BRP Launches Process for the Sale of its Marine Businesses

Rhea-AI Summary

BRP Inc. (TSX: DOO) (NASDAQ: DOOO) has announced the initiation of a process to sell its Marine businesses, including Alumacraft, Manitou, Telwater (Quintrex, Stacer, Savage and Yellowfin), and Marine parts, accessories and apparel. This decision excludes Sea-Doo personal watercraft, Sea-Doo Switch pontoons, and jet propulsion systems. The company aims to focus on its Powersports portfolio and OEM Engine business due to challenging economic conditions.

BRP's President and CEO, José Boisjoli, stated that the company has built a solid foundation in the Marine sector through investments in innovative products and facility upgrades. The sale is expected to be completed in the first quarter of Fiscal Year 2026. BRP has retained National Bank Financial Inc. to assist with the sale process and does not anticipate any impacts on its current Fiscal Year 2025 guidance.

Positive

• BRP aims to solidify its position as a leading global Powersports OEM
• The sale is expected to improve BRP's margin profile
• The decision may enhance BRP's position for long-term success in the Powersports industry

Negative

• BRP is divesting its Marine businesses due to challenging economic conditions
• The sale process may create uncertainty for the affected Marine brands and employees

Insights

Financial Analyst

BRP's decision to divest its Marine businesses is a strategic move that could significantly impact the company's financial profile. This divestiture, excluding Sea-Doo and related products, signals a shift towards focusing on core Powersports activities. The potential sale could:

• Improve BRP's margin profile by concentrating on higher-margin Powersports segments
• Generate cash from the sale, which could be reinvested in growth opportunities or used for debt reduction
• Streamline operations, potentially leading to cost savings and improved efficiency

However, it's important to note that the Marine segment likely contributed to revenue diversification. The impact on overall revenue will depend on the relative size of the Marine business within BRP's portfolio. Investors should watch for details on the financial implications once the sale process progresses.

The company's maintained FY2025 guidance suggests that the immediate financial impact is expected to be minimal. The anticipated completion in Q1 FY2026 gives BRP time to manage the transition effectively. Overall, this move appears to be a strategic realignment aimed at long-term value creation, but the success will depend on the execution of the sale and subsequent reinvestment of proceeds.

Market Research Analyst

BRP's decision to exit the Marine industry, excluding Sea-Doo products, reflects broader market trends and competitive dynamics. The move to "double down" on Powersports suggests:

• The Powersports market may offer more attractive growth prospects and profit margins compared to the Marine sector
• BRP sees potential for market share gains or expansion in its core Powersports segments
• The company may be anticipating shifts in consumer preferences or economic conditions that favor Powersports over Marine products

This strategic pivot could position BRP more competitively against pure-play Powersports manufacturers. However, it also increases the company's exposure to Powersports market fluctuations. The success of this strategy will depend on BRP's ability to innovate and capture market share in the Powersports sector, as well as the broader economic conditions affecting discretionary consumer spending on recreational vehicles.

Investors should monitor industry trends, consumer sentiment and BRP's market share in Powersports segments to gauge the potential long-term benefits of this strategic shift. The sale process and eventual price achieved for the Marine businesses will also be important indicators of the strategy's initial success.

VALCOURT, QC, Oct. 17, 2024 /PRNewswire/ - BRP Inc. (TSX: DOO) (NASDAQ: DOOO) today announced that it is initiating a process for the sale of its Marine businesses namely Alumacraft, Manitou, Telwater (Quintrex, Stacer, Savage and Yellowfin), and Marine parts, accessories and apparel. This process excludes all activities related to its Sea-Doo personal watercraft, Sea-Doo Switch pontoons and jet propulsion systems.

In light of the challenging economic context, BRP has decided to channel its efforts and investments towards its Powersports Year-Round Products, Seasonal Products, Parts, Accessories and Apparel portfolio, as well as its Original Equipment Manufacturer (OEM) Engine business.

"After careful consideration and given the current dynamics of both the Marine and Powersports industries, we have decided to double down on our core Powersports activities and to sell our Marine businesses," said José Boisjoli, President and CEO of BRP. "Over the past few years, we have built a solid foundation by investing in the development of innovative Marine products and upgrading the production facilities. As such, we believe that these iconic brands can offer attractive value creation opportunities for a new owner."

BRP's objective is to solidify its position as a leading global Powersports OEM. The Company is confident that this decision will enable it to capitalize on growth opportunities within the Powersports industry and improve its margin profile, thereby enhancing its position for long-term success.

Given that BRP expects this process to be completed in the first quarter of Fiscal Year 2026, it does not anticipate any impacts on its current Fiscal Year 2025 guidance and will not provide comments on the progress of the process.

BRP has retained National Bank Financial Inc. to assist with the sale process.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

Certain statements in this press release, including, but not limited to, statements relating to the process initiated for the sale of its Marine businesses, the businesses that are included or not as part of that process, the expected timeline for completion, the potential outcomes of that process and expectation of what it can offer to a new buyer, the expected impact on the Company's core Powersports activities, including on its ability to solidify its position, focus on growth opportunities and improve margin, and lack of impact anticipated on its Fiscal Year 2025 financial guidance, and other statements that are not historical facts constitute forward-looking statements within the meaning of Canadian and United States securities laws. The words "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, are intended to identify forward-looking statements. Forward-looking statements, by their very nature, involve inherent risks and uncertainties and are based on a number of 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 the actual results or performance of BRP to be materially different from the outlook or any future results or performance implied by such statements. Further details and descriptions of these and other factors are disclosed in BRP's MD&A for the fiscal year ended on January 31, 2024 and in other continuous disclosure materials filed from time to time with Canadian securities regulatory authorities and the Securities and Exchange Commission.

About BRP
BRP Inc. is a global leader in the world of powersports products, propulsion systems and boats built on over 80 years of ingenuity and intensive consumer focus. Through its portfolio of industry-leading and distinctive brands featuring Ski-Doo and Lynx snowmobiles, Sea-Doo watercraft and pontoons, Can-Am on and off-road vehicles, Alumacraft and Quintrex boats, Manitou pontoons and Rotax marine propulsion systems as well as Rotax engines for karts and recreational aircraft, BRP unlocks exhilarating adventures and provides access to experiences across different playgrounds. The Company completes its lines of products with a dedicated parts, accessories and apparel portfolio to fully optimize the riding experience. Committed to growing responsibly, BRP is developing electric models for its existing product lines. Headquartered in Quebec, Canada, BRP has annual sales of CA$10.4 billion from over 130 countries and a global workforce of close to 20,000 driven, resourceful people.

www.brp.com
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Ski-Doo, Lynx, Sea-Doo, Can-Am, Rotax, Alumacraft, Manitou, Quintrex, and the BRP logo are trademarks of Bombardier Recreational Products Inc. or its affiliates. All other trademarks are the property of their respective owners.

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SOURCE BRP Inc.

FAQ

What Marine businesses is BRP (DOOO) planning to sell?

BRP is planning to sell Alumacraft, Manitou, Telwater (including Quintrex, Stacer, Savage and Yellowfin brands), and Marine parts, accessories and apparel businesses.

When does BRP (DOOO) expect to complete the sale of its Marine businesses?

BRP expects to complete the sale process in the first quarter of Fiscal Year 2026.

Will the sale affect BRP's (DOOO) Fiscal Year 2025 guidance?

BRP does not anticipate any impacts on its current Fiscal Year 2025 guidance due to the sale process.

Which financial advisor is assisting BRP (DOOO) with the Marine businesses sale?

BRP has retained National Bank Financial Inc. to assist with the sale process of its Marine businesses.