BRP Fiscal Reports – Launches 2021 Can-Am’s

Last July, BRP virtually launched the 2021 Can-Am Maverick X3 X rs Turbo RR with Smart-Shox Technology, the industry’s first fully self-adjustable suspension © BRP 2020

2021 - Maverick X3

2021 - Maverick Sport XRC

2021 - Maverick Trail DPS 1000

2021 - Can-Am Defender XT

BRP REPORTS FISCAL YEAR 2021 SECOND QUARTER RESULTS

Highlights for the quarter vs Q2 FY20: 

  • Revenues of $1,233.3 million, a decrease of $226.2 million or 15.5%;
  • Powersports retail sales were up 40% in North America and were strong in all categories; • Net income of $126.1 million, an increase of $32.8 million, which resulted in a diluted earnings per share of $1.43, an increase of $0.47 per share;
  • Normalized net income [1] of $100.9 million, an increase of $32.1 million, which resulted in a normalized diluted earnings per share[1] of $1.14, an increase of $0.43 per share or 60.6%;
  • Normalized EBITDA[1] of $214.3 million representing 17.4% of revenues, an increase of $46.6 million or 27.8%;
  • The Company is introducing financial guidance for FY21 with normalized EPS of $3.65 to $3.95.

In addition, during the three-month period ended July 31, 2020: 

  • Most of the Company’s powersports and marine manufacturing operations were temporarily suspended in April and May following worldwide government measures adopted in response to COVID-19, which limited our ability to wholesale units in the quarter. 

[1]See “Non-IFRS Measures” section of this press release. 

  • The Company entered into an incremental U.S. $600.0 million tranche under its Term Facility maturing in May 2027 and exempt of financial covenants and into a € 75.0 million loan agreement under an Austrian government COVID-19 program.
  • In May, the Company announced the realignment of its marine business by focusing on the growth of its boat brands and by winding down the Evinrude outboard engines production in its Sturtevant, Wisconsin, facility.

The Company announced the increase of its manufacturing capacity with the construction of a new facility in Juárez, Mexico, to meet demand for its SSV business.

Valcourt, Quebec, August 27, 2020 BRP Inc. (TSX:DOO; NASDAQ:DOOO) today reported its financial results for the three- and six-month periods ended July 31, 2020. All financial information is in Canadian dollars unless otherwise noted. The complete financial results are available at Sedar, as well as in the Quarterly Reports section of BRP’s website. “Current trends have expanded our consumer base, creating a surge in new entrants. Together with our dealer network, we will now aim to capitalize on this opportunity by converting them into lifelong customers. I would like to express my gratitude and admiration to all our partners and employees for their resilience, which has been and will continue to be critical to our business continuity,” concluded Boisjoli.

Highlights for the Three- and Six-Month Periods Ended July 31, 2020
Revenues decreased by $226.2 million, or 15.5%, to $1,233.3 million for the three-month period ended July 31, 2020, compared with $1,459.5 million for the corresponding period ended July 31, 2019. The revenue decrease was mainly due to a lower volume of Year-Round Products and Seasonal Products sold due to the temporary suspension of production, partially offset by a favourable foreign exchange rate variation of $13 million.

The Company's North American retail sales for powersports vehicles and outboard engines increased by 38% for the three-month period ended July 31, 2020 compared with the three- month period ended July 31, 2019. The increase was driven by Year-Round Products and PWC.

Gross profit decreased by $79.4 million, or 24.2%, to $248.4 million for the three-month period ended July 31, 2020, compared with $327.8 million for the corresponding period ended July 31, 2019. The gross profit decrease includes a favourable foreign exchange rate variation of $4 million. Gross profit margin percentage decreased by 240 basis points to 20.1% from 22.5% for the three-month period ended July 31, 2019. The decrease of 240 basis points was primarily due to the costs related to the wind-down of the Evinrude outboard engines production, the under- absorption of fixed costs resulting from the temporary suspension of production and an unfavourable product mix. The decrease was partially offset by a positive pricing and sales programs variation due to the favourable retail environment.

