BRP as an investment…

[misterbc]

The company had excellent earnings announced today and the shares popped on the Toronto Stock Exchange. I’ve been in and out of it for years and have been buying recently especially since I’m a Spyder owner and looked closely at their product line and it’s impressive. They build quality products, the main reason I own it, now they need more dealerships for the distribution but that will come as their production capabilities increases and that is happening.
FYI it’s worth looking at.

 

[WDAVEY]

There's always one that disagrees. I question BRP's ability to plan for long term brand viability. My evidence is the way Evinrude outboard motors has disappeared. One of the oldest makers was ruined (IMHO) by BRP's refusal to invest in 4 stroke engines and lack of development of motors larger than 300HP.

As far as developing a dealer network, my local mom & pop dealer no longer sells Spyders because BRP was forcing them to take 25% more machines than they ever sold in their best year. The dealer would have lost money on every unit sold when he figured in floor plan on unsold units over the winter (upstate NY) and heavy discounts in the spring to dump the leftovers. My nearest dealer now is a lot farther away and is a mega-dealer that sells Triumph, Honda, Spyders, Sea-Do, Snow mobiles and ATV's. No mechanics can be expert on that many different machines. YMMV

 

[misterbc]

Maybe they decided that investing money in 300+ HP engines didn’t make sense for them. Who needs 300+ HP engines anyway? Must be a micro market that they can easily say to Yamaha ‘ you can have it’. You should go to their website and see the product offerings they have and that are in the pipeline. Truly impressive, and that’s what makes successful companies and happy shareholders.
Auto makers have been walking away from unprofitable sectors for years. That money goes into R&D and creates new products like BPR Switch that have mass appeal and the ability to draw new customers into the BRP umbrella. Very smart management and makers of great products.
YMMV.

 

[UtahPete]

From what I know, I tend to agree with you, misterbc. The stock market couldn't give a damn about individual customers' opinions.

 

[Azbronco]

I think they've shown Spyders and Rykers have a cult following. And the new electric motorcycle looks interesting (although no real information other than it exists was shared). As an investor, I'd be more worried about BRPs inability to deliver 2022 models (hurts both customers and dealers), the number of upset customers whose machines sit because they can't get repair parts, and if brand loyalty is being damaged resulting in current owners looking at (or recommending friends to look at) HD trikes or Goldwing trike conversions for their next ride. I'd also be interested in the long-term product roadmap (what will be the range of electric Spyders/Rykers, for example). If three wheel motorcycles continue to grow in popularity, Can Am will be hurt if someone like Honda steps in with a competitive product (which they've only done in concept so far). HD dealers tend to only keep one or two new trikes on hand, plus a few used ones, so I'm not sure they're seeing any jump in demand for the trike segment. Then there's the fact that Millenials generally aren't interested in road or touring motorcycles (but they do buy dirt bikes). Granted, Can Am has a more diverse offering than HD, but the struggles of HD are well documented and don't bode well for the future of the industry. Who knows--that could change as Millenials pay off student loans and their own kids leave home.

In snowmobiles, Ski-Doo is already the market leader. How can they continue to grow that segment (especially as winters seem to be getting shorter)? Sea Doo is in a more competitive market with Jet Ski and Wave Runner. Off-road machines are probably the most competitive segment with the most opportunity to steal market share from Polaris, Honda, Yamaha, etc.

Anyway, I don't pretend to know the answers to my questions or have a recommendation one way or another. Stock price being impacted short-term by a good earnings quarter is fine, but I tend to be more of a long-term investor. I'd have to do some research before deciding if I thought Can-Am was a good investment.

 

[misterbc]

Good points but the supply chain affects everyone not just BRP. The company has said they have 2022 production sold and are bringing on the Mexican factory and an additional one in 2023. COVID changed lifestyles for many people and they now seek sporting/leisure activities. BRP isn’t targeting Millenials IMO there are too many other age groups who will or have inherited sums of money sufficient to pay cash for power sports vehicles.
The situation is different in Canada and the N part of the USA where winter is still lengthy and there are plenty of lakes for boats and many barely used roads for Spyders. It’s sparsely populated and lots of motorcyclists. The dealerships sell different products in all 4 seasons of the year. I’m an investor because they make quality innovative products that are on trend and sell like crazy.
As I noted upthread the BRP.com website has a section on their Shift pontoon boat that’s worth looking at.
They have only just begun to tap the European market with Spyders and it’s bigger than the North American market. They have proved to be astute managers over the years and I don’t think too many other bike makers want to challenge the Spyder or they would have done so already.
Just my take on it and I’ve owned their snowmobiles from 1972 to 2003 and now own a Spyder F3T and it’s an impressive machine.