Good morning ladies and gentlemen. Welcome to the BRP Inc. FY23 second quarter results conference call. For participants who use the telephone line, it is recommended to turn off the sound on your device. I would now like to turn the meeting over to Mr. Philippe Deschênes. Please go ahead, Mr. Deschênes. Philippe Deschênes: Thank you Julie. Good morning and welcome to BRP’s conference call for the second quarter of fiscal year 2023. Joining me this morning are José Boisjoli, President and Chief Executive Officer, and Sébastien Martel, Chief Financial Officer. Before we move to the prepared remarks, I would like to remind everyone that certain forward-looking statements will be made during the call and that future results could differ from those implied in these statements. The forward-looking information is based on certain assumptions and is subject to risks and uncertainties, and I invite you consult BRP’s MD&A for a complete list of these. Also during the call, reference will be made to supporting slides, and you can find the presentation on our website at brp.com under the Investor Relations section. With that, I’ll turn the call over to José. José Boisjoli: Thank you Philippe. Good morning everyone and thank you for joining us. BRP once again demonstrated its ability to succeed in the unique operating environment. We concluded the first half of the year on a very strong note by delivering our strongest quarterly revenues and normalized EBITDA ever. Our team’s resiliency was further tested following the end of the quarter as we were the target of a cyberattack forcing us to temporarily suspend operations. Our quick reaction and relentless effort allowed us to contain the situation and limit its impact. A very special thanks to our team of ISIT experts who did a remarkable job from the very…

[Operator instructions] Your first question comes from Robin Farley from UBS. Please go ahead.

Great, thanks for taking the question. Obviously very strong results. I’m just curious why your gross margin guidance is unchanged when the revenue is higher, just given your comments about improvements in the logistics and commodity pieces. With that higher revenue kind of not translating into--I don’t know if perhaps you’re just being conservative, but I’d love to hear your thoughts on that. Sébastien Martel: Good morning Robin. Obviously there are pluses and minuses in building the guidance, and obviously, yes, a better top line, which is good. We are improving the overall EBITDA as well coming with higher revenues, so it’s a variation between operating expenses and gross margin. We will be investing probably slightly more in operating expenses, and that’s why you’re not seeing the gross margin move, it’s staying flat.

Okay, great. Thanks. Then just one quick follow-up, are you seeing anything in the environment that’s promotional from others? It sounds like obviously continuing strong retail demand and lack of availability across the board, but just any thoughts there? Thanks. José Boisjoli: So far, I would say the environment is quite stable, like we saw in the last, I would say, 18 months.

Okay, great. Thank you.

The next question comes from Xian Siew with BNP. Please go ahead.

Hi guys, thanks for the questions. For the quarter, net retail sales up 20% for your products is very impressive. I guess, where do you think they shake out for the rest of the year, and how do you think the industry is comparing relative to that 20%? Sébastien Martel: Well, if you look at our year-to-date, or for six months, our retail is down 12% after six months, and with the planned increase in wholesale and the better inventory position versus a year ago at the end of Q2, our expectation is that total retail for the year for us should probably be high single digits, is where we’re targeting to end. From an industry perspective, obviously it’s still limited by inventory, and so I’m expecting the industry to probably be in the mid to low single digits overall industry growth for the full year.

Okay, got it, but I guess to clarify, the 20% quarter to date for you, that’s outperforming the industry, right? Sébastien Martel: Well, we don’t have the industry data as of the mid of September, but the number is based on over Monday’s data, so quarter to date Monday. Obviously we don’t have the industry data as of the mid month.

