Highlights
- Revenues of
$2,709 million , up 71% compared to the same period last year, a record performance for a single quarter in the Company's history; - Normalized EBITDA [1] of
$488 million , up 94% compared to the same period last year; - Retail sales up for Powersports products by 43% compared to the same period last year, and market share gains for SSV in
North America ; - Normalized diluted EPS [1][2] of
$3.64 , an increase of$2.16 per share or 146% and a record performance for a single quarter, and diluted EPS of$1.76 , an increase of$0.23 per share, or 15%, compared to the same period last year; - Acquisition of 80% of the outstanding shares of
Pinion GmbH , and the purchase of substantially all the assets related to the powersports business of Kongsberg Automotive ASA inQuebec , and - Increasing full-year guidance for Revenues, Normalized EBITDA [1] and Normalized EPS – diluted [1] upward by
$0.35 , now ranging from$11.65 to$12.00 representing a growth of 17% to 21% compared to Fiscal 2022.
"BRP delivered record fiscal 2023 third quarter results, well ahead of expectations, driven by our team's solid execution and our operational discipline. Our strong product line-ups, additional production capacity and proactive approach to navigating supply chain challenges with the support of our suppliers and dealers were key factors in achieving exceptional retail growth of 43% for powersports in
"Given these strong results and the visibility we have on deliveries for the rest of the year, we are increasing our full-year guidance with an expected Normalized EPS of
[1] See "Non-IFRS Measures" section of this press release |
[2] Earnings per share is defined as "EPS" |
Financial Highlights | Three-month periods ended | Nine-month periods ended | ||
(in millions of Canadian dollars, except per |
|
|
|
|
Revenues | ||||
Gross Profit | 654.7 | 410.6 | 1,711.8 | 1,522.7 |
Gross Profit (%) | 24.2 % | 25.9 % | 24.6 % | 28.7 % |
Normalized EBITDA [1] | 487.9 | 251.7 | 1,178.3 | 1,045.7 |
Net income | 141.6 | 127.7 | 500.3 | 585.0 |
Normalized net income [1] | 292.5 | 123.7 | 667.5 | 595.2 |
Earnings per share – diluted [2] | 1.76 | 1.53 | 6.15 | 6.81 |
Normalized earnings per share – diluted [1] | 3.64 | 1.48 | 8.21 | 6.93 |
Weighted average number of shares – diluted | 80,253,434 | 83,525,890 | 81,137,287 | 85,791,361 |
FISCAL YEAR 2023 UPDATED GUIDANCE & OUTLOOK
The FY23 guidance has been updated as follows:
Financial Metric | FY22 | FY23 Guidance[5] vs FY22 |
Revenues | (vs. Previous Guidance) | |
Year-Round Products | Up 36% to 41% (previously ''Up 33% to 38%") | |
Seasonal Products | 2,524.1 | Up 26% to 29% (previously ''Up 24% to 29%") |
Powersports PA&A and OEM Engines | 1,143.5 | Up 17% to 22% |
Marine | 512.8 | Flat to up 5% (previously ''Up 12% to 17%") |
Total Company Revenues | 7,647.9 | Up 27% to 32% (previously ''Up 26% to 31%") |
Normalized EBITDA [3] | 1,462.1 | Up 15% to 18% (previously ''Up 14% to 17%") |
Effective Tax Rate [3][4] | 25.4 % | 25.0% to 25.5% (previously ''26.0% to 26.5%") |
Normalized Earnings per Share – | Up 17% to 21% ( (previously | |
Net income | 794.6 | ~ |
Other assumptions for FY23 Guidance |
|
[1] See "Non-IFRS Measures" section of this press release |
[2] Earnings per share is defined as "EPS" |
[3] See "Non-IFRS Measures" section of this press release |
[4] Effective tax rate based on Normalized Earnings before Normalized Income Tax. |
[5] 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 2023 guidance. |
THIRD QUARTER RESULTS
Despite the pressure on the global supply chain network, and the recent cybersecurity incident, the Company increased revenues during the third quarter of Fiscal 2023, notably by increasing its production output and the conversion rate of substantially completed units available for retail. The increase in revenues for the three and nine-month periods this fiscal year compared to Fiscal 2022 is explained by the strong consumer demand and supported by the additional available capacity, such as the new Juarez 3 facility dedicated to SSV production. However, the deliveries of PWC and 3WV in the quarter occurred after the peak in the retail season and drove an increase in the dealer network inventory at the end of the third quarter.
