03 Dec 18

BRP REPORTS FISCAL YEAR 2019 THIRD QUARTER RESULTS

BRP REPORTS FISCAL YEAR 2019 THIRD QUARTER RESULTS

 Highlights for the quarter vs Q3 FY18:

  • Revenues of $1,394.2 million, an increase of $167.7 million or 13.7%;
  • Net income of $90.2 million, an increase of $20.2 million, which resulted in a diluted earnings per share of $0.92, an increase of $0.25 per share;
  • Normalized net income[1] of $102.9 million, a decrease of $0.7 million, which resulted in a normalized diluted earnings per share [1] of $1.04, an increase of $0.05 per share;
  • A. Powersports retail for Q3 is outpacing the industry and grew 6% vs same period last year, or 16% when excluding snowmobile;
  • The Company introduced the Can-Am Ryker, a new three-wheeled vehicle platform. With its lower purchase point, the Can-Am Ryker is designed to bring the on-road experience to more people;
  • The Company acquired 100% of Triton Industries Inc. (“Triton”) located in Lansing, Michigan (United States), a pontoon manufacturer selling under the Manitou brand

 

Valcourt, Quebec, November 30, 2018 – BRP Inc. (TSX:DOO; NASDAQ: DOOO) today reported its financial results for the three- and nine-month periods ended October 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.

“We posted another record quarter with sustained demand for our products. Consumer demand for BRP’s powersports line-up was also strong this quarter with retail up by more than 25% for both side-by-side vehicles (SSV) and personal watercraft (PWC) in North America. This performance is a testament to our relentless focus on executing on our strategic priorities and on bringing the most innovative products to market”, said José Boisjoli, President and CEO.

"The fundamentals of our business are robust, we continue to drive operational excellence, and are thus well positioned to be very competitive despite the current potential headwinds caused by current market inflationary pressure. The diversified BRP product portfolio and line-up has never been as strong and the degree of positive engagement from our dealers is very high. We are excited by our momentum and are committed on delivering another record year of normalized EPS growth of 30% to 35%", concluded Boisjoli.

Highlights for the Three- and Nine-Month Periods Ended October 31, 2018

Revenues increased by $167.7 million, or 13.7%, to $1,394.2 million for the three-month period ended October 31, 2018, compared with $1,226.5 million for the corresponding period ended October 31, 2017. The revenue increase was mainly due to higher wholesale in Year- Round Products and a favourable foreign exchange rate variation of $31 million.

The Company's North American retail sales for powersports vehicles and outboard engines increased by 5% for the three-month period ended October 31, 2018 compared with the three-month period ended October 31, 2017. The increase was mainly due to SSV and PWC, partially offset by a decrease in snowmobiles sales. 

As at October 31, 2018, North American dealer inventories for powersports vehicles and outboard engines increased by 8% compared to October 31, 2017. The increase was primarily driven by higher side-by-side inventory to meet demand for our line-up.

Gross profit increased by $36.9 million, or 11.5%, to $356.8 million for the three-month period ended October 31, 2018, compared with $319.9 million for the corresponding period ended October 31, 2017. The gross profit increase includes a favourable foreign exchange rate variation of $6 million. Gross profit margin percentage decreased by 50 basis points to 25.6% from 26.1% for the three-month period ended October 31, 2017. The decrease was primarily due to an unfavourable product mix, partially offset by a higher volume of SSV and PAC sold.

Operating expenses increased by $32.3 million, or 19.3%, to $199.7 million for the three-month period ended October 31, 2018, compared with $167.4 million for the three-month period ended October 31, 2017. This increase was mainly attributable to higher general and administrative as well as higher selling and marketing expenses. The higher general and administrative expense is mainly due to costs related to the modernization of information systems and higher variable employee compensation expenses.

Revenues increased by $511.4 million, or 15.8%, to $3,737.9 million for the nine-month period ended October 31, 2018, compared with $3,226.5 million for the corresponding period ended October 31, 2017. The revenue increase was primarily attributable to higher wholesale of Year-Round Products and Seasonal Products and a favourable foreign exchange rate variation of $12 million.

