- Record quarterly revenues of $866.0 million, an increase of 18% compared to the corresponding period of FY2013
- Net income of $48.2 million, an increase of 52% compared to the third quarter FY2013, which resulted in basic earnings per share of $0.41, an increase of $0.10 compared to the corresponding period of FY2013;
- Normalized net income[1] of $59.0 million, an increase of 39% compared to the third quarter FY2013, which resulted in normalized basic earnings per share[1] of $0.50, an increase of $0.08 compared to the corresponding period of FY2013;
- Updating FY2014 normalized basic EPS[1] guidance to $1.49 – $1.54 from $1.45 – $1.50
VALCOURT, QUEBEC – December 12, 2013 – BRP Inc. (TSX: DOO)
today reported its financial results for the three- and nine-month
periods ended October 31, 2013. All financial information is in Canadian
dollars unless otherwise noted. The complete financial results are
available at www.sedar.com.
“The strong performance in our third quarter was primarily driven by strong shipments of snowmobiles both in North America and internationally. Our results were also buoyed by consumer enthusiasm for our Year-Round products led by our new models of side–by-side vehicles which have been well received worldwide. With solid results through nine months of the fiscal year, we are on track to meet our Revenue and Normalized EBITDA guidance for the year and we are very excited about the line-up of new products for the coming model year 2014,” said José Boisjoli, president and CEO.
“I am very pleased with this performance and particularly proud of the fact that we were able to deliver strong quarterly results as we approach our 10th anniversary as a standalone company. I would like to take this opportunity to thank our employees, our dealers and distributors for their hard work and continued loyal support,” he continued.
Highlights for the Three- and Nine-Month Periods Ended October 31, 2013
“The strong performance in our third quarter was primarily driven by strong shipments of snowmobiles both in North America and internationally. Our results were also buoyed by consumer enthusiasm for our Year-Round products led by our new models of side–by-side vehicles which have been well received worldwide. With solid results through nine months of the fiscal year, we are on track to meet our Revenue and Normalized EBITDA guidance for the year and we are very excited about the line-up of new products for the coming model year 2014,” said José Boisjoli, president and CEO.
“I am very pleased with this performance and particularly proud of the fact that we were able to deliver strong quarterly results as we approach our 10th anniversary as a standalone company. I would like to take this opportunity to thank our employees, our dealers and distributors for their hard work and continued loyal support,” he continued.
Highlights for the Three- and Nine-Month Periods Ended October 31, 2013
Revenues increased by $132.1 million, or 18.0%, to $866.0 million for the three-month period ended October 31, 2013, up from $733.9 million for the corresponding period ended October 31, 2012. The increase in revenues includes a favourable foreign exchange rate variation of $37 million, mainly related to the strengthening of the U.S. dollar and the Euro against the Canadian dollar.
Revenues increased by $186.5 million, or 8.9%, to $2,291.2 million for the nine-month period ended October 31, 2013, up from $2,104.7 million for the corresponding period ended October 31, 2012. The revenues were negatively impacted by the exit of the sport boat business that accounted for $71 million in revenues for the nine-month period ended October 31, 2012. Excluding the exit of the sport boat business, revenues would have increased by 12.7% or $257.5 million. The increase in revenue includes a favourable foreign exchange rate variation of $61 million, mainly related to the strengthening of the U.S. dollar and the Euro against the Canadian dollar.
NET INCOME DATA
[1] EBITDA, Normalized EBITDA, Normalized net income and Normalized earnings per share are non-IFRS measures that the Company uses to assess its operating performance. EBITDA is defined as net income before financing costs, financing income, income taxes expense (recovery), depreciation expense and foreign exchange (gain) loss on long-term debt. Normalized EBITDA is defined as net income before financing costs, financing income, income taxes expense, depreciation expense, foreign exchange (gain) loss on long-term debt, increase in fair value of redeemable common shares and unusual and non-recurring items. Normalized Net Income is defined as net income before foreign exchange (gain) loss on long-term debt, increase in fair value of redeemable common shares and unusual and non-recurring items adjusted to reflect the tax effect on these items. Normalized earnings per share – basic is calculated by dividing the normalized net income by the weighted average number of shares.
[2] Restated to reflect the application of the amendments to IAS 19 “Employee Benefits” standard as explained in Note 2a) of the unaudited condensed consolidated interim financial statements for the third quarter ended October 31, 2013.
Seasonal Products
Revenues from Seasonal Products increased by $106.3 million, or 38.5%, to $382.5 million for the three-month period ended October 31, 2013, compared with $276.2 million for the corresponding period ended October 31, 2012. The increase in revenues results mainly from a higher volume and from a favourable product mix of snowmobiles sold following increased orders for the model year 2014 resulting from dealers and distributors’ demand. These incremental orders were mainly shipped in the third quarter. The increase in revenues includes a favourable foreign exchange rate variation of $14 million.
North American Seasonal Products retail sales, excluding the sport boat business, registered an increase in the mid-twenty per cent range as compared to the third quarter of Fiscal 2013.
