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Cyclops Marine 2023 November - LEADERBOARD

BRP presents its fourth quarter and full-year 2024 results

by BRP 29 Mar 09:41 PDT
BRP logo © BRP

Highlights for FY24 Q4

  • Revenues of $2,691.8 million, a decrease of $384.5 million or 12.5% compared to the same period last year, which was a record fourth quarter;
  • Net income of $188.2 million, a decrease of $176.9 million or 48.5% compared to the same period last year;
  • Normalized EBITDA [1] of $404.5 million, a decrease of $123.5 million or 23.4% compared to the same period last year;
  • Normalized diluted earnings per share [1] of $2.46, a decrease of $1.39 per share or 36.1% and diluted earnings per share of $2.46, a decrease of $2.08 per share, or 45.8%, compared to the same period last year;
  • Continued outpacing the SSV industry with Can-Am retail sales increasing by more than 20% compared to the same period last year;
  • The Company increased its quarterly dividend by 17% to $0.21.

Highlights for FY24

  • Increased revenues by 3.3% compared to last year, reaching an all-time record high of $10,367.0 million;
  • Net income of $744.5 million, a decrease of $120.9 million or 14.0% compared to last fiscal year;
  • Reached revised FY24 guidance with Normalized diluted earnings per share [1] of $11.11, a decrease of $0.94 per share or 7.8%. Diluted earnings per share of $9.47;
  • Continued to gain market share as North American Powersports retail sales increased by 8% compared to the same period last year, while the industry increased by 1%;
  • Delivered record free cash flow of over a billion dollars, allowing for strong returns to shareholders with $501.8 million deployed for share repurchases and dividend payments.

Fiscal 2025 full-year guidance

  • The Company is planning to maintain its growth in market share in the Powersports industry and to reduce its network inventory, leading to a revenue guidance in the range of $9.1 billion to $9.5 billion; and
  • Normalized diluted earnings per share [1] expected in the range of $7.25 to $8.25.

BRP Inc. (TSX:DOO; NASDAQ:DOOO) today reported its financial results for the three-month and twelve-month periods ended January 31, 2024. 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 was marked by market share gains in the North American Powersports industry, successful product launches and continued progress on our strategic initiatives, leading to record revenues and free cash flow. Our performance in the side-by-side category was very impressive, as we reached a market share of 30% one year ahead of plan. I sincerely thank our teams for their commitment to our success," said José Boisjoli, President and CEO of BRP.

"Our fourth quarter results ended within our guidance despite unfavourable winter conditions affecting our snow-related business. Heading into fiscal 2025, we are focused on proactively managing network inventory to maintain our dealer value proposition. We expect to strengthen our position as the OEM[2] of choice, driven by our diversified product portfolio, as well as our strong business fundamentals. We are also excited about the launch of our new electric Can-Am motorcycles later this year which should further expand our addressable market," concluded Mr. Boisjoli. [1] See " Non-IFRS Measures " section of this press release.
[2] Original Equipment Manufacturer

Fiscal year 2025 guidance

The Company has established its FY25 guidance as follows, which supersedes all prior financial guidance statements made by the Company, including the long-term financial targets which were previously issued by the Company in connection with its strategic 5-year plan referred to as Mission 2025:

Other assumptions for FY25 Guidance

  • Depreciation Expense Adjusted: ~$440M (Compared to $382M in FY24)
  • Net Financing Costs Adjusted: ~$185M (Compared to $175M in FY24)
  • Effective tax rate [1] ~25.5% to 26.0% (Compared to 23.6% in FY24)
  • Weighted average number of shares - diluted: ~76.2M shares (Compared to 78.5M in FY24)
  • Capital Expenditures: ~$500M (Compared to $586M in FY24)

FY25 Quarterly Outlook [4]

Given its focus on managing network inventory levels, the Company expects Q1 Fiscal 2025 Normalized EBITDA [1] to be down approximatively 35% versus the same three-month period last fiscal year.

[1] See "Non-IFRS Measures" section of this press release.
[3] Effective tax rate based on Normalized Earnings before Normalized Income Tax.
[4] 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 2025 guidance.

Fourth Quarter Results

The Company's three-month period ended January 31, 2024 was marked by a decrease in the volume of shipments and revenues compared to the three-month period ended January 31, 2023. The results of the fourth quarter of this fiscal year were mainly driven by a decrease in Seasonal Products deliveries, as the fourth quarter of this fiscal year compares unfavourably to a strong fourth quarter last fiscal year, where Seasonal Products shipments were completed after peak retail season due to supply chain issues last year. Revenues were also negatively impacted by higher sales incentives and unfavourable winter conditions, primarily in North America, where the short riding season reduced the demand for PA&A compared to the fourth quarter of last fiscal year.

