Highlights:
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Results in-line with the outlook provided on March 28;
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Revenues of $758.6 million, a decrease of 6% compared to the three-month
period ended April 30, 2013;
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Normalized EBITDA of $56.6 million; a decrease of 47% compared to the
three-month period ended April 30, 3013;
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Net income of $28.0 million, which resulted in diluted earnings per
share of $0.24;
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Normalized net income of $16.6 million, which resulted in normalized
diluted earnings per share of $0.14;
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Strong spring bookings in snowmobiles;
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Sea-Doo Spark retail beyond expectations;
-
Fiscal Year 2015 financial guidance reaffirmed
VALCOURT, QC, June 12, 2014 /CNW Telbec/ - BRP Inc. (TSX: DOO) today
reported its financial results for the three-month period ended April
30, 2014. All financial information is in Canadian dollars unless
otherwise noted. The complete financial results are available at www.sedar.com.
"Our financial results for the first quarter were as expected and
consistent with our outlook," said José Boisjoli, president and CEO.
"Our sales in international markets grew in the quarter despite the
situation in Russia, but this was offset by the long winter affecting
sales of off-road vehicles in North America. We continue to fulfill our
strategic initiatives and we are very much on track to accomplish our
annual plan."
Commenting on the outlook for Fiscal Year 2015, Boisjoli added: "We are
fine-tuning our guidance for Fiscal Year 2015, but as a whole,
forecasted growth for Revenues and Normalized Net Income is unchanged.
We anticipate a stronger second half of the year resulting from strong
spring snowmobile orders, the introduction of the Can-Am Outlander L
ATV, the restart of the Sea-Doo Spark manufacturing in Querétaro and
upcoming product launches. For the second quarter, we expect our
financial performance to be similar to last year's, factoring in the
continued uncertainty in Eastern Europe."
Highlights for the Three-Month Period Ended April 30, 2014
Revenues decreased by $45.7 million, or 5.7%, to $758.6 million for the
three-month period ended April 30, 2014, compared with $804.3 million
for the corresponding period ended April 30, 2013. The revenue decrease
was mainly due to lower wholesale in Year-Round Products and to lower
wholesale and unfavourable mix in Seasonal Products. The decrease in
revenues was partially offset by a favourable foreign exchange rate
variation of $49 million mainly related to the strengthening of the
U.S. dollar and the Euro against the Canadian dollar.
NET INCOME DATA
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Three-month periods ended
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|
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April 30,
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April 30,
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(in millions of Canadian dollars)
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2014
|
2013
|
|
|
|
|
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Revenues by category
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|
|
|
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Seasonal Products
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$ 184.6
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$ 206.7
|
|
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Year-Round Products
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365.4
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404.7
|
|
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Propulsion Systems
|
97.3
|
92.9
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|
|
PAC
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111.3
|
100.0
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Total Revenues
|
758.6
|
804.3
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Cost of sales
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585.2
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586.3
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Gross profit
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173.4
|
218.0
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|
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As a percentage of revenues
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22.9%
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27.1%
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Operating expenses
|
|
|
|
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Selling and marketing
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67.3
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65.3
|
|
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Research and development
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41.6
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37.3
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|
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General and administrative
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36.8
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35.0
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|
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Other operating income
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(0.7)
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(5.7)
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Total operating expenses
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145.0
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131.9
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Operating income
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28.4
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86.1
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|
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Net financing costs
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13.6
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16.9
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|
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Foreign exchange (gain) loss on long-term debt
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(12.3)
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8.3
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Increase in fair value of common shares
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—
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19.6
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Income before income taxes
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27.1
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41.3
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Income taxes expense (recovery)
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(0.9)
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15.6
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Net income
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$ 28.0
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$ 25.7
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|
|
|
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EBITDA [1]
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$ 55.0
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$ 87.6
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Normalized EBITDA [1]
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56.6
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107.8
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Normalized net income [1]
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16.6
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53.4
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Normalized earnings per share - basic
|
0.14
|
0.52
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Normalized earnings per share - diluted
|
0.14
|
0.51
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[1] For a reconciliation of net income to EBITDA, Normalized EBITDA and
Normalized Net Income, see the Reconciliation Tables included in the
MD&A.
EBITDA, Normalized EBITDA and Normalized Net Income 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 (recovery), depreciation expense, foreign exchange (gain)
loss on long-term debt, increase in fair value of 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 common shares and unusual and non-recurring
items adjusted to reflect the tax effect on these items.
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QUARTERLY REVIEW BY CATEGORIES
Seasonal Products
Revenues from Seasonal Products decreased by $22.1 million, or 10.7%, to
$184.6 million for the three-month period ended April 30, 2014,
compared with $206.7 million for the corresponding period ended April
30, 2013. The reduction resulted primarily from a decrease of
traditional PWC volume partly offset by the new entry-level Sea-Doo
Spark PWC. The decrease of volume was attributable to a longer than
anticipated production ramp-up at the Querétaro, Mexico facility
causing delays in the delivery of certain PWC products. The decrease in
revenues was partially offset by a favourable foreign exchange rate
variation of $11 million.
