BRP reports Q4 sales growth across all categories

BRP Inc. (DOO) today reported its financial results for the three- and twelve-month periods ended January 31, 2015. All financial information is in Canadian dollars unless otherwise noted. The complete financial results are available at www.sedar.com.

“We grew sales in all four product categories, grew revenues in international markets despite the situation in Russia and exceeded our objective for new dealers. We also launched several market-shaping products with significant volume potential and the consumer reaction so far is very promising,” said José Boisjoli, president and CEO. “All in all, we had challenges throughout Fiscal Year 2015 but we stayed the course, executed on our plan and delivered solid results.”

Commenting on the outlook, Boisjoli added: “We are introducing our guidance for Fiscal Year 2016 with continued revenues and EBITDA growth, mitigated by an assumption of a reduction in sales from Russia when compared to Fiscal Year 2015. The construction of our new plant in Mexico is progressing well and production is still expected to start in the back-end of Fiscal Year 2016. I look forward to continued success on our journey to grow our Year-Round Products category.”

Highlights for the Three- and Twelve-Month Periods Ended January 31, 2015

Revenues increased by $165.2 million, or 18.3%, to $1,068.1 million for the three-month period ended January 31, 2015, compared with $902.9 million for the corresponding period ended January 31, 2014. The revenue increase was mainly due to higher wholesale in Year-Round Products. The increase in revenues includes a favorable foreign exchange rate variation of $42 million mainly related to the strengthening of the U.S. dollar against the Canadian dollar.

Revenues increased by $330.6 million, or 10.4%, to $3,524.7 million for the twelve-month period ended January 31, 2015, compared with $3,194.1 million for the corresponding period ended January 31, 2014. The revenue increase was mainly due to higher wholesale in Seasonal Products and their related PAC, and a favorable foreign exchange rate variation of $155 million mainly related to the strengthening of the U.S. dollar and the euro against the Canadian dollar.

QUARTERLY REVIEW BY CATEGORIES

Year-Round Products

Revenues from Year-Round Products increased by $143.5 million, or 52.7%, to $416.0 million for the three-month period ended January 31, 2015, compared with $272.5 million for the corresponding period ended January 31, 2014. The increase resulted primarily from the introduction of new models such as the Maverick X ds SSV, the Outlander L ATV mid-cc segment family and the Can-Am Spyder F3, and from higher shipments of Can-Am off-road vehicles from third to fourth quarter mainly to be more closely aligned with the retail season. The increase in revenues includes a favourable foreign exchange rate variation of $29 million.

Seasonal Products

Revenues from Seasonal Products decreased by $14.8 million, or 3.6%, to $391.6 million for the three-month period ended January 31, 2015, compared with $406.4 million for the corresponding period ended January 31, 2014. The decrease resulted primarily from a lower volume of snowmobiles sold in Russia and Scandinavia, partially offset by an increased volume of Sea-Doo Spark watercraft. The decrease in revenues includes a favourable foreign exchange rate variation of $6 million.

Propulsion Systems

Revenues from Propulsion Systems increased by $33.4 million, or 44.4%, to $108.7 million for the three-month period ended January 31, 2015, compared with $75.3 million for the corresponding period ended January 31, 2014. The increase in revenues was mainly attributable to a higher volume of outboard engines sold due to the introduction of the Evinrude E-TEC G2 engine.

PAC (Parts, Accessories, Clothing and other services)

Revenues from PAC increased by $3.1 million, or 2.1%, to $151.8 million for the three-month period ended January 31, 2015, compared with $148.7 million for the corresponding period ended January 31, 2014. The increase was mainly attributable to a favourable foreign exchange rate variation of $7 million, partially offset by a lower volume of snowmobile PAC sold in Russia and Scandinavia.

Gross profit increased by $66.5 million, or 29.8%, to $289.7 million for the three-month period ended January 31, 2015, compared with $223.2 million for the corresponding period ended January 31, 2014. The increase in gross profit is primarily due to a higher volume of Year-Round Products sold and a favorable foreign exchange rate impact of $2 million. Gross profit margin percentage increased by 240 basis points to 27.1% from 24.7% for the three-month period ended January 31, 2014. The increase in gross profit margin percentage was primarily due to a higher volume, a favorable mix and pricing from Year-Round Products sold, partially offset by unfavorable foreign exchange rate variations.

Operating expenses decreased by $29.6 million, or 20.4%, to $115.4 million for the three-month period ended January 31, 2015, compared with $145.0 million for the three-month period ended January 31, 2014. This decrease was primarily driven by foreign exchange rate changes mainly on foreign-denominated working capital elements as on those elements the Company recorded a foreign exchange gain of $12 million during this quarter compared to a foreign exchange loss of $10 million during the same period last year. To a lower extent, the decrease of operating expenses is also attributable to lower advertising expenses.

Normalized net income reached $116.5 million, an increase of $68.2 million, which resulted in normalized diluted earnings per share of $0.98, an increase of $0.57 per share. The increase was primarily due to increased gross profit from higher volume of Year-Round Products sold and to lower operating expenses.

Fiscal Year 2016 Guidance

The table below sets forth BRP’s financial guidance for Fiscal Year 2016 when compared to actual results for Fiscal Year 2015. The individual targets are based on certain assumptions for currency exchange rates and exclude the effects of future fluctuations.

The above targets are based on a number of economic and market assumptions the Company has made in preparing its Fiscal Year 2016 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 cautions that the assumptions used to prepare the forecasts for Fiscal Year 2016, although reasonable at the time they were made, may prove to be incorrect or inaccurate. In addition, the above forecasts do not reflect the potential impact of any non-recurring or other special items or of any new material commercial agreements, dispositions, mergers, acquisitions, other business combinations or other transactions that may be announced or that may occur after March 26, 2015. The financial impact of such transactions and non-recurring and other special items can be complex and depends on the facts particular to each of them. We therefore cannot describe the expected impact in a meaningful way or in the same way we present known risks affecting our business. Accordingly, our actual results could differ materially from our expectations as set forth in this news release. 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.