BRP reports fourth-quarter and record fiscal year 2018 results

Highlights for the year vs FY2017:
• Record revenues of $4,487 million, an 8% increase;
• Normalized EBITDA[1] of $559 million, an 11% increase;
• Net income of $275 million resulting in a diluted earnings per share (EPS) of $2.54, an increase of 12% or $0.27 per share;
• Normalized net income[1] of $257 million resulting in a normalized diluted EPS[1] of $2.38, an increase of 21% or $0.42 per share;
• Returned $480M of capital to shareholders through share repurchases and the introduction of a quarterly dividend;
• Entered the trail SSV segment with the Can-Am Maverick Trail model, introduced a new Sea-Doo PWC platform and expanded the Ski-Doo and Lynx REV Gen4 snowmobile platform to more models;
• Relocated its North American sales office to Texas to be closer and better connected to the U.S.market, the largest for BRP; and
• Invested to increase the production capacity of its Juarez 2 and Queretaro manufacturing facilities to meet demand in Year-Round and Seasonal products.

Highlights for the quarter vs Q4 FY2017:
• Revenues of $1,263 million for the fourth quarter of FY2018, a 3% decrease, as expected;
• Net income of $115 million resulting in a diluted EPS of $1.12, a decrease of 16% or $0.10 per share;
• Normalized diluted EPS[1] of $0.96, a decrease of 4% or $0.04 per share;
• Announced a quarterly dividend of $0.09 per share, an increase from the $0.08 dividend paid in the previous quarter; and
• Announced renewal of its normal course issuer bid.

Valcourt, Québec, March 21, 2018 – BRP Inc. (TSX:DOO) today reported its financial results for the three- and twelve-month periods ended January 31, 2018. All financial information is in Canadian dollars unless otherwise noted. The complete financial results are available at www.sedar.com, as well as in the Quarterly Reports section of BRP’s website.

“I am very pleased with our excellent year-end results; we set a strong growth objective and we surpassed it once again with record results,” said José  Boisjoli, President and CEO. “Our plan was well-executed worldwide by our employees and yielded impressive results, in particular with our retail momentum that outpaced both the competition and the industries in all our markets.”

The results for the year, the strongest in BRP’s history, are partly based on the excellent worldwide momentum of its retail sales and the increased demand for its Can-Am side-by-side vehicles. For example, BRP’s global market share for this product has reached the #3 position in the past year, only seven years after our entry into the industry.

“Model year 2018 products, including two new Can-Am side-by-side platforms and a cuttingedge Sea-Doo platform, were well-received by our consumers, dealers and the media,” Boisjoli added. “We have also established a record year for accessory introductions, providing our consumers with the just-right parts, accessories and clothing, fully adapted and customized to their vehicle, to enhance their riding experience.”

“For fiscal year 2019, we continue to aim for high-paced growth from the Year-Round and Seasonal product categories. To this end, our planned increase in capacity in both Juarez 2 and Queretaro manufacturing facilities will be a key enabler,” Boisjoli concluded. “In the current economic environment, I am confident that we are well-positioned to deliver our fiscal year 2019 guidance that calls for 5 to 8% revenue growth as well as 20 to 25% normalized EPS growth.”

Highlights for the Three- and Twelve-Month Periods Ended January 31, 2018

As expected, Revenues decreased by $42.1 million, or 3.2%, to $1,263.2 million for the threemonth period ended January 31, 2018, compared with $1,305.3 million for the corresponding period ended January 31, 2017. The revenue decrease was mainly due to lower wholesale in Seasonal Products and an unfavourable foreign exchange rate variation of $14 million.

Gross profit decreased by $18.4 million, or 5.5%, to $317.2 million for the three-month period ended January 31, 2018, compared with $335.6 million for the corresponding period ended January 31, 2017. The gross profit decrease includes an unfavourable foreign exchange rate variation of $1 million. Gross profit margin percentage decreased by 60 basis points to 25.1% from 25.7% for the three-month period ended January 31, 2017. The decrease was primarily due to higher production costs and higher sales program costs driven by the increase in retail sales, partially offset by a higher volume of products sold.

Revenues increased by $315.4 million, or 7.6%, to $4,486.9 million for the twelve-month period ended January 31, 2018, compared with $4,171.5 million for the corresponding period ended January 31, 2017. The revenue increase was primarily attributable to higher wholesale of Year-Round Products and Seasonal Products. The increase was partially offset by an unfavourable foreign exchange rate variation of $36 million.

