Q4 2020 Earnings Call
[music].
All participants please standby youre, calling fences said you begin good morning, ladies and gentlemen, and welcome to the VIP Inc. and fly 24th quarter results Conference call I would now like to tuna meeting over to Mr. fitted Vishay. Please go ahead mr. their Shane.
Thank you remote good morning, and the Wolfcamp B RP conference calls for fourth quarter fiscal year 2020.
Joining me this morning, our shows the Bush <unk>, President and Chief Executive Officer, and Sebastien massive Chief Financial Officer.
Before we moved to the prepared remarks, I would like to remind everyone that certain forward looking statement will be made during the call that are subject to a number of risk and uncertainties.
I invite you to review our piece that quite 20 earnings press release for listing of the.
Also during the call reference will be made to supporting slides and you can find the presentation on our website that the ARPU dotcom under the Investor Relations section.
So with that I'll turn the call over to deal with it.
Thank you fitted.
Good morning, everyone and thank you for joining us.
This morning, we'll give you the Q4 in fiscal year 20 results.
However, given how rapidly the situation would come in 19 is evolving globally. It is difficult to predict gets sent back on our business.
Do you understand that's what we'll continue to adjust our plan.
Last thing unfold.
Let us start by reviewing the current situation.
First the employee of ERP are doing well, we have established clear policy on travel events and health and we'll continue to update them as governor minarets funds evolve. We have also adds up to the work from home practice where applicable.
Second I would like to thank all our employee in particular, our manufacturing workforce.
Speaking extracare to apply special health for fixed measure.
Third we have had some challenges, but have not experience and they break in our supply chain to date.
Port as of today, all our manufacturing site, our operational but we anticipate that will be line speeds reduction or temporary closure to adapt to the demand.
Fifth.
Most of our dealer around the world with a few exceptions are continuing their operation.
And dealer are closely king.
Pete, Spain, and France for the moment.
And service thing to note in China 26 out of our 33 dealers have really opened for business.
And traffic is beginning to resume.
As you can imagine we are monitoring the situation closely and we'll continue to add that.
Before I move on to discuss fiscal year, 20 result, we'd like to remind everyone thats our diversified manufacturing footprint.
Hi portfolio and market prisons provides us a solid base to work upon.
Let's start by looking at our financial results for the year on slide four.
Our revenue were up 15% to reached 6.1 billion, primarily driven by strong growth in year on products.
Our normalized EBITDA was up 23%.
804 million, resulting in a normalized earnings per share that came in above our guidance range at $3 83, representing solid growth of 24% over last year.
For the fourth straight year, we have been able to outpace the industry.
Our north American bars sport retail sales for the year were up 15% compared to an industry Thats was up mid single digit.
When excluding snowmobile or north entity can parse pork retail sales.
Were up 17% in an industry that was up mid single digit.
This is a testament to our reputation for pushing technology and innovation to create market shaping product as well as our flawless execution and our strong dealer network.
Is difficult to celebrate in times like this.
But we achieved our 2020 objective one year in advance by delivering over 6 billion in revenue and over $3 50 in normalized EPS.
Im extremely proud of what VR fee is becoming I would like to thank all our employees.
We have set a solid foundations together.
Now, let's move to our performance for the fourth quarter, starting with the look at global retail on slide seven.
Our strong momentum continued into the fourth quarter as once again, our parse port product lineup continue to drive strong consumer demand around the world.
In North America, our retail was up 12% or 21% when excluding snowmobile.
Latin America was up 19% driven by strong side by side and personal rotorcraft sales.
We continued performing well in EMEA.
I would treat the up 7%.
Even though the industry was down low single digit and in Asia Pacific, where our retail was up 9%, while the industry was up mid single digits.
Looking at North American the retailers by product line on slide eight.
Again, this quarter with delivered solid growth across our parse port product portfolio.
We continue to outperform the off road industry with side by side retail growing above 30% for a second consecutive quarter and EV your retail being up about 10%.
Early in the season, three with vehicle retail was up low single digits.
Continuing to grow despite lapping a very difficult comparable as our retail has tripled during last year fourth quarter.
For silhouette to craft performed well.
Early in the season, which retail up low teens, and we had a strong quarter for snowmobile with retail hub mid single digit in an industry that was down high single digit.
