|BRP reports third-quarter results for fiscal year 2015|
BRP's Can-Am Spyder F3. © BRP 2014
 Please see definitions of Normalized EBITDA, Normalized net income and Normalized earnings per share following the Net income data table.
Valcourt, Québec, December 12, 2014 — BRP Inc. (TSX: DOO) today reported its financial results for the three- and nine-month periods ended October 31, 2014. All financial information is in Canadian dollars unless otherwise noted. The complete financial results are available at www.sedar.com.
"Building on the second-quarter momentum in Seasonal Products, third-quarter Revenues grew 6% and Normalized net income increased 22% compared to the same period last year. We started shipping new products, including the Can-Am Maverick X ds side-by-side model, during the last few weeks and with dealer inventories at healthy levels in North America, we expect a strong fourth quarter for Year-Round Products," said José Boisjoli, president and CEO.
Commenting on the guidance for Fiscal Year 2015, Boisjoli added: "Earlier this year, we identified a currency risk in Russia and the situation has deteriorated significantly with a steep decline in the value of the ruble since the end of October. The outcome is higher costs for imported products and this affects our distributor's sales to consumers. With six weeks remaining before the end of the fiscal year, we are adjusting our guidance to reflect the potential financial impact. I am nevertheless pleased with our results because the other main drivers of our earlier guidance are largely unchanged and this speaks volumes about the quality of our execution."
Highlights for the Three- and Nine-Month Periods Ended October 31, 2014
Revenues increased by $52.0 million, or 6.0%, to $918.0 million for the three-month period ended October 31, 2014, compared with $866.0 million for the corresponding period ended October 31, 2013. The revenue increase was mainly due to higher wholesale in snowmobiles along with an increased wholesale of their related PAC. The increase was partially offset by lower wholesale in Year-Round Products. The increase in revenues includes a favourable foreign exchange rate variation of $29 million mainly related to the strengthening of the U.S. dollar and the euro against the Canadian dollar.
Revenues increased by $165.4 million, or 7.2%, to $2,456.6 million for the nine-month period ended October 31, 2014, compared with $2,291.2 million for the corresponding period ended October 31, 2013. The revenue increase was mainly due to higher wholesale in Seasonal Products and their related PAC, partially offset by lower wholesale and higher sales program costs in Year-Round Products. The revenue increase includes a favourable foreign exchange rate variation of $113 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 $70.4 million, or 18.4%, to $452.9 million for the three-month period ended October 31, 2014, compared with $382.5 million for the corresponding period ended October 31, 2013. The increase resulted primarily from an increase in volume of snowmobiles sold for the upcoming season. The increase in revenues includes a favourable foreign exchange rate variation of $13 million.
Revenues from Year-Round Products decreased by $22.1 million, or 8.9%, to $227.5 million for the three-month period ended October 31, 2014, compared with $249.6 million for the corresponding period ended October 31, 2013. The decrease resulted primarily from lower shipments of Can-Am Maverick models. The decrease in revenues includes a favourable foreign exchange rate variation of $9 million.
Revenues from Propulsion Systems decreased by $6.3 million, or 7.0%, to $83.3 million for the three-month period ended October 31, 2014, compared with $89.6 million for the corresponding period ended October 31, 2013. The decrease in revenues was mainly attributable to a lower volume of outboard engines sold. The decrease includes a favourable foreign exchange rate variation of $3 million.
PAC (Parts, Accessories, Clothing and other services)
Revenues from PAC increased by $10.0 million, or 6.9%, to $154.3 million for the three-month period ended October 31, 2014, compared with $144.3 million for the corresponding period ended October 31, 2013. The increase is mainly attributable to a higher volume of Seasonal Products' PAC sold for the upcoming snowmobile season. The increase includes a favourable foreign exchange rate variation of $4 million.
Gross profit increased by $15.7 million, or 7.0%, to $239.6 million for the three-month period ended October 31, 2014, compared with $223.9 million for the corresponding period ended October 31, 2013. The foreign exchange rate negatively impacted gross profit by $1 million. Gross profit margin percentage increased by 20 basis points to 26.1% from 25.9% for the three-month period ended October 31, 2013. The increase in gross profit margin percentage was primarily due to a higher volume of snowmobiles sold, partially offset by unfavourable foreign exchange rate variations.
Operating expenses increased by $12.0 million, or 9.3%, to $140.9 million for the three-month period ended October 31, 2014, compared with $128.9 million for the three-month period ended October 31, 2013. This increase was driven by an unfavourable foreign exchange impact of $13 million mainly on working capital.
Normalized net income reached $71.9 million, an increase of $12.9 million, which resulted in a normalized diluted earnings per share of $0.60, an increase of $0.10 per share. The increase was primarily due to higher gross profit from a greater volume of snowmobiles sold partially offset by increased foreign exchange loss mainly on foreign-denominated working capital elements. The unfavourable foreign exchange rate variation amounted to $14 million.
Fiscal Year 2015 Guidance
BRP's financial guidance targets as presented on September 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 December 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. (ET), BRP Inc. will host a conference call and webcast to discuss BRP's FY2015 third-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 third-quarter conference call by phone, for the English integral version (event number 4204323), please dial 514-861-1681 or 800-766-6630 (toll-free in North America), or 800-2787-2090 for overseas callers. For the French version (event number 4204324), please dial 514-392-1478 or 866-542-4146 (toll-free in North America), or 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 800-408-3053. For the English integral version, please enter the pass code 5725326. For the French translation, enter 6277831. The instant replay will be available 30 days following the call.
Ski-Doo, Lynx, Sea-Doo, Evinrude, Rotax, Can-Am, Spyder, Maverick, X, F3 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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|"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding BRP's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.|