Okay, got it. Then it sounds like you’re making progress on the retrofit, and that’s helping the availability and some of the increases in the quarter to date retail; but just curious, how many new orders are you coming--are you still making--you know, increasing the number of pre-orders? I think pre-orders were up 80% in Q1. Where are we today, and is there any way to kind of think about the pace of new orders coming in? José Boisjoli: First on the retrofit side, like I said in my remarks, we received a lot of components in the month of July and a lot in the last week of July, that have been delivered to the dealers, and that’s the reason why we saw the retail going up in Q3. The supply chain is definitely getting better, then we are expecting the number of backorders to go down significantly by the end of the year, and this is overall quite healthy. In terms of the--your second question on the pre-orders, this time of the year, it’s a bit difficult to read. The snowmobiles, obviously pre-orders are extremely high - this didn’t change, and we just came out of the Club beginning of August with the introduction of the Sea-Doo watercraft, Sea-Doo pontoon, the side-by-side and ATVs that we allocated to December, the three-wheeled vehicles, and all the boats, and so far the reception at the dealers is excellent and, like we said, the bookings, because we introduced the product, we had discussions on volume, and bookings are coming in right now and we’re trending about 20% up versus last year. I’m very, very happy with that. Product well received, and I would like to remind you that the dealers are the front line. They are dealing with the consumer and so far--I mean, momentum is great.

Okay, got it. Thank you very much.

Your next question comes from Benoit Poirier from Desjardins Capital. Please go ahead.

Yes, thank you very much, and congratulations for the results. Just to come back on the strong retail performance so far in Q3, obviously up over 20%. I was just wondering how much is driven by orders placed during the quarter versus those who had been made prior to Q3, and if you could provide some color about the inventory replenishment, whether this is still around $1.4 billion and mostly skewed towards fiscal ’24, or is it trending a bit earlier than expected? That would be great, thanks. Sébastien Martel: Yes, sure. I’ll pick up on the inventory question, and I could cover also the orders. Obviously when you look at the inventory and you compare it to where we were in Q1, it’s up $400 million at the dealer network. We talked about the inventory opportunity replenishment at 1.4. You can appreciate that a significant portion of that inventory is related to seasonal products such as personal watercraft, and so a lot of the retail that is happening in August was for personal watercraft. Even with the cyber incident, the wholesale deliveries were lower than expected in August, so as of today, my inventory in the network is actually lower than where it was in July. Given the short term nature of the product that we shipped in July, i.e. in terms of when it was supposed to be retail, I’d say that the 1.4 opportunity is still there today. In terms of the retail which happened when the orders from the consumers were placed, these are orders that have been in dealers’ hands for a long time - as I said, some of them were Switch, some of them were personal watercraft, so in-season product. Side-by-side, the inventory is so low that consumers had placed these orders with the dealers several months or several quarters ago.

Okay, that’s great. Just a question on the snowmobiles, obviously you have already pre-sold a very good number of snowmobiles for the upcoming winter, but given the Stop Ride sale at Polaris, do you see an opportunity to gain market share ahead of the winter season, or is most of the planned inventory already sold out? José Boisjoli: Like we said, Benoit, a high level of our Ski-Doo model year ’23 are already sold to end consumers, and there is always some in-season models but for sure, it’s difficult to see how our competitor will react and if they will slow down production because of all this. But this makes us even more confident that we will sell through everything we have, we will ship to the dealer before the end of the year.

Okay, perfect. Last one for me, do you see--in terms of booking trends, is there a larger interest for, or do you see a big change in the mix versus between entry level and higher end products? José Boisjoli: No. No, I know many of you have that question, but so far we didn’t see any trends versus the low end. What is interesting, you know, it was our first in-person dealer meeting beginning of August, and we gave the allocation to the dealers. Now we’re hearing that many dealers already sold their whole Sea-Doo ’23 allocation to end consumers, same thing for the Sea-Doo Switch. I know we have some concern about the demand and the environment of the global economy, but so far we don’t see that in our industry.

Okay. Congratulations, and thanks for the time. José Boisjoli: Thank you Benoit.

Your next question comes from Joe Altobello from Raymond James. Please go ahead.

