Recent dealer checks by BMO Capital Markets analyst Gerrick Johnson have found that while poor spring weather has hindered powersports sales, BRP’s business “has been strong enough to overcome these pressures, and anticipate solid 1Q results when the company reports earnings next week.”
BMO, which also serves as PSB’s partner on our quarterly dealer surveys, reports that a common theme “across all of our dealer checks is that BRP’s unit sales are outpacing the overall market in just about every category the company participates in, with particularly positive comments on Can-Am off-road vehicles, Sea-Doo personal watercraft and Ski-Doo snowmobiles.
“With 1Q reporting less than a week away (June 1), we are confident in our estimates of $0.04 in EPS and $965 million in sales for BRP. We note that we are below the Street, which is currently estimating $0.09 per share and $976 million in sales. Our sales and earnings estimates are lower in the quarter because our earnings model is more backend loaded (for the full year our EPS estimate is ahead of the Street at $2.30 vs. $2.22).
“But business appears to be strong enough to perhaps exceed our estimates and meet the current Street consensus. In off-road, we continue to believe Can-Am side-by-sides — the Maverick X3 high performance SSV and the Defender utility SSV — continue to sell well and expand market share. These new products appear to be helping the company increase the number of dealer points as well as the range of products carried by each dealer.
“We are also getting very good feedback on Sea-Doo personal watercraft, with good sales across the entire line. Dealers highlight the Spark and Trixx as standout performers. The PWC market is also the one that dealers appear to have the most optimism.
“BRP even appears to have avoided the snowmobile weakness impacting other brands, with positive response embodied in solid spring pre-orders for MY2018 that appear to be significantly outperforming peers.
“Spyder roadster retail sales have also seen a recent lift, outperforming the overall motorcycle industry. But we think this performance has more to do with generous rebate offers than anything else.”
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