BRP Reports Fiscal Year 2021 Third Quarter Results

Highlights for the quarter vs Q3 FY20:
Revenues of $1,674.7 million, an increase of $31.1 million or 1.9%;Gross profit of $486.9 million representing 29.1% of revenues, an increase of $45.0 million;Net income of $198.7 million, an increase of $63.4 million, which resulted in a diluted earnings per share of $2.22, an increase of $0.73 per share;Normalized net income^[1] of $190.6 million, an increase of $53.9 million, which resulted in a normalized diluted earnings per share^[1] of $2.13, an increase of $0.62 per share or 41.1%;Normalized EBITDA^[1] of $348.6 million representing 20.8% of revenues, an increase of $80.4 million or 30.0%;FY21 Normalized EPS^[1] guidance increased from $3.65-$3.95 to $5.00-$5.25, an expected growth of 31% to 37% compared to FY20. Recent eventsOn November 24, 2020, the Company’s Board of Directors authorized the renewal of its normal course issuer bid program which, subject to approval by the TSX, allows for the purchase for cancellation of up to approximately 4.3M subordinate voting shares over the next 12 months, representing approximately 10% of the Company’s public float.The Company’s Board of Directors declared a quarterly dividend of $0.11 per share.^[1]See “Non-IFRS Measures” section of this press release.VALCOURT, Quebec, Nov. 25, 2020 (GLOBE NEWSWIRE) — BRP Inc. (TSX:DOO; NASDAQ:DOOO) today reported its financial results for the three- and nine-month periods ended October 31, 2020. All financial information is in Canadian dollars unless otherwise noted. The complete financial results are available at Sedar, as well as in the Quarterly Reports section of BRP’s website.“We are very pleased with our results as our strong line-up continues to gain market share globally. The surge in demand for our products has offered a major opportunity for us to continue this pace and we are working hard to maintain it. We expect this positive trend to continue over the next quarter, and based on this, we are increasing our year-end guidance with Normalized EPS now expected to be up 31% to 37% vs. last year”,said José Boisjoli, President and CEO. “I would also like to thank the remarkable dedication of our employees, dealers and suppliers who have risen to the occasion and allowed us to continue to deliver exceptional results while still ensuring the health and safety of our people everywhere around the world,” concluded Boisjoli.Highlights for the Three- and Nine–Month Periods Ended October 31, 2020Revenues increased by $31.1 million, or 1.9%, to $1,674.7 million for the three-month period ended October 31, 2020, compared with $1,643.6 million for the corresponding period ended October 31, 2019. The revenue increase was mainly driven by lower sales programs due to a favourable retail environment and a favourable product mix, partially offset by a lower volume of products sold due to the replenishment of inventory at International.
        
The Company’s North American retail sales for powersports vehicles increased by 16% for the three-month period ended October 31, 2020 compared with the three-month period ended October 31, 2019. The increase was driven by Year-Round Products and snowmobile, partially offset by PWC. North American boat retail sales increased by 4% compared with the three-month period ended October 31, 2019.Gross profit increased by $45.0 million, or 10.2%, to $486.9 million for the three-month period ended October 31, 2020, compared with $441.9 million for the corresponding period ended October 31, 2019. The gross profit increase includes an unfavourable foreign exchange rate variation of $15 million. Gross profit margin percentage increased by 220 basis points to 29.1% from 26.9% for the three-month period ended October 31, 2019. The increase of 220 basis points was primarily due to a positive pricing and sales programs variation due to the favourable retail environment, partially offset by the under-absorption of fixed costs resulting from a lower level of production in Seasonal Products and an unfavourable foreign exchange rate variation.Operating expenses decreased by $31.3 million, or 13.4%, to $202.6 million for the three-month period ended October 31, 2020, compared with $233.9 million for the three-month period ended October 31, 2019. This decrease was mainly attributable to cost reduction initiatives to mitigate the COVID-19 impact.Revenues decreased by $299.0 million, or 6.7%, to $4,137.8 million for the nine-month period ended October 31, 2020, compared with $4,436.8 million for the corresponding period ended October 31, 2019. The revenue decrease was primarily attributable to a lower volume of Seasonal Products due to the temporary suspension of production during part of the first half of Fiscal 2021 following government measures adopted in response to COVID-19 and to a lower volume of Marine products sold due to the wind-down of the Evinrude outboard engines production, partially offset by a favourable foreign exchange rate variation of $23 million.
        