The Company's North American quarterly retail sales were down for all product lines except SSV, resulting in an overall decrease in retail when compared to the same period last year. While the Company continues to demonstrate production efficiencies due to supply chain improvements, the reduction in volume and increase in sales programs have led to a decrease in the profit margin percentage for the three-month period ended January 31, 2024, compared to the same period last year.

Revenues

Revenues decreased by $384.5 million, or 12.5%, to $2,691.8 million for the three-month period ended January 31, 2024, compared to the $3,076.3 million for the corresponding period ended January 31, 2023. The revenue decrease was primarily due to a lower volume across most product lines, explained by late shipments of Seasonal Products for the same period last fiscal year, softening consumer demand, primarily in International markets, higher sales programs across most product lines and unfavourable winter conditions, which impacted the Snowmobile season for PA&A. The decrease was partially offset by favourable product mix in Year-Round products and favourable pricing across most product lines. The decrease includes a favourable foreign exchange rate variation of $4 million.

  • Year-Round Products [5] (51% of Q4-FY24 revenues): Revenues from Year-Round Products increased by $109.1 million, or 8.7%, to $1,363.9 million for the three-month period ended January 31, 2024, compared to $1,254.8 million for the corresponding period ended January 31, 2023. The increase was primarily attributable to a favourable product mix due to the introduction of new models and higher volume of 3WV, due to timing of shipments between the third and fourth quarter of Fiscal 2024. The increase in revenues was partially offset by higher sales programs and a lower volume of ATV and SSV sold. The increase includes an unfavourable foreign exchange rate variation of $1 million.

  • Seasonal Products[5] (35% of Q4-FY24 revenues): Revenues from Seasonal Products decreased by $366.9 million, or 27.8%, to $952.6 million for the three-month period ended January 31, 2024, compared to $1,319.5 million for the corresponding period ended January 31, 2023. The decrease was primarily attributable to a lower volume of products sold and higher sales programs, mainly on Snowmobile due to unfavourable winter conditions. The decrease in volume is mostly explained by late shipments in the three-month period ended January 31, 2023, compared to this year. The decrease was partially offset by favourable pricing across all product lines. The decrease also includes a favourable foreign exchange rate variation of $2 million.

  • Powersports PA&A and OEM Engines [5] (11% of Q4-FY24 revenues): Revenues from Powersports PA&A and OEM Engines decreased by $87.3 million, or 23.1%, to $291.0 million for the three-month period ended January 31, 2024, compared to $378.3 million for the corresponding period ended January 31, 2023. The decrease was attributable to a lower volume of PA&A sold, which was mainly attributable to lower dealer orders due to a higher level of stock remaining in dealer inventory and unfavourable winter conditions in North America, which impacted the Snowmobile riding season and the related PA&A revenues. The decrease also includes a favourable foreign exchange rate variation of $4 million. [1] See "Non-IFRS Measures" section of this press release.
    [5] The inter-segment transactions are included in the analysis.

  • Marine [5] (3% of Q4-FY24 revenues): Revenues from the Marine segment decreased by $38.4 million, or 29.9%, to $90.1 million for the three-month period ended January 31, 2024, compared to $128.5 million for the corresponding period ended January 31, 2023. The decrease was primarily attributable to a lower volume of products sold, higher sales programs, and an unfavourable product mix. The decrease in volume is mainly explained by softer consumer demand in the industry. The decrease was partially offset by favourable pricing across most product lines. The decrease includes an unfavourable foreign exchange rate variation of $1 million.

North American Retail Sales

The Company's North American retail sales for Powersports Products decreased by 10% for the threemonth period ended January 31, 2024 compared to the same period last fiscal year. This was mainly driven by lower retail sales of Snowmobile and PWC for the three-month period ended January 31, 2024 compared to the same period last fiscal year, due to late shipments that occurred after peak retail season during the three-month period ended January 31, 2023. In addition, unfavourable winter conditions impacted our Snowmobile season this fiscal year. The decrease was partially offset by increased retail sales of SSV for the three-month period ended January 31, 2024.

  • Year-Round Products: retail sales increased on a percentage basis in the low-teens range compared to the three-month period ended January 31, 2023. The Year-Round Products industry increased on a percentage basis in the mid-single digits over the same period.

  • Seasonal Products: retail sales decreased on a percentage basis in the low-twenties range, even when excluding Sea-Doo pontoon, compared to the three-month period ended January 31, 2023. The Seasonal Products industry decreased on a percentage basis in the high-teens range over the same period.

The Company's North American retail sales for Marine Products decreased by 14% compared to the three-month period ended January 31, 2023 as a result of softening consumer demand in the boating industry.