Operating expenses decreased by $29.0 million, or 13.3%, to $188.9 million for the three- month period ended July 31, 2020, compared with $217.9 million for the three-month period ended July 31, 2019. This decrease was mainly attributable to cost reduction initiatives to mitigate the COVID-19 impact.

“We are very pleased with our results, which are better than we initially anticipated, and with the exceptionally high demand for our products throughout the quarter. We expect the momentum to continue, as we closely monitor the global situation”, said José Boisjoli, President and CEO at BRP. 

Revenues decreased by $330.1 million, or 11.8%, to $2,463.1 million for the six-month period ended July 31, 2020, compared with $2,793.2 million for the corresponding period ended July 31, 2019. The revenue decrease was primarily attributable to a lower volume of Year-Round Products, Seasonal Products and Marine products sold due to the temporary suspension of production, partially offset by a favourable foreign exchange rate variation of $25 million. 

The Company's North American retail sales for powersports vehicles and outboard engines increased by 23% for the six-month period ended July 31, 2020 compared with the six-month period ended July 31, 2019, mainly due to an increase in SSV, ATV and PWC. 

Gross profit decreased by $144.9 million, or 23.1%, to $483.5 million for the six-month period ended July 31, 2020, compared with $628.4 million for the corresponding period ended July 31, 2019. The gross profit decrease includes a favourable foreign exchange rate variation of $16 million. Gross profit margin percentage decreased by 290 basis points to 19.6% from 22.5% for the six-month period ended July 31, 2019. The decrease was primarily due to the costs related to the wind-down of the Evinrude outboard engines production and the under-absorption of fixed costs resulting from the temporary suspension of production. The decrease was partially offset by a positive pricing and sales programs variation due to the favourable retail environment. 

Operating expenses increased by $121.8 million, or 28.4%, to $551.3 million for the six-month period ended July 31, 2020, compared with $429.5 million for the six-month period ended July 31, 2019. The increase was mainly attributable to the impairment charge recorded during the first quarter of Fiscal 2021 for the Marine segment and the restructuring costs for a total of $206.4 million, partially offset by cost reduction initiatives to mitigate the COVID-19 impact. 

QUARTERLY REVIEW BY SEGMENT Powersports

Year-Round Products 

Revenues from Year-Round Products decreased by $113.4 million, or 15.4%, to $621.2 million for the three-month period ended July 31, 2020, compared with $734.6million for the corresponding period ended July 31, 2019. The decrease was primarily attributable to a lower volume of products sold due to the temporary suspension of production. The decrease was partially offset by a favourable product mix in 3WV, lower sales programs due to a favourable retail environment and a favourable foreign exchange rate variation of $9 million. 

North American Year-Round Products retail sales increased on a percentage basis in the low- sixties range compared with the three-month period ended July 31, 2019. 

Seasonal Products 

Revenues from Seasonal Products decreased by $105.8 million, or 24.7%, to $322.7 million for the three-month period ended July 31, 2020, compared with $428.5 million for the corresponding period ended July 31, 2019. The decrease was driven by a lower volume of products sold due to the temporary suspension of production and an unfavourable product mix in PWC, partially offset by lower sales programs in PWC due to favourable retail environment. 

North American Seasonal Products retail sales increased on a percentage basis in the high-teens range compared with the three-month period ended July 31, 2019. 

Powersports PA&A and OEM Engines 

Revenues from Powersports PA&A and OEM Engines increased by $35.1 million, or 20.2%, to $209.1 million for the three-month period ended July 31, 2020, compared with $174.0 million for the corresponding period ended July 31, 2019. The increase was mainly attributable to a higher volume of PA&A coming from strong unit retail sales and higher replacement parts revenue driven by an increased usage of products by consumers. 

Marine 

Revenues from the Marine segment decreased by $45.4 million, or 35.9%, to $81.0 million for the three-month period ended July 31, 2020, compared with $126.4 million for the corresponding period ended July 31, 2019. The decrease was mainly due to the wind-down of the Evinrude outboard engines production resulting in additional retail sales incentives and a lower volume of outboard engines sold. The decrease was partially offset by the additional revenues following the acquisition of Telwater Pty Ltd (“Telwater”) during Fiscal 2020. 