Thanks, hey guys. Good morning. I guess first question on the ransomware attack, and I apologize if I missed this, but did you guys quantify the impact of the ransomware attack on maybe revenue across Q2 and Q3? Sébastien Martel: Yes, good morning Joe. First, obviously the investigation is still ongoing and so there’s certain information I can’t share with you, but here is a few points that I can obviously cover. First, cyber security has been a priority of BRP for several years and we’ve made considerable investments in cyber. We’ve obviously updated our plans based on the advice of experts over the years and making sure we have the latest tools and technology. Our tools were able to quickly detect the infiltration and limit the impact on our business, and soon after we put our plan to progressively restart operations, making sure that our systems and data were scrubbed to make sure that was safe to restart the operation. In terms of overall quantification, as I said earlier in terms of guidance, no impact in the guidance as we’re able to offset it; but when you combine the fact that our sites were closed for between one to two weeks and the fact that we could recoup with some weekends and overtime, net-net we probably lose four to five days of production before the compensating effect of having more components and selling more--building more good units and delivering these units to the network.

Okay, all right. That’s helpful. Maybe second question, you guys sounded pretty optimistic about supply chain getting better this morning. How confident are you that what you’re seeing is sustainable and not just some puts and takes like we’ve seen in the past? José Boisjoli: Like we said in Q2, what happened in the summer--I mean, semiconductors have improved and we are well--in good position with our suppliers for H2. On top of it, in terms of logistics and transportation, everything is easier, and we have less case by case. For the last 12 months, we had many, many cases every day, every week, and now we see some reduction in those case by case. I’m happy because the procurement team around the world at BRP could take some holiday, then this is a good sign that things are improving. That’s why we’re quite optimistic that we will be able to run all our factories at full capacity in the fall.

Okay, great. Thank you guys.

Your next question comes from Mark Petrie from CIBC. Please go ahead.

Hey, good morning. I just wanted to actually ask with regards to the guidance, hoping you can give a bit of color regarding the pacing of growth between Q3 and Q4. Obviously heard the comment for potentially over 50% growth in Q3, but that still leaves a significant amount of growth for Q4 in order to hit this sort of guidance. Could you just help us think about the balance between Q3 and Q4 with regards to, I guess, revenues and margins? Sébastien Martel: Yes, sure. Obviously when you look at the overall guidance margin-wise, there was going to be an improvement happening in the second half of the year with--compared to where we were. The bulk of the improvement in margin is going to happen, though, in the fourth quarter with strong shipments of personal watercraft, snowmobiles, and side-by-sides. Year to date, the revenues were about $4.2 billion. We’re looking at back half of the year between $5.3 billion and $5.7 billion. I’d say that the overall growth in revenue will be much higher in Q4, in line with the EPS growth, and so revenues are probably in the range--probably 60% of the revenue is going to be in Q4 and the remaining in Q3, would be a fair distribution.

Okay. As we think about the pacing of growth into fiscal ’24, you mentioned that you’re still of the belief that the $1.4 billion of inventory replenishment opportunity, you know, I think what would remain in place going into next year is the expectation effectively that that can be serviced in fiscal ’24, or what’s your current view on the balance of your ability to supply and what you’re seeing with regards to demand? José Boisjoli: Just an additional comment and to answer your question, I would like to remind you that we added capacity for watercraft and side-by-side, but were not able in H1 to run the factory at full capacity because of the supply chain. Now in H2, we’re running all our factories at a good pace. We have a BOD catch-up because we received components from suppliers that will be retrofit at the dealer level during Q3 and Q4, and next year obviously the capacity is there, then if the demand is there, we feel confident we can run all operations at a higher level in fiscal year ’24 versus ’23.

Okay, and then maybe just to clarify then, is your expectation that the retrofits will effectively be complete at the dealer level by the end of this year, or is that going to remain in place for next year? Sébastien Martel: Our expectation is that we will ship very little, if no BODs, which was our retrofit units at the dealer, in the fourth quarter, but we will still have some units in our inventory that we will need to retrofit in the first half of next year. But based on where the supply chain is trending today, we believe that we could move away from sending incomplete units to the dealers by the fourth quarter. In terms of inventory opportunity, obviously when we look at it, we look at it from a year-round products position, i.e. ORV and the seasonal products business. We know we will have personal watercraft inventory at the end of the year because of the timing in production, so better timing in production this year versus last year, and so--but that inventory will be already sold to the dealer and dealers will have orders. We expect to still be low in side-by-side ATV inventory in Q4.

