Highlights:
- Strongest fourth quarter on record in terms of revenues, Year-Round Products revenues increased 53% in the fourth quarter compared to prior year;
- Revenues of $3,524.7 million for FY2015, a 10% increase compared to prior year;
- Normalized EBITDA [1] of $421.3 million for FY2015, an 11% increase compared to prior year;
- Net income of $70.1 million for FY2015 resulting in diluted earnings per share of $0.59;
- Normalized net income[1] of $196.2 million for FY2015, a 17% increase compared to prior year, which resulted in a normalized diluted earnings per share[1] of $1.65; and
- Normalized income tax rate of 22% for FY2015 compared to guidance range of 24.5% - 25.5%.
VALCOURT, QC, March 27, 2015 /CNW Telbec/ - BRP Inc. (TSX: DOO) today reported its financial results for the three- and twelve-month periods ended January 31, 2015. All financial information is in Canadian dollars unless otherwise noted. The complete financial results are available at www.sedar.com.
"We grew sales in all four product categories, grew revenues in international markets despite the situation in Russia and exceeded our objective for new dealers. We also launched several market-shaping products with significant volume potential and the consumer reaction so far is very promising," said José Boisjoli, president and CEO. "All in all, we had challenges throughout Fiscal Year 2015 but we stayed the course, executed on our plan and delivered solid results."
Commenting on the outlook, Boisjoli added: "We are introducing our guidance for Fiscal Year 2016 with continued revenues and EBITDA growth, mitigated by an assumption of a reduction in sales from Russia when compared to Fiscal Year 2015. The construction of our new plant in Mexico is progressing well and production is still expected to start in the back-end of Fiscal Year 2016. I look forward to continued success on our journey to grow our Year-Round Products category."
Highlights for the Three- and Twelve-Month Periods Ended January 31, 2015
Revenues increased by $165.2 million, or 18.3%, to $1,068.1 million for the three-month period ended January 31, 2015, compared with $902.9 million for the corresponding period ended January 31, 2014. The revenue increase was mainly due to higher wholesale in Year-Round Products. The increase in revenues includes a favourable foreign exchange rate variation of $42 million mainly related to the strengthening of the U.S. dollar against the Canadian dollar.
Revenues increased by $330.6 million, or 10.4%, to $3,524.7 million for the twelve-month period ended January 31, 2015, compared with $3,194.1 million for the corresponding period ended January 31, 2014. The revenue increase was mainly due to higher wholesale in Seasonal Products and their related PAC, and a favourable foreign exchange rate variation of $155 million mainly related to the strengthening of the U.S. dollar and the euro against the Canadian dollar.
| [1] |
Please see definitions of Normalized EBITDA, Normalized net income and Normalized diluted earnings per share following the Net income data table. |
| Net Income data |
|||||||
| Three-month periods ended |
Twelve-month periods ended |
||||||
| (in millions of Canadian dollars) |
January 31, |
January 31, |
January 31, |
January 31, |
January 31, |
||
| Revenues by category |
[3] |
||||||
| Year-Round Products |
$ 416.0 |
$ 272.5 |
$ 1,306.3 |
$ 1,204.9 |
$ 1,045.7 |
||
| Seasonal Products |
391.6 |
406.4 |
1,288.9 |
1,136.2 |
1,056.9 |
||
| Propulsion Systems |
108.7 |
75.3 |
373.7 |
343.7 |
333.8 |
||
| PAC |
151.8 |
148.7 |
555.8 |
509.3 |
459.8 |
||
| Total Revenues |
1,068.1 |
902.9 |
3,524.7 |
3,194.1 |
2,896.2 |
||
| Cost of sales |
778.4 |
679.7 |
2,679.1 |
2,386.4 |
2,158.5 |
||
| Gross profit |
289.7 |
223.2 |
845.6 |
807.7 |
737.7 |
||
| As a percentage of revenues |
27.1% |
24.7% |
24.0% |
25.3% |
25.5% |
||
| Operating expenses |
|||||||
| Selling and marketing |
54.5 |
55.4 |
242.1 |
230.7 |
228.3 |
||
