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Maritimo 2023 M600 LEADERBOARD

BRP reports its fourth quarter and full-year 2023 results

by BRP 24 Mar 2023 14:34 PDT
BRP logo © BRP

Highlights for FY23 Q4

  • Revenues of $3,076.3 million, an increase of $728.8 million or 31% compared to the same period last year, a record performance for a single quarter in the Company's history;
  • Retail sales up for Powersports products by 21% compared to the same period last year, and market share gains for SSV in North America;
  • Normalized diluted earnings per share of $3.85, an increase of $0.85 per share or 28%, and diluted earnings per share of $4.54, an increase of $2.04 per share or 82% compared to the same period last year;
  • Normalized EBITDA of $528.0 million, an increase of $111.6 million or 27% compared to the same period last year.

Highlights for FY23

  • Increased revenues by 31% compared to last year, reaching an all-time record high of $10,033.4 million;
  • Outperformed our increased FY23 guidance with Normalized diluted earnings per share of $12.05, an increase of $2.13 per share or 21%;
  • Achieved market share gains of over 5 percentage points in the North American Powersports industry;
  • Provided strong returns to shareholders with $356 million deployed for share repurchases and dividend payments; and
  • Continued to invest in future market-shaping products with the completion of 3 acquisitions, the creation of the LVHA Group and the start of construction of the Can-Am electric two-wheel motorcycle production facility in Querétaro, Mexico.

Fiscal 2024 full-year guidance

  • The Company is well positioned to continue its growth with revenues expected to increase in the range of 9% to 12% compared to fiscal year 2023; and
  • Normalized diluted earnings per share expected in the range of $12.25 - $12.75 or resulting in an increase of 2% to 6% compared to fiscal 2023.

BRP Inc. (TSX:DOO; NASDAQ:DOOO) today reported its financial results for the three- and twelve-month periods ended January 31, 2023. All financial information is in Canadian dollars unless otherwise noted. The complete financial results are available on SEDAR and EDGAR as well as in the section Quarterly Reports of BRP's website.

"We achieved record results for the year with revenues exceeding $10 billion for the first time ever, solid profit margins and Normalized EPS above our guidance range. These achievements speak volumes about the dedication and relentless work of our team, as well as the strength of our product portfolio. We are proud of our outstanding fourth quarter retail performance as we significantly outpaced the Powersports industry and concluded the year with an exceptional 5 percentage points market share increase over the previous year in North America," said José Boisjoli, President and CEO of BRP.

"Heading into fiscal 2024, despite macro concerns, we expect to continue our growth and deliver Normalized EPS between $12.25 and $12.75. BRP's proven reputation for product innovation, industry-leading brands and solid dealer network provide a robust foundation for sustainable growth," concluded Mr. Boisjoli.

Fiscal Year 2024 Guidance

  The Company has established its FY24 guidance as follows:  

Financial Metric FY23 FY24 Guidance vs FY23
Revenues    
Year-Round Products $4,827.1 Up 16% to 19%
Seasonal Products 3,440.3 Down 4% to Flat
Powersports PA&A and OEM Engines 1,276.4 Up 3% to 7%
Marine 489.6 Up 45% to 50%
Total Company Revenues 10,033.4 Up 9% to 12%
Normalized EBITDA 1,706.3 Up 9% to 13%
Effective Tax Rate 24.4% 24.5% to 25.5%
Normalized Earnings per Share – Diluted $12.05 $12.25 to $12.75 (Up 2% to 6%)
Net Income 865.4 ~$985M to $1,025M

Other assumptions for FY24 Guidance

  • Depreciation Expenses Adjusted: ~$375M (Compared to $304M in FY23)
  • Net Financing Costs Adjusted: ~$180M (Compared to $110M in FY23)
  • Weighted average number of shares – diluted: ~80.5M shares (Compared to 9M shares in FY23)
  • Capital Expenditures: ~$750M to $800M (Compared to $659M in FY23)

Financial Highlights

                                          Three-month periods ended                          Twelve-month periods ended

(in millions of Canadian dollars, except per share data and margin) January 31, 2023 January 31, 2022 January 31, 2023 January 31, 2022 January 31, 2021
Revenues $3,076.3 $2,347.5 $10,033.4 $7,647.9 $5,952.9
Gross Profit 787.6 609.5 2,499.4 2,132.2 1,472.3
Gross Profit (%) 25.6% 26.0% 24.9% 27.9% 24.7%
Normalized EBITDA 528.0 416.4 1,706.3 1,462.1 999.0
Net income (loss) 365.1 209.6 865.4 794.6 362.9
Normalized net income 309.2 251.3 976.7 846.5 477.0
Earnings per share - diluted 4.54 2.50 10.67 9.31 4.10
Normalized earnings             per share – diluted    3.85   3.00   12.05   9.92   5.39
Weighted average number of shares – basic   78,812,364   81,965,577   79,382,008   82,973,284   87,519,856
Weighted average number of shares – diluted   80,402,213   83,691,775   80,946,102   85,259,520   88,604,984