Now, let's turn to slide nine for the year on product highlights.
Revenue were up 18% driven by a higher volume of side by sides sold.
On the retail sites seven months into season 20, the side by side industry was up high single digit.
The demands park and them side by side was fairly strong and our retail was up low 30% season to date.
Got them side by side was also performing well in international markets, we treat down for the quarter up over 30% in Latin America, and up over 40% in EMEA and Asia Pacific.
Turning to we TV the North American EV industry was also seven months into the season and retail overall it was up low single digit.
For the same period cannot meet TV was up low teen percent, notably gaining share in the mid Cc segment.
Let me TV was also performing very well in Europe, and Asia Pacific with retail up high single digit and low teen respectively.
Now looking at the tree wheeled vehicle.
Earnings season, 20, the North American three will motorcycle industry was up low single digit and kept them three will vehicle retail was up low single digit.
We started shipping to new RT model in the last two week of the fourth quarter and it is very well received by dealer and consumer.
Turning to seasonal product on slide 10.
Seasonal product revenue were down 6%, primarily driven by a lower volume of personal watercress sold due to production timing.
Looking at retail starting with personal or graph. We are currently at the end of this season and countries season market and see do continue to experience solid growth, notably in Brazil.
Our retail was up in the mid 20% for the quarter.
In Australia, and New Zealand, our retail was up low single digit despite the negative impact from the wildfire problems.
In North America traction that the boastful was good and season to date retail was up low teen percent, both for the industry and foresee too.
Turning to snowmobile send money to the seasons, the North American snowmobile industry was about flat compared to last year.
Our skewed to line up continued to drive strong consumer demand, resulting in a retail that was up about 10% and we remain number one in North America in all the segment in the which we are competing and have global lead to higher market share in our history.
So we're essentially hail our dealer event, where we introduced our model year 21 key do enlinks lineup.
The most important use far mother Deere 21 key to lineup was the introduction of the world's first factory built two stroke turbocharge engine that is available on the news key to submit 850.
This is another great example of our ability to push technology and disrupt the industry.
Continuing with the look at par sport parts accessories, and apparel at Oems and OEM engines.
Revenue were up 6% into quarter, driven by higher volume of year around product parts and accessories.
Fiscal year 20 was an excellent year far accessories business as we've delivered double digit accessories revenue growth with all our pars pork product line.
Now looking at the Marine Contiguity revenues were up 19% in their quarter driven by the acquisition of 10 water and the higher volume of outboard engine sold.
Looking at retail sales seven months into season 20, the North American outboard engine industry was about flat with Evan rude retail down high teen percent.
Both retail for a new mechanisms many to end Quintuplex was generally in line with the industry.
For the Marine business, we are following our by Bill transform strategy and I would like to remind you again that this is a mid to long term. Please.
Overall, we had a very good results for fiscal year 20, and our momentum continued early into fiscal year 21.
Exceptionally this morning will share some color on our fiscal year two underwater retail.
Our retail from first to last Friday on March 13 was up 11% and 24% excluding snowmobile for a good start of the year.
However in this current global uncertainty, we are proactively implementing measure to protect our financial flexibility and our monitoring closely the situation.
And discount that will not issue a full year guidance for fiscal year 2001 that is fine.
We believe that beer fee will be well position when the economy bonds back.
And with that I will turn the call over to say best team and will return for closing remarks.
Thank you Julie and good morning, everyone before we jump into Q1, a and discuss the current business environment. Let me give you an overview of the Q4 results. We completed fiscal year 20 with results came in slightly ahead of our expectations driven by the continued strength of our or RV business.
Revenues for the last three months of the fiscal year grew 7% to reach $1.6 billion, primarily driven by higher wholesales of SSV due to continued popularity of our lineup with consumers.
Our gross profit margin ended up 23.7% an increase of 150 basis points from last year's fourth quarter.
As a net favorable impacts coming from volume pricing and sales programs and production and distribution costs were partly offset by unfavorable foreign exchange rate variation.
Our normalized EBITDA was up 22% to $222 million in our normalized EPS was up 27% to reach a dollar in 12 cents.
Looking at the full year as I mentioned, we also delivered record results with revenues up 15% to reached $6.1 billion and normalized EPS up 24% to reach $3.83, both metrics ending slightly above the higher end of our guidance ranges, primarily driven by stronger.
