With the manufacturer reporting its fiscal fourth quarter 2022 results on Friday, BMO Capital Markets analyst Gerrick Johnson has provided Powersports Business with a research note related to BRP’s expected results.
“We expect BRP (DOO) to report FY4Q22 normalized EPS of $2.36, up +30% from $1.82 in FY4Q21. Our estimate is below the Street estimate of $2.54 (+40%). Implied FY4Q22 guidance is for EPS of $2.09-2.84 (+15% to +56%). DOO had previously commented that FY2023 would post double-digit revenue and EPS growth off the midpoint of its 2022 guidance range. With growing macro-economic uncertainty, we think investors have viewed this prior guidance skeptically. We expect investors to be positively surprised when the company reiterates this guidance.
“We expect FY4Q22 sales to grow +25% to $2.27 billion, just below consensus of $2.3 billion (+27%). Implied FY4Q22 guidance is for revenue of $2.14-2.44 billion (+18% to +34%).
“We expect FY4Q22 North American powersports retail sales to decline about -15% y/y. We think retail demand has remained solid, albeit slower than 4Q21 owing to a severe lack of dealer inventory. We note in our 4Q21 BMO/Powersports Dealer Survey open-ended responses indicate dealer confidence in demand for outdoor recreational products, but also increasing concern about the economy, inflation, and discretionary incomes.
“We expect 4Q revenue to increase +25% in Year-Round Products, with SSV up +79% owing to expanded capacity from the first wave of the Juarez 3 facility build-out. We expect ATV sales to be down -40%, as the company prioritizes production of higher-margin/revenue SSVs. We plan Roadster sales to be up +9%.
“We expect that Seasonal Product revenues grew +34% in the quarter on a +51% increase in PWC sales and +25% growth in snowmobile sales. We project the company’s marine segment will increase +14% (boats flat and marine PAC up +65%).
“We expect the gross margin to contract -120 bps to 26.5%, owing to rising input, labor, and logistics costs more than offsetting higher production levels, overhead absorption, price increases, and lower promotions.
“Management had previously commented that FY2023 would post double-digit revenue and EPS growth off the midpoint of its 2022 guidance range, i.e. at least $8.35 billion and $10.30, respectively.
“We are currently modeling FY2023 revenue of $9.3 billion (+23%), EPS of $11.60 (+25%), and normalized EBITDA of $1.63 billion (+12%). The Street revenue estimate is $8.8 billion (+16%), EPS is $10.47 (+13%), and normalized EBITDA is $1.56 billion (+7%).”