Okay, that’s helpful, thanks. Then I guess just one last one, obviously you’ve made a number of acquisitions, more tuck-in in nature and size, I guess, but obviously important from a strategic perspective. Seb, just given the elevated capex and sort of the macro uncertainty, maybe you could just remind us your immediate capital priorities over the course of the next year and opportunity for NCIB activity. A - Sébastien Martel: Yes, well if you look at what we’ve done in terms of share buybacks since the beginning of the year, we’ve purchased $300 million of shares, and we’ve obviously communicated to all of you in the past, our priority has been investing in the business, and so this year we have an ambitious capex plan. We also invested in working capital to manage through the supply chain headwinds and allow us to bring units quicker to the dealer by using a retrofit approach - that obviously required some capital investments, and obviously the acquisitions that we’re doing as well is going to require cash, probably to the tune of about $200 million. That has always been our priority, but we’ve also been very diligent and being opportunistic in buying back shares, so making sure that we maintain that financial flexibility and being opportunistic is something that we will obviously pay close attention going forward, as we’ve done in the past.

That’s very helpful. Thanks, and all the best. José Boisjoli: Thank you.

Your next question comes from Gerrick Johnson from BMO Capital Markets. Please go ahead.

Good morning, thank you. I’m interested in seasonal, particularly in personal watercraft. Is there a way to quantify Switch contribution to seasonal in the quarter, and then also, is Switch in PWC retail when you report that retail? Also related, the delay in Sea-Doo shipments, I think after last quarter, we were expecting an acceleration in 2Q, so that seems to be pushed out. Sébastien Martel: Yes, well first, the Switch is not built into the personal watercraft retail - obviously it’s a different industry, so it is not included in those numbers. In terms of overall contribution, what I can tell you is that the expectation for seasonal this year is that Switch will be 10% of our revenue, and so obviously a very good business for us. Your second question, Gerrick - sorry?

The delay on Sea-Doo shipments. José Boisjoli: Yes, what happened on the Sea-Doo shipment, Gerrick, there was a critical component for the Sea-Doo, specific to Sea-Doo, that we received a big shipment in July. We had to re-ship the component in kits to the dealers, and those were shipped the last two weeks of July, then the dealers received the components but they could not obviously retail before the end of July. That’s why we see the pace increasing in Q3, and I think there will be some more retail going on in the next few months. That’s what happened.

Okay, got it, great. Then on Manitou and Alumacraft, how about the orders coming out of your Club event? Are they in line with your expectations? José Boisjoli: We sold out. Everything we can produce is sold out to the dealers, and we’re hearing very good comments that presale units to consumer is extremely strong.

Okay, very good. Thank you. José Boisjoli: Thank you.

Your next question comes from Martin Landry from Stifel GMP. Please go ahead.

Hi, good morning. I just want to go back on the promotional environment and wondering what have you factored into your H2 guidance in terms of promotional activity, and when do you think that we go back to promotional levels that are more in line with historical levels? Sébastien Martel: We’ve done--given that we shipped some units later than what we would have liked for personal watercraft, for three-wheeler, we have provided in the guidance a bit more promotion, but nothing significant, as I said earlier. There’s always some pluses and minuses - that’s one of the adjustments we did, but nothing too significant, but cautiously we’re planning for it. In terms of going back to normal, obviously our hope is that we don’t go back to normal ever, but we know that what we’re living today is exceptional and there is probably going to be a new normal after COVID. Obviously dealers tell us they like operating with lower inventory, all the OEMs say it as well, and there are some learnings from the last two or three years that we know that we can apply going forward in being much more tactical in how we deploy programs. So could we end up, as I shared, saving 100 basis points overall from less promotions, that’s certainly something that we’re pushing the teams to strive for.