Good day anticipated results for our already business and favorable tax rates.
Free cash flow ended at 225 million, including Capex that ended below our guidance with investments of $331 million a certain projects were pushed to fiscal year 21.
Also just after the end of the year, we extended the maturity on our long term debt by two years to May 2027, and reduced pricing on a portion of it.
As you know proactively managing the maturity of our long term debt and maintaining our covenant light structure is one other ways, we contribute to strengthening our balance sheet.
Turning to slide 15.
Our quarterly normalized net income was up $14 million compared to last year as it ended the quarter at $100 million. The growth was driven by a net favorable impact of $56 million coming from volume mix pricing and sales program.
And then net favorable impact from production and distribution costs of $19 million, which were partly offset by higher operating expenses for $15 million to support continued product investments higher net financing costs and normalized income tax expense for $17 million and a non.
Favorable foreign exchange rate impact for $29 million.
Looking at network inventory on slide 16, our networked inventory was up 7% over the same period last year as we continue gaining market share.
Remember that our retail for the quarter was up 12% or 21% when excluding snowmobile. So again this quarter. The increase in network inventory continued to trend positively as it was lower than retail sales growth.
Our network inventory is up four and society as we continue to experience solid momentum with the second consecutive quarter of retail growth above 30%.
And three will primarily driven by writer for which demand continued to be strong and we started shipping units for the upcoming season earlier than we did last year, we are comfortable with our network inventory level and quality as the number of days continued to trend in line with our targets and the costs.
Entity of aged inventory is low with less than 3% being more than 18 months old managing a healthy network is a key priority of ours and we will continue to diligently manage it to ensure that evolves in line with retail demand.
And finally, turning to slide 17 to talk about fiscal year 21.
Now with the recent developments related to Corbin 19, our ability to forecast the year. At this time is challenged the potential impacts, resulting from the pandemic remain unknown and difficult to predict and so far the direct impact on our business on Zulily indicated have been limited.
However, when we look at the containment measures the various governments have implemented around the world. It is only a matter of time before we start feeling the impact on our business whether through supply chain or retail demand. Therefore, given the fluidity of the situation and the inherent challenges it creates in predicting how the.
Next month will unfold, we will not be issuing guidance for fiscal year 21 today.
Despite the limited visibility like many companies we have started scenario planning exercise that focus in part on volume reductions cost control and cash flow.
We are still in the beginning of this process and therefore it is too early to share the details of this with you today.
However, proactively in order to ensure that we have access to liquidity as needed. This past Wednesday, we have drew the full amount on our 700 million dollar revolver facility and with the board, we have decided to suspend the quarterly dividends.
We expect to provide you with more information and details at the latest.
On our outlook for fiscal year 21 during our Q1 earnings call.
As we look ahead, our focus remains on delivering on what we control all the while taking a prudent approach to the year, notably by implementing recommended actions by government officials to ensure the safety our of our employees by working closely with our suppliers by adjusting our productive.
Levels in line with retail trends to ensure that our dealer network inventory remains healthy and that lastly, and a balance proactive and prudent manner by implementing contingency measures as required to control cost optimized cash flow and position us to continue our growth one.
This crisis is behind us and with this I will turn the call Busters shortly.
Thank you said best team.
Our fiscal year, two and there was an incredible year for us as was deliver our five year plan challenge 2021 year in advance by exceeding our 6 billion in revenue and $3 50 EPS target.
As I said I'm extremely proud of what VR fee has achieved as well as this trend and the resilience of our people.
During the fed the this period of uncertainty our first off our with everyone affected by the situation.
Including our employees dealers and business partners.
As a situation evolve we are ready to respond and to adjust our business plan as needed in order to protect our long term growth.
On Thats note I will turn the call over to the operator for questions.
Thank you.
Please press star one at this time, if you have a question that was the at least fossil all participants, but just a couple questions.
Thank you for your patience.
Our first question is from Steve High Chairman from RBC capital markets. Please go ahead.
Great. Thank you very much Im just wondering if you can elaborate on a couple of things.
It's on dealer inventory you talked about it at the end of the quarter something there.
Comments at all and in what you're seeing how is trending over the last few weeks since quarter end.