| Research and development |
39.0 |
41.4 |
158.2 |
144.9 |
128.2 |
||
| General and administrative |
34.9 |
36.4 |
144.4 |
143.8 |
127.5 |
||
| Other operating expenses (income) |
(13.0) |
11.8 |
(4.1) |
(6.8) |
34.0 |
||
| Total operating expenses |
115.4 |
145.0 |
540.6 |
512.6 |
518.0 |
||
| Operating income |
174.3 |
78.2 |
305.0 |
295.1 |
219.7 |
||
| Net financing costs |
14.3 |
15.1 |
56.6 |
62.0 |
60.7 |
||
| Foreign exchange (gain) loss on long-term debt |
111.5 |
52.9 |
123.9 |
96.4 |
(3.6) |
||
| Increase in fair value of common shares |
— |
— |
— |
19.6 |
11.0 |
||
| Income before income taxes |
48.5 |
10.2 |
124.5 |
117.1 |
151.6 |
||
| Income taxes expense |
40.0 |
16.5 |
54.4 |
57.4 |
32.4 |
||
| Net income (loss) |
$ 8.5 |
$ (6.3) |
$ 70.1 |
$ 59.7 |
$ 119.2 |
||
| Attributable to shareholders |
$ 8.5 |
$ (6.2) |
$ 70.2 |
$ 59.9 |
$ 119.2 |
||
| Attributable to non-controlling interest |
— |
(0.1) |
(0.1) |
(0.2) |
— |
||
| Normalized EBITDA [1] |
$ 199.3 |
$ 106.0 |
$ 421.3 |
$ 380.2 |
$ 335.0 |
||
| Normalized net income [1] |
116.5 |
48.3 |
196.2 |
168.3 |
146.7 |
||
| Normalized earnings per share – basic [2] |
0.98 |
0.41 |
1.66 |
1.50 |
1.44 |
||
| Normalized earnings per share – diluted [2] |
0.98 |
0.41 |
1.65 |
1.49 |
1.43 |
||
| [1] |
For a reconciliation of Net income (loss) to Normalized net income and Normalized EBITDA, see the Reconciliation Tables in the MD&A. |
| Normalized EBITDA and Normalized net income are non-IFRS measures that the Company uses to assess its operating performance. Normalized EBITDA is defined as Net income (loss) before financing costs, financing income, income taxes expense (recovery), depreciation expense and normalized elements. Normalized net income is defined as Net income (loss) before normalized elements, adjusted to reflect the tax effect on these elements. See "Non-IFRS Measures" section in the MD&A. |
|
| [2] |
Normalized earnings per share – basic and normalized earnings per share – diluted are calculated respectively by dividing the Normalized net income by the weighted average number of shares – basic and the weighted average number of shares – diluted. |
| As per IFRS requirements, the weighted average number of shares outstanding for the three- and twelve-month periods ended January 31, 2014 and for the twelve-month period ended January 31, 2013 has been calculated taking into account the consolidation of the outstanding shares on 3.765 to one basis that occurred on May 29, 2013, pursuant to the initial public offering of the Company's subordinate voting shares (the "IPO"). |
|
| [3] |
Restated to reflect the application of the amendments to IAS 19 "Employee Benefits" standard as explained in Note 2a) of the audited consolidated financial statements for the year ended January 31, 2014. |
QUARTERLY REVIEW BY CATEGORIES
Year-Round Products
Revenues from Year-Round Products increased by $143.5 million, or 52.7%, to $416.0 million for the three-month period ended January 31, 2015, compared with $272.5 million for the corresponding period ended January 31, 2014. The increase resulted primarily from the introduction of new models such as the Maverick X ds SSV, the Outlander L ATV mid-cc segment family and the Can-Am Spyder F3, and from higher shipments of Can-Am off-road vehicles from third to fourth quarter mainly to be more closely aligned with the retail season. The increase in revenues includes a favourable foreign exchange rate variation of $29 million.
Seasonal Products
Revenues from Seasonal Products decreased by $14.8 million, or 3.6%, to $391.6 million for the three-month period ended January 31, 2015, compared with $406.4 million for the corresponding period ended January 31, 2014. The decrease resulted primarily from a lower volume of snowmobiles sold in Russia and Scandinavia, partially offset by an increased volume of Sea-Doo Spark watercraft. The decrease in revenues includes a favourable foreign exchange rate variation of $6 million.