Okay, that’s helpful. Then maybe just switching gears to your acquisitions in the electric sector and urban mobility, I was wondering, I’m a bit curious with urban mobility, was wondering when we could see you launch something in that sector, and I was wondering if you can discuss the competitive landscape in urban mobility. Is it a fragmented market, and what does the distribution network look like? José Boisjoli: Yes, this is a very general question, Martin. Let’s say that this is definitely a segment that is growing. Human assist products are very popular because many customers buy it because obviously they train when they ride their product and some use the product for utility. We are--basically the three acquisitions that we’ve done was to give us the additional know-how. The Pinion gearbox, it’s a very, very sophisticated, small compact gearbox that can be applied to many of our product lines. I will not comment this morning on what we’re looking at, but again you can expect from us that we’ll enter a new category of product, we intend to invent new categories of product, and it’s like--my best example is the Sea-Doo Rise, the electric hydrofoil. Hydrofoil has been around for many years, but you need to be an athlete to ride an electric hydrofoil. The one that we’re launching with the Sea-Doo Rise, and I’m sure you saw the video, you can run it as a board, you can run it with the foil half deployed or full deployed, very, very easy to ride for the whole family. This is what we intend to do, is to democratize certain industry and come with great innovation, and that’s why we are confident we can grab good market share in that $70 billion bubble, but too early to give you more detail this morning.

Perfect, thank you. José Boisjoli: Thank you.

Your next question comes from Craig Kennison from Baird. Please go ahead.

Hey, good morning. Thanks for taking my questions. You’ve addressed several already. A point of clarification on Slide 6 - Seb, when is revenue recognized on unfinished units at the dealer? Is it when the part is shipped to the dealer, when it arrives at the dealer, or when the part is installed? Sébastien Martel: The revenue is recognized when the part is shipped to the dealer.

Got it, and how long does it generally take to get to the dealer, and how long does it take to have that part installed on average? Sébastien Martel: Oh, it could take a day to a few days. We ship them--usually we have overnight service that we get the parts to the dealers. We want to get them quickly as possible because we know consumers are waiting for the products.

Then I guess regarding that unfinished product at dealerships, what are the most common part shortages that, when shipped, would allow them to be recognized as revenue and sold at retail? José Boisjoli: The cluster, the gauge. Like we explained before, we have three types of clusters - low, medium and high end, and this is--there are several microchips in there and the cluster is one of the most critical components that we ship after assembly. This typically takes--cluster is very short, but let’s say average it will take between 45 minutes to retrofit the unit.

Great, thank you.

Your next question comes from Cameron Doerksen from National Bank Financial. Please go ahead.

Thanks, good morning. I guess maybe to go back to an earlier question around working capital and your wholesale inventories - I mean, obviously assuming a part of the inventory increase on your balance sheet is related to these retrofits. Maybe you can just discuss a little bit about how--or maybe discuss what you’d think kind of a normal level of inventory on your balance sheet should be, given the size of the business now, because we’ve seen obviously a significant increase over the last 18 months, but a lot of that is kind of unusual, so what do you think a normal level of inventory should be for BRP with the size of the business now? Sébastien Martel: Yes, well obviously we have invested in working capital in the last few years for raw materials for retrofits, and there’s lower actually finished goods, and the inventory is at a record level, over $2 billion on our books in inventory. My expectation is that in Q3, we’ll still be running with high inventory, probably even some investments in working capital that are going to continue as we ramp up our production, and the expectation is that should go down in the fourth quarter and probably be a working capital cash generation element. When are we going to come back to normalized inventory? Obviously we’re running today with higher raw material because we want to have a bit more buffer in our planning, and we are actually having discussions with the team as to, okay, what’s going to be that new level once we get to that new normal. There’s one thing I’m going to note, that I do know, is that finished goods inventory is going to go up in the fourth and in the first quarters of next year, but when will the raw material come back down to more regular levels, it’s still too early to call, Cameron.