And with respect to dealer orders and expected delivery in the next in coming months health from logos or how much flexibility just really have four.
Offerings deliveries or canceled outright and with the revenue recognition impacts there.
Good morning, Steve dealer orders I will talk to above the dealer order and substantial in car video inventory.
Dealer order right now obviously in country like.
Spain, Italy.
And France dealer order I mean, everything is slower than we don't have any.
Shipment.
In North America, we don't see yet.
Any dealer cancellations.
The retailer was accident and Thats why I gave you that color of our retail till last Friday, our retail excellent till last Friday, and we didn't see any.
Cancellation of the order at this point that being said.
We believe it will come.
And I don't think.
I don't think the dealer will will cancel orders, but that's one point dealer will close and it will be difficult to ship.
Obviously, we have firm orders for off road for the next three months.
We have firm order for watercraft, we have Dfc do ski snowmobiles.
And she will vehicle we have firm order also till the end of the season, but it will depend how this situation will evolve over the third or the over the next few days.
Hi, Good morning, Steve on the inventory as you saw at the end of January.
Retail for the quarter, the retail was super strong and the inventory position was good as well and as rosy indicated in his opening remarks retail up to last week was up 24%. When you exclude snowmobile. So the retail continued to be very good and sold the inventory position is still very healthy obviously.
We will monitor.
And we are monitoring or retail on a on a daily and weekly basis, and we are working with our teams to.
Adjusts deliveries and production if needed based on dealers ability that take these orders and service consumers.
And just one one final one today.
Rapidly evolving situation any color on the actions you've taken already or things that have already been implemented to scale back production.
To various facilities and when you look at your stress testing.
Any color at all in on what locates downside scenarios look like over the coming.
As a as of todays all our manufacturing sites are running normally but you can expect into coming weeks.
Some sex study will go from two shifts to one shift.
To slow down production and some could be close temporarily for period of time.
Obviously season.
We will adapt depending how fast the situation will.
Well, we'll have the demi new impact what is a bit funny is some industry are doing still very well our retail on side by side is strong LTV.
Even watercraft seen us is doing well then it's very very difficult right now.
To to follow the situation and we'll adjust.
As fast as weekend, when we have a better indication.
Its course understand thanks very much they will.
Thank you.
Thank you.
Following question is on that Mark Petri from RBC. Please go ahead.
Hey, good morning, just a follow up on that topic with regards to sort of the production of specific types of product age of your facilities just remind us.
Although your ability to potentially sort of consolidate.
Crosses facility.
As opposed to just sort of shutting down the line.
No at this point, we don't think about consolidation, it's a lot more efficient.
To go from to shift to one shift.
And if the demand stuff total leads to stop totally deal operation.
Consolidations takes time and we're not there I think.
I think we'll go through a period of time and this is this is a big.
The big question, how deep and how long.
This will last.
Then we are not thats easy of looking at the consolidation.
This could last a few months this could less.
I don't know.
Dan will adjust our plan, but right now it's a lot easier to reduce light speed.
And temporary closing then consultation.
Yes, Okay fair enough.
And then could you just give us a sense sort of by your buckets of costs.
Via cost of goods and then your various opex lines, how much of that was sort of be trying to fix or just pure overhead and how much would be very.
Variable or semi variable.
Good morning March.
Obviously, when we looked at our business and we look out.
Adjusting.
Adjusting level operations Opex in overhead will be the big element.
And then just to give you a bit a color.
Most comfortable trough.
In some job fixed versus variable.
We have about.
Let's say.
Probably 90% of their costs in overhead is.
Is fixed.
And then the cost of goods sold bucket, 85% of the costs are variable 15% of that is fixed and of that 15%, 90% is pretty much difficult to as a tool to read it was because it's either depreciation or.
Leases that you have on the building so 85% is variable 15% of is fixed and of that 90% pretty much frozen and so overall in Cogs about 13% is fixed and then on opex well that is pretty much variable you probably have.
80, 85% about that's variable.
Sorry.
Right.
Yes, no aggressively we got there.
And then could you just.
Could you just sort of talk at a high level. If when you I mean, obviously, we're not there yet, but theres going to be a point where.
Presumably there's a scenario where.
A lot of your dealers are under some pretty significant financial pressure and could you just talk about structures or past experiences in terms of providing financial release to dealers and what that has looked like.