Revenues
Revenues increased by
- Year-Round Products [6] (47% of Q3-23 revenues): Revenues from Year-Round Products increased by
$543.5 million , or 73.8%, to$1,279.8 million for the three-month period endedOctober 31, 2022 , compared to$736.3 million for the corresponding period endedOctober 31, 2021 . The increase in revenues was due to a high volume of SSV and 3WV sold. The higher volume of SSV sold was due to added capacity and improved supply chain. The increase in 3WV volume was the result of the late shipment of model year 2022 which are usually delivered during the second quarter. The increase includes a favourable foreign exchange rate variation of$47 million . - Seasonal Products [6] (38% of Q3-23 revenues): Revenues from Seasonal Products increased by
$583.6 million , or 133.5%, to$1,020.9 million for the three-month period endedOctober 31, 2022 , compared to$437.3 million for the corresponding period endedOctober 31, 2021 . The increase in revenues was primarily attributable to a higher volume of PWC sold due to late shipment of model year 2022 which are usually delivered during the second quarter. The increase was also attributable to a higher volume of snowmobiles sold and the introduction of the Sea-Doo pontoon. - Powersports PA&A and OEM Engines [6] (11% of Q3-23 revenues): Revenues from Powersports PA&A and OEM Engines increased by
$14.1 million , or 5.0%, to$298.0 million for the three-month period endedOctober 31, 2022 , compared to$283.9 million for the corresponding period endedOctober 31, 2021 . The increase in revenues was driven by favourable pricing and the introduction of the Sea-Doo pontoon. - Marine [6] (4% of Q3-23 revenues): Revenues from the Marine segment decreased by
$17.5 million , or 12.8%, to$118.8 million for the three-month period endedOctober 31, 2022 , compared to$136.3 million for the corresponding period endedOctober 31, 2021 . The decrease in revenues was primarily due to a lower volume of boats sold due to supply chain disruptions and the cybersecurity incident which delayed the new product introductions, partially offset by favourable pricing and a favourable mix of boats sold. The decrease includes a favourable foreign exchange rate variation of$2 million .
[6] The inter-segment transactions are included in the analysis. |
North American Retail Sales
The Company's North American retail sales for powersports products increased by 43% [7] for the three-month period ended
- Year-Round Products: retail sales increased on a percentage basis in the high-twenties range compared to the three-month period ended
October 31, 2021 . In comparison, the Year-Round Products industry recorded an increase on a percentage basis in the low single-digits over the same period. - Seasonal Products: retail sales increased on a percentage basis in the high-seventies range compared to the three-month period ended
October 31, 2021 . In comparison, the Seasonal Products industry increased on a percentage basis in the low-teens range over the same period while the Company increased on a percentage basis in the low-sixties range when excluding pontoons. - Marine: retail sales for Marine products decreased by 47% compared to the three-month period ended
October 31, 2021 as a result of lower product availability.
Gross profit
Gross profit increased by
Operating expenses
Operating expenses increased by
Normalized EBITDA [8]
Normalized EBITDA [8] increased by
Net Income
Net income increased by
[7] Including Sea-Doo pontoons. |
[8] See "Non-IFRS Measures" section of the press release. |
NINE-MONTH PERIOD ENDED
Revenues
Revenues increased by
Normalized EBITDA [9]
Normalized EBITDA [9] increased by
Net Income
Net income decreased by
LIQUIDITY AND CAPITAL RESOURCES
The Company generated net cash flows from operating activities totaling
The Company invested
Dividend
On
Today at
The Company's third quarter FY23 webcast presentation is posted in the Quarterly Reports section of BRP's website.
[9] See "Non-IFRS Measures" section of the press release. |
About BRP
We are a global leader in the world of powersports products, propulsion systems and boats built on 80 years of ingenuity and intensive consumer focus. Our portfolio of industry-leading and distinctive products includes Ski-Doo and Lynx snowmobiles, Sea-Doo watercraft and pontoons, Can-Am on and off-road vehicles, Alumacraft and Quintrex boats,
www.brp.com
@BRPNews
Ski-Doo, Lynx, Sea-Doo, Can-Am, Rotax, Alumacraft,
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements in this press release, including, but not limited to, statements relating to our Fiscal Year 2023, including financial guidance and outlook 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), the Company's ability to convert new entrants into life-long customers, statements relating to the anticipated additional production capacity, 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, financial position, market position, capabilities, competitive strengths, beliefs, the prospects and trends of the industries in which the Company operates, the expected growth in demand for products and services in the markets in which the Company competes, statements relating to the impact that the cybersecurity incident will have on its systems and operations, the Company's ability to mitigate financial consequences due to the cybersecurity incident, and its lack of impact on its financial year-end guidance updated on
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 its Annual Information Form dated
KEY ASSUMPTIONS