Year-Round Products
Revenues from Year-Round Products decreased by $39.3 million, or 9.7%,
to $365.4 million for the three-month period ended April 30, 2014,
compared with $404.7 million for the corresponding period ended April
30, 2013. The decrease resulted primarily from lower shipments of SSVs
due to the impact of the introduction of the Can-Am Maverick models in
the corresponding period last year. To a lesser extent, the decrease
was also attributable to ATVs mainly due to the decrease of volume sold
in Russia, which was primarily driven by the political and economic
instability in Eastern Europe. The decrease in revenues was partially
offset by a favourable foreign exchange rate variation of $22 million.
Propulsion Systems
Revenues from Propulsion Systems increased by $4.4 million, or 4.7%, to
$97.3 million for the three-month period ended April 30, 2014, compared
with $92.9 million for the corresponding period ended April 30, 2013.
The increase in revenues was mainly attributable to a favourable
foreign exchange rate variation of $9 million. The increase in sales
related to the new jet propulsion system was more than offset by the
lower volume of motorcycle engines sold.
PAC (Parts, Accessories & Clothing)
Revenues from PAC increased by $11.3 million, or 11.3%, to $111.3
million for the three-month period ended April 30, 2014, compared with
$100.0 million for the corresponding period ended April 30, 2013. The
increase was mainly attributable to a favourable foreign exchange rate
variation of $7 million and from a higher volume of PAC related to
Seasonal Products due to better winter conditions in North America.
Gross profit decreased by $44.6 million, or 20.5%, to $173.4 million for the
three-month period ended April 30, 2014, compared with $218.0 million
for the corresponding period ended April 30, 2013. Gross profit margin
percentage decreased by 420 basis points to 22.9% from 27.1% for the
three-month period ended April 30, 2013. The decrease in gross profit
margin percentage was primarily due to lower wholesale in Year-Round
and Seasonal Products, an unfavourable product mix in Seasonal
Products, expenses related to the production ramp-up at the Querétaro,
Mexico facility and to the transfer of PAC distribution to third-party
logistics provider. The margin decrease was partially offset by a
favourable foreign exchange rate variation of $7 million.
Operating expenses increased by $13.1 million, or 9.9%, to $145.0 million for the
three-month period ended April 30, 2014, compared with $131.9 million
for the three-month period ended April 30, 2013. This increase was
mainly due to a negative foreign exchange impact of $12 million.
Normalized net income of $16.6 million, a decrease of $36.8 million, which resulted in
normalized basic earnings per share of $0.14, a decrease of $0.38 per
share. The decrease in normalized net income is primarily due to lower
wholesale in Year-Round and Seasonal Products, cost related to the
production ramp-up at the Querétaro facility and to the transfer of PAC
distribution.
Fiscal Year 2015 Guidance
BRP's financial guidance targets as presented on March 28, 2014 are
revised as follows (no change unless otherwise noted):
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Financial Metric
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FY15 Guidance vs FY14 Results
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Revenues
|
|
|
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Seasonal Products
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Up 9% to 13% (Increased from Up 5% to 10%)
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|
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Year-Round Products
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Up 9% to 13% (Lowered from Up 12% to 15%)
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|
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Propulsion Systems
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Up 7% to 10%
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|
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PAC
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Up 10% to 15%
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Total Company Revenues
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Up 9% to 13%
|
|
Normalized EBITDA
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Up 11% to 15%
|
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Effective Tax Rate[1]
|
26% - 27%
|
|
Normalized Net Income[2]
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Up 10% to 17%
|
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Normalized Earnings per Share - Diluted
|
$1.55 - $1.65 (Up 10% to 17%)[3]
|
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Capital Expenditures
|
$165M to $175M
|
[1] Effective tax rate based on Normalized Earnings before Income Tax.
[2] Assuming $116M of depreciation expense.
[3] The 10% to 17% increase assumes a constant weighted average number
of diluted shares of 118.9 million for both Fiscal Year 2015 and Fiscal
Year 2014.
|
The above targets are based on a number of economic and market
assumptions the Company has made in preparing its Fiscal Year 2015
financial guidance, including assumptions regarding the performance of
the economies in which it operates, foreign exchange currency
fluctuations, market competition and tax laws applicable to its
operations. The Company cautions that the assumptions used to prepare
the forecasts for Fiscal Year 2015, 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 June 11, 2014. 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 9 a.m. (EDT), BRP Inc. will host a conference call and webcast
to discuss BRP's FY2015 first-quarter results released this morning.
The call will be hosted by José Boisjoli, president and CEO and
Sébastien Martel, CFO. A slide presentation and link to the audio
webcast will be posted at http://investors.brp.com in the Event Calendar section.
Note that exceptionally, this conference call will be held at 9 a.m.
