BRP Releases Second Quarter Results for Fiscal 2015


BRP Inc., headquartered in Valcourt, Québec, reported its financial results for the three- and six-month periods ended July 31, 2014.

Released on September 12, BRP says its revenues increased by $159.1 million, or 25.6 percent, to $780.0 million for the three-month period ended July 31, 2014, compared with $620.9 million for the corresponding period ended July 31, 2013.

The company says the revenue increase was mainly due to higher wholesale in seasonal products. The increase was partially offset by increased sales program costs relating to Year-Round Products. The increase in revenues included a favourable foreign exchange rate variation of $35 million mainly related to the strengthening of the Euro and the US dollar against the Canadian dollar.

Revenues increased by $113.4 million, or 8.0 percent, to $1,538.6 million for the six-month period ended July 31, 2014, compared with $1,425.2 million for the corresponding period ended July 31, 2013. The revenue increase was mainly due to higher wholesale in seasonal products and their related parts, accessories and clothing, partially offset by lower wholesales and higher sales program costs in year-round products. The revenue increase included a favourable foreign exchange rate variation of $84 million mainly related to the strengthening of the US dollar and the Euro against the Canadian dollar.

"After a soft start into Fiscal Year 2015, Revenues growth accelerated meaningfully in the second quarter with solid performance in seasonal products,' said José Boisjoli, President and CEO. "Our second quarter is typically seasonally weaker and our gross margins were affected by higher costs resulting from sales programs and an unforeseen foreign exchange impact.'

Commenting on the outlook for the second half of Fiscal Year 2015, Boisjoli added: "We had strong retail in North America for both seasonal and year-round products when compared to the second quarter of last year driven by the commercial success of the Sea-Doo Spark watercraft, Can-Am Spyder and side-by-side vehicles. Our inventories in the channel are in good shape and this bodes well for the second half of the year. As such, we are reaffirming our guidance for Fiscal Year 2015 with expected continued acceleration of revenues and a strong finish in the fourth quarter driven by sales of snowmobiles and deliveries of new products.'

Second Quarter Report Highlights:
• Revenues of $780 million, a 25.6 percent increase compared to the same period last year;
• Normalized EBITDA of $31.3 million;
• Net loss of $3.6 million compared to a net loss of $7.9 million for the same period last year, which resulted in a diluted loss per share of $0.03 compared to a diluted loss per share of $0.07;
• Normalized net loss of $8.8 million that resulted in a normalized diluted loss per share of $0.07;
• 19 percent increase in retail sales of Seasonal Products and Year-Round Products in North America when compared to the same period last year;
• The Evinrude E-TEC G2 outboard engine received positive feedback from dealers, boat builders and trade media
• Revealed the turbocharged side-by-side vehicle, the 121-hp-rated Can-Am Maverick X ds.

Quarterly Review by Categories

Seasonal Products
Revenues from Seasonal Products increased by $119.2 million, or 84.8 percent, to $259.8 million for the three-month period ended July 31, 2014, compared with $140.6 million for the corresponding period ended July 31, 2013. The increase resulted primarily from an increase of volume of PWC sold driven by the new entry-level Sea-Doo Spark model and an increase in volume of snowmobiles sold for the upcoming season. The increase in revenues included a favourable foreign exchange rate variation of $10 million.

Year-Round Products
Revenues from Year-Round Products increased by $19.3 million, or 6.9%, to $297.4 million for the three-month period ended July 31, 2014, compared with $278.1 million for the corresponding period ended July 31, 2013. The increase resulted primarily from higher shipments of Can-Am side-by-side vehicles reflecting the industry growth in North America and to a lower extent from Can-Am all-terrain vehicles. The increase was mitigated by higher sales program costs. The increase in revenues included a favourable foreign exchange rate variation of $13 million.

Propulsion Systems
Revenues from Propulsion Systems decreased by $1.5 million, or 1.7%, to $84.4 million for the three-month period ended July 31, 2014, compared with $85.9 million for the corresponding period ended July 31, 2013. The decrease in revenues was mainly attributable to a lower volume of outboard engines sold, partially offset by a favourable mix. The decrease included a favourable foreign exchange rate variation of $5 million.

Parts, Accessories, Clothing and other services
Revenues from PAC increased by $22.1 million, or 19.0%, to $138.4 million for the three-month period ended July 31, 2014, compared with $116.3 million for the corresponding period ended July 31, 2013. The increase was mainly attributable to a higher volume of Seasonal Products' PAC sold due to the good performance of the Sea-Doo Spark model and higher deliveries of snowmobiles' PAC for the upcoming season. The increase included a favourable foreign exchange rate variation of $7 million.

Gross profit remained stable to $142.9 million for the three-month period ended July 31, 2014, compared with $142.6 million for the corresponding period ended July 31, 2013. Gross profit margin percentage decreased by 470 basis points to 18.3% from 23.0% for the three-month period ended July 31, 2013. The decrease in gross profit margin percentage was primarily due to higher sales programs costs in year-round products, absorption of overhead costs stemming from the reduction of finished goods inventory, unfavourable foreign exchange rate variations and expenses related to the production ramp-up at the Querétaro, Mexico facility and to the transfer of PAC distribution to third-party logistics providers. The foreign exchange rate negatively impacted the gross profit by $4 million.

Operating expenses increased by $32.5 million, or 30.4 percent, to $139.3 million for the three-month period ended July 31, 2014, compared with $106.8 million for the three-month period ended July 31, 2013. This increase was driven by increased marketing expenses in relation with the Sea-Doo Spark model and the launch of the new Evinrude E-TEC G2 outboard engine and by increased research and development costs. The increase included an unfavourable foreign exchange impact of $6 million.

Normalized net loss of $8.8 million, a decrease of $16.4 million, which resulted in normalized diluted loss per share of $0.07, a decrease of $0.14 per share. The decrease in normalized net income was primarily due to increased sales program costs, costs related to the production ramp-up at the Querétaro facility and to the transfer of PAC distribution and increased marketing costs, offset by an increase of products sold. The decrease included an unfavourable foreign exchange rate variation of $10 million.

BRP's complete financial results are available at www.sedar.com.

BRP's portfolio includes Ski-Doo and Lynx snowmobiles, Sea-Doo watercraft, Can-Am all-terrain and side-by-side vehicles, Can-Am Spyder roadsters, Evinrude and Rotax marine propulsion systems as well as Rotax engines for karts, motorcycles and recreational aircraft. The company reports annual sales of over CA$3 billion from 105 countries and employs approximately 7,100 people worldwide.