Gross profit

Gross profit decreased by $134.8 million, or 17.1%, to $652.8 million for the three-month period ended January 31, 2024, compared to $787.6 million for the three-month period ended January 31, 2023. Gross profit margin percentage decreased by 130 basis points to 24.3% from 25.6% for the three-month period ended January 31, 2023. The decrease in gross profit and gross profit margin percentage were the result of a lower volume sold, as highlighted above, and higher sales programs. The decrease was partially offset by favourable pricing and product mix across most product lines and a decrease in material and logistics costs due to more efficiencies in the supply chain. The decrease in gross profit includes an unfavourable foreign exchange rate variation of $12 million.

Operating expenses

Operating expenses increased by $123.6 million, or 35.2%, to $474.3 million for the three-month period ended January 31, 2024, compared to $350.7 million for the three-month period ended January 31, 2023.

The increase in operating expenses was mainly attributable to the impairment charge recorded during the fourth quarter of Fiscal 2024 for the Marine segment. The increase in operating expenses includes an unfavourable foreign exchange rate variation of $6 million.

[1] See "Non-IFRS Measures" section of this press release.
[5] The inter-segment transactions are included in the analysis.

Normalized EBITDA [1]

Normalized EBITDA [1] decreased by $123.5 million, or 23.4%, to $404.5 million for the three-month period ended January 31, 2024, compared to $528.0 million for the three-month period ended January 31, 2023. The decrease was primarily due to lower gross profit and higher operating expenses, even when excluding the impairment charge related to the Marine segment.

Net Income

Net income decreased by $176.9 million, or 48.5% to $188.2 million for the three-month period ended January 31, 2024, compared to $365.1 million for the three-month period ended January 31, 2023. The decrease was primarily due to a lower operating income, resulting from the impairment charge related to the Marine segment recorded during the fourth quarter of Fiscal 2024, and an increase in financing costs, partially offset by a favourable foreign exchange rate variation on the U.S. denominated long-term debt, a lower income tax expense and an increase in financing income.

Twelve-Month Period Ended January 31, 2024

Revenues

Revenues increased by $333.6 million, or 3.3%, to $10,367.0 million for the twelve-month period ended January 31, 2024, compared to $10,033.4 million for the corresponding period ended January 31, 2023. The increase was primarily due to a higher volume of SSV and ATV sold, increased deliveries of SeaDoo pontoon, favourable product mix across most product lines, as well as favourable pricing across all product lines. The increase was partially offset by higher sales programs, which are mostly due to retail incentives, and a lower volume across the remaining product lines. The increase includes a favourable foreign exchange rate variation of $187 million.

Normalized EBITDA [1]

Normalized EBITDA [1] decreased by $6.7 million, or 0.4%, to $1,699.6 million for the twelve-month period ended January 31, 2024, compared to $1,706.3 million for the twelve month period ended January 31, 2023. The decrease was primarily due to higher operating expenses, even when excluding the impairment charge related to the Marine segment, partially offset by higher gross profit.

Net Income

Net income decreased by $120.9 million, or 14.0%, to $744.5 million for the twelve-month period ended January 31, 2024, compared to $865.4 million for the twelve-month period ended January 31, 2023. The decrease was primarily due to a lower operating income, resulting from the impairment charge related to the Marine segment recorded during the fourth quarter of Fiscal 2024, and an increase in financing costs, partially offset by a favourable impact of the foreign exchange rate variation on the U.S. denominated long-term debt, a lower income tax expense and an increase in financing income.

Liquidity and Capital Resources

The Company generated net cash flows from operating activities totaling $1,658.1 million for the twelvemonth period ended January 31, 2024 compared to net cash flows of $649.5 million for the twelve-month period ended January 31, 2023. The increase was mainly due to favourable changes in working capital and lower income taxes paid.

The Company invested $585.8 million of its liquidity in capital expenditures to add production capacity and modernize the Company's software infrastructure to support future growth.

During the twelve-month period ended January 31, 2024, the Company also returned $501.8 million to its shareholders through quarterly dividend payouts and its share repurchase programs.

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

Dividend

On March 27, 2024, the Company's Board of Directors declared a quarterly dividend of $0.21 per share for holders of its multiple voting shares and subordinate voting shares. The dividend will be paid on April 22, 2024 to shareholders of record at the close of business on April 8, 2024.

Conference call and webcast presentation

Today at 9 a.m. ET, BRP Inc. will host a conference call and webcast to discuss its FY24 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 20887), please dial 1 (800) 717 1738 (toll-free in North America). Visit here for International numbers. The Company's fourth quarter FY24 webcast presentation is posted in the Quarterly Reports section of BRP's website.

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