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BRP releases Q1 results

BRP reported its financial results for the three-month period ended April 30, 2017. Revenues increased by $26.3 million, or 2.8%, to $956.2 million, in comparison with $929.9 million for the corresponding period ended April 30, 2016.

"I am very pleased with BRP's performance in the start of this new fiscal year, with excellent first quarter revenues and profitability. Our side-by-side business continues on its positive trend with great demand for the Can-Am Defender and Maverick X3 vehicles (SSV)," said José Boisjoli, president and CEO. "Even though the Sea-Doo season is only just starting, we can see a good momentum in the watercraft business. Our Parts, Accessories and Clothing business has also performed very well this quarter, due to good end-of-season snowmobile parts sales and to strong interest in our new SSV accessories."

"I consider that we are in an excellent position to reach our strategic objectives as the entire team remains aligned towards their realisation. We are introducing today our new Can-Am off-road line-up with several innovations, and I am sure it will be well received by the market," said Boisjoli. "What's more, snowmobile spring orders from dealers were higher than planned. All this, combined with the excellent results from the first quarter, have led us to increase our guidance."

In closing, Boisjoli added: "The Board of Directors approved yesterday the declaration of a quarterly dividend and the launch of a substantial issuer bid. These decisions reflect our solid financial position, strong ongoing cashflow generation ability and confidence in BRP's fundamental value. We are proud to be in a position to return capital to all shareholders while maintaining our ability to pursue our growth opportunities." 

Highlights for the Three-Month Period Ended April 30, 2017

Revenues increased in FY2018 Q1. The revenue increase was primarily attributable to higher wholesale of Seasonal Products and PAC. The increase includes an unfavorable foreign exchange rate variation of $1 million.

Gross profit increased by $13.1 million, or 6.7%, to $207.2 million for the three-month period ended April 30, 2017, compared with $194.1 million for the corresponding period ended April 30, 2016. The gross profit increase includes a favorable foreign exchange rate variation of $9 million. Gross profit margin percentage increased by 80 basis points to 21.7% from 20.9% for the three-month period ended April 30, 2016. The increase in gross profit margin percentage was primarily due to a favorable product mix in SSV and a favorable foreign exchange rate variation, partially offset by a lower volume of Spyder vehicles and higher production costs.

QUARTERLY REVIEW BY CATEGORIES

Year-Round Products

Revenues from Year-Round Products decreased by $9.8 million, or 2.4%, to $390.4 million for the three-month period ended April 30, 2017, compared with $400.2 million for the corresponding period ended April 30, 2016. The decrease was primarily attributable to a lower wholesale in Spyder vehicles, partially offset by a higher wholesale and a favourable product mix in SSV due to the introduction of the Can-Am Maverick X3.

Seasonal Products

Revenues from Seasonal Products increased by $19.7 million, or 6.9%, to $306.5 million for the three-month period ended April 30, 2017, compared with $286.8 million for the corresponding period ended April 30, 2016. The increase resulted primarily from a higher volume and a favourable mix of PWC sold.

Propulsion Systems

Revenues from Propulsion Systems decreased by $5.5 million, or 5.0%, to $105.6 million for the three-month period ended April 30, 2017, compared with $111.1 million for the corresponding period ended April 30, 2016. The decrease in revenues was primarily attributable to a lower volume of aircraft engines sold.

PAC (Parts, Accessories, Clothing and other services)

Revenues from PAC increased by $21.9 million, or 16.6%, to $153.7 million for the three-month period ended April 30, 2017, compared with $131.8 million for the corresponding period ended April 30, 2016. The increase was mainly attributable to a higher volume of SSV PAC sold following the introduction of the Can-Am Maverick X3 and to a higher volume of snowmobile PAC sold.

Operating expenses decreased by $20.9 million, or 11.1%, to $166.7 million for the three-month period ended April 30, 2017, compared with $187.6 million for the three-month period ended April 30, 2016. This decrease was mainly attributable to the specific expense recorded last year following the unfavourable litigation decision described below and a favourable foreign exchange rate variation of $5 million.

The Company is involved in multiple lawsuits with one of its competitors whereby each party is claiming damages for the alleged infringement of some of its patents. On June 1, 2016, a verdict was rendered in one of those lawsuits against the Company for an amount of U.S. $15.5 million ($19.5 million) in compensatory damages, which was recorded during the three-month period ended April 30, 2016. On June 13, 2016, the trial judge formalized the verdict rendered on June 1, 2016 and awarded additional damages in favor of the plaintiff. Subsequently, the trial judge also established a royalty payable upon the sale of any future contravening vehicles. As a result, for the three-month period ended April 30, 2017, the Company recorded an expense of $4.8 million. Management believes that the verdict and subsequent decisions are unfounded and unsupported by either law or evidence and filed an appeal on August 23, 2016.

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