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BRP revenue grows 6.5 percent

September 12, 2013
Filed under News, Top Stories

In its second quarter fiscal 2014 results statement, BRP announced that its revenues of $620.0 million increased 6.5 percent compared to the previous year, while overall the company posted a net loss of $7.9 million, which translates to a $0.07 loss per share. The Valcourt, Quebec-based manufacturer reported strong growth in year-round products and PAC sales, and that its North American retail sales increased 16 percent in the quarter compared with last year, excluding sport boats.

From the release:

BRP Inc. (TSX: DOO) reported its financial results for the three and six-month periods ended July 31, 2013. All financial information is in Canadian dollars unless otherwise noted. The complete financial results are available at www.sedar.com.

2012-02-BRP-President-CEO-J-Boisjoli-2“Our second quarter results were right in line with our expectations and we are on track to achieve our guidance for the year. I’m particularly pleased with the 16 percent growth in retail sales of our products in North America during the quarter,” said President and CEO, José Boisjoli.

“I am pleased with the performance of our team and the strength of our brands. Our 14 percent growth in international markets (excluding sport boat) is a strong testament to our product momentum, and this despite the fact that our second quarter is traditionally our weakest quarter of the year.”

“I’m looking forward to welcoming over 2,000 participants from 99 countries as we begin our semi-annual dealer meeting in Orlando, Florida in three days. This event will be another key opportunity to showcase our leadership in the powersports industry as we introduce new Sea-Doo and Can-Am models for the 2014 season,” he concluded.

Highlights for the three- and six-month periods ended July 31, 2013

Revenues for the three-month period ended July 31,2013 were $620.9 million, an increase of 2.1 percent or $12.8M compared to the same period of last year. Revenues increased by 6.5 percent or $37.8 million when excluding the impact of the exit of the sport boat business in the fall of 2012. The increase in revenues includes a favorable foreign exchange rate variation of $11 million, mainly related to the strengthening of the Euro against the Canadian dollar.

Revenues for the six-month period ended July 31,2013 were $1,425.2 million, an increase of 4.0 percent or $54.4 million compared to the same period of last year. Revenues increased by 9.5 percent or $123.4 million when excluding the impact of the exit of the sport boat business in the fall of 2012. The increase in revenues includes a favorable foreign exchange rate variation of $24 million, mainly related to the strengthening of the US dollar and Euro against the Canadian dollar.

BRP-FY14-Income

Seasonal Products

Revenues from Seasonal Products decreased by $15.5 million, or 9.9 percent, to $140.6 million for the three-month period ended July 31, 2013, compared with $156.1 million for the corresponding period last year. The decrease in revenues is attributable to the reduction of $25 million of revenues following the Company’s decision announced in the third quarter of 2012 to exit the sport boat business. Excluding the exit of the sport boat business, revenues would have increased by $9.5 million or 7.2 percent. The increase results from higher volume of products sold, partially offset by additional sales programs put in place to support retail in North America due to the late arrival of spring and generally unfavorable weather conditions.

Year-Round Products

Revenues from Year-Round Products increased by $20.9 million, or 8.1 percent, to $278.1 million for the three-month period ended July 31, 2013, up from $257.2 million for the corresponding period last year. The increase is primarily due to higher worldwide sales of both ATV and side-by-side vehicles, partially offset by additional sales programs.

Propulsion Systems

Revenues from Propulsion Systems decreased by $2.6 million, or 2.9 percent, to $85.9 million for the three-month period ended July 31, 2013, compared with $88.5million for the corresponding period last year. The decrease in revenues is mainly due to lower volume of outboard engines sold, partially offset by a favorable foreign exchange rate variation of $3 million.

Parts, Accessories & Clothing [PAC]

Revenues from PAC increased by $10.0 million, or 9.4 percent, to $116.3 million for the three months ended July 31, 2013, up from $106.3 million for the corresponding period last year. The increase is primarily due to increased sales of Year-Round Products and a favorable foreign exchange rate variation of $2 million.

Gross profit decreased by $7.0 million or 4.7 percent of revenues, to $142.6 million for the three-month period ended July 31,2013, down from $149.6million for the corresponding period last year. The gross profit margin decreased by 160 basis points from 24.6 percent for the three-month period ended July 31, 2012. The decrease in gross profit margin was primarily due to increased sales program costs and to additional costs related to the transfer of PWC manufacturing to the Querétaro, Mexico facility. The decrease was partially offset by favorable product mix, higher selling prices and by a favorable foreign exchange rate variation of $6 million.

Operating expenses decreased by $28.0 million, or 20.8 percent, to $106.8 million for the three-month period ended July 31, 2013, down from $134.8 million for the three-month period ended July 31, 2012. During the three-month period ended July 31, 2013, the Company recorded a gain of $11.0 million from an insurance recovery whereas during the three-month period ended July 31, 2012, restructuring costs of $9.7 million and an impairment charge of $7.6 million were recorded in connection respectively with the transfer of PWC manufacturing in Mexico and the closure of the sport boat business. The foreign exchange impact represented an increase of operating expenses of $3 million. Overall, operating expenses before unusual and non-recurring items remained stable between the three-month periods ended July 31, 2013 and July 31, 2012.

Normalized net income decreased by $10.6 million to $7.6 million for the three-month period ended July 31, 2013, compared with $18.2 million for the corresponding period last year. The decrease is primarily due to increased sales program costs, additional expenses in connection with the transfer of PWC production to Mexico and increased interest costs from a higher amount of long-term debt outstanding.

Fiscal year 2014 Outlook

BRP’s financial guidance targets as presented on June 13, 2013 are reconfirmed and remain as follows:

Financial Metrics FY 2014 Guidance vs. FY13
Revenues
Seasonal Products
Flat to up low single digits %
Year-Round Products
Up high double digits %
Propulsion Systems
Up mid to high single digits %
PAC
Up high single digits %
Total Company Revenues
Up high single digits %
Normalized EBITDA
Up low double digits %
Effective Tax Rate
Up to 28-29%
Normalized Net Income
Up low double digits %
Normalized earnings/share
$1.45-$1.50
CAPEX
Flat

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