Fourth Quarter Results

For the fourth quarter of Fiscal 2023, the Company continued to deliver strong financial results which contributed to exceed its previously announced Fiscal 2023 financial guidance. The demand for our products continued to be strong, as evidenced by the increase of 21% in the Company's North American retail sales for Powersports Products during the fourth quarter of Fiscal 2023 compared to the same period last year.

The increase in revenues for the three-month period ended January 31, 2023 compared to Fiscal 2022 is mainly explained by a strong consumer demand. It was supported by the additional available capacity such as the new Juarez-3 facility dedicated to SSV production, successful new product introductions, and the final completion of its substantially completed units available for retail allowing to achieve record high revenues during the fourth quarter of Fiscal 2023. The supply chain is gradually returning to a more stable level, however we continue to incur production inefficiencies resulting in higher production costs. Most Powersports product lines favorably contributed to the strong revenue growth compared to the fourth quarter of Fiscal 2022, resulting in higher profitability than last year.

Revenues

Revenues increased by $728.8 million, or 31.0%, to $3,076.3 million for the three-month period ended January 31, 2023, compared to $2,347.5 million for the corresponding period ended January 31, 2022. The revenue increase was primarily driven by a higher wholesale volume across all product lines due to strong retail demand, and the introduction of the Sea-Doo pontoon. The increase includes a favourable foreign exchange rate variation of $73 million.

  • Year-Round Products (41% of Q4-23 revenues) : Revenues from Year-Round Products increased by $401.7 million, or 47.1%, to $1,254.8 million for the three-month period ended January 31, 2023, compared to $853.1 million for the corresponding period ended January 31, 2022. The increase was due to a higher volume and favorable pricing across all product lines. The higher volume of SSV sold was driven by strong market demand and increased production capacity. The increase in ATV and 3WV volume was due to better product availability. The increase includes a favourable foreign exchange rate variation of $35 million.
  • Seasonal Products (43% of Q4-23 revenues) : Revenues from Seasonal Products increased by $270.6 million, or 25.8%, to $1,319.5 million for the three-month period ended January 31, 2023, compared to $1,048.9 million for the corresponding period ended January 31, 2022. The increase was due to a higher volume of PWC sold along with favorable pricing across all product lines and the introduction of the Sea-Doo pontoon. The higher volume of PWC sold was driven by strong market demand and better product availability. These increases were partially offset by a decrease in the volume of snowmobiles sold resulting from the suspension of sales in Russia. The increase also includes a favourable foreign exchange rate variation of $17 million.
  • Powersports PA&A and OEM Engines (12% of Q4-23 revenues) : Revenues from Powersports PA&A and OEM Engines increased by $67.6 million, or 21.8%, to $378.3 million for the three-month period ended January 31, 2023, compared to $310.7 million for the corresponding period ended January 31, 2022. The increase was due to a higher volume of PA&A coming from strong unit retail sales, combined with favourable pricing and the introduction of the Sea-Doo pontoon. The increase also includes a favourable foreign exchange rate variation of $15 million.
  • Marine (4% of Q4-23 revenues) : Revenues from the Marine segment decreased by $10.5 million, or 7.6%, to $128.5 million for the three-month period ended January 31, 2023, compared to $139.0 million for the corresponding period ended January 31, 2022. The decrease was due to a lower volume of boats sold due to supply chain disruptions, which slowed down the introduction of new products, partially offset by favourable pricing in addition to a favourable mix of boats sold. The decrease includes a favourable foreign exchange rate variation of $6 million.

North American Retail Sales

The Company's North American retail sales for Powersports products increased by 21%, or 19% when excluding pontoons for the three-month period ended January 31, 2023 compared to the three-month period ended January 31, 2022. The increase was mainly attributable to PWC and SSV.

  • Year-Round Products: retail sales increased on a percentage basis in the mid-thirties range compared to the three-month period ended January 31, 2022.
  • Seasonal Products: retail sales increased on a percentage basis in the low-teens range compared to the three-month period ended January 31, 2022.
  • Marine: boat retail sales decreased by 57% compared to the three-month period ended January 31, 2022.

