BRP PRESENTS FISCAL YEAR 2025 FIRST QUARTER RESULTS
BRP Inc. (NASDAQ: DOOO) reported its Q1 FY2025 results on May 31, 2024. Revenues fell by 16.4% year-over-year to $2,031.7 million. The company recorded a net loss of $7.4 million, a sharp decline from a profit of $154.5 million last year. Normalized EBITDA decreased by 34.4% to $247.2 million. Normalized diluted earnings per share dropped to $0.95 from $2.38, while diluted loss per share was $0.10, a decrease from earnings of $1.92 per share last year. Despite strong retail performance in the Can-Am SSV segment, BRP adjusted its full-year guidance, forecasting revenues between $8.6 to $8.9 billion and normalized diluted EPS between $6.00 and $7.00. The company anticipates further pressure on dealer profitability due to macroeconomic challenges, competitive dynamics, and high interest rates.
- Retail sales in the SSV and ATV industries increased in the low-teens and high-single digits range, respectively.
- Strong retail performance in the Can-Am SSV segment, marking its best Q1 ever.
- Updated FY2025 revenue guidance of $8.6B to $8.9B.
- Normalized diluted EPS guidance for FY2025 is between $6.00 and $7.00.
- Reduction in capital expenditures to approximately $475M from $586M in FY24.
- Revenues decreased by 16.4% year-over-year to $2,031.7 million.
- Net loss of $7.4 million compared to a profit of $154.5 million last year.
- Normalized EBITDA decreased by 34.4% to $247.2 million.
- Normalized diluted earnings per share dropped by $1.43 to $0.95.
- Diluted loss per share was $0.10, a decrease from earnings of $1.92 per share last year.
- Total company revenues for FY2025 projected to decline from $10,367.0 million to between $8.6B and $8.9B.
- Marine segment revenues expected to decrease by 40% to 50% in FY2025.
- Increased depreciation expenses projected at ~$435M, up from $382M in FY24.
- Higher net financing costs expected at ~$185M, up from $175M in FY24.
- Effective tax rate projected to increase to 25.0% to 25.5%, up from 23.6% in FY24.
Insights
BRP's fiscal year 2025 first quarter results offer several insights that can impact investor decisions. Revenues decreased by
From a broader financial perspective, the normalization of EBITDA to
Long-term investors should note the company's commitment to investing in market-shaping products to maintain its OEM leadership. However, the pressure on dealer profitability and the need to adjust production warrants careful consideration. Investors should weigh the short-term financial strains against the potential long-term benefits of the company’s strategic investments.
The performance of BRP in the first quarter offers a mixed bag for stakeholders. While the decrease in overall revenues and net income reveals economic pressure, the company's ability to outperform in the SSV and ATV industries suggests a strong market presence. The company's strategic focus on managing inventory to support dealer value is a smart move in a competitive landscape, but the same strategy also highlights the economic sensitivities that the company faces.
BRP’s strongest first quarter in the Can-Am SSV segment reflects robust consumer demand in specific product lines, a positive indicator for those segments. Still, the reduction in revenue projections across other product lines, especially Marine, down by
For retail investors, it’s important to understand that while the company is positioned strongly in some product categories, the overall economic environment and competitive pressures can impact future financials. The guidance adjustments show prudence but also warrant vigilance, as macroeconomic conditions could further affect performance.
Highlights
- Continued outpacing the SSV and ATV industries with retail sales increasing in the low-teens range and high-single digits range, respectively;
- Revenues of
$2,031.7 million 16.4% compared to last year; - Net loss of
$7.4 million $161.9 million - As expected, Normalized EBITDA [1] of
$247.2 million 34.4% compared to last year; - Normalized diluted earnings per share [1] of
$0.95 $1.43 $0.10 $2.02 - Adjusting full year-end guidance for revenues, now ranging between
$8.6 $8.9 billion $6.00 $7.00
"Our first quarter results were in line with expectations and reflect our focus on managing network inventory to protect our dealer value proposition. Our strong product portfolio performed well at retail, especially in the Year-Round Products category, where we gained market share across all product lines. We are particularly pleased with our Can-Am SSV business, which had its strongest first quarter ever at retail," said José Boisjoli, President and CEO of BRP.
"As the year unfolds, our dealers' profitability is under more pressure than anticipated given the current macroeconomic context, a more competitive landscape and high interest rates. For these reasons, we have decided to adjust our production to further reduce network inventory while continuing to maximize retail sales. Looking ahead, given our strong business fundamentals, we are confident in our long-term strategy, and committed to investing in the development of market-shaping products to remain the leading OEM [2] in the industry," concluded Mr. Boisjoli.