Okay, fair enough. Maybe just second question on--I guess again on the M&A, the Kongsberg acquisition, more of a vertical integration for BRP. Can you maybe just go into a little more detail as to why you felt the need to bring some of that supply in-house, and is there anything else that you think is critical, that you think you need to bring in-house that potentially could be an M&A opportunity for you? José Boisjoli: First, we were about 80% of that division sales, and there is many unique features that we developed together over the years. We even have common patterns in certain areas. But I give an example - power steering, we developed with them the power steering that we use on our ATV side-by-side and our three-wheeled vehicle units. It’s unique to BRP, and we believe we can accelerate the pace, and it’s a combination of acquiring the know-how and also being self sufficient in key components. It has the power steering, and this is only one part that they’re doing for us.

Okay, do you think there’s additional acquisitions you might want to do too for other critical components? José Boisjoli: At this point, we’re looking obviously at opportunities all the time. At this point, there is no specific plan for this, and again the acquisition of Kongsberg had two objectives. One obviously is vertical integration, doing it ourselves, but the other one was to acquire the very talented team over there to continue to push innovation and have better coordination between our team here in Canada and their team to go faster. It was like two objectives for Kongsberg.

Okay, makes sense. All right, thanks very much. José Boisjoli: Thank you.

Your next question comes from Jaime Katz from Morningstar. Please go ahead.

Hey, good morning. Thanks for squeezing me in. I actually have a couple nuanced questions just on consumer behavior. I think you discussed the availability of credit, saying that it seemed pretty good, but I’m curious whether the usage of credit for purchases has changed or if the quality of borrowers has changed over time. Sébastien Martel: Good morning Jaime. When I look at the data for Q2 and I look at the overall FICO scores compared to where we were pre-pandemic and where we were last year, the FICO scores are actually higher, which is obviously a good sign on the people who apply for credit. You might say, well Seb, it’s easy to get higher scores if the acceptance rates are lower, but acceptance rates are also trending higher. Last year in Q2, we were at 66% of acceptance rates from our financing partner; this quarter, we’re at 71%, and when I look at the data just for August, we’re still trending higher at 73% of acceptance rates. As we say, yes, we are looking at what’s happening in the news and we are reading and listening to all the articles and looking at inflation, but the retail is remaining strong, booking from dealers is strong, and they’re on the front line. Website visits are also strong, so we’re not seeing any slowdown from the consumer in the interest in powersports and marine products.

Okay, and then I don’t think it was bifurcated, but between North America and international, it seems like there was a little bit of a shift in the composition of sales. Is there anything that you’re seeing abroad that indicates that the cadence of demand might be slower than domestic, or any other trends that might be noteworthy? Thanks. José Boisjoli: Yes, in terms of--obviously we’re watching Europe because in the context of the energy shortage, there is high inflation in some areas. But if we look at the Q2 retail again in EMEA, and it was low double digits, when in North America was mid double digits and LatAm was also mid low double digits, then basically EMEA in Q2, despite all the pressure that we see or we hear about energy, the retail was somewhat in line with what we saw in North America and LatAm.

That’s really helpful. Thank you.

Your next question comes from Brian Morrison from TD Securities. Please go ahead.

Yes, thank you. Good morning. I just want to follow up on the earlier question on the guidance weighting--you know, second half EPS, it looks like 30% will be Q3 and 70% Q4. But you’re talking about the supply chain improvements, capacity improvements, so is the skewing to Q4, is this cyber related, is it supply chain, is it the retro products and WIP? I guess in simplistic terms, why can’t we push through more retrofit in Q3? Sébastien Martel: Good question, Brian. Obviously yes, the cyber incident impacted Q3 production. Some of the catch-up is going to be happening mostly in Q4 with overtime and weekends, and also the completion rates are going to be higher or are expected to be higher in the fourth quarter. Obviously we are working with the teams, can we optimize and be better in Q3? That’s something we always strive to do, but just the inherent, we’ll call it improvement of the supply chain and cyber incident are obviously weighting heavier on the third quarter.

