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Selden 2020 - LEADERBOARD

BRP reports fiscal year 2024 first quarter results

by BRP 1 Jun 2023 04:39 PDT
BRP logo © BRP

Highlights

  • Revenues of $2,429 million, up 34% compared to the same period last year, a record for a first quarter in the Company's history;
  • Normalized EBITDA[1] of $377 million, up 39% compared to the same period last year;
  • North American Powersports retail sales grew by 3% compared to the same period last year, once again outperforming the industry driven by market share gains in SSV and PWC;
  • Normalized earnings per share - diluted[1] of $2.38, an increase of $0.72 per share or 43% and diluted earnings per share of $1.92, an increase of $0.46 per share, or 32%, compared to the same period last year; and
  • Reaffirming full year-end guidance of revenues up 9% to 12% compared to Fiscal 2023, and Normalized earnings per share - diluted[1] between $12.25 and $12.75.

BRP Inc. (TSX:DOO; NASDAQ:DOOO) today reported its financial results for the three-month period ended April 30, 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.

"Fiscal 2024 is off to a good start for BRP. We delivered a solid first-quarter performance with record revenue for that period and a 43% increase in Normalized EPS - diluted[1][2]. Once again, we outpaced the North American Powersports industry thanks to sustained consumer demand for our strong and well diversified product portfolio," said José Boisjoli, President and CEO of BRP.

"We recently celebrated our 10th anniversary as a publicly traded company, and we are proud of our achievements over that period. Our revenues tripled, Normalized EPS - diluted[1][2] grew eightfold and our Powersports market share almost doubled. Moreover, we created significant value for shareholders with a 368% share price appreciation as of the anniversary date[3], and $2.7 billion in capital distributions through dividends and share repurchases[4]."

"Driven by a regular flow of new product introductions, and with many others in their early stage of growth, the future is very promising for BRP. Over the short term, our focus is on executing and optimizing efficiencies, and we remain on pace to deliver on our financial guidance for this year," concluded Mr. Boisjoli.

    [1] See "Non-IFRS Measures" section of this press release
    [2] Earnings per share is defined as "EPS"
    [3] Share price increase calculated between Initial Public Offering and May 19, 2023 on the TSX (DOO)
    [4] Calculated between Initial Public Offering and April 30, 2023

Fiscal year 2024 updated guidance and outlook

The FY24 guidance has been updated as follows:

    [1] See "Non-IFRS Measures" section of this press release
    [2] Earnings per share is defined as "EPS"
    [5] Effective tax rate based on Normalized Earnings before Normalized Income Tax.
    [6] Please refer to the "Caution Concerning Forward-Looking Statements" and "Key assumptions" sections of this press release for a summary of important risk factors that could affect the above guidance and of the assumptions underlying this Fiscal Year 2024 guidance.

First quarter results

Strong deliveries, aided by improvements in the supply chain and inflationary environment, allowed the Company to deliver a solid first quarter, outperforming the results of the first quarter of Fiscal 2023. The demand for our products continued to be healthy, as evidenced by the increase of 3% in the Company's North American retail sales for Powersports Products during the first quarter of Fiscal 2024 compared to the same period last year.

The increase in revenues for the three-month period ended April 30, 2023 compared to the first quarter of Fiscal 2023 is mainly explained by high deliveries of units for the upcoming retail season. During that period, we experienced strong PWC, Sea-Doo pontoon, and SSV retail sales. The supply chain has gradually returned to a more stable level, resulting in production efficiencies and an increase in gross profit margin compared to the same period last year.

Revenues

Revenues increased by $620.1 million, or 34.3%, to $2,429.4 million for the three-month period ended April 30, 2023, compared to $1,809.3 million for the corresponding period ended April 30, 2022. The increase in revenue was primarily due to a higher wholesale volume of SSV, PWC, 3WV as well as a favourable product mix and favourable pricing across all product lines, partially offset by higher sales programs. The increase includes a favourable foreign exchange rate variation of $94.8 million.

  • Year-Round Products[7] (55% of Q1-24 revenues): Revenues from Year-Round Products increased by $398.9 million, or 42.7%, to $1,333.3 million for the three-month period ended April 30, 2023, compared to $934.4 million for the corresponding period ended April 30, 2022. The increase was primarily attributable to a higher volume of SSV and 3WV sold due to additional capacity and due to supply chain issues experienced in the prior year that impacted product availability, as well as favourable pricing and product mix across all product lines, which was partially offset by higher sales programs. The increase includes a favourable foreign exchange rate variation of $63 million.

  • Seasonal Products[7] (28% of Q1-24 revenues): Revenues from Seasonal Products increased by $283.2 million, or 69.3%, to $691.9 million for the three-month period ended April 30, 2023, compared to $408.7 million for the corresponding period ended April 30, 2022. The increase was primarily attributable to a higher volume of PWC sold, driven by strong market demand and due to supply chain issues experienced in the prior year which impacted product availability, as well as increased deliveries of the Sea-Doo pontoon. The increase was also attributable to favourable pricing across all product lines, partially offset by higher sales programs. The increase includes a favourable foreign exchange rate variation of $16 million.

