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BRP revenues, gross profit rise in 2016 fiscal Q2

News release

BRP reported its fiscal year 2016 second quarter results today.

Highlights:

  • Revenues of $812.1 million, a 4.1% increase compared to the second quarter of FY2015;
  • Normalized EBITDA [1] of $53.1, a 69.6% increase compared to the same period last year;
  • Gross profit of $169.4 million representing 20.9% of revenues, an increase of $26.5 million compared to the same period last year;
  • Normalized net income[1] of $4.0 million resulting in a normalized diluted earnings per share[1] of $0.03; and
  • FY16 financial guidance adjusted upward due to lower assumed depreciation expenses.

Valcourt, Québec, September 11, 2015 — BRP Inc. (TSX:DOO) today reported its financial results for the three- and six-month periods ended July 31, 2015. All financial information is in Canadian dollars unless otherwise noted. The complete financial results are available at www.sedar.com.

“Two years after the introduction of the Sea-Doo Spark, we can now affirm that we have achieved our goal of rejuvenating the personal watercraft industry, knowing that it has grown globally by more than 25%, having a positive impact on sales of traditional personal watercraft. We also had an excellent first season with our Can-Am Outlander L ATV family, which contributed to good market share gains in the mid-cc ATV segment,” said José Boisjoli, president and CEO. “These successes are the results of the teams’ excellent execution and hitting the market on time.”

[1] Please see definitions of Normalized EBITDA, Normalized net income and Normalized diluted earnings per share below the Net income data table.

Commenting on the outlook for the second half of Fiscal Year 2016, Boisjoli added: “I am happy with the momentum our products are gaining globally. I remain confident that despite softer markets in Russia, Latin America and lately Canada, we are well positioned with our products’ portfolio to deliver strong results in the second half.”

Highlights for the Three- and Six-Month Periods Ended July 31, 2015

Revenues increased by $32.1 million, or 4.1%, to $812.1 million for the three-month period ended July 31, 2015, compared with $780.0 million for the corresponding period ended July 31, 2014. The revenue increase was mainly due to a favourable foreign exchange rate variation of $45 million mostly related to the strengthening of the U.S. dollar against the Canadian dollar. The increase was partially offset by lower wholesale in Year-Round Products and Seasonal Products.

Revenues increased by $171.6 million, or 11.2%, to $1,710.2 million for the six-month period ended July 31, 2015, compared with $1,538.6 million for the corresponding period ended July 31, 2014. The revenue increase was mainly due to higher wholesale in Seasonal Products. The increase includes a favourable foreign exchange rate variation of $81 million mainly due to the strengthening of the U.S. dollar against the Canadian dollar, partially offset by the strengthening of the Canadian dollar against the euro.

[1] For a reconciliation of Net income (loss) to Normalized net income (loss) and Normalized EBITDA, see the Reconciliation Tables in the MD&A.

Normalized EBITDA and Normalized Net Income (loss) are non-IFRS measures that the Company uses to assess its operating performance. Normalized EBITDA is defined as net income (loss) before financing costs, financing income, income taxes expense (recovery), depreciation expense and normalized elements. Normalized Net Income (loss) is defined as net income (loss) before normalized elements adjusted to reflect the tax effect on these elements. See “Non-IFRS Measures” section included in the MD&A.

[2] Normalized earnings (loss) per share - basic and normalized earnings (loss) per share – diluted are calculated respectively by dividing the normalized net income (loss) by the weighted average number of shares – basic and the weighted average number of shares – diluted.

QUARTERLY REVIEW BY CATEGORIES

Year-Round Products

Revenues from Year-Round Products increased by $1.0 million, or 0.3%, to $298.4 million for the three-month period ended July 31, 2015, compared with $297.4 million for the corresponding period ended July 31, 2014. The increase resulted primarily from a favourable foreign exchange rate variation of $16 million, mostly offset by lower wholesale and an unfavourable product mix in ATVs and roadsters.

Seasonal Products

Revenues from Seasonal Products increased by $3.6 million, or 1.4%, to $263.4 million for the three-month period ended July 31, 2015, compared with $259.8 million for the corresponding period ended July 31, 2014. The increase resulted primarily from earlier shipments of snowmobiles and a favourable foreign exchange rate variation of $15 million. The increase was partially offset by lower volumes of PWC sold due to earlier deliveries made in the first quarter compared to last year, following the completion of the production ramp-up at the Querétaro, Mexico facility.

Propulsion Systems

Revenues from Propulsion Systems increased by $11.0 million, or 13.0%, to $95.4 million for the three-month period ended July 31, 2015, compared with $84.4 million for the corresponding period ended July 31, 2014. The increase in revenues was mainly attributable to a favourable mix of outboard engines sold due to the E-TEC G2 introduction and to lower sales programs. The increase in revenues also includes a favourable foreign exchange rate variation of $3 million.

PAC (Parts, Accessories, Clothing and other services)

Revenues from PAC increased by $16.5 million, or 11.9%, to $154.9 million for the three-month period ended July 31, 2015, compared with $138.4 million for the corresponding period ended July 31, 2014. The increase was mainly attributable to a favourable foreign exchange rate variation of $11 million.

Gross profit increased by $26.5 million, or 18.5%, to $169.4 million for the three-month period ended July 31, 2015, compared with $142.9 million for the corresponding period ended July 31, 2014. The gross profit increase includes a favourable foreign exchange rate variation of $9 million. Gross profit margin percentage increased by 260 basis points to 20.9% from 18.3% for the three-month period ended July 31, 2014. The increase in gross profit margin percentage was primarily due to lower sales programs in SSVs and outboard engines and lower production costs, partially offset by an unfavourable mix of roadsters and ATVs sold.

Operating expenses increased by $7.8 million, or 5.6%, to $147.1 million for the three-month period ended July 31, 2015, compared with $139.3 million for the three-month period ended July 31, 2014. This increase was mainly due to an unfavourable foreign exchange impact of $10 million.

Normalized net income reached $4.0 million, an increase of $12.8 million, which resulted in normalized diluted earnings per share of $0.03, an increase of $0.10 per share. The increase was primarily due to higher operating income, partially offset by higher income taxes expense.

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