First you.
You know we've been we've been growing and the economy have been strong far more than 10 years, then the dealer overall, we're in good financial situation compared to wait to align the where the situation.
The Teddy 88 for a few years before to hit the crisis in a way to nine dense first I think the dealer to date worldwide are in better shape than they were in the wait till nine does the first thing I.
I think everyone is managing their inventory better compared to what we're doing before.
And.
And dealer right now.
Our trying to operate just to give you a sense.
In Us Wednesday, we've done this survey in North America, We've done this survey Wednesday, and only 4% of the dealer workflows.
About 20 or thinking about closing and the other worth elaborating, let's changing a bit their habits. Some are trying to sell products.
On digital some are doing VIP delivery than everyone is trying to to find new ways to keep going.
Very difficult to to know, but no doubt that we are in better shape than where it before.
Okay. Appreciate it I'll pass the line thanks.
Thank you.
Following question is from anyone Slahi comes there Chardan capital markets. Please go ahead.
Yes, good morning, everyone.
Could you talk visuals and little bit.
About the situation back in 2008, 2009, and also what kind of slicks.
Do you out from a capex standpoint kind of your ability to to reduce your capex going forward.
The which level.
Yet in Iceland Lane, and Weve look obviously of how old the situation to tell you on eight but the big differences in noise to align you had like about 10 months of declining in sales.
If that Thats, we hit the bottom and the took a long time to recover. This time is different as you saw and Thats why I gave you the color on our retail up to last Friday, the everything was rolling full blast.
And now we know that deal will be a slowdown but the big question is how deep in the how long.
Then right now we are monitoring obviously, the health of our employee we're monitoring closely all our expenses.
All that capex that we can depending how things evolve debts, we can deli and obviously doing that.
Doing debt trying to protect our short term growth our term our growth and the economy bounced back we wont to be our goal is to be extremely well positioned when the economy bonds back.
And on your Capex question.
But in the why we had shared some preliminary numbers last fall that are looking at fiscal year, one and we had said that our plan for fiscal year 21 was capex north of $400 million. We are still in the planning phase. Obviously, we're taking is very seriously and we're looking at all the cash elements of the business.
We don't have a number yet for 21, but if we need to bring that number in the low two hundreds it so certainly something that is.
Is feasible.
When I looked at the high level plan, but obviously, we'll we'll be doing a bottom up in the next few weeks.
Okay, perfect and how much of your sales you expect if we look at fiscal 2001 no guidance. All do you expect growth in every product client. So how much of your revenues is already bake in terms of the people that already preorders snowmobiles that will be received.
In November and December and how should we expect dealer inventory to evolve.
Let's say the coming quarters.
Obviously the situation is still very very fluid at unprecedented we do have firm orders for personal watercraft. We wanted to we have the orders for Q1 for Q2 winters Super good visibility there for our view. We also have good visibility for snowmobile dealers have placed the orders for next season, but obviously.
The it's one thing to producing but then you need to have dealers that are able to take them and consumers that are able to buy them as well and so.
Today, I think it would be optimistic dosing, we were able to.
Sell all of the preordered units for consumers and as we said will be adjusting our plans accordingly and be we'll be working with our dealers plan partners to make sure that we do the right thing for the business in the long term.
Okay perfect. Thank you very much.
Thank you.
I'm. Following question is from Tim Conder from Wells Fargo Securities. Please go ahead.
Hey, good morning. This is actually more turns around for Tim Thanks for taking your questions.
First just given where oil prices on out could you remind us your direct and indirect exposure to the oil patch regions may be a percentage of your total off road vehicle sales where sales overall.
Yes, I mean, the our exposure to the oil.
We are fairly limited and.
We still have a lot of market share to gain in dose in those states and the we do we don't do much b to B, we do most of our sales b to C. But just to give US then it's about 20% of our U.S sales.
Seven stateless to access the cloud loan new Mexico couldn't handle Wyoming, North Dakota and California.
And so far I mean, we're growing this season, we are growing over 20% in dose state.
Then.
So far we don't see any direct them back, but because we see fairly small in dose in dose area. We still believe thus we have some runway.
Okay, Great and then.
Certain environment is there any I guess some separation at this point change product launch cadence throughout the year.
