Narrow-Moat BRP Positioned for Another Banner Year of Sales and Profits; Shares Attractive

We plan to raise our CAD 113 fair value estimate ($88 for U.S.-listed shares) for narrow-moat BRP by a mid-single-digit rate after incorporating fourth-quarter results and an updated outlook for fiscal 2023. The fourth-quarter print was in line with our CAD 2.3 billion forecast (up 28%), bolstered by strong sales across all segments--year-round products rose 12% to CAD 853 million; seasonal jumped 56% to more than CAD 1 billion; parts and accessories and engines increased 21% to CAD 311 million; and marine lifted 6% to CAD 135 million. Successful performance despite supply chain challenges stem from BRP’s ability to nimbly pivot and deliver products that were in season (snowmobiles), maximizing throughput. This further allowed for stellar absorption of fixed costs, driving full-year adjusted EBITDA margin to 19%, roughly 80 basis points ahead of our forecast, the high-water mark over the past decade.