BRP announces fiscal 2016 results

News release

BRP Inc. (TSX:DOO) today reported its financial results for the three- and twelve-month periods ended January 31, 2016. All financial information is in Canadian dollars unless otherwise noted. The complete financial results are available at www.sedar.com.

“Despite intense competition and a softer economy in certain key markets, the BRP team has really come together and delivered on our plan. This has been a year marked by solid product introductions, flawless execution on all our programs and gains across our product lines. I would highlight in particular the introduction of all our new products, the completion of our second state-of-the-art manufacturing facility in Juárez, Mexico, and the addition of 105 new powersports dealers to our North American network,” said José Boisjoli, president and CEO. “We feel the momentum across all our product lines, particularly with Can-Am vehicles where we’ve committed to deliver a new side-by-side model every six months for the next four years. I’m also very proud of the recently launched Ski-Doo platform that will maintain our leadership position.”

In closing, Boisjoli added: “Our continued focus on innovation, which consistently drives market share gains, as well as our geographic and product diversification and global manufacturing footprint, continue to provide us with the levers required to deliver growth. In addition, given our team’s determination and the breadth of products to be announced over the coming year, across our six product lines, I am confident that we will reach our financial targets for Fiscal Year 2017.”

Highlights for the Three- and Twelve-Month Periods Ended January 31, 2016

Revenues increased by $40.7 million, or 3.8%, to $1,108.8 million for the three-month period ended January 31, 2016, compared with $1,068.1 million for the corresponding period ended January 31, 2015. The revenue increase was mainly due to a favorable foreign exchange rate variation of $98 million related largely to the strengthening of the U.S. dollar against the Canadian dollar and to higher wholesale in Year-Round Products. The increase was partially offset by lower wholesale in Seasonal Products.

Gross profit decreased by $3.8 million, or 1.3%, to $285.9 million for the three-month period ended January 31, 2016, compared with $289.7 million for the corresponding period ended January 31, 2015. The gross profit decrease is mainly due to lower wholesale and additional sales program costs in snowmobiles, partially offset by a favorable foreign exchange rate variation of $13 million. Gross profit margin percentage decreased by 130 basis points to 25.8% from 27.1% for the three-month period ended January 31, 2015. The decrease in gross profit margin percentage was primarily due to higher sales programs in snowmobiles, to an unfavorable channel mix in outboard engines and to an unfavorable foreign exchange variation, partially offset by general price increases.

Revenues increased by $304.5 million, or 8.6%, to $3,829.2 million for the twelve-month period ended January 31, 2016, compared with $3,524.7 million for the corresponding period ended January 31, 2015. The revenue increase was attributable to a favorable foreign exchange rate variation of $254 million mainly due to the strengthening of the U.S. dollar against the Canadian dollar and to a higher wholesale in Year-Round Products and PAC.

Gross profit increased by $68.6 million, or 8.1%, to $914.2 million for the twelve-month period ended January 31, 2016, compared with $845.6 million for the corresponding period ended January 31, 2015. The gross profit increase includes a favorable foreign exchange rate variation of $23 million. Gross profit margin percentage remained stable at 23.9% for the twelve-month period ended January 31, 2016 compared with 24.0% for the twelve-month period ended January 31, 2015. Higher sales program costs in Seasonal Products and unfavorable foreign exchange rate impact were offset by lower production costs and general price increases.

QUARTERLY REVIEW BY CATEGORIES 

Year-Round Products

Revenues from Year-Round Products increased by $66.6 million, or 16.0%, to $482.6 million for the three-month period ended January 31, 2016, compared with $416.0 million for the corresponding period ended January 31, 2015. The increase resulted from a favourable foreign exchange rate variation of $51 million, from a higher volume of SSV sold following the introduction of the Defender and from general price increases. The increase was partially offset by an unfavourable product mix of SSV sold.

Seasonal Products

Revenues from Seasonal Products decreased by $34.9 million, or 8.9%, to $356.7 million for the three-month period ended January 31, 2016, compared with $391.6 million for the corresponding period ended January 31, 2015. The decrease resulted primarily from a lower volume of snowmobiles sold mainly attributable to earlier shipments during the year and additional sales program costs due to a lack of snowfall in North America and an economic slowdown experienced in Western Canada. The decrease was partially offset by a favourable mix in PWC and a favourable foreign exchange rate variation of $24 million.

Propulsion Systems

Revenues from Propulsion Systems decreased by $9.7 million, or 8.9%, to $99.0 million for the three-month period ended January 31, 2016, compared with $108.7 million for the corresponding period ended January 31, 2015. The decrease in revenues was mainly attributable to a lower volume and an unfavourable mix of outboard engines sold. The decrease was partially offset by a favourable foreign exchange rate variation of $9 million.

PAC (Parts, Accessories, Clothing and other services)

Revenues from PAC increased by $18.7 million, or 12.3%, to $170.5 million for the three-month period ended January 31, 2016, compared with $151.8 million for the corresponding period ended January 31, 2015. The increase was mainly attributable to a favorable foreign exchange rate variation of $14 million and to a higher volume of SSV and roadsters PAC sold resulting from new product introductions. The increase was partially offset by a lower volume of snowmobile PAC sold resulting from a lack of snowfall in North America and an economic slowdown experienced in Western Canada.

Operating expenses increased by $95.2 million, or 82.5%, to $210.6 million for the three-month period ended January 31, 2016, compared with $115.4 million for the three-month period ended January 31, 2015. This increase was mainly due to a non-cash impairment charge of $70.3 million ($45.1 million net of income taxes) related to outboard engine assets and to an unfavorable foreign exchange impact of $17 million. The impairment was triggered by the strengthening of the U.S. dollar against almost all currencies which has negatively impacted the profitability of outboard engine products sold outside of the United States, and by lower overall performance than expected.

Normalized net income[1] stood at $86.8 million, a decrease of $29.7 million, which resulted in a normalized diluted earnings per share[1] of $0.75, a decrease of $0.23 per share. The decrease was primarily due to lower wholesale in snowmobiles and higher operating expenses.