[1] See "Non-IFRS Measures" section of this press release. |
[2] Original Equipment Manufacturer |
Financial Highlights | |||
Three-month periods ended | |||
(in millions of Canadian dollars, except per share data and margin) | April 30, 2024 | April 30, 2023 | |
Revenues | |||
Gross Profit | 480.0 | 623.5 | |
Gross Profit (%) | 23.6 % | 25.7 % | |
Normalized EBITDA [1] | 247.2 | 377.1 | |
Net income (loss) | (7.4) | 154.5 | |
Normalized net income [1] | 72.5 | 192.0 | |
Earnings (loss) per share - diluted | (0.10) | 1.92 | |
Normalized earnings per share – diluted [1] | 0.95 | 2.38 | |
Weighted average number of shares – basic | 74,897,906 | 78,856,822 | |
Weighted average number of shares – diluted | 76,036,145 | 80,411,463 | |
FISCAL YEAR 2025 UPDATED GUIDANCE & OUTLOOK
The FY25 guidance has been updated as follows:
Financial Metric | FY24 | FY25 Guidance [4] vs FY24 |
Revenues | ||
Year-Round Products | Down | |
Seasonal Products | 3,410.7 | Down |
Powersports PA&A and OEM Engines | 1,184.6 | Down |
Marine | 432.3 | Down |
Total company revenues | 10,367.0 | |
Normalized EBITDA [1] | 1,699.6 | |
Normalized earnings per share – diluted [1] | 11.11 | |
Net income | 744.5 |
Other assumptions for FY25 Guidance
• Depreciation Expenses Adjusted: | |
• Net Financing Costs Adjusted: | |
• Effective tax rate [1] [3] | ~ |
• Weighted average number of shares – diluted: | ~75.6M shares (Compared to 78.5M in FY24) |
• Capital Expenditures: |
FY25 Quarterly Outlook [4]
Given its focus on managing network inventory levels, the Company expects Q2 Fiscal 2025 Normalized EBITDA [1] to be down approximatively mid
[1] See "Non-IFRS Measures" section of this press release. |
[3] Effective tax rate based on Normalized Earnings before Normalized Income Tax. |
[4] 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 2025 guidance. |
FIRST QUARTER RESULTS
As expected, the Company's three-month period ended April 30, 2024 was marked by a decrease in the volume of shipments compared to the same period last year as the Company is focused on reducing network inventory levels throughout Fiscal 2025. The decrease in volume of shipments and higher sales incentives due to increased promotional intensity have led to a reduction in the profit margin compared to the same period last year.
The Company's North American quarterly retail sales for Powersport Products were down
Revenues
Revenues decreased by
- Year-Round Products [5] (
57% of Q1-FY25 revenues): Revenues from Year-Round Products decreased by$175.5 million 13.2% , to$1,157.8 million $1,333 $9 million - Seasonal Products [5] (
26% of Q1-FY25 revenues): Revenues from Seasonal Products decreased by$156.8 million 22.7% , to$535.1 million $691.9 million $5 million - Powersports PA&A and OEM Engines [5] (
14% of Q1-FY25 revenues): Revenues from Powersports PA&A and OEM Engines increased by$4.2 million 1.5% , to$289.1 million $284 $3 million
[1] See "Non-IFRS Measures" section of this press release. |
[5] The inter-segment transactions are included in the analysis. |
- Marine [5] (
3% of Q1-FY25 revenues): Revenues from the Marine segment decreased by$69.2 million 56.6% , to$53.1 million $122.3 million
North American Retail Sales
The Company's North American retail sales for Powersports Products decreased by
- North American Year-Round Products retail sales increased on a percentage basis in the low-teens range compared to the three-month period ended April 30, 2023. The Year-Round Products industry increased on a percentage basis in the low-single digits over the same period.
- North American Seasonal Products retail sales decreased on a percentage basis in the low-thirties range compared to the three-month period ended April 30, 2023. The Seasonal Products industry decreased on a percentage basis in the high-twenties range over the same period.
The Company's North American retail sales for Marine Products increased by
Gross profit
Gross profit decreased by
Operating expenses
Operating expenses increased by
[1] See "Non-IFRS Measures" section of this press release. |
[5] The inter-segment transactions are included in the analysis. |
Normalized EBITDA [1]
Normalized EBITDA [1] decreased by
Net Income (Loss)
Net income decreased by
LIQUIDITY AND CAPITAL RESOURCES
The Company generated net cash flows from operating activities totaling
The Company invested
During the three-month period ended April 30, 2024, the Company also returned
Dividend
On May 30, 2024, the Company's Board of Directors declared a quarterly dividend of
[1] See "Non-IFRS Measures" section of this press release. |
CONFERENCE CALL AND WEBCAST PRESENTATION
Today at 9 a.m. EDT, BRP Inc. will host a conference call and webcast to discuss its FY25 first quarter results. The call will be hosted by José Boisjoli, President and CEO, and Sébastien Martel, CFO. To listen to the conference call by phone (event number 14359), please dial 1 800 717-1738 (toll-free in
The Company's first quarter FY25 webcast presentation is posted in the Quarterly Reports section of BRP's website.
