BMO Capital Markets analyst Gerrick Johnson has provided Powersports Business readers with BMO’s expectations for BRP's 2Q22 earnings, which will be reported on Thursday.
“We expect BRP (DOO) to report 2Q22 EPS of $1.86, up from $1.14 in 2Q21, and ahead of Street consensus of $1.38. We think retail demand has remained strong, market share losses in off-road vehicles have subsided, and customer reception to new products (such as the Sea-Doo Switch) has been enthusiastic. As a whole, our Leisure coverage has easily surpassed expectations, though the stocks have been weak owing to investor skepticism around long-term sustainability of demand, and short-term supply chain bottlenecks and rising input costs.
“We expect DOO's FY2Q22 revenue to increase +50% to $1.85 billion, above the Street consensus of $1.73 billion (+41%). We expect normalized 2Q22 EBITDA of $305 million, +42% y/y. The Street consensus is $247 million (+15%).
“We expect North American powersports retail to be down about -35% y/y in the quarter (+10% vs. 2Q20) given low dealer inventory levels, supply chain constraints, and difficult comparisons (+40% in 2Q21).
- Year-Round Products: $900 million (+45%) with SSV +30% to $450 million, ATV +45% to $275 million, and Roadster +106% to $175 million. The Street is also expecting $900 million.
- Seasonal Products: $550 million (+70%), above the Street at $502 million (+56%). We model PWC +85% to $450 million and snowmobile +25% to $100 million.
- Powersports Parts, Accessories, Clothing & OEM Engines: $275 million (+32%), above the Street at $248 million (+19%).
- Marine Engine, Boats, and PAC: $125 million (+56%) vs. the Street at $115 million (+43%). We forecast a +178% jump in boats and +40% growth in Marine PAC.
“We expect gross margin to expand +640 bps y/y to 26.5% from 20.1% owing to the higher production levels, overhead absorption, and lower promotions and rebates offsetting rising input, labor, and logistics costs. The Street consensus is for +500 basis points to 25.1%.
“DOO's FY2022 guidance is for revenue of $7.62-7.92 billion (+28% to +33%), EPS of $7.75-8.50 (+44% to +58%), and normalized EBITDA of $1.27-1.35 billion (+27% to +35%). We currently expect revenue of $8.0 billion (+34%), EPS of $9.00 (+68%), and normalized EBITDA of $1.46 billion (+46%), while the Street is expecting revenue of $7.8 billion (+31%), EPS of $8.33 (+55%), and normalized EBITDA of $1.32 billion (+33%).”