Sébastien Martel: The — today, as we mentioned there, when you look at our inventory turns, they’re healthier than pre-COVID. But we want to operate with higher inventory turns than pre-COVID and dealers as well want that. The expectation for this year is that inventory at the end of Q4 will probably be flat to up single digit versus where we are at Q3. Obviously, very dependent on the how the snowmobile season will evolve but it’s off to a good start. Next year, some of the wholesale adjustments that we will do will be as a result of managing the inventory in the network. So if you were to ask me, we said, would you want inventory to be lower at the end of next year than it is today. It’s certainly something that I’d like to see because, as I said, we prefer retailing current products and non-current products.
And so given the current backdrop and the softness in the market, running with leaner inventory is beneficial for us because of less programs and beneficial for the dealers as well because less discount.
James Hardiman: Got it. If I may ask, that was the follow-up. But if I may ask a follow-up. Do you think your peers will see the current environment in much the same way? It seems like there may be risk that if you’re taking a really conservative approach and hoping to finish next year with lower levels of inventory if your peers aren’t doing the same, then you could ultimately, A, lose market share but B, still feel the effects of a dealer channel that feels like it has too much inventory?
José Boisjoli: But I don’t know — I don’t want to predict what the peers are doing or will do. But one thing I can tell you, pre-COVID, we had less inventory than our competitor and we’ve been gaining share since fiscal year ’16. And we’re doing this by protecting the value proposition of the dealers. Then we’re getting €“ we truly believe in our plan that if we are increasing the inventory turn, protect the dealer profitability, this will pay off long term. And this, we had it pre-COVID from fiscal year ’16 to fiscal year ’21, we’re gaining share with less inventory than our peers. And we want to make sure that, again, we’re protecting the value proposition for our dealers and that will be more successful going forward.
Operator: Next question will be from Martin Landry at Stifel.
Martin Landry: I’d like to just get some color on the order of magnitude of your production costs — your production cuts, sorry, for — that you’re making in Q4. Can you give us just an idea of how much you’ve cut your production for Q4?
Sébastien Martel: Well, the best way to read it, Martin, is by looking at the adjustment we made in the guidance. So again, with one quarter ago, we’ve adjusted guidance downward to reflect mostly our production cuts. And so that’s the main driver from a top-line point of view. If you look at — or we’re expecting a strong quarter for year-round products because we’re going to catch up from the Texas-Mexico situation that happened in the third quarter. So there’s probably about 100 — a little over $100 million of revenue coming from that. But also, we have Maverick R’s to ship, the new ATV platform that’s shipping and high-end side by sides as well. So we’ll have a decent quarter there. And we’re delivering the final snowmobiles for which we have preorders from dealers and customers as well. So expecting a good quarter as well for seasonal products.
Martin Landry: Okay. And just trying to understand a little bit what’s your approach to promotional activity. Some OEMs you’ve mentioned are very promotional. So what’s your strategy to protect your market share on a go-forward basis? Do you want to match these promotions? Like how are you thinking about that?
José Boisjoli: First, some of our competition right now are having promotion on model year ’23 and ’24. We have no promotion on ’24 and — but obviously, like normal, we have promotion on ’23. Then we’re trying to be balanced, obviously, again, to protect our brands and our value proposition and to continue our momentum. But it’s a fine line. But at this point, we have more promotion, obviously, than last year but we are still, we believe, in the normal path like we had pre-COVID
Operator: Next question will be from Joe Altobello at Raymond James.
Joe Altobello: I guess first question, I was hoping to get a little bit more clarity on the softer demand and the adjustments in production. It sounds like it’s mostly off-road and mostly marine. But — is it really more across the board? Or is it primarily in those two categories?
José Boisjoli: That’s correct. Off-road and marine is where we’ve adjusted. We’ve also adjusted P&A because same story for P&A versus units. We want to be diligent in managing the inventory in the network as well. And so we’ve made adjustments to the P&A shipment plan based on the current inventory in the network. We do have a bit of visibility there and also expectations on retail in the fourth quarter as well.
Joe Altobello: Okay. And just a follow-up on that. It looks like based on your revised guidance, you’re expecting double-digit growth for year-round products in Q4. And obviously, a lot of that’s the catch up that you talked about earlier from the slowdown at the border. But it also looks like your marine revenue guidance implies double-digit growth in Q4. So help us understand that dynamic given that demand is so soft in that category?
Sébastien Martel: Well Yes. We’re lapping a very easy quarter last year in Q4 for marine. We were in the beginning of the ramp-up of the new Manitou boats. And as you know, it was a challenging ramp up. And so last year, we had very little shipments on the marine side. And so this year, now that the production is running much more smoothly, we are expecting to deliver the new product to the market ahead of — and obviously, dealers need these units for boat show.
