BRP Q3 results show increased revenue for first three quarters
BRP Inc. has reported its financial results for the three- and nine-month periods ended October 31, 2019. All financial information is in Canadian dollars unless otherwise noted. The complete financial results are available at Sedar, as well as in the Quarterly Reports section of BRP’s website.
“We delivered once again a solid financial performance and our best third quarter ever. Our industry is performing well globally, and we continue to outpace it with double digit growth. As we look ahead, our strong third quarter results allow us to raise the lower end of the guidance for our full year normalized EPS range with expected growth of 19% to 23%,” stated José Boisjoli, president and CEO. “Due to the strength of our strategy and the seamless execution by our people, we are on track to deliver industry-leading results for FY20. Our efforts are paying off and we don’t intend to ease up.”
Highlights for the Three- and Nine-Month Periods Ended October 31, 2019
Revenues increased by $249.4 million, or 17.9%, to $1,643.6 million for the three-month period ended October 31, 2019, compared with $1,394.2 million for the corresponding period ended October 31, 2018. The revenue increase was mainly due to higher wholesale of Year-Round Products and Seasonal Products.
The Company’s North American retail sales for powersports vehicles and outboard engines increased by 21% for the three-month period ended October 31, 2019 compared with the three-month period ended October 31, 2018. The increase was driven by higher wholesale of Year-Round Products and snowmobile.
Gross profit increased by $85.1 million, or 23.9%, to $441.9 million for the three-month period ended October 31, 2019, compared with $356.8 million for the corresponding period ended October 31, 2018. The gross profit increase includes an unfavourable foreign exchange rate variation of $4 million. Gross profit margin percentage increased by 130 basis points to 26.9% from 25.6% for the three-month period ended October 31, 2018. The increase of 130 basis points was primarily due to a higher volume of Year-Round Products and PWC sold and from a favourable mix in snowmobile and SSV. The increase was partially offset by higher sales program costs and by higher commodity and production costs.
Operating expenses increased by $34.2 million, or 17.1%, to $233.9 million for the three-month period ended October 31, 2019, compared with $199.7 million for the three-month period ended October 31, 2018. This increase was mainly attributable to continued product investments.
Revenues increased by $698.9 million, or 18.7%, to $4,436.8 million for the nine-month period ended October 31, 2019, compared with $3,737.9 million for the corresponding period ended October 31, 2018. The revenue increase was primarily attributable to higher wholesale of Year-Round Products and a favourable foreign exchange rate variation of $22 million.
The Company’s North American retail sales for powersports vehicles and outboard engines increased by 13% for the nine-month period ended October 31, 2019 compared with the nine-month period ended October 31, 2018, mainly due to an increase in Year-Round Products, partially offset by lower retail of outboard engines.
Gross profit increased by $151.8 million, or 16.5%, to $1,070.3 million for the nine-month period ended October 31, 2019, compared with $918.5 million for the corresponding period ended October 31, 2018. Gross profit margin percentage decreased by 50 basis points to 24.1% from 24.6% for the nine-month period ended October 31, 2018. The decrease was primarily due to higher commodity, production and distribution costs and higher sales program costs, partially offset by higher volume of Year-Round Products sold and a favourable product mix of Seasonal Products.
Operating expenses increased by $91.0 million, or 15.9%, to $663.4 million for the nine-month period ended October 31, 2019, compared with $572.4 million for the nine-month period ended October 31, 2018. The increase was mainly attributable to higher expenses to support for the launch of various products such as the Can-Am Ryker, continued product investments, costs related to the modernization of information systems and additional operating expenses resulting from acquisition of companies in the Marine segment, partially offset by lower variable employee compensation expenses.
QUARTERLY REVIEW BY SEGMENT
Powersports
Year-Round Products
Revenues from Year-Round Products increased by $162.6 million, or 28.9%, to $725.0 million for the three-month period ended October 31, 2019, compared with $562.4 million for the corresponding period ended October 31, 2018. The increase resulted mainly from a higher volume of SSV sold and the introduction of the Can-Am Ryker.
North American Year-Round Products retail sales increased on a percentage basis in the high-twenties range compared with the three-month period ended October 31, 2018.
Seasonal Products
Revenues from Seasonal Products increased by $63.9 million, or 13.0%, to $554.8 million for the three-month period ended October 31, 2019, compared with $490.9 million for the corresponding period ended October 31, 2018. The increase was driven by a favourable product mix in snowmobile and a higher volume of PWC and snowmobile sold.
North American Seasonal Products retail sales increased on a percentage basis in the high-teens range compared with the three-month period ended October 31, 2018.
Powersports PAC and OEM Engines[1]
Revenues from Powersports PAC and OEM Engines increased by $24.4 million, or 12.1%, to $226.6 million for the three-month period ended October 31, 2019, compared with $202.2 million for the corresponding period ended October 31, 2018. The increase was mainly attributable to a higher volume of SSV parts and accessories.
Marine[1]
Revenues from the Marine segment decreased by $3.4 million, or 2.3%, to $142.4 million for the three-month period ended October 31, 2019, compared with $145.8 million for the corresponding period ended October 31, 2018. The decrease was mainly due to a lower volume of outboard engines sold, mostly offset by the additional revenues following the acquisition of Telwater.
North American outboard engine retail sales decreased on a percentage basis in the low-teens range compared with the three-month period ended October 31, 2018.
[1] Includes inter-segment transactions
DECLARATION OF DIVIDEND
The Board of Directors approved a quarterly dividend of $0.10 per share for holders of its multiple voting shares and subordinate voting shares. The dividend will be paid on January 10, 2020 to shareholders of record at the close of business on December 27, 2019. The payment of each quarterly dividend remains subject to the declaration of that dividend by the Board of Directors.
The actual amount, the declaration date, the record date and the payment date of each quarterly dividend are subject to the discretion of the Board of Directors.