Gross profit

Gross profit increased by $178.1 million, or 29.2%, to $787.6 million for the three-month period ended January 31, 2023, compared to $609.5 million for the corresponding period ended January 31, 2022. The increase in gross profit was primarily due to the favorable volume of SSV and PWC sold and a favorable pricing across all product lines. Gross profit margin percentage decreased by 40 basis points to 25.6% from 26.0% for the three-month period ended January 31, 2022. The slight decrease in gross profit margin percentage was attributable to higher logistics, commodities and labour costs due to inefficiencies related to supply chain disruptions and inflation, and higher sales programs resulting from historical low levels in Fiscal 2022. The decrease was partially offset by higher volume and favorable pricing.

Operating expenses

Operating expenses increased by $87.8 million, or 33.4%, to $350.7 million for the three-month period ended January 31, 2023, compared to $262.9 million for the three-month period ended January 31, 2022. The increase was mainly attributable to higher general and administrative ("G&A") expenses, mainly for the modernization of the Company's software infrastructure to support future growth, increases in research and development ("R&D") expenses and selling and marketing to support future growth, and continued product investments.

Normalized EBITDA

Normalized EBITDA increased by $111.6 million, or 26.8%, to $528.0 million for the three-month period ended January 31, 2023, compared to $416.4 million for the three-month period ended January 31, 2022. The increase was primarily due to higher gross profit partially offset by higher operating expenses.

Net Income

Net income increased by $155.5 million or 74.2%, to $365.1 million for the three-month period ended January 31, 2023, compared to $209.6 million for the three-month period ended January 31, 2022. The increase was primarily due to a higher operating income and a favorable foreign exchange rate variation impact on the U.S. denominated long-term debt, partially offset by net financing costs and a higher income tax expense.

Twelve-Month Period Ended January 31, 2023

Revenues

Revenues increased by $2,385.5 million, or 31.2%, to $10,033.4 million for the twelve-month period ended January 31, 2023, compared to $7,647.9 million for the corresponding period ended January 31, 2022. The increase was primarily due to a higher volume of SSV, snowmobile, 3WV and PWC sold, the introduction of Sea-Doo pontoons and favorable pricing across all product lines. The increase includes a favourable foreign exchange rate variation of $107 million.

Normalized EBITDA

Normalized EBITDA increased by $244.2 million, or 16.7%, to $1,706.3 million for the twelve-month period ended January 31, 2023, compared to $1,462.1 million for the twelve-month period ended January 31, 2022. The increase was primarily due to higher gross profit, partially offset by higher operating expenses, mostly in R&D and G&A.

Net Income

Net income increased by $70.8 million to $865.4 million for the twelve-month period ended January 31, 2023, compared to $794.6 million for the twelve-month period ended January 31, 2022. The increase in net income was primarily due to a higher operating income and lower net financing costs, partially offset by an unfavorable impact of the foreign exchange rate variation on the U.S. denominated long-term debt and a higher income tax expense.

Liquidity and Capital Resources

The Company generated net cash flows from operating activities totaling $649.5 million for the twelve- month period ended January 31, 2023 compared to $770.0 million for the twelve-month period ended January 31, 2022.

The Company invested approximately $660 million of its liquidity in capital expenditures to add production capacity and modernize the Company's software infrastructure to support future growth and $208 million in business combinations. The Company also returned $356 million to shareholders through share repurchases and a quarterly dividend payout.

On December 13, 2022, the Company entered into an incremental U.S. $500.0 million tranche under its Term Facility. This new tranche matures on December 13, 2029, and, consistent with the existing tranche of the Term Facility, is exempt of financial covenants. On the same date, the Company fully repaid the then outstanding U.S. $100 million Term Loan B-2 for repayment of $135.0 million.

Dividend

On March 22, 2023, the Company's Board of Directors declared a quarterly dividend of $0.18 per share for holders of its multiple voting shares and subordinate voting shares. The dividend will be paid on April 17, 2023 to shareholders of record at the close of business on April 3, 2023.

Conference Call and Webcast Presentation

Today at 9 a.m. EDT, BRP Inc. will host a conference call and webcast to discuss its FY23 fourth quarter 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 39706809), please dial 1 (888) 396-8049 (toll-free in North America). Click here for International numbers.

The Company's fourth quarter FY23 webcast presentation is posted in the Quarterly Reports section of BRP's website.

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