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,
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements in this press release, including, but not limited to, statements relating to the Company's Fiscal Year 2025, including adjusted financial guidance and related assumptions of the Company (including revenues, Normalized EBITDA, Effective Tax Rate, Normalized earnings per share, net income, depreciation expense, net financing costs adjusted, weighted average of the number of shares diluted and capital expenditures), statements relating to the declaration and payment of dividends, statements about the Company's current and future plans, and other statements about the Company's prospects, expectations, anticipations, estimates and intentions, results, levels of activity, performance, objectives, targets, goals or achievements, priorities and strategies, including further adjusting the production to proactively manage network inventory and considering other incremental actions to protect the dealer value proposition, financial position, market position, including its ability to gain additional market share, capabilities, competitive strengths, beliefs, the prospects and trends of the industries in which the Company operates, including softer industry trends and promotional intensity and pricing actions, the expected demand for the Company's products and services and sustainable growth, research and product development activities, including the expectation of regular flow of new product introductions and development of market-shaping products, including the introduction of the new electric Can-Am motorcycles later this year, their projected design, characteristics, capacity or performance, expected scheduled entry to market and the anticipated impact of such product introductions, expected financial requirements and the availability of capital resources and liquidities or any other future events or developments and other statements that are not historical facts constitute forward-looking statements within the meaning of Canadian and
Forward-looking statements are presented for the purpose of assisting readers in understanding certain key elements of the Company's current objectives, goals, targets, strategic priorities, expectations and plans, and in obtaining a better understanding of the Company's business and anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes; readers should not place undue reliance on forward-looking statements contained herein. Forward-looking statements, by their very nature, involve inherent risks and uncertainties and are based on a number of assumptions, both general and specific, as further described below.
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 factors, which are discussed in greater detail under the heading "Risk Factors" of the Company'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: the impact of adverse economic conditions including in the context of recent significant increases of interest and inflation rates; any decline in social acceptability of the Company and its products, including in connection with the broader adoption of electrical or low-emission products; high levels of indebtedness; any unavailability of additional capital; any supply problems, termination or interruption of supply arrangements or increases in the cost of materials, including as a result of the ongoing military conflict between
KEY ASSUMPTIONS
The Company made a number of economic, market and operational assumptions in preparing and making certain forward-looking statements contained in this press release, including without limitation the following assumptions: reasonable industry growth ranging from down to slightly up; market share will remain constant or moderately increase; slowing global economic growth; limited impact from the ongoing military conflict between
NON-IFRS MEASURES
This press release makes reference to certain non-IFRS measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company's results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS. The Company uses non-IFRS measures including the following:
Non-IFRS measures | Definition | Reason for use | ||
Normalized EBITDA | Net income before financing costs, financing income, income tax expense (recovery), depreciation expense and normalized elements. | Assist investors in determining the financial performance of the Company's operating activities on a consistent basis by excluding certain non-cash elements such as depreciation expense, impairment charge, foreign exchange gain or loss on the Company's long-term debt denominated in | ||
Normalized net income | Net income before normalized elements adjusted to reflect the tax effect on these elements | In addition to the financial performance of operating activities, this measure considers the impact of investing activities, financing activities and income taxes on the Company's financial results. | ||
Normalized income tax expense | Income tax expense adjusted to reflect the tax effect on normalized elements and to normalize specific tax elements | Assist investors in determining the tax expense relating to the normalized items explained above, as they are considered not being reflective of the operational performance of the Company. | ||
Normalized effective tax rate | Based on Normalized net income before Normalized income tax expense | Assist investors in determining the effective tax rate including the normalized items explained above, as they are considered not being reflective of the operational performance of the Company. | ||
Normalized earnings per share – diluted | Calculated by dividing the Normalized net income by the weighted average number of shares – diluted | Assist investors in determining the normalized financial performance of the Company's activities on a per share basis. | ||
Free cash flow | Cash flows from operating activities less additions to PP&E and intangible assets | Assist investors in assessing the Company's liquidity generation abilities that could be available for shareholders, debt repayment and business combination, after capital expenditure |
The Company believes non-IFRS measures are important supplemental measures of financial performance because they eliminate items that have less bearing on the Company's financial performance and thus highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS measures. The Company also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of companies, many of which present similar metrics when reporting their results. Management also uses non-IFRS measures in order to facilitate financial performance comparisons from period to period, prepare annual operating budgets, assess the Company's ability to meet its future debt service, capital expenditure and working capital requirements and also as a component in the determination of the short-term incentive compensation for the Company's employees. Because other companies may calculate these non-IFRS measures differently than the Company does, these metrics are not comparable to similarly titled measures reported by other companies.
