The Canadian company said 2019 was an “incredible year” and was very bullish about the upcoming year prior to the coronavirus outbreak with top-line growth projected across all product segments

BRP reported results today for its fourth quarter and full financial year ended January 31, 2020.  “We concluded another record year in FY20. Our 15% increase in retail sales in a flattish North American industry, proves our strong position in the market and allowed us to deliver our Challenge 2020 five-year plan one year in advance by exceeding our C$6bn revenue and $3.50 EPS targets,” confirmed José Boisjoli, president and CEO.

BRP Jose-Boisjoli

BRP President and CEO José Boisjoli

The company’s North American retail sales for powersports vehicles and outboard engines increased by 12% for the 12-month period ended January 31, 2020 compared with the 12-month period ended January 31, 2019, mainly due to an increase in Year-Round Products. Net income for the year jumped 63% to C$371m.

On today’s webcast with investors, Boisjoli was enthusiastic about the company’s position. ”We have the highest global share in the company’s history and we are first in American in all of our product sectors and we hit our targets one year earlier than planned.”

At the same time, he acknowledged the challenges of the current circumstances. “During this time, our thoughts are with all those who have been affected by the COVID-19 virus and we are putting in place different measures to ensure the health and safety of our employees across the world. In this current global uncertainty, we are proactively implementing measures to protect our financial flexibility and are monitoring closely the situation to assess its potential impact on our business. In this context, we will not issue a full-year guidance for FY21 at this time,” said Boisjoli.

“It’s only a matter of time before the restrictions will have an effect on demand.”

 BRP’s José Boisjoli

Boisjoli together with CFO Sébastien Martel reassured investors on today’s webcast that they had both been through the 2007-08 global financial crisis and had gained valuable experience in managing sudden shifts in the business enviroment. One of the first steps they have taken in recent weeks was to draw fully on a C$700m credit line to ensure the company’s liquidity. They also extended the maturity on longer-term debt at attractive rates and have been diligent in ensuring ’covenant light’ terms.

In addition, BRP has been working with its credit partners for both floorplan and consumer financing to ensure the stability of its dealer network and extend terms where needed. Boisjoli noted retail sales for the period of 1 February through 13 March were up 11%, indicating the company had only seen a limited impact from the coronavirus outbreak so far.  However, he added “it’s only a matter of time before the restrictions will have an effect on demand.”  

“Our diversified manufacturing footprint, product portfolio, market presence and our experienced management team provide us with a solid base to navigate through this period of uncertainty while preserving our industry leadership position,” concluded Boisjoli.

BRP’s financial results for marine-related products are captured in the following business divisions:

  • Seasonal products which include Sea-Doo personal watercraft
  • Parts & Accessories and OEM Engines
  • Marine which includes Evinrude outboards, the Alumacraft and Manitou boat brands, and 80% of the Australian Telwater boat and trailer manufacturing business acquired in August 2019

Seasonal Products

Revenues from Seasonal Products decreased by $34.9m, or 6.0%, to $542.7m for the three-month period ended January 31, 2020, compared with $577.6m for the corresponding period ended January 31, 2019. The decrease was driven by a lower volume of PWC sold and an unfavourable foreign exchange rate variation of $10m, partially offset by a favourable product mix and price increase in snowmobile and PWC.

North American Seasonal Products retail sales increased on a percentage basis by high-single digits compared with the three-month period ended January 31, 2019.

Powersports Parts & Accessories and OEM Engines

Revenues from Powersports P&A and OEM Engines increased by $11.4m, or 5.6%, to $215.6m for the three-month period ended January 31, 2020, compared with $204.2m for the corresponding period ended January 31, 2019. The increase was mainly attributable to a higher volume of Year-Round Products parts and accessories.

Marine

Revenues from the Marine segment increased by $23.8m, or 18%, to $157.4m for the three-month period ended January 31, 2020, compared with $133.6m for the corresponding period ended January 31, 2019. The increase was mainly due to the additional revenues following the acquisition of Telwater and a higher volume of outboard engines sold. The company said the North American outboard engines industry is about flat seven months into the 2020 season, with retail sales of Evinrude outboard engines retail down about high teen %.

As part of BRP’s measures to preserve its financial flexilibility, the Board of Directors also said it would suspend the company’s quarterly cash dividend until further notice.

 

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