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|BRP reports second-quarter results for fiscal year 2015|
 Please see definitions of Normalized EBITDA and Normalized net loss on Page 2 of this release below the Net Income Data table.
Valcourt, Québec, September 12, 2014 — BRP Inc. (TSX: DOO) today reported its financial results for the three- and six-month periods ended July 31, 2014. All financial information is in Canadian dollars unless otherwise noted. The complete financial results are available at www.sedar.com.
"After a soft start into Fiscal Year 2015, Revenues growth accelerated meaningfully in the second quarter with solid performance in Seasonal Products," said José Boisjoli, president and CEO. "Our second quarter is typically seasonally weaker and our gross margins were affected by higher costs resulting from sales programs and an unforeseen foreign exchange impact."
Commenting on the outlook for the second half of Fiscal Year 2015, Boisjoli added: "We had strong retail in North America for both Seasonal and Year-Round Products when compared to the second quarter of last year driven by the commercial success of the Sea-Doo Spark watercraft, Can-Am Spyder and side-by-side vehicles. Our inventories in the channel are in good shape and this bodes well for the second half of the year. As such, we are reaffirming our guidance for Fiscal Year 2015 with expected continued acceleration of Revenues and a strong finish in the fourth quarter driven by sales of snowmobiles and deliveries of new products."
Highlights for the Three- and Six-Month Periods Ended July 31, 2014
Revenues increased by $159.1 million, or 25.6%, to $780.0 million for the three-month period ended July 31, 2014, compared with $620.9 million for the corresponding period ended July 31, 2013. The revenue increase was mainly due to higher wholesale in Seasonal Products and in Year-Round Products along with an increased wholesale of their related parts, accessories and clothing (PAC). The increase was partially offset by increased sales program costs relating to Year-Round Products. The increase in revenues included a favourable foreign exchange rate variation of $35 million mainly related to the strengthening of the Euro and the U.S. dollar against the Canadian dollar.
Revenues increased by $113.4 million, or 8.0%, to $1,538.6 million for the six-month period ended July 31, 2014, compared with $1,425.2 million for the corresponding period ended July 31, 2013. The revenue increase was mainly due to higher wholesale in Seasonal Products and their related PAC, partially offset by lower wholesales and higher sales program costs in Year-Round Products. The revenue increase included a favourable foreign exchange rate variation of $84 million mainly related to the strengthening of the U.S. dollar and the Euro against the Canadian dollar.
QUARTERLY REVIEW BY CATEGORIES
Revenues from Seasonal Products increased by $119.2 million, or 84.8%, to $259.8 million for the three-month period ended July 31, 2014, compared with $140.6 million for the corresponding period ended July 31, 2013. The increase resulted primarily from an increase of volume of PWC sold driven by the new entry-level Sea-Doo Spark model and an increase in volume of snowmobiles sold for the upcoming season. The increase in revenues included a favourable foreign exchange rate variation of $10 million.
Revenues from Year-Round Products increased by $19.3 million, or 6.9%, to $297.4 million for the three-month period ended July 31, 2014, compared with $278.1 million for the corresponding period ended July 31, 2013. The increase resulted primarily from higher shipments of Can-Am side-by-side vehicles reflecting the industry growth in North America and to a lower extent from Can-Am all-terrain vehicles. The increase was mitigated by higher sales program costs. The increase in revenues included a favourable foreign exchange rate variation of $13 million.
Revenues from Propulsion Systems decreased by $1.5 million, or 1.7%, to $84.4 million for the three-month period ended July 31, 2014, compared with $85.9 million for the corresponding period ended July 31, 2013. The decrease in revenues was mainly attributable to a lower volume of outboard engines sold, partially offset by a favourable mix. The decrease included a favourable foreign exchange rate variation of $5 million.
PAC (Parts, Accessories, Clothing and other services)
Revenues from PAC increased by $22.1 million, or 19.0%, to $138.4 million for the three-month period ended July 31, 2014, compared with $116.3 million for the corresponding period ended July 31, 2013. The increase was mainly attributable to a higher volume of Seasonal Products' PAC sold due to the good performance of the Sea-Doo Spark model and higher deliveries of snowmobiles' PAC for the upcoming season. The increase included a favourable foreign exchange rate variation of $7 million.
Gross profit remained stable to $142.9 million for the three-month period ended July 31, 2014, compared with $142.6 million for the corresponding period ended July 31, 2013. Gross profit margin percentage decreased by 470 basis points to 18.3% from 23.0% for the three-month period ended July 31, 2013. The decrease in gross profit margin percentage was primarily due to higher sales programs costs in Year-Round Products, absorption of overhead costs stemming from the reduction of finished goods inventory, unfavourable foreign exchange rate variations and expenses related to the production ramp-up at the Querétaro, Mexico facility and to the transfer of PAC distribution to third-party logistics providers. The foreign exchange rate negatively impacted the gross profit by $4 million.
Operating expenses increased by $32.5 million, or 30.4%, to $139.3 million for the three-month period ended July 31, 2014, compared with $106.8 million for the three-month period ended July 31, 2013. This increase was driven by increased marketing expenses in relation with the Sea-Doo Spark model and the launch of the new Evinrude E-TEC G2 outboard engine and by increased research and development costs. The increase included an unfavourable foreign exchange impact of $6 million.
Normalized net loss of $8.8 million, a decrease of $16.4 million, which resulted in normalized diluted loss per share of $0.07, a decrease of $0.14 per share. The decrease in normalized net income was primarily due to increased sales program costs, costs related to the production ramp-up at the Querétaro facility and to the transfer of PAC distribution and increased marketing costs, offset by an increase of products sold. The decrease included an unfavourable foreign exchange rate variation of $10 million.
Fiscal Year 2015 Guidance
BRP's financial guidance targets as presented on June 12, 2014 are revised as follows (no change unless otherwise noted):
 Effective tax rate based on Normalized Earnings before Income Tax.
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 September 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 second-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.
To listen to the second-quarter conference call by phone, for the English integral version (event number 4197660), 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 4197659), 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 2533401. For the French translation, enter 6927817. The instant replay will be available 30 days following the call.
Ski-Doo, Lynx, Sea-Doo, Evinrude, Rotax, Can-Am, Spyder, E-TEC, G2, Spark and the BRP logo are trademarks of Bombardier Recreational Products Inc. or its affiliates.
Caution regarding non-IFRS measures
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