  • Powersports PA&A and OEM Engines[7] (12% of Q1-24 revenues): Revenues from Powersports PA&A and OEM Engines decreased by $58.7 million, or 17.1%, to $284.9 million for the three-month period ended April 30, 2023, compared to $343.6 million for the corresponding period ended April 30, 2022. The decrease in revenues was mainly attributable to a lower volume of sales. The decrease in sales volume was mainly attributable to higher sales of snowmobile PA&A last year driven by late unit deliveries in the season, and lower dealer orders. The decrease includes a favourable foreign exchange rate variation of $11 million.

  • Marine[7] (5% of Q1-24 revenues): Revenues from the Marine segment decreased by $9.9 million, or 7.5%, to $122.3 million for the three-month period ended April 30, 2023, compared to $132.2 million for the corresponding period ended April 30, 2022. The decrease in revenues from the Marine segment was mainly due to a lower volume of boats and PA&A sold as a result of supply chain disruptions and a longer production ramp-up related to the introduction of new products. The decrease was partially offset by a favourable product mix of boats sold, as well as higher pricing and a favourable foreign exchange rate variation of $5 million.

[7] The inter-segment transactions are included in the analysis.

North American Retail Sales

The Company's North American retail sales for Powersports Products increased by 3% for the three-month period ended April 30, 2023 compared to the three-month period ended April 30, 2022. The increase was mainly driven by an increase in the sales of PWC and SSV.

  • Year-Round Products: retail sales decreased on a percentage basis in the low-single digits compared to the three-month period ended April 30, 2022. In comparison, the Year Round Products industry recorded a decrease on a percentage basis in the high-single digits over the same period.
  • Seasonal Products: retail sales increased on a percentage basis in the mid-single digits compared to the three-month period ended April 30, 2022, when excluding pontoons. In comparison, the Seasonal Products industry recorded an increase on a percentage basis in the mid-single digits over the same period.

Marine Products retail sales decreased by 39% compared to the three-month period ended April 30, 2022, as a result of lower product availability.

Gross profit

Gross profit increased by $169.1 million, or 37.2%, to $623.5 million for the three-month period ended April 30, 2023, compared to $454.4 million for the corresponding period ended April 30, 2022. Gross profit margin percentage increased by 60 basis points to 25.7% from 25.1% for the three-month period ended April 30, 2022.

The increase in gross profit was the result of a favourable volume of SSV, 3WV, and PWC sold along with favourable pricing, a decrease in logistics costs due to more efficiencies in the supply chain, and favourable product mix across product lines. The increase was partially offset by higher materials and labour costs due to inflation, as well as higher sales programs. The increase in gross profit margin percentage was the result of favourable product mix of PWC and 3WV, favourable pricing across all product lines and higher production efficiency coming from an improved supply chain, partially offset by higher sales programs.

Operating expenses

Operating expenses increased by $86.8 million, or 34.1%, to $341.6 million for the three-month period ended April 30, 2023, compared to $254.8 million for the three-month period ended April 30, 2022. The increase in operating expenses was mainly attributable to an increase in R&D expenses to support future growth, higher G&A expenses mainly related to the modernization of the Company's software infrastructure and higher selling and marketing expenses mainly attributable to continued product investments. The increase in operating expenses includes an unfavourable foreign exchange rate variation of $14 million.

Normalized EBITDA[1]

Normalized EBITDA increased by $105.0 million, or 38.6%, to $377.1 million for the three-month period ended April 30, 2023, compared to $272.1 million for the three-month period ended April 30, 2022. The increase was primarily due to higher gross profit partially offset by higher operating expenses, mostly in R&D, and selling and marketing.

[1]See "Non-IFRS Measures" section of the press release

Liquidity and capital resources

The Company generated net cash flows from operating activities totaling $258.8 million for the three-month period ended April 30, 2023 compared to a usage of $333.1 million for the three-month period ended April 30, 2022. The increase was mainly due to an improvement in the changes in working capital and lower income taxes paid.

The Company invested $117.8 million of its liquidity in capital expenditures to add production capacity and modernize the Company's software infrastructure to support future growth and also returned $63.8 million to its shareholders through quarterly dividend payouts and its share repurchase programs.

Dividend
On May 31, 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 July 14, 2023 to shareholders of record at the close of business on June 30, 2023.

Conference call and webcast presentation
Today at 9 a.m. EDT, BRP Inc. will host a conference call and webcast to discuss its FY24 first 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 53112848), please dial 1 (888) 396-8049 (toll-free in North America). Visit here for International numbers.

The Company's first quarter FY24 webcast presentation is posted in the Quarterly Reports section of BRP's website.

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