(EDT) to accommodate for the Annual Shareholders' Meeting that will be
held at 1 p.m. (EDT) the same day in the Laurent Beaudoin Design &
Innovation Centre in Valcourt. The meeting will be webcast live. Click here for details.
To listen to the first-quarter conference call by phone, for the English
integral version (event number 4192520), please dial 1-514-861-1681 or
1-800-766-6630 (toll-free in North America), or 00 800 2787-2090 for
overseas callers. For the French version (event number 4192521), please
dial 1-514-392-1478 or 1-866-542-4146 (toll-free in North America), or
00 800 7701 8886 for overseas calls.
A replay of the conference call will be available two hours after the
call for 30 days following the original broadcast.
To listen to an instant replay of the call, please dial 514-861-2272 or
1-800-408-3053. For the English integral version, please enter the pass
code 5909362. For the French translation, enter 3412785. The instant
replay will be available 30 days following the call.
About BRP
BRP (TSX: DOO) is a global leader in the design, development,
manufacturing, distribution and marketing of powersports vehicles and
propulsion systems. Its 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. BRP supports its line of products with
a dedicated parts, accessories and clothing business. With annual sales
of over CA$3 billion from 105 countries, the Company employs
approximately 7,100 people worldwide.
www.brp.com
@BRPNews
Ski-Doo, Lynx, Sea-Doo, Evinrude, Rotax, Can-Am and the BRP logo are
trademarks of Bombardier Recreational Products Inc. or its affiliates.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
Certain information included in this release, including, but not limited
to, statements relating to our Fiscal Year 2015 financial outlook
(including revenues, gross profit margin, operating expenses,
Normalized EBITDA, Effective Tax Rate, Normalized net income and
Normalized earnings per share), and other statements that are not
historical facts, are "forward-looking statements" within the meaning
of Canadian securities laws. Forward-looking statements are typically
identified by the use of terminology such as "may", "will", "would",
"should", "could", "expects", "forecasts", "plans", "intends",
"trends", "indications", "anticipates", "believes", "estimates",
"outlook", "predicts", "projects", "likely" or "potential" or the
negative or other variations of these words or other comparable words
or phrases. Forward looking statements, by their very nature, involve
inherent risks and uncertainties and are based on several assumptions,
both general and specific. BRP cautions that its assumptions may not
materialize and that current economic conditions render such
assumptions, although reasonable at the time they were made, subject to
greater uncertainty. Such forward-looking statements are not guarantees
of future performance and involve known and unknown risks,
uncertainties and other factors which may cause actual the actual
results or performance of the Company or the power sports industry to
be materially different from the outlook or any future results or
performance implied by such statements. Key assumptions used in
determining forward-looking information are set forth below.
Key Assumptions
The Company made a number of economic and market assumptions in
preparing its 2015 financial guidance, including assumptions regarding
the performance of the economies in which it operates, market
competition, tax laws applicable to its operations and foreign exchange
currency fluctuation. In addition, many factors could cause the
Company's actual results, level of activity, performance or
achievements or future events or developments to differ materially from
those expressed or implied by the forward-looking statements,
including, without limitation, the following: impact of adverse
economic conditions on consumer spending; decline in social
acceptability of the Company's products; fluctuations in foreign
currency exchange rates; high levels of indebtedness; unavailability of
additional capital; unfavourable weather conditions; seasonal sales
fluctuations; the Company's ability to comply with product safety,
health, environmental and noise pollution laws; dependence on dealers,
distributors, suppliers, financing sources and other strategic partners
who may be sensitive to economic conditions; large fixed cost base;
inability of dealers and distributors to secure adequate access to
capital; supply problems, termination or interruption of supply
arrangements or increases in the cost of materials; restrictive
covenants in the Company's financing and other material agreements;
competition in product lines; loss of members of management team or
employees who possess specialized market knowledge and technical
skills; inability to maintain and enhance reputation and brands;
adverse determination in any significant product liability claim
against the Company; significant product repair and/or replacement due
to product warranty claims or product recalls; reliance on a network of
independent dealers and distributors to manage the retail distribution
of products; dependence on customer relationships for the sale of
original equipment manufacturer products; unsuccessful management of
inventory; risks associated with international operations; inability to
enhance existing products and develop and market new products;
protection of intellectual property; failure of information technology
systems; declining prices for used versions of products and oversupply
by competitors; unsuccessful execution of manufacturing strategy;
changes in tax laws and unanticipated tax liabilities; higher fuel
costs; deterioration in relationships with employees; pension plan
liabilities; natural disasters; failure to carry proper insurance
coverage; public company expenses; conduct of business through
subsidiaries; and significant influence by our principal shareholders
holding multiple voting shares.
BRP undertakes no obligation to update or revise forward-looking
statements to reflect future events, changes in circumstances, or
changes in beliefs, unless required by applicable Canadian securities
laws. In the event that BRP does update any forward-looking statement,
no inference should be made that BRP will make additional updates with
respect to that statement, related matters, or any other
forward-looking statement.
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SOURCE BRP