Year-Round Products
Revenues from Year-Round Products increased by $2.2 million, or 0.9%, to $249.6 million for the three-month period ended October 31, 2013, up from $247.4 million for the corresponding period ended October 31, 2012. The increase is primarily due to higher wholesale and a favourable product mix in side-by-side vehicles, for an increase of approximately 38% compared with the corresponding period ended October 31, 2012. The increase was mainly offset by a 20% reduction in ATV sales compared with the corresponding period ended October 31, 2012. This reduction is mainly due to the introduction during the previous fiscal year of new ATV models such as the Can-Am Outlander two-passenger family and mud-ready models. The increase in revenues includes a favourable foreign exchange rate variation of $12 million.
North American Year-Round Products retail sales increased on a percentage basis by mid-single digits compared with the third quarter of Fiscal 2013.
Propulsion Systems
Revenues from Propulsion Systems increased by $7.6 million, or 9.3%, to $89.6 million for the three-month period ended October 31, 2013, compared with $82.0 million for the corresponding period ended October 31, 2012. The increase in revenues is mainly due to a favourable foreign exchange rate variation of $6 million.
PAC (Parts, Accessories & Clothing)
Revenues from PAC increased by $16.0 million, or 12.5%, to $144.3 million for the three-month period ended October 31, 2013, up from $128.3 million for the corresponding period ended October 31, 2012. The increase is primarily due to a higher volume driven by the increase of Year-Round Products business. The revenue increase includes a favourable foreign exchange rate variation of $5 million.
Gross profit increased by $46.5 million, or 26.2%, to $223.9 million for the three-month period ended October 31, 2013, up from $177.4 million for the corresponding period ended October 31, 2012. Gross profit margin percentage increased by 170 basis points to 25.9% from 24.2% for the three-month period ended October 31, 2012. The increase in gross profit margin percentage was primarily due to higher volumes in Seasonal Products, a favourable product mix and a favourable foreign exchange rate variation of $12 million. The increase was partially offset by the costs related to the transfer of PWC manufacturing to the Querétaro, Mexico facility.
Operating expenses decreased by $3.9 million, or 2.9%, to $128.9 million for the three-month period ended October 31, 2013, down from $132.8 million for the three-month period ended October 31, 2012. This decrease is mainly due to restructuring costs of $17.1 million that were recorded in connection with the closure of the sport boat business during the three-month period ended October 31, 2012, partially offset by higher stock-based compensation in relation to the initial public offering of the subordinate voting shares of the Company, higher advertising expenses to support the introduction of new products and a negative foreign exchange impact of $3 million.
Normalized net income increased by $16.6 million to $59.0 million for the three-month period ended October 31, 2013, compared with $42.4 million for the corresponding period last year. The increase is primarily due to higher wholesale and favourable product mix in Seasonal Products.
Fiscal year 2014 Outlook
Other than a reduction to the Effective Tax Rate, and the resulting increase to Normalized Net Income and Normalized Earnings per Share (as highlighted), BRP’s financial guidance targets as presented on June 13, 2013 are reconfirmed and remain as follows:
The above guidance excludes the effects of fluctuations in currency exchange rates. In addition, the Company made a number of economic and market assumptions in preparing its FY2014 financial guidance, including assumptions regarding the performance of the economies in which it operates, market competition and tax laws applicable to its operations. The Company cautions that the assumptions used to prepare the forecasts for FY2014, although reasonable at the time they were made, may prove to be incorrect or inaccurate. In addition, the above forecasts do not reflect the potential impact of any non-recurring or other special items or of any new material commercial agreements, dispositions, mergers, acquisitions, other business combinations or other transactions that may be announced or that may occur after December 12, 2013. The financial impact of such transactions and non-recurring and other special items can be complex and depends on the facts particular to each of them. We therefore cannot describe the expected impact in a meaningful way or in the same way we present known risks affecting our business. Accordingly, our actual results could differ materially from our expectations as set forth in this news release.
The outlook provided constitutes forward-looking statements within the meaning of applicable securities laws and should be read in conjunction with the “Caution Concerning Forward-Looking Statements” section.
Conference call and Webcast presentation
Today at 10 a.m. (EST), BRP Inc. will host a conference call and
webcast to discuss BRP’s FY2014 third quarter earnings results released
this morning. The call will be hosted by José Boisjoli, president and
CEO and Claude Ferland, CFO. A slide presentation and link to the audio
webcast will be posted at http://investors.brp.com in the Event Calendar section.To listen to the conference call by phone, for the integral version please dial 1-514-861-4190 or 1-877-461-2815 (toll-free in North America), or 00 800 6578 9898 for overseas callers. To listen to the English version only, please dial 1-514-392-1478 or 1-866-225-0198 (toll-free in North America), or 00 800 6578 9898 for overseas calls. For the French version only, please dial 1-514-392-9196 or 1-866-225-2055 (toll-free in North America), or 00 800 6578 9898 for overseas calls. In all cases, the event number is 4175835.
A replay of the conference call will be available two hours after the call for 90 days following the original broadcast.
About BRP
BRP (TSX: DOO) is a global leader in the design, development, manufacturing, distribution and marketing of powersports vehicles. Distributed in 105 countries, its portfolio of brands and products includes Ski-Doo and Lynx snowmobiles, Sea-Doo watercraft, Can-Am all-terrain and side-by-side vehicles, Can-Am roadsters, Evinrude outboard engines as well as Rotax propulsion systems. BRP employs approximately 6,800 people worldwide. www.brp.com @BRPNews
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