The Company made a number of economic, market and operational assumptions in preparing and making certain forward-looking statements contained in this MD&A, including the following: reasonable industry growth ranging from slightly down to up high-single digits, that is based on the assumption that the supply chain disruptions do not worsen; market share that will remain constant or moderately increase; stable global and North American economic conditions, a limited impact from the military hostilities in
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 | Assist management and 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 Other elements, such as restructuring, cybersecurity incident and wind-down costs, non-recurring gain or loss and acquisition-related costs, may be excluded from net income in the determination of Normalized EBITDA as they are considered not being reflective of the operational performance of the Company | |
Normalized net income | Net income adjusted of normalized elements | In addition to the financial performance of operating activities, these measures consider 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 | ||
Normalized effective tax rate | Based on Normalized net income before | ||
Normalized earnings per share – basic & diluted | Calculated respectively by dividing the | ||
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 the aforementioned 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 table 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 respective IFRS measures:
Three-month periods ended | Nine-month periods ended | ||||
(in millions of Canadian dollars) | 2022 | 2021 | 2022 | 2021 | |
Net income | |||||
Normalized elements | |||||
Foreign exchange (gain) loss on long-term debt and lease liabilities | 133.0 | (10.4) | 149.0 | (61.7) | |
Cybersecurity incident costs [2] | 23.3 | — | 23.3 | — | |
(Gain) loss on NCIB | — | — | (1.8) | 21.3 | |
Depreciation of intangible assets related to business combinations | 1.5 | 1.0 | 3.6 | 3.1 | |
Transaction costs and other related expenses [3] | 2.1 | — | 2.1 | 5.8 | |
Evinrude outboard engine wind-down [4] | — | (0.7) | — | 1.7 | |
Restructuring and related costs [5] | 0.8 | — | 0.8 | (0.1) | |
Transaction costs on long-term debt [6] | — | — | — | 44.3 | |
Other elements | — | 0.1 | 1.1 | 2.9 | |
Income tax adjustment [1] [7] | (9.8) | 6.0 | (10.9) | (7.1) | |
Normalized net income [1] | 292.5 | 123.7 | 667.5 | 595.2 | |
Normalized income tax expense | 87.6 | 45.9 | 219.4 | 210.0 | |
Financing costs adjusted | 33.3 | 16.4 | 77.4 | 49.4 | |
Financing income adjusted | (0.3) | (0.7) | (2.8) | (3.5) | |
Depreciation expense adjusted | 74.8 | 66.4 | 216.8 | 194.6 | |
Normalized EBITDA [1] |
[1] See "Non-IFRS Measures" section. |
[2] During Fiscal 2023, the Company incurred costs related to a cybersecurity incident. These costs are mainly comprised of recovery costs, idle costs such as direct labor during shutdown period, etc. |
[3] Costs related to business combinations. |
[4] The Company incurred costs related to the wind-down of the outboard engine production such as, but not limited to, idle costs and other exit costs. |
[5] The Company is involved, from time to time, in restructuring and reorganization activities in order to gain flexibility and improve efficiency. The costs related to these activities are mainly composed of severance costs and retention salaries. |
[6] During Fiscal 2022, the Company incurred a prepayment premium of |
[7] Income tax adjustment is related to the income tax on Normalized elements subject to tax and for which income tax has been recognized, adjustment related to the impact of foreign currency translation from Mexican operations, as well as the unrecognized tax benefits related to Evinrude outboard engine wind-down in Fiscal 2021. |
(millions of Canadian dollars, except per share data) | Three-month periods ended | Nine-month periods ended | |||
2022 | 2021 | 2022 | 2021 | ||
Depreciation expense reconciliation | |||||
Depreciation expense | |||||
Depreciation of intangible assets related to business combinations | 1.5 | 1.0 | 3.6 | 3.1 | |
Evinrude outboard engine wind-down [2] | — | — | — | 1.4 | |
Depreciation expense adjusted | |||||
Income tax expense reconciliation | |||||
Income tax expense | |||||
Income tax adjustment [3] | (9.8) | 6.0 | (10.9) | (7.1) | |
Normalized income tax expense [1] | |||||
Financing costs reconciliation | |||||
Financing costs | |||||
Transaction costs on long-term debt [4] | — | — | — | 44.3 | |
Loss on NCIB | — | — | — | 21.3 | |
Other | (0.2) | 0.1 | — | (0.1) | |
Financing costs adjusted | |||||
Financing income reconciliation | |||||
Financing income | |||||
Gain on NCIB | — | — | (1.8) | — | |
Financing income adjusted | |||||
Normalized EPS - basic [1] calculation | |||||
Normalized net income [1] | |||||
Non-controlling interests | 0.4 | 0.1 | 1.7 | 0.5 | |
Weighted average number of shares - basic | 78,735,106 | 81,168,487 | 79,573,969 | 83,312,905 | |
Normalized EPS - basic [1] | |||||
Normalized EPS - diluted [1] calculation | |||||
Normalized net income [1] | |||||
Non-controlling interests | 0.4 | 0.1 | 1.7 | 0.5 | |
Weighted average number of shares - Diluted | 80,253,434 | 83,525,890 | 81,137,287 | 85,791,361 | |
Normalized EPS - diluted [1] |
[1] See "Non-IFRS Measures" section. |
[2] During Fiscal 2022, the Company incurred costs related to the wind-down of the outboard engine production such as, but not limited to, idle costs and other exit costs. |
[3] Income tax adjustment is related to the income tax on Normalized elements subject to tax and for which income tax has been recognized, adjustment related to the impact of foreign currency translation from Mexican operations, as well as the unrecognized tax benefits related to Evinrude outboard engine wind-down in Fiscal 2021. |
[4] During Fiscal 2022, the Company incurred a prepayment premium of |
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