Propulsion Systems
Revenues from Propulsion Systems increased by $33.4 million, or 44.4%, to $108.7 million for the three-month period ended January 31, 2015, compared with $75.3 million for the corresponding period ended January 31, 2014. The increase in revenues was mainly attributable to a higher volume of outboard engines sold due to the introduction of the Evinrude E-TEC G2 engine.
PAC (Parts, Accessories, Clothing and other services)
Revenues from PAC increased by $3.1 million, or 2.1%, to $151.8 million for the three-month period ended January 31, 2015, compared with $148.7 million for the corresponding period ended January 31, 2014. The increase was mainly attributable to a favourable foreign exchange rate variation of $7 million, partially offset by a lower volume of snowmobile PAC sold in Russia and Scandinavia.
Gross profit increased by $66.5 million, or 29.8%, to $289.7 million for the three-month period ended January 31, 2015, compared with $223.2 million for the corresponding period ended January 31, 2014. The increase in gross profit is primarily due to a higher volume of Year-Round Products sold and a favourable foreign exchange rate impact of $2 million. Gross profit margin percentage increased by 240 basis points to 27.1% from 24.7% for the three-month period ended January 31, 2014. The increase in gross profit margin percentage was primarily due to a higher volume, a favourable mix and pricing from Year-Round Products sold, partially offset by unfavourable foreign exchange rate variations.
Operating expenses decreased by $29.6 million, or 20.4%, to $115.4 million for the three-month period ended January 31, 2015, compared with $145.0 million for the three-month period ended January 31, 2014. This decrease was primarily driven by foreign exchange rate changes mainly on foreign-denominated working capital elements as on those elements the Company recorded a foreign exchange gain of $12 million during this quarter compared to a foreign exchange loss of $10 million during the same period last year. To a lower extent, the decrease of operating expenses is also attributable to lower advertising expenses.
Normalized net income reached $116.5 million, an increase of $68.2 million, which resulted in normalized diluted earnings per share of $0.98, an increase of $0.57 per share. The increase was primarily due to increased gross profit from higher volume of Year-Round Products sold and to lower operating expenses.
Fiscal Year 2016 Guidance
The table below sets forth BRP's financial guidance for Fiscal Year 2016 when compared to actual results for Fiscal Year 2015. The individual targets are based on certain assumptions for currency exchange rates and exclude the effects of future fluctuations.
| Financial Metric |
FY16 Guidance vs FY15 Results |
||
| Revenues |
|||
| Year-Round Products |
Up 7% to 11% |
||
| Seasonal Products |
Flat to up 4% |
||
| Propulsion Systems |
Up 7% to 10% |
||
| PAC |
Up 10% to 15% |
||
| Total Company Revenues |
Up 5% to 9% |
||
| Normalized EBITDA |
Up 6% to 10% |
||
| Effective Tax Rate[1] |
27% - 29% |
Up from a normalized income tax rate of 22.0% in FY15 |
|
| Normalized Net Income[2] |
Down 9% to flat |
Flat to up 7%, adjusting FY15 tax rate using FY16 estimated tax rate |
|
| Normalized Earnings per Share – Diluted |
$1.50 - $1.65 |
||
| Capital Expenditures |
$200M to $220M |
||
| [1] |
Effective tax rate based on Normalized Earnings before Normalized Income Tax. |
| [2] |
Assuming $135M of depreciation expense compared to $113M in FY15. |
The above targets are based on a number of economic and market assumptions the Company has made in preparing its Fiscal Year 2016 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 2016, 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 March 26, 2015. 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 fourth-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 year-end conference call by phone, for the English integral version (event number 4206602), 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 4206603), 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 6046877. For the French translation, enter 4265416. The instant replay will be available 30 days following the call.
About BRP
BRP (TSX: DOO) is a global leader in the design, development, manufacturing, distribution and marketing of powersports vehicles and propulsion systems. Its portfolio includes Ski-Doo and Lynx snowmobiles, Sea-Doo watercraft, Can-Am all-terrain and side-by-side vehicles, Can-Am Spyder roadsters, Evinrude and Rotax marine propulsion systems as well as Rotax engines for karts, motorcycles and recreational aircraft. BRP supports its line of products with a dedicated parts, accessories and clothing business. With annual sales of over CA$3.5 billion from 107 countries, the Company employs approximately 7,600 people worldwide.
