BRP Q4 results conclude ‘record year’ for FY2020

BRP has reported its financial results for the three- and twelve-month periods ended January 31, 2020. All financial information is in Canadian dollars unless otherwise noted.

“We concluded another record year in FY20. Our 15% increase in retail sales in a flattish North American industry, proves our strong position in the market and allowed us to deliver our Challenge 2020 five-year plan one year in advance by exceeding our $6 billion revenue and $3.50 EPS targets,” confirmed José Boisjoli, President and CEO of BRP.

“During this time, our thoughts are with all those who have been affected by the COVID-19 virus and we are putting in place different measures to ensure the health and safety of our employees across the world. In this current global uncertainty, we are proactively implementing measures to protect our financial flexibility and are monitoring closely the situation to assess its potential impact on our business. In this context, we will not issue a full-year guidance for FY21 at this time. Our diversified manufacturing footprint, product portfolio, market presence and our experienced Management Team provide us with a solid base to navigate through this period of uncertainty while preserving our industry leadership position.”

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Highlights for the Three- and Twelve-Month Periods Ended January 31, 2020

Revenues increased by $110.0 million, or 7.3%, to $1,615.9 million for the three-month period ended January 31, 2020, compared with $1,505.9 million for the corresponding period ended January 31, 2019. The revenue increase was mainly due to higher wholesale of Year-Round Products, partially offset by an unfavourable foreign exchange rate variation of $27 million.

The Company’s North American retail sales for powersports vehicles and outboard engines increased by 12% for the three-month period ended January 31, 2020 compared with the three-month period ended January 31, 2019. The increase was driven by Year-Round Products and snowmobile.

Gross profit increased by $48.8 million, or 14.6%, to $383.7 million for the three-month period ended January 31, 2020, compared with $334.9 million for the corresponding period ended January 31, 2019. The gross profit increase includes an unfavourable foreign exchange rate variation of $26 million. Gross profit margin percentage increased by 150 basis points to 23.7% from 22.2% for the three-month period ended January 31, 2019. The increase of 150 basis points was primarily due to favourable pricing and sales programs variation, lower warranty costs and a higher volume of products sold, partially offset by an unfavourable foreign exchange rate variation.

Operating expenses decreased by $22.1 million, or 10.6%, to $186.3 million for the three-month period ended January 31, 2020, compared with $208.4 million for the three-month period ended January 31, 2019. This decrease was mainly attributable to the reversal of expenses related a favourable litigation decision, partially offset by higher general and administrative expenses for continued product investments.

Revenues increased by $808.9 million, or 15.4%, to $6,052.7 million for the twelve-month period ended January 31, 2020, compared with $5,243.8 million for the corresponding period ended January 31, 2019. The revenue increase was primarily attributable to higher wholesale of Year-Round Products.

The Company’s North American retail sales for powersports vehicles and outboard engines increased by 12% for the twelve-month period ended January 31, 2020 compared with the twelve-month period ended January 31, 2019, mainly due to an increase in Year-Round Products.

Gross profit increased by $200.6 million, or 16.0%, to $1,454.0 million for the twelve-month period ended January 31, 2020, compared with $1,253.4 million for the corresponding period ended January 31, 2019. Gross profit margin percentage increased by 10 basis points to 24.0% from 23.9% for the twelve-month period ended January 31, 2019. The increase was primarily due to higher volume of Year-Round Products sold and favourable pricing and sales programs variation, partially offset by higher commodity, production and distribution costs.

Operating expenses increased by $68.9 million, or 8.8%, to $849.7 million for the twelve-month period ended January 31, 2020, compared with $780.8 million for the twelve-month period ended January 31, 2019. The increase was mainly attributable to expenses incurred in connection with the launch of various products, continued product investments, costs related to the modernization of information systems and additional operating expenses resulting from acquisition of boat companies in the Marine segment, partially offset by the reversal of expenses related to the favourable litigation decision.

QUARTERLY REVIEW BY SEGMENT

Powersports

Year-Round Products

Revenues from Year-Round Products increased by $107.5 million, or 18.0%, to $705.1 million for the three-month period ended January 31, 2020, compared with $597.6 million for the corresponding period ended January 31, 2019. The increase resulted mainly from a higher volume of SSV sold, partially offset by an unfavourable foreign exchange rate variation of $11 million.

North American Year-Round Products retail sales increased on a percentage basis in the low-twenties range compared with the three-month period ended January 31, 2019.

Seasonal Products

Revenues from Seasonal Products decreased by $34.9 million, or 6.0%, to $542.7 million for the three-month period ended January 31, 2020, compared with $577.6 million for the corresponding period ended January 31, 2019. The decrease was driven by a lower volume of PWC sold and an unfavourable foreign exchange rate variation of $10 million, partially offset by a favourable product mix and price increase in snowmobile and PWC.

North American Seasonal Products retail sales increased on a percentage basis by high-single digits compared with the three-month period ended January 31, 2019.

Powersports PA&A and OEM Engines

Revenues from Powersports PA&A and OEM Engines increased by $11.4 million, or 5.6%, to $215.6 million for the three-month period ended January 31, 2020, compared with $204.2 million for the corresponding period ended January 31, 2019. The increase was mainly attributable to a higher volume of Year-Round Products parts and accessories.

Marine

Revenues from the Marine segment increased by $23.8 million, or 17.8%, to $157.4 million for the three-month period ended January 31, 2020, compared with $133.6 million for the corresponding period ended January 31, 2019. The increase was mainly due to the additional revenues following the acquisition of Telwater and a higher volume of outboard engines sold.

North American outboard engine retail sales decreased on a percentage basis by low-single digits compared with the three-month period ended January 31, 2019.

Net Cash Flows Used in Financing Activities

Net cash flows used in financing activities totalled $177.7 million for the twelve-month period ended January 31, 2020 compared with $213.2 million for the twelve-month period ended January 31, 2019. The $35.5 million decrease in net cash flows used was mainly attributable to the new U.S. $335.0 million tranche of the Term Facility, partially offset by a higher amount invested to repurchase shares and stock options, the repayment of lease liabilities due to IFRS 16 – Leases adoption and a higher interest paid.

As of March 18, 2020, BRP drew on its revolving credit facility to reach the amount of $700 million as a precautionary measure to increase liquidity and preserve financial flexibility in light of the COVID-19 situation.

SUSPENSION OF DIVIDEND

As part of BRP’s measures to preserve its financial flexibility, the Board of Directors has decided to suspend the Company’s quarterly cash dividend until further notice.