Gross profit increased by $58.6 million, or 5.8%, to $1,067.5 million for the twelve-month period ended January 31, 2018, compared with $1,008.9 million for the corresponding period ended January 31, 2017. The gross profit increase includes an unfavourable foreign exchange rate variation of $11 million. Gross profit margin percentage decreased by 40 basis points to 23.8% from 24.2% for the twelve-month period ended January 31, 2017. The decrease was primarily due to higher production costs and higher sales program costs driven by the increase in retail sales, partially offset by a favourable product mix and a higher volume in SSV as well as general price increases.

QUARTERLY REVIEW BY CATEGORIES

Year-Round Products
Revenues from Year-Round Products increased by $11.5 million, or 2.2%, to $538.8 million for the three-month period ended January 31, 2018, compared with $527.3 million for the corresponding period ended January 31, 2017. The increase resulted mainly from a higher volume of SSV and Spyder vehicles sold, partially offset by an unfavourable product mix of SSV sold and by an unfavourable foreign exchange rate variation of $9 million.

Seasonal Products
Revenues from Seasonal Products decreased by $46.2 million, or 9.4%, to $443.3 million for the three-month period ended January 31, 2018, compared with $489.5 million for the corresponding period ended January 31, 2017. The decrease was driven by a lower volume of snowmobiles sold resulting from the late introduction of the REV Gen4 platform last year and from an unfavourable foreign exchange rate variation of $3 million. The decrease was partially offset by a higher volume of PWC sold due to industry growth.

Propulsion Systems
Revenues from Propulsion Systems decreased by $21.3 million, or 19.1%, to $90.2 million for the three-month period ended January 31, 2018, compared with $111.5 million for the corresponding period ended January 31, 2017. The decrease was mainly attributable to a lower volume of motorcycle engines sold and to a lower wholesale of outboard engines. The decrease was partially offset by a favourable foreign exchange rate variation of $1 million.

PAC (Parts, Accessories, Clothing and other services)
Revenues from PAC increased by $13.9 million, or 7.9%, to $190.9 million for the three-month period ended January 31, 2018, compared with $177.0 million for the corresponding period ended January 31, 2017. The increase was mainly attributable to a higher volume of SSV accessories, partially offset by an unfavourable foreign exchange rate variation of $3 million.

Operating expenses remained relatively stable at $164.5 million for the three-month period ended January 31, 2018, compared with $168.2 million for the three-month period ended January 31, 2017.

Declaration of dividend
The Board of Directors approved a $0.01 increase for its quarterly dividend to $0.09 per subordinate and multiple voting share that will be paid on April 13, 2018 to shareholders of record as at the close of business on March 30, 2018. The payment of each quarterly dividend will remain subject to declaration of that dividend by the Board of Directors. The actual amount of each quarterly dividend, as well as each declaration date, record date and payment date, is subject to the discretion of the Board of Directors.

Fiscal Year 2019 Guidance
The table below sets forth BRP’s financial guidance for Fiscal Year 2019 when compared to actual results for Fiscal Year 2018, as revised to reflect the adoption of new IFRS 9 Financial instruments (IFRS 9) and IFRS 15 Revenue from contracts with customers (IFRS 15) standards effective as of February 1, 2018.

The above targets are based on a number of economic and market assumptions the Company has made in preparing its Fiscal Year 2019 financial guidance, including assumptions regarding the performance of the economies in which it operates, foreign exchange currency fluctuations, market competition and tax laws applicable to its operations. The Company cautions that the assumptions used to prepare the forecasts for Fiscal Year 2019, although reasonable at the time they were made, may prove to be incorrect or inaccurate. In addition, the above forecasts do not reflect the potential impact of any non-recurring or other special items or of any new material commercial agreements, dispositions, mergers, acquisitions, other business combinations or other transactions that may be announced or that may occur after March 20, 2018. The financial impact of such transactions and non-recurring and other special items can be complex and depends on the facts particular to each of them. We therefore cannot describe the expected impact in a meaningful way or in the same way we present known risks affecting our business. Accordingly, our actual results could differ materially from our expectations as set forth in this news release. The outlook provided constitutes forward-looking statements within the meaning of applicable securities laws and should be read in conjunction with the "Caution Concerning Forward-Looking Statements" section.

Conference Call and Webcast Presentation

Today at 9 a.m. ET, BRP will host a conference call and webcast to discuss its FY2018 fourth-quarter and year-end results. The call will be hosted by José Boisjoli, President and CEO, and Sébastien Martel, CFO. To listen to the conference call by phone (event number 4283086), please dial 514-392-0235 or 800-564-3880 (toll-free in North America). Click for international dial-in numbers.

The Company’s fourth-quarter and year-end FY2018 MD&A, financial statements and webcast presentation are posted in the Quarterly Reportssection of BRP’s website, while its Annual Information Form can be found in the Annual Reports section.

Andrea Veitschegger

Public Relations

+43 7246 / 601 2202 andrea.veitschegger@brp.com

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