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BRP Inc. President & CEO José Boisjoli joins Yahoo Finance's Zack Guzman to discuss the company's latest outlook amid COVID-19 as the demand soars for its recreational products.
ZACK GUZMAN: First off, thanks for joining us. If you could, give us a little bit more insight into that there, because I think-- I was just on a [INAUDIBLE] last week. It's obviously very popular right now to get outside. But what about the idea of these kinds of high-ticket-value purchases here in a pandemic when people might not be sure what their economic futures look like? What are you seeing in terms of demand?
JOSE BOISJOLI: Yeah, I think it's the result of this-- we call it the staycation phenomenon. With the restriction on traveling, the restriction on vacation, I think a lot of people are wondering, what do we do with our holiday? What do we do with the disposable income?
And we saw a surge in the demand for our product. To be honest, on some product line, like off-road vehicle, where using them, you distance things-- you are distant to others-- then the retail never really slowed down. But for a product like three-wheel vehicle or watercraft, we saw peak demand in June, July. It exploded. And right, now we are out of inventory. And I think it's a question of refocusing the disposable income on recreational product, because people don't have-- they have to stay home or stay in their country.
JULIA LA ROCHE: Yeah, certainly a good point you bring up, Jose. I think we're seeing this trend of the wallet share shifting, as you were just referencing, folks who aren't taking that vacation anymore, but spending elsewhere. You just mentioned you have this peak season for the water sports vehicles here and that you all are already out of inventory.
Talk to us how you're thinking about your inventory. I know production had been closed to part of the quarter. Walk us through the strategy there and how you're kind of keeping up with that pent-up demand.
JOSE BOISJOLI: And we have 11 factory around the world. We have two factory in Europe and the others in North America. And overall, we were closed for about two months. And during that two months, we depleted our network inventory by about 50% and our yard inventory by about 40%.
And, obviously, it's a big wheel. To restart everything takes time. And right now, we are in the process-- I mean, all our factory, our book, 100% 'til the end of the year. But it will take some time as we're shipping product in Australia. We're shipping product in Brazil. We're shipping product in Europe.
And the product is in the water 6 to 10 weeks. It will take time to replenish that inventory. Then for a period of time, there could be some dealer will-- no, I don't think dealer will miss product. But they won't have that specific model at the right time. But we are working hard to refill that inventory as fast as we can.
JULIA LA ROCHE: And, of course, we were just mentioning peak season for the water sports. I have to imagine, though, as we get into the fall, winter, you also have various vehicles and recreational vehicles for those types of sports or activities. How are you also thinking about that pipeline? And what kind of demand are you starting to see as we get into-- I mean, it's still warm here. It's still summer, but as we start to approach the colder months?
JOSE BOISJOLI: Well, just to give you a sense-- in Q2, our retail across all product line worldwide was up 40%. And in each one, if you take even the month in March and April, where there was a lot of shutdown, in H1 for the year we were up 26%. Then right now in August, the momentum is continuing.
Snowmobile, we are out of the season. But there is a lot of activity because people realize they won't be able to go in the South. And right now, there is a lot of activity and traffic at the dealer level. And we are right now replenish-- shipping a lot of product in Scandinavia, where we have a very good market in Europe and here in North America. But no doubt that we believe at this time the demand for snowmobile will be probably as strong as it was for the summer product this summer.
That being said, we need to be cautious, because operating all those factory and making sure that the COVID spread don't happen in your factory, it's a challenge. Making sure that the supply chain is following is a challenge. But we are optimistic about the demand, cautiously optimistic about the ability to deliver on plan 'til the end of the year.
ZACK GUZMAN: Yeah, and you guys are-- there aren't a lot of companies out there right now offering guidance. You guys did in terms of what you guys see for the rest of the future here with the company. But how difficult is it to kind of forecast anything out there in this environment?
You say you think demand is going to be strong. I assume a lot of that is tied back to how this pandemic continues here when we get to the winter season. Is there anything that gives you an extra sense of confidence in your guys' forecast, whether it be maybe the idea that some of these purchases are tied to a more luxury-oriented consumer?
JOSE BOISJOLI: Yeah, we have-- we're selling our product in the 127 country to 4,500 dealers worldwide. Then we believe that the demand for the product would be there. We might have a problem in that country or that country or region. But we believe overall that the demand will be there for the product.
The challenge, again, is to making sure that we are able to supply the product and our supplier will follow. Then we gave this morning a guidance, which is quite wide. At this time of the year, we know pretty well how we will end the year in terms of revenue. But we gave a wider range in terms of guidance.
And what we've said to the analysts is in our guidance, we have planned for some hiccup here and there, a day or two or maybe a missing part here and we need to retrofit the vehicle. Obviously, we cannot plan for big wave two in the country or shutdown again the factory. But all of this is somewhat built in our guidance for the end of the year.