I believe that with our continued push on product and helping the dealers and working with the dealers to continue to grow, this is what explains the success. Definitely I will not commit this morning about any specific number for any dates, but I can assure you we will not stop at 30%.
Luke Hannan: Great, thanks for the commentary.
Operator: Your next question comes from Brian Morrison from TD Securities. Please go ahead.
Brian Morrison: Hey, good morning. Thanks for all the clarification comments. I have one further question to clarify, though. Séb, you mentioned on Slide 18 and your prepared comments that you’re lapping H2 fiscal ’23, there’s $1 billion of inventory replenishment. How much of that–how much was inventory replenishment revenue in fiscal ’23, how much do you estimate will be in fiscal ’24, and how much is there to go in the second half? I understand that retail unit sales are well in excess still of the increase in inventory at retail.
Sébastien Martel: As of today, Brian, I’d say we’re pretty much done on the inventory replenishment. Obviously there is going to be some seasonal elements where we might find, okay, there’s snowmobile that’s going to be there at Q3 more than last year, but from an overall business point of view, their inventory replenishment is not a tailwind for us. Growth in inventory will come with growth in market share or growth in industry, but not from putting more units at the dealership.
Brian Morrison: Okay, and how much replenishment was there this year and last?
Sébastien Martel: Well, last year was a billion. We probably did $250 million at the beginning of this year, and in fiscal year ’23, I’d have to check, but not that significant, probably same in this year. But obviously the bulk was in the second half of last year.
Brian Morrison: Right. Then on Slide 17, you said there’s lower shipments of PA&A, primarily due to Sea-Doo pontoon. Can you just reconcile that with the strength of the Switch? Was it just the pre-builds because the product was in its infancy last year?
Sébastien Martel: Well, last year, as you know, we under-delivered in terms of Sea-Doo Switch pontoons, and so dealers–we under-delivered units, but we delivered–dealers had ordered parts and accessories, and so they had quite a bit of inventory on hand. This year, they were able to cycle through their inventory, get it to the dealers, but they still have a bit more inventory, and so dealer levels are higher from a PA&A side, and so they will be adjusting their dealer inventory and they’re ordering less from us.
Brian Morrison: Okay, simply timing. Okay, thank you very much.
Operator: Your next question comes from Tristan Thomas-Martin from BMO Capital Markets. Please go ahead.
Tristan Thomas-Martin: Good morning, just one question from me. How are dealers approaching holding inventory or maybe ordering over their off seasons any different given how elevated floor plan costs are?
José Boisjoli: It’s a bit funny. I was again with power sports dealers and marine dealers two weeks ago, and if you talk to dealers, like I said in the question before, they don’t like the inventory in dollars and the interest, but at the same time when we take an order, it’s like a discussion between your growth and what you’re planning and basically orders in line with our expectations. That’s why we said the volume is in line with expectations but with a richer mix. It’s a bit funny, the power sport dealers right now, most of them complain about the interest bill at the end of the month, but they still–they understand that to support the growth, they need to invest in working capital.
Sébastien Martel: Yes, and the other thing is that dealers do trust us, that we’ll make the right decisions. One thing that’s important is that we do support the inventory in the first 60 to 90 days when the unit is shipped, so obviously that is a burden that they do not have. We have, and we accept it. The other thing is in the past, if we’ve ended a season with too much inventory, we’ve always been there to step in and support the dealers with their floor plan financing, and that’s something that we’ve done and that’s something that we will continue to do if a season would end up to be not as good as expected and they’d have more inventory. There is a level of trust there that exists between us and the dealers on that side.
Tristan Thomas-Martin: Okay, so they’re complaining more but they’re not changing their habits? Got it, thank you.
Sébastien Martel: Well I mean, they’ve lived in a perfect world for two years – they had no floor plan financing costs and so they forgot what it was, and now they have inventory, which they’re happy because that allows them to sell, but there is obviously a higher interest rate and higher floor plan that comes with it, so there is sticker shock but it’s a cost of doing business.
José Boisjoli: It’s like meals in the restaurant – more expensive, but you still go.
Tristan Thomas-Martin: Sounds good, thank you.
Operator: Your next question comes from Michael Kypreos from Desjardins. Please go ahead.
Michael Kypreos: Good morning and congrats on the strong results. Just one quick one for me, maybe on the snowmobile front. I think you mentioned 50% had been presold, the same figure that you had mentioned last quarter. Have you seen any early signs of cancellations, or is everything setting up well for a strong season in your point of view, especially with one of your competitors saying that they’re going to exit the market?
José Boisjoli: No, no sign of–every year, you have some fallout and some cancellations, but I haven’t heard any dealers saying that this year was worse than previous years. Snowmobile customers are different than the others. Some will save money and that’s the last thing they will cut in their budget because it’s a passion, and we believe we’re in good shape for the snowmobile season.
Michael Kypreos: Appreciate the color, thank you.
Operator: Your next question comes from Jonathan Goldman from Scotiabank. Please go ahead.
Jonathan Goldman: Hi, good morning guys, and thanks for taking my questions. Most of them have been answered, just two housekeeping ones. José, you talked about possibly exceeding the 30% market share in side-by-side next year. I just wanted to, if you can revisit the capacity that you have in side-by-side currently and coming online, what market share could that support over the next two years, or year and a half?
