BRP Reports Fiscal 2017 Second Quarter Results


Valcourt, Quebec-based BRP Inc. reported its financial results for the three- and six-month periods ended July 31, 2016. (All financial information is in Canadian dollars unless otherwise noted.)

“I am pleased with the second quarter of fiscal 2017 that has registered strong retail sales worldwide, particularly for Sea-Doo PWC and Can-Am off-road vehicles,” says José Boisjoli, President and CEO. “We have good momentum with the Can-Am Defender models, introduced last September, and with the positive reception of the most recent product launches, such as the Evinrude E-TEC G2 engines or the Can-Am Maverick X3 vehicle.

“Our manufacturing operations are progressing as planned,” adds Boisjoli, “allowing us to accelerate the pace of product introductions as promised. We are aligned on our strategic priorities and I am confident that we will reach our objectives.”

BRP unveiled four new models for its Evinrude E-TEC G2 lineup as well as a new 60 H.O. model in late June.

Highlights: Three- and Six-Month Periods Ended July 31, 2016
Revenues increased by $44.0 million, or 5.4 percent, to $856.1 million for the three-month period ended July 31, 2016, compared with $812.1 million for the corresponding period ended July 31, 2015. The revenue increase was mainly due to higher wholesale in Year-Round Products and to a favourable foreign exchange rate variation of $20 million related largely to the strengthening of the US dollar and the euro against the Canadian dollar.

Gross profit increased by $2.6 million, or 1.5 percent, to $172.0 million for the three-month period ended July 31, 2016, compared with $169.4 million for the corresponding period ended July 31, 2015. The gross profit increase includes an unfavourable foreign exchange rate variation of $3 million. Gross profit margin percentage decreased by 80 basis points to 20.1 percent from 20.9 percent for the three-month period ended July 31, 2015. The decrease in gross profit margin percentage was primarily due to higher production costs and an unfavourable foreign exchange variation, partially offset by a favourable product mix in Year-Round Products and lower sales programs costs.

Revenues increased by $75.8 million, or 4.4 percent, to $1,786.0 million for the six-month period ended July 31, 2016, compared with $1,710.2 million for the corresponding period ended July 31, 2015. The revenue increase was primarily attributable to a favourable foreign exchange rate variation of $60 million, again mainly due to the strengthening of the US dollar and the euro against the Canadian dollar and to higher wholesale of Seasonal Products.

Gross profit decreased by $16.2 million, or 4.2 percent, to $366.1 million for the six-month period ended July 31, 2016, compared with $382.3 million for the corresponding period ended July 31, 2015. The gross profit decrease includes an unfavourable foreign exchange rate variation of $13 million. Gross profit margin percentage decreased by 190 basis points to 20.5 percent from 22.4 percent for the six-month period ended July 31, 2015. The decrease in gross profit margin percentage was primarily due to an unfavourable foreign exchange variation and higher sales program costs, partially offset by a favourable product mix in Year-Round Products and PWC, as well as a general price increase.

Propulsion Systems
Revenues from Propulsion Systems increased by $4.5 million, or 4.7 percent, to $99.9 million for the three-month period ended July 31, 2016, compared with $95.4 million for the corresponding period ended July 31, 2015. The increase in revenues was mainly attributable to a favourable foreign exchange rate variation of $3 million.

Lawsuits
BRP is involved in multiple lawsuits with one of its competitors whereby each party is claiming damages for the alleged infringement of some of its patents. On June 1, 2016, a verdict was rendered in one of those lawsuits against the company for an amount of US $15.5 million ($19.5 million) in compensatory damages, which was recorded during the three-month period ended April 30, 2016. On June 13, 2016, the trial judge formalized the verdict rendered on June 1, 2016 and awarded additional damages in favour of the plaintiff. For the three-month period ended July 31, 2016, BRP recorded as an expense total damages and related costs of $43.1 million. Management believes that the verdict and subsequent decisions are unfounded and unsupported by either law or evidence and filed an appeal on August 23, 2016.

BRP reports annual sales of over $3.8 billion from over 100 countries. The company employs approximately 7,900 people worldwide.