Okay, and then I guess a higher level question, maybe for José, when you discontinued Evinrude, you signed a deal with Brunswick. Does that agreement phase out with the Stealth technology now in place, or what is that relationship going forward? José Boisjoli: No, when we signed the agreement, they knew about our plan with the Ghost technology, and the agreement is going on.

So what is the competitive response, or what do you think the competitive--you know, what’s their reaction to having a new competitor, a very strong competitor now in place? José Boisjoli: This, I don’t know. Again, if you look at the marine industry, it’s a huge industry - $36 billion, and today we have about half a billion dollars of revenue in that industry. We have a long way to go, but for us the division is to sell a complete product like we do on all our other product lines. That being said, it will take a while before we get there, but step by step we will continue to go there. When we acquired Telwater in Australia, Mercury was not there, and now they are a partner in Australia, then there is some win-win for both companies and the relationship continues.

Okay, thank you. Congratulations. José Boisjoli: Thank you Brian.

Your next question comes from Fred Wightman from Wolfe Research. Please go ahead.

Hey guys, good morning. Thanks for the question. Seb, you had alluded to some potential tailwinds just on the raw material side. I know you’re not really expecting that to hit this year, but is there any way you could sort of put parameters around what that tailwind could look like as we think about next fiscal year? Sébastien Martel: Well, earlier in the year, we talked about a headwind coming from inflation, supply chain disruption of about 300 basis points. Obviously this year, commodities are improving, but we’re kind of hedged or committed with our suppliers this year, so not much opportunity. Obviously that 300 basis point headwind is something that we would--we will obviously work hard to remove or reduce next year, and it brings a considerable opportunity for us going forward as we address it.

Makes sense. Then on the updated guidance, have you guys assumed, or is there any business interruption insurance that is contemplated in that? Sébastien Martel: We do have insurance coverage for cyber incidents. We’re in the middle of doing the computations. Yes, we did file a claim with the insurance company, and our guidance assumes that the insurance will not be--or the insurance with the additional costs would be normalized from those numbers.

Sorry, just to be clear, so the business interruption insurance claim, assuming that goes through, would be incremental to the current guidance, or current guidance assumes that-- Sébastien Martel: That would be normalized.

Okay. All right, thank you.

Again, if you’d like to ask a question, press star, one on your telephone keypad. Your next question comes from Gerrick Johnson from BMO Capital Markets. Please go ahead.

Great, thanks. On the acquisitions, how is that impacting your guidance for the year, and also Sébastien, how is that impacting the P&L from an accounting standpoint, given that these are some suppliers? Sébastien Martel: Well for this year, no impact on the guidance. They are relatively small acquisitions - Pinion is a relatively small business with a lot of opportunity. It will be presented in the powersport P&A and OEM engines, but no significant impact this year. Kongsberg, obviously it’s twofold, as José said, from a technology standpoint, strategically there’s a good fit there, and from a vertical integration, obviously it’s going to reduce our overall building material cost. We expect some minor benefits this year, but they’re still operating in a tough supply chain environment and some--most of the benefits will come next year. But--

Okay, but the impact-- Sébastien Martel: But nothing super material, Gerrick.

Okay, I was just wondering about the accounting for it, so this is not adding revenues since they were supply components, or is there some revenue recognition or is it a cost-- Sébastien Martel: No revenues. It’s going to be a cost advantage we get mostly next year.

Okay, okay. Thank you.

There are no further questions at this time. I will turn the call back over to Mr. Deschênes for closing remarks. Philippe Deschênes: Super, thank you Julie, and thanks everyone for joining us this morning and for your interest in BRP. We look forward to speaking with you again for our third quarter conference call on November 30. Have a good day, everyone.

This concludes today’s conference call. You may now disconnect.