New models like the 2019 Can-Am Defender HD8 help increase Can-Am market share.
Can Am Defender Max
BRP Reports Strong Fiscal Q2 Earnings
BRP Inc., manufacturer of Can-Am vehicles announced strong earnings for their fiscal second quarter (ending July 31, 2018) and improved Can-Am market share for their side-by-side business. Management reported an increase in revenue of 18% to $1,207 million from $1,023 million (In Canadian $) as well as increased profit margins.
Ahead of Strategic Plan
Since implementing their strategic plan in 2015 Can-Am has steadily made inroads in the side-by-side market. Management set the goal of doubling Can-Am market share for the North American side-by-side market from approximately 10% to 20% by 2020. They are on track to reach that goal in 2019 instead of the original 2020 target year.
Recent Can-Am UTV Launches Source: Can-Am Presentation 9/10/2018
Product Development Drives Can-Am Market Share Success
The company drove this rapid growth by launching a host of new models to maintain competitiveness in existing market segments or to enter new segments. They typically launch new models every six months. The Defender lineup of UTVs is an example of entering new segments. The Defender not only attacked the work/utility segment where Can-Am needed a presence, but opened up under represented geographic markets. The company reports US side-by-side dealer network coverage increased over 50% over four years. They also added trail and sport models for the recreational segment while continuing to produce competitive high-end performance side-by-sides as well.
Can-Am Emerges as Main Polaris Competitor
While still far from the market share of market leader Polaris, Can-Am has established itself as the main competitor to Polaris, outpacing the likes of Yamaha, Honda, John Deere and others. This applies to not only to the side-by-side market but in other product segments as well including ATVs, 3-wheelers and snowmobiles. Both companies have also entered the boating market with recent acquisitions. (BRP; Polaris) Can-Am is one of the few side-by-side manufacturers that comes close to the breadth of models that Polaris offers across all the market sub-segments. Management’s intentions are to continue to build out their product lineup.
Earnings Call Highlights
The following are highlights from the earnings call and presentation. Unless noted comparisons are to the same quarter of the previous year.
- Revenues were up in North America (NA) and all intl markets
- NA retail sales for Seasonal and Year-round business segments increased 16%
- All product segments are outgrowing respective industries
- Year Round business which includes SxS, ATV and Spyder products increased by 26% from $440.4 to $554.0
- NA side-by-side retail jumped low 30% vs. low teen % for industry for the quarter
- NA 2018 SSV industry up high single digits percent for recently ended model year while Can-Am jumped mid 30%
- Management reports gaining over 2.5% in market share in NA side-by-side market for the 2018 season
- Can-Am SxS up 25% in all international markets: Europe/Middle East, Latin America and Asia-Pacific.
- Management states: “We are seeing solid growth across the lineup, and the popularity of our specialized models such as the Defender LONE STAR, the Maverick X3 rock crawler and our mud-ready Maverick X3 and Defender is helping us deliver superior profitability for us and our dealers.“
- Management increased guidance for Year Round business to up 18-21% from previously guided 12-15%
- Can-Am has more than doubled their side-by-side retail volume since 2015 with 6 new platform introduced over the past 3 years and on target to reach 2020 goals one year in advance
- Room to grow in the Defender side-by-side segment
- Some cost pressures from commodity prices and freight costs