No it's still too early to call. Obviously the product launches are scheduled several years and advance I mean, we haven't team is working on product launches.
One year two years so.
Too early to say, what we're going to be announcing in June and what we're going to be announcing in September we might adjust or plans based on how the economy's evolving but most of the engineering work is done for these products. So we still have a healthy pipeline of product introductions to do.
Obviously, the situation will dictate what we announce.
And when.
Okay. Thanks, and then in that that you provided some commentary on your 2021 plan prior to the virus impact.
Could you provide anymore detail on what your segment outlooks kind of look like without the impact for the year.
What the what could have looks like so remark I missed the segment.
Yes segment outlooks for the year.
Yes, we were obviously you saw the result that we delivered last year and.
You saw the retail how it kicked off early this year and so were outlook for fiscal year 21 before this whole situation was very favorable.
Yes, the or the.
And off road was a segment where.
We were we were looking for growth and solid growth.
Snowmobile with the product introductions that we did last last winter and a few months ago at our club. We were also optimistic for for that product line and we have a very solid lineup with personal watercraft and with our three wheel business sold.
Honestly before this we were actually very very bullish for fiscal year 21.
Okay, great. Thank you.
Thank you.
My question is from Robin Farley from you'll be US. Please go ahead.
Thanks, I wanted to clarify retail that you see we set season to date or is that just since February one he thinks that retailer rich flash hi, Justin.
Started that period.
So.
If you can clarify if you [laughter] production and she's been maintaining labor expenses and you gave some of the fixed versus variable, but thank you.
Variable labor expansion mentored, yes that would keep maintaining thanks.
First the the retailers I gave you in fiscal year 2001.
It was from fed first but this year two last Friday March 13, and just to repeat were up 11% overall and excluding snowmobile were up.
24% than.
This is.
We had that David good momentum in term of labor if we.
Close temporarily.
We will adapt to the country rules in some in North America and in Europe. There is there is program for.
Full year.
Large competitively off then it will depend of the country, where we have the operation or we have our sales.
Team will will adapt to each region.
[laughter] potentially.
Make sense and continuing they precautions that HM.
Okay.
She testing.
The line is very bad Robin we are breaking up sorry.
And just actually.
With the a couple of weeks since may be maintaining.
Labor based curious maintained this labor cost.
If if we do temporary shutdowns.
Most of the government programs kick in immediately the first day of ups of temporary really off and so we wouldn't necessarily need to wins most of the country's need to maintain the labor cost for a few weeks if we shut down for a few weeks.
Okay, great. Thank you very much.
Thank you.
Following question is summit, Craig Kennison from Baird. Please go ahead.
Hey, good morning, Thank you for taking my questions as well.
Seven I understand you are undergoing a liquidity review right now, but just wondering if there are any particular covenants in play in that are top of mind for you.
Good morning, Craig Good question.
Weve.
She was and I were both paranoid online and back then we had the long term debt.
With with covenants and so we had to navigate through that period of uncertainty and manage the business through covenants and one of the takeaways. We had back then is that if ever there was another slowdown we don't know we don't want to be hindered by jeopardizing or making sacrifices to the business because we need to comply with covenants. So we've been.
Barry.
Stubborn and diligent in maintaining a covenant lite depth and so today our debt is covenant light there are no financial covenants associated with our term b.
We've also been very diligent attic always extended the extending the maturities. So we don't want to be stuck with any short term.
Debt reimbursements and.
Last January the markets were good the pricing was good as well and we decided proactively to extend the maturity on her debt by an additional two years into an hour term b has a covenant light structure and repayment date of 2027 and so.
That's one of the lessons that we learn back in a wait and online and today wallet knock on wood. This is one good decision that we've taken and it provides us with added flexibility in these types of situations.
Thank you that's very helpful. And then I'm wondering if you've had conversations with your credit partners either on the floor plan side or.
Those who provide.
Loans to consumers and just curious what they might be saying to you at this time.
Absolutely we've been we've we're working with a Tcf and North America for Fore plan, we work with Wells Fargo as well it at international and we're in constant communication with.
With both partners. They are extremely supportive they understand the situation that has been through this before.
We are working hand in hand to support our dealers.
We are adjusting our payment terms, we are we're extending floor plan as well to our dealers.