North American outboard engine retail sales increased on a percentage basis in the low-teens range compared with the three-month period ended July 31, 2019. North American boat retail sales increased on a percentage basis by the mid-twenties range compared with the three-month period ended July 31, 2019.

Financial Metric FY20 FY21 Guidance [3] vs FY20
Revenues
Year-Round Products $2,791.7 Flat to Down 4%
Seasonal Products $1,901.4 Down 12% to 15%
Powersports PAC / OEM Engines $799.8 Flat to Up 5%
Marine $559.8 Down 25% to 30%
Total Comapny Revenues $6,052.7 Down 5% to 9%
Normalized EBITDA[1] $804.4 Flat to Up 5%
Effective Tax Rate [1][2] 26.1% 26.5%
Normalized Earnings per Share - Diluted [1] $3.83 Down 5% to Up 3% ($3.65 to 3.95)
Net Income 370.6 $100M to $130M
  • Expecting ~$260M of Depreciation Expense compared to $231M in FY20, ~$105M of Net Financing Costs Adjusted
    compared to ~$89M in FY20 and ~89M shares
  • Expecting Capital Expenditures of ~$275M to $300M in FY21 compared to $331M in FY20.
    [1] Please refer to “Non-IFRS Measures” section.
    [2] Effective tax rate based on Normalized Earnings before Normalized Income Tax.
    [3] Please refer to “Forward-Looking Statements” and “Key assumptions” sections for a summary of important risk factors underlying the FY21 guidance.
    The above targets are based on a number of economic, market and operational assumptions the Company has made in preparing its Fiscal Year 2021 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 made a number of economic, market and operational assumptions in preparing and making certain forward-looking statements contained in this press release, including the following: reasonable industry growth ranging from flat to double digit; market share that will remain constant or moderately increase; no further deterioration and a relatively rapid stabilization of global and North American economic conditions, including with respect to the ongoing COVID-19 health crisis; any increase in interest rates will be modest; currencies will remain at near current levels; inflation will remain in line with central bank expectations in countries where the Company is doing business; the Company’s current margins excluding the impact of the wind-down of Evinrude outboard engines and COVID-19 will remain at current or improved levels; the supply base will remain able to support product development and planned production rates on commercially acceptable terms in a timely manner; there will be no significant changes in tax laws or free trade arrangements or treaties applicable to the Company; no trade barriers will be imposed amongst jurisdictions in which the Company carries operations; the absence of unusually adverse weather conditions, especially in peak seasons. BRP cautions that its assumptions may not materialize and that current economic conditions, including all of the current uncertainty resulting from the ongoing COVID-19 health crisis and its broader repercussions on the global economy, render such assumptions, although believed reasonable at the time they were made, subject to greater uncertainty. 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.

About BRP 

We are a global leader in the world of powersports vehicles, propulsion systems and boats built on over 75 years of ingenuity and intensive consumer focus. Our portfolio of industry-leading and distinctive products includes Ski-Doo and Lynx snowmobiles, Sea-Doo watercraft, Can-Am on- and off-road vehicles, Alumacraft, Manitou, Quintrex, Stacer and Savage boats, Evinrude and Rotax marine propulsion systems as well as Rotax engines for karts, motorcycles and recreational aircraft. We complete our lines of products with a dedicated parts, accessories and apparel business to fully enhance the riding experience. With annual sales of CA$6.1 billion from over 120 countries, our global workforce is made up of approximately 12,600 driven, resourceful people. 

www.brp.com @BRPNews 

Ski-Doo, Lynx, Sea-Doo, Can-Am, Rotax, Alumacraft, Manitou, Quintrex, Stacer, Savage, Evinrude and the BRP logo are trademarks of Bombardier Recreational Products Inc. or its affiliates. All other trademarks are the property of their respective owners. 

- Press Release / Information Obtained from BRP Website

  • September 8, 2020
  • Published by DirtAlliance

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2020-09-08T22:11:46+00:00