. So Q4 is sequentially improving.

It's Brian Morrison, TD Cowen. When I take a look at your margin expansion initiatives, the 200 basis points of EBITDA expansion, it looks awfully conservative with respect to your ORV growth and your Lean initiatives. But then you have this big growth initiatives offsetting that. And I'm wondering if it's just simply if you can go a little bit more in depth, is it just R&D? Is it the dealer support we've talked about, but what are those offsets?

Well, the -- yes, R&D is part of it. We're going to continue growing the R&D spend. The other element versus fiscal '25 is variable compensation. There is no variable comp in '25. And so that is obviously factored in our plan. And then there's other parts of the business. The initiatives we have from a dealer perspective, improving service, improving training for our dealers, that is obviously going to require resources, which we want to do, and that obviously requires investments to do so.

And also marketing expenses. We want to elevate our brand. We want to elevate our awareness of the brand, then there is some investment there, too.

Luke Hannan, Canaccord Genuity. I just wanted to ask about the joint venture that you guys have in Vietnam. So it's going to begin in Q4 of fiscal '27. How big should we expect it to be roughly either in terms of square footage or units coming out of that? And if it progresses as planned, what's your intention as far as how big that could be?

Then overall, VPIC had an old factory that together we remodel, then we're not building a new building, we're just remodeling an existing building and our products are quite small, then it was easy to fit an efficient layout into those buildings. And investment in the big picture is very reasonable. And we will go step by step. Ryker is the first product. We have other plans for other products. But obviously, for competitive reasons, we'll not go there this morning. But the agreement has been signed a few months ago. We are on plan for Q4 next year. And we're quite optimistic because, as I said, the main benefit is to avoid tariff in South Asia. Then if Steve can bring the growth, we'll continue to add product in that factory. That means Ryker, we're shifting production from Mexico to Vietnam because we needed space in Juarez 1 for the ATV. Juarez 1 is our smallest factory, then the timing was perfect for this. After that, we could -- you could expect to have maybe assembly of other product lines in 2 factories, one for North America [ USMCA ] and one for Vietnam, but that's mid- to long term.

Perfect. This concludes our Q&A session and our 2025 Analyst Day. Thank you for your participation and interest. Thank you very much.