Ski-Doo, Lynx, Sea-Doo, Evinrude, Rotax, Can-Am, Spyder, Maverick, X, F3, Spark, G2 and the BRP logo are trademarks of Bombardier Recreational Products Inc. or its affiliates. All other trademarks are the property of their respective owners.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
Certain information included in this release, including, but not limited to, statements relating to our Fiscal Year 2016 financial outlook (including revenues, gross profit margin, operating expenses, Normalized EBITDA, Effective Tax Rate, Normalized net income and Normalized earnings per share), and other statements that are not historical facts, are "forward-looking statements" within the meaning of Canadian securities laws. Forward-looking statements are typically identified by the use of terminology such as "may", "will", "would", "should", "could", "expects", "forecasts", "plans", "intends", "trends", "indications", "anticipates", "believes", "estimates", "outlook", "predicts", "projects", "likely" or "potential" or the negative or other variations of these words or other comparable words or phrases. Forward looking statements, by their very nature, involve inherent risks and uncertainties and are based on several assumptions, both general and specific. BRP cautions that its assumptions may not materialize and that current economic conditions render such assumptions, although reasonable at the time they were made, subject to greater uncertainty. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results or performance of the Company or the power sports industry to be materially different from the outlook or any future results or performance implied by such statements. Key assumptions used in determining forward-looking information are set forth below.
Key Assumptions
The Company made a number of economic and market assumptions in preparing its 2016 financial guidance, including assumptions regarding the performance of the economies in which it operates, market competition, tax laws applicable to its operations and foreign exchange currency fluctuation. In addition, 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: impact of adverse economic conditions on consumer spending; decline in social acceptability of the Company's products; fluctuations in foreign currency exchange rates; high levels of indebtedness; unavailability of additional capital; unfavourable weather conditions; seasonal sales fluctuations; the Company's ability to comply with product safety, health, environmental and noise pollution laws; dependence on dealers, distributors, suppliers, financing sources and other strategic partners who may be sensitive to economic conditions; large fixed cost base; inability of dealers and distributors to secure adequate access to capital; supply problems, termination or interruption of supply arrangements or increases in the cost of materials; restrictive covenants in the Company's financing and other material agreements; competition in product lines; loss of members of management team or employees who possess specialized market knowledge and technical skills; inability to maintain and enhance reputation and brands; adverse determination in any significant product liability claim against the Company; significant product repair and/or replacement due to product warranty claims or product recalls; reliance on a network of independent dealers and distributors to manage the retail distribution of products; dependence on customer relationships for the sale of original equipment manufacturer products; unsuccessful management of inventory; risks associated with international operations; inability to enhance existing products and develop and market new products; protection of intellectual property; failure of information technology systems; declining prices for used versions of products and oversupply by competitors; unsuccessful execution of manufacturing strategy; changes in tax laws and unanticipated tax liabilities; higher fuel costs; deterioration in relationships with employees; pension plan liabilities; natural disasters; failure to carry proper insurance coverage; public company expenses; conduct of business through subsidiaries; and significant influence by our principal shareholders holding multiple voting shares.
BRP undertakes no obligation to update or revise forward-looking statements to reflect future events, changes in circumstances, or changes in beliefs, unless required by applicable Canadian securities laws. In the event that BRP does update any forward-looking statement, no inference should be made that BRP will make additional updates with respect to that statement, related matters, or any other forward-looking statement.
CAUTION REGARDING NON-IFRS MEASURES
This press release makes reference to financial results in accordance with IFRS, and also makes reference to certain non-IFRS measures. Normalized EBITDA, normalized net income (loss), normalized basic earnings (loss) per share and normalized diluted earnings (loss) per share are measures that are not defined by the IFRS. 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 the management's perspective. BRP believes non-IFRS measures are important supplemental measures of operating performance because they eliminate items that have less bearing on the Company's operating performance and thus highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS measures. Management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess the Company's ability to meet its future debt service, capital expenditure and working capital requirements.
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SOURCE BRP
Pascal Bossé, Corporate Director, Communications and Investor Relations, Tel: +1.450.532.6466, [email protected]
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