BRP reports first quarter results for FY24

BRP Inc. reported its financial results on June 1 for its first quarter of fiscal year ’24 (FY24) which ended April 30, 2023, with record revenues and solid retail sales growth in North America. The company also reaffirmed its guidance for FY24 of 9% to 12% growth over FY23. (Editor’s note: Financial information is in Canadian dollars unless otherwise noted.)

“Fiscal 2024 is off to a good start for BRP. We delivered a solid first-quarter performance with record revenue for that period… Once again, we outpaced the North American Powersports industry thanks to sustained consumer demand for our strong and well-diversified product portfolio,” says José Boisjoli, president and CEO of BRP.

“Driven by a regular flow of new product introductions, and with many others in their early stage of growth, the future is very promising for BRP. Over the short term, our focus is on executing and optimizing efficiencies, and we remain on pace to deliver on our financial guidance for this year,” Boisjoli concludes.

First Quarter Results

Strong deliveries, aided by improvements in the supply chain and inflationary environment, allowed the Company to deliver a solid first quarter, outperforming the results of the first quarter of Fiscal 2023. The demand for our products continued to be healthy, as evidenced by the increase of 3% in the company’s North American retail sales for powersports products during the first quarter of fiscal 2024 compared to the same period last year.

The increase in revenues for the three-month period ended April 30, 2023, is mainly explained by high deliveries of units for the upcoming retail season. During that period, we experienced strong PWC, Sea-Doo pontoon, and SSV retail sales. The supply chain has gradually returned to a more stable level, resulting in production efficiencies and an increase in gross profit margin compared to the same period last year.

Revenues

Revenues increased by $620.1 million ($461 million USD), or 34.3%, to $2,429.4 million ($1.8 billion USD) for the three-month period, compared to $1,809.3 million for the corresponding period of 2022. The increase in revenue was primarily due to a higher wholesale volume of SxS (SSV), PWC, and three-wheelers (3WV) as well as a favorable product mix and favorable pricing across all product lines, partially offset by higher sales programs. The increase includes a favorable foreign exchange rate variation of $94.8 million.

North American retail sales

BRP’s North American retail sales for powersports products increased by 3% for the three-month period of 23 (Q1-24), compared to the three-month period of 2022 (Q1-23). The increase was mainly driven by an increase in PWC and SSV sales.

Year-Round Products retail sales decreased on a percentage basis in the low-single digits compared to the first three months of 2022.

Seasonal Products retail sales increased on a percentage basis in the mid-single digits compared to Q1-23, when excluding pontoons.

Marine Products retail sales decreased by 39% compared to the three-month period of ’22 as a result of lower product availability.

Gross profit

Gross profit in Q1-24 increased by $169.1 million, or 37.2%, to $623.5 million for the three-month period ended April 30, 2023, compared to $454.4 million for Q1-23. Gross profit margin percentage increased by 60 basis points to 25.7% from 25.1% for Q1-23. The increase in gross profit was the result of a favorable volume of SSV, 3WV, and PWC sold along with favorable pricing, a decrease in logistics costs due to more efficiencies in the supply chain, and favorable product mix across product lines.

The increase was partially offset by higher materials and labor costs due to inflation, as well as higher sales programs. The increase in gross profit margin percentage was the result of favorable product mix of PWC and 3WV, favorable pricing across all product lines, and higher production efficiency coming from an improved supply chain, partially offset by higher sales programs.

Operating expenses

Operating expenses increased in Q1-24 by $86.8 million, or 34.1%, to $341.6 million, compared to $254.8 million for Q1-23. The increase in operating expenses was mainly attributable to an increase in R&D expenses to support future growth, higher G&A expenses mainly related to the modernization of the company’s software infrastructure, and higher selling and marketing expenses mainly attributable to continued product investments. The increase in operating expenses includes an unfavorable foreign exchange rate variation of $14 million.

Net Income

Net income increased in Q1-24 by $33.5 million, or 27.7%, to $154.5 million, compared to the $121.0 million for Q1-23. The increase was primarily due to a higher operating income and lower income tax expense, partially offset by an increase in financing costs and an unfavorable impact of the foreign exchange rate variation on the U.S.-denominated long-term debt.