The Company’s North American retail sales for powersports vehicles increased by 23% for the nine-month period ended October 31, 2020 compared with the nine-month period ended October 31, 2019, mainly due to an increase in SSV and ATV. North American boat retail sales increased by 8% compared with the nine-month period ended October 31, 2019.Gross profit decreased by $99.9 million, or 9.3%, to $970.4 million for the nine-month period ended October 31, 2020, compared with $1,070.3 million for the corresponding period ended October 31, 2019. The gross profit decrease includes a favourable foreign exchange rate variation of $1 million. Gross profit margin percentage decreased by 60 basis points to 23.5% from 24.1% for the nine-month period ended October 31, 2019. The decrease was primarily due to the under-absorption of fixed costs resulting from the temporary suspension of production, the costs related to the wind-down of the Evinrude outboard engines production and higher labour costs. The decrease was partially offset by a positive pricing and sales programs variation due to the favourable retail environment.Operating expenses increased by $90.5 million, or 13.6%, to $753.9 million for the nine-month period ended October 31, 2020, compared with $663.4 million for the nine-month period ended October 31, 2019. The increase was mainly attributable to the impairment charge recorded during the first quarter of Fiscal 2021 for the Marine segment and the restructuring costs for a total of $214.5 million, partially offset by cost reduction initiatives to mitigate the COVID-19 impact.QUARTERLY REVIEW BY SEGMENTPowersportsYear-Round ProductsRevenues from Year-Round Products increased by $78.0 million, or 10.8%, to $803.0 million for the three-month period ended October 31, 2020, compared with $725.0 million for the corresponding period ended October 31, 2019. The increase resulted mainly from lower sales programs due to a favourable retail environment and a favourable product mix in SSV and 3WV. The increase was partially offset by a lower volume of SSV sold due to the replenishment of inventory at International.North American Year-Round Products retail sales increased on a percentage basis in the low-thirties range compared with the three-month period ended October 31, 2019.Seasonal ProductsRevenues from Seasonal Products decreased by $46.5 million, or 8.4%, to $508.3 million for the three-month period ended October 31, 2020, compared with $554.8 million for the corresponding period ended October 31, 2019. The decrease was driven by a lower volume of products sold due to a change in the production schedule compare to the third quarter of Fiscal 2020, partially offset by lower sales programs due to favourable retail environment.North American Seasonal Products retail sales decreased on a percentage basis by high-single digits compared with the three-month period ended October 31, 2019.Powersports PA&A and OEM Engines
        
Revenues from Powersports PA&A and OEM Engines increased by $33.3 million, or 14.7%, to $259.9 million for the three-month period ended October 31, 2020, compared with $226.6 million for the corresponding period ended October 31, 2019. The increase was mainly attributable to a higher volume of PA&A coming from strong unit retail sales and higher replacement parts revenue driven by an increase usage of products by consumers.MarineRevenues from the Marine segment decreased by $34.0 million, or 23.9%, to $108.4 million for the three-month period ended October 31, 2020, compared with $142.4 million for the corresponding period ended October 31, 2019. The decrease was mainly due to the wind-down of the Evinrude outboard engines production resulting in a lower volume of outboard engines sold.DECLARATION OF DIVIDEND
The Board of Directors approved a quarterly dividend of $0.11 per share for holders of its multiple voting shares and subordinate voting shares. The dividend will be paid on January 14, 2021 to shareholders of record at the close of business on December 31, 2020. The payment of each quarterly dividend remains subject to the declaration of that dividend by the Board of Directors.Fiscal Year 2021 GuidanceThe financial guidance targets have been adjusted as follows:Other assumptions for FY21 Guidance:Depreciation expense: ~$260MNet Financing Costs Adjusted: ~$105MWeighted average number of shares – diluted: ~89M sharesCapital Expenditures: ~$275M to $300M^[1] Please refer to “Non-IFRS Measures” section.
^[2] Effective tax rate based on Normalized Earnings before Normalized Income Tax.
^[3] Please refer to the “Caution Concerning Forward-Looking Statements” and “Key assumptions” sections of this press release for a summary of important risk factors that could affect the above guidance and of the assumptions underlying this Fiscal Year 2021 financial guidance.^[1] See “Non-IFRS Measures” section.