The Company's North American retail sales for powersports vehicles and outboard engines increased by 10% for the nine-month period ended October 31, 2018 compared with the nine-month period ended October 31, 2017, mainly due to an increase in SSV and PWC.

Gross profit increased by $155.5 million, or 20.4%, to $918.5 million for the nine-month period ended October 31, 2018, compared with $763.0 million for the corresponding period ended October 31, 2017. The gross profit increase includes a favourable foreign exchange rate variation of $7 million. Gross profit margin percentage increased by 100 basis points to 24.6% from 23.6% for the nine-month period ended October 31, 2017. The increase was primarily due to a higher volume of SSV, PWC and PAC sold and to favourable pricing.

Operating expenses increased by $69.4 million, or 13.8%, to $572.4 million for the nine-month period ended October 31, 2018, compared with $503.0 million for the nine-month period ended October 31, 2017. The increase was mainly attributable to higher selling and marketing expenses to support launch of various products as well as higher general and administrative expenses.

QUARTERLY REVIEW BY SEGMENT

Powersports

Year-Round Products

Revenues from Year-Round Products increased by $98.0 million, or 21.1%, to $562.4 million for the three-month period ended October 31, 2018, compared with $464.4 million for the corresponding period ended October 31, 2017. The increase resulted mainly from a higher volume of SSV sold and a favourable foreign exchange rate variation of $21 million, partially offset by an unfavourable product mix of SSV sold.

North American Year-Round Products retail sales increased on a percentage basis in the low-teen range compared with the three-month period ended October 31, 2017.

Seasonal Products

 Revenues from Seasonal Products increased by $15.3 million, or 3.2%, to $490.9 million for the three-month period ended October 31, 2018, compared with $475.6 million for the corresponding period ended October 31, 2017. The increase was driven by a higher volume of PWC sold and from a favourable foreign exchange rate variation of $5 million, partially offset by an unfavourable product mix of snowmobiles sold.

North American Seasonal Products retail sales decreased by low-single digits compared with the three-month period ended October 31, 2017.

Powersports PAC and OEM Engines

Revenues from Powersports PAC and OEM Engines increased by $22.2 million, or 12.3%, to $202.2 million for the three-month period ended October 31, 2018, compared with $180.0 million for the corresponding period ended October 31, 2017. The increase was mainly attributable to a higher volume of SSV and PWC parts and accessories.

Marine

Revenues from Marine increased by $29.5 million, or 25.4%, to $145.8 million for the three-month period ended October 31, 2018, compared with $116.3 million for the corresponding period ended October 31, 2017. The increase was mainly due to the acquisition of Alumacraft and Triton, partially offset by a lower volume of outboard engines sold.

North American outboard engine retail sales decreased on a percentage basis in the low-teen range compared with the three-month period ended October 31, 2017.

DECLARATION OF DIVIDEND

On November 29, 2018, the Company’s Board of Directors declared a quarterly dividend of $0.09 per share for holders of its multiple voting shares and subordinate voting shares. The dividend will be paid on January 11, 2019 to shareholders of record at the close of business on December 28, 2018. The payment of each quarterly dividend remains subject to the declaration of that dividend by the Board of Directors. The actual amount, the declaration date, the record date and the payment date of each quarterly dividend are 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 and IFRS 15 Revenue from contracts with customers 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 November 29, 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" and “Key Assumptions” sections.

Conference Call and Webcast Presentation

Today at 9 a.m. (ET), BRP Inc. will host a conference call and webcast to discuss BRP's FY2019 third-quarter results released this morning. The call will be hosted by José Boisjoli, President and CEO, and Sébastien Martel, CFO. To listen to the English-only conference call by phone (event number 4296044), please dial 514-392-0235 or 800-564-3880 (toll-free in North America). Click for international dial-in numbers.

The Company’s third-quarter FY2019 MD&A, financial statements and webcast presentation are posted in the Quarterly Reports section of BRP’s website.

Andrea Veitschegger
Andrea Veitschegger
Public Relations

+43 7246 / 601 2202
Contact

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