The Company refers the reader to the tables below for the reconciliations of the non-IFRS measures presented by the Company to the most directly comparable IFRS measure.
Reconciliation Tables
The following tables present the reconciliation of non-IFRS measures compared to their respective IFRS measures:
Three-month periods ended | |||
(in millions of Canadian dollars) | April 30, 2024 | April 30, 2023 | |
Net income (loss) | |||
Normalized elements | |||
Foreign exchange loss on long-term debt and lease liabilities | 70.7 | 43.8 | |
Costs related to business combinations [2] | 3.8 | 4.9 | |
Restructuring and related costs [3] | 16.2 | — | |
Other elements [4] | 0.9 | 0.2 | |
Income tax adjustment [1] [5] | (11.7) | (11.4) | |
Normalized net income [1] | 72.5 | 192.0 | |
Normalized income tax expense [1] | 26.1 | 52.6 | |
Financing costs adjusted [1] | 48.7 | 44.1 | |
Financing income adjusted [1] | (1.8) | (1.5) | |
Depreciation expense adjusted [1] | 101.7 | 89.9 | |
Normalized EBITDA [1] | |||
[1] | See "Non-IFRS Measures" section. |
[2] | Transaction costs and depreciation of intangible assets related to business combinations. |
[3] | Costs associated with restructuring and reorganization activities, which are mainly composed of severance costs. |
[4] | Other elements include fees associated with the secondary offering that occurred during Fiscal 2025. |
[5] | Income tax adjustment is related to the income tax on Normalized elements subject to tax and for which income tax has been recognized and to the adjustment related to the impact of foreign currency translation from Mexican operations. |
The following table presents the reconciliation of items as included in the Normalized net income [1] and Normalized EBITDA [1] compared to respective IFRS measures as well as the Normalized EPS – basic and diluted [1] calculation.
(in millions of Canadian dollars, except per share data) | Three-month periods ended | ||
April 30, 2024 | April 30, 2023 | ||
Depreciation expense reconciliation | |||
Depreciation expense | |||
Depreciation of intangible assets related to business combinations | (2.0) | (2.5) | |
Depreciation expense adjusted | |||
Income tax expense reconciliation | |||
Income tax expense | |||
Income tax adjustment [2] | 11.7 | 11.4 | |
Normalized income tax expense [1] | |||
Financing costs reconciliation | |||
Financing costs | |||
Transaction costs on long-term debt | — | (0.2) | |
Financing costs adjusted | |||
Financing income reconciliation | |||
Financing income | |||
Financing income adjusted | |||
Normalized EPS - basic [1] calculation | |||
Normalized net income [1] | |||
Non-controlling interests | (0.2) | (0.3) | |
Weighted average number of shares - basic | 74,897,906 | 78,856,822 | |
Normalized EPS - basic [1] | |||
Normalized EPS - diluted [1] calculation | |||
Normalized net income [1] | |||
Non-controlling interests | (0.2) | (0.3) | |
Weighted average number of shares - diluted | 76,036,145 | 80,411,463 | |
Normalized EPS - diluted [1] | |||
[1] | See "Non-IFRS Measures" section. |
[2] | Income tax adjustment is related to the income tax on Normalized elements subject to tax and for which income tax has been recognized and to the adjustment related to the impact of foreign currency translation from Mexican operations. |
The following table presents the reconciliation of net cash flows generated from operating activities to free cash flow [1].
(in millions of Canadian dollars) | Three-month periods ended | ||
April 30, 2024 | April 30, 2023 | ||
Net cash flows generated from operating activities | |||
Additions to property, plant and equipment | (66.8) | (111.2) | |
Additions to intangible assets | (8.4) | (6.6) | |
Free cash flow [1] | |||
[1] | See "Non-IFRS Measures" section. |
View original content to download multimedia:https://www.prnewswire.com/news-releases/brp-presents-fiscal-year-2025-first-quarter-results-302160202.html
SOURCE BRP Inc.
FAQ
What were BRP's revenues for Q1 FY2025?
What is BRP's updated revenue guidance for FY2025?
What was BRP's net loss for Q1 FY2025?
How did BRP's normalized EBITDA for Q1 FY2025 compare to last year?
What is BRP's FY2025 guidance for normalized diluted EPS?
How did BRP's diluted loss per share change in Q1 FY2025?
What was BRP's gross profit margin for Q1 FY2025?
What are the projections for BRP's Marine segment revenues in FY2025?
How are BRP's capital expenditures expected to change in FY2025?
What factors are affecting BRP's dealer profitability in FY2025?