We need our dealers in the long term and we need healthy dealers and so we understand that Tcf and wells Fargo understands that as well and so we're proactively working to try to lessen the burden on them as much as possible.
Thanks, and lastly, I don't know if you commented on retail.
In the last week, obviously, it's early buy things have changed a lot have you seen any.
Any statistics on retail since the end of last week.
I will give you some colors, a craig and we're monitoring this worldwide and just to give you a sense.
Our retail was about 10%.
Fourth since the beginning of the year last two weeks last week and the rolling last to weaken last week was about 10% up.
It was down 9% in the last few days then you can see that is starting to effect and obviously in Europe trends, Spain.
And each of the are down then this is totally normal and in U.S. like I said in my comments, 4% of the dealer.
Our close right now than this is what we don't know is I'll big will BNL fat, how deep and how long it will be.
Very helpful. Thank you.
Thank you.
I'll. Following question is from the KEMRON Saxa from National Bank Financial. Please go ahead.
It's just the Vimovo and Samsung to Q, So I wasn't going to go with that.
Jimmy Johnson from BMO capital markets. Please go ahead.
Great. Thank you Hey.
Can you tell us what the capacity utilization.
Was prior to the virus outbreak.
On the revolver.
No no a factory capacity utilization, where we are today.
We were a analysts we were running full capacity at the end side by side, the personal watercraft as well so we were running.
Pretty high base, obviously snowmobile is an off season, so not without running.
But in the three wheeled vehicle business as well we were Oh, we started production of the new our T. model late January and so thats in production and by goal and the reicher as well shipping for the summer season, Okay great.
Can you repeat where you said about the $700 million revolver.
Yes, well in my prepared remarks, what I indicated as that we last Wednesday, we decided to draw the full amount on the revolver okay.
In order to provide us with necessary liquidity.
When needed.
Was there a chance that it would go away why didn't you need to what you need to pull on that right now well a when we when we look out the overall market situation when we look at the uncertainty.
Yes, the your look you're reading a news like everyone else is.
A lot of the business a lot of businesses are going through tough times.
And backing away to nine there was a concerns about access to liquidity and how banks, which fair and all of this we're not worried because we have Canadian charter banks behind the revolver, but other certain points.
We want it to be proactive and prudent and our managing the business and Thats why we decided to pull on the revolver. Okay gotcha.
And lastly, similar to Robbins line of questioning on Opex I think you said, 85% is variable.
And I get it R&D, and perhaps sales and marketing, but GNS I would think would be pretty darn fix, especially if its people and labor behind that so can you just talked about about your operating expense a little bit more in detail on how it is 85% variable.
Yes, well, maybe I'll, just I, probably didnt do a good job on Rover announced or question earlier on terms of fixed versus variable. So let me redo that over again, we'll start with the cost of goods sold line.
When you look at the cost of goods sold all the costs of goods sold 15% is overhead and depreciation in about 90% of that is fix the rest of the Cogs is material labor rate warranty et cetera, and thats, 85% of their cost of goods sold and Thats variable in terms of Opex, yes, there's a lot of salaries.
Yes, there is advertising dollars consultants I would say, 80% to 85% of that it's variable and addressable, yes, theres some salaries, but if the situation warrants.
That we need to adjust our workforce, we will adjust our workforce. Accordingly, obviously these actions will be measured.
We want there are certain skills and competencies that we want to protect and make sure that they are there when the economy turns around but.
The way we look at it is everything should be addressable in terms of spend.
And then we will take the measured the decisions as needed okay. Great. Thank you.
Thank you.
The following question is from Brendan Raleigh.
Watch closely research. Please go ahead.
Good morning, I, just wanted to ask about all your largest north American RV competitor.
Gotten much more aggressive this year have you seen any impact on your retail demand sense, maybe mid February and.
In the future do you plan to compete with lower pricing.
Or do you plan to just continue beating on.
Evasion. Thank you.
No I think I mean, we didn't see any slowdown in our retail as you saw on Q4, we were over 30%.
In retail versus last year, and we had a very very strong start of fiscal year 2001, then obviously there is a great competition between.
Our biggest competitor and us.
But when you didnt see any slowdown in our retail.
Okay, great. Thank you.
Thank you.
Well following question is from Brian Morrison from TD Securities. Please go ahead.
Hi, Good morning said in your commentary you talked about your Capex and flexibility to take it from potentially 400 million down to 200 million can you maybe just talk about some of the major projects that comprise that 400 million and and what might be.
Amenable that you can take it down to 200 million.
Well, obviously, you've seen our business evolve over the last two years and you've seen us grow and our plans for fiscal year 21, or more to continue to grow and so we were making investments and capacity.
In most of our sites.
So obviously, we will re question capacity investments in the short term.
Some we also had some some projects that add more longer term returns certain.
Investments in our systems at all on and so these are items that we can re question as well.
And obviously in situations like this well some improvements that you might want to me to some of the buildings, but are not to 30 critical can be postponed to wave a future time and obviously these are things that we will.
Also be addressing in our in our plans.
Okay. Thank you and then one follow ups I can back in your prospectus you provided some color on the impact us.
Volumes and.
Revenues and EBITDA and the impact back in a way no nine can you maybe talk about what happened your free cash flow at that time as well just to get a colors.
Some color on the impacts.
Yes, well, obviously cash generation was impacted back in OID and Onein.
We were in a way to nine we did consume some cash in the first year and it took about two years before we came back to positive cash generation.
And so that's why we are taking a prudent approach and managing the business. That's why we took the decision to postpone the dividend payment the quarterly dividend payment.
We have ample flexibility with our revolver.
But as there was a indicated the the duration in the extends of.
Of this crisis is unknown today, and we prefer to be prudent.
And adjust accordingly, if things are better than.
Than what people anticipate.
Thank you very much.
Thank you. Following question is from some Directv from Canaccord Genuity. Please go ahead.
Hi, Thanks, So just one last one on the Capex, so that low 200 million numbers you quoted.
Is that what you would define as maintenance capex right now within that within the system too early to call I. Just wanted to give you an appreciation of as the us to the flexibility that we have on our capex device.
Talked earlier, obviously will be selective and what we decide to do when not to do.
But like any companies, we were growing and so we were making investments some of them that are paying more in the short term some of them are paying more in the long term.
The good news is that we have flexibility to adjust our plans than we do not believe that it will could jeopardize the business in the long term. So we'll be very very selective and what we decide to do.
Okay. Thanks, and just in terms of your on.
Exposure to more oil and gas focused regions I'm, assuming the majority of that exposure would be in year on products and likely utilities segment.
I'd be around can you just comment on like where your market share is on that I mean that was obviously a big growth.
On vertical for you and I suspect that you you still going to gain market share even in that could be very challenging market.
Yes, the popular product can those region is the defender the utility side by side. This is the product was.
The big stellar in dose region and again, we introduced a new defender the defender in 2000.
Steve.
Then that's why we started from almost zero market share and we've been going since that time at the very good space.
And this is why we believe we still have run the week despite.
Oil price that have declined nishu.
Can you give us any color on the market share.
The market share I mean, it's low to mid teen.
Since.
Great. Thank you very much.
Thank you.
Following question is on that then with Wahid, some discharge and kept all markets. Please go ahead.
Yeah.
With respect to capital deployment opportunities could you maybe provide your view about how do you look at share buyback given the pullback in your stock price weather.
For present, an unfortunate in your view and maybe if you believe there might be some and they need fortunate fees.
Down the road and if it's something that Youre.
We will be.
Looking at it.
Market environment. Thanks.
But as long as we don't have better visibility on the situation, we will be very prudent.
Again, I think it's the first time, we're writing history.
Right now and in the Big question is how deep and how long.
This prices Swiss will last.
And.
As long as we don't have better visibility will be very careful to protect our cash position.
That's right okay. Thanks.
Thank you we have no forget question, but just so at this time I would now like to continue meeting back over to Mr. addition.
Thank you moat and thanks, everyone for joining us. This morning, our next conference call will be on May 28 for first quarter conference call for.
This call 21, thanks, again, everyone and other good thing.
Thank you.
Vince has now ended.
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Thank you for modest single family homes that Devon.
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Office FIFA.
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Okay fair enough because it had been.
Okay.
Yes.
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I mean, how about 55. Please note that this conference call has ended please disconnect. Your line at this time. Thank you.
Okay. Thank you.
I would tell me.
Your next question about funding.
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Yes, I don't process before.
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Okay opinion.
If you tell me.
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