Sea-Doo, Ski-Doo Parent Delivers Solid First Quarter Results On Healthy Demand

BRP, Inc., the Canada-based parent company of the Ski-Doo, Lynx and Sea-Doo brands, said that strong deliveries, aided by improvements in the supply chain and inflationary environment, allowed the company to deliver a solid first quarter, outperforming the results of the first quarter of Fiscal 2023. BRP said the demand for its products “continued to be healthy,” as evidenced by the increase of 3 percent in its North American retail sales for Powersports Products during the first quarter of Fiscal 2024 compared to the year-ago comparable period.

The increase in revenues for the three-month period ended April 30, 2023 compared to the first quarter of Fiscal 2023 stems from high deliveries of units for the upcoming retail season, and during that period, BRP said it experienced strong PWC, Sea-Doo pontoon, and SSV retail sales.

“The supply chain has gradually returned to a more stable level, resulting in production efficiencies and an increase in gross profit margin compared to the same period last year,” the company said in a statement.

Revenues increased 34.3 percent to CN$2.43 billion for the three-month period ended April 30, compared to CN$1.81 billion for the corresponding period ended April 30, 2022. The increase in revenue was primarily due to a higher wholesale volume of SSV, PWC, 3WV and a favorable product mix and pricing across all product lines, partially offset by higher sales programs. The increase includes a favorable foreign exchange rate variation of CN$94.8 million.

Year-Round Products revenues delivered 55 percent of sales for the quarter, increasing 42.7 percent to CN$1.33 billion for the period, compared to CN$934.4 million for the corresponding Q1 period last year. The increase was primarily attributable to a higher volume of SSV and 3WV sold due to additional capacity and supply chain issues experienced in the prior year that impacted product availability and favorable pricing and product mix across all product lines, partially offset by higher sales programs. The increase includes a favorable foreign exchange rate variation of CN$63 million.

Seasonal Products revenues, which represented 28 percent of sales in the quarter, increased 69.3 percent to CN$691.9 million for the period, compared to CN$408.7 million for the corresponding year-ago period. The increase was primarily attributable to a higher volume of PWC sold, driven by strong market demand and due to supply chain issues 

experienced in the prior year, which impacted product availability and increased deliveries of the Sea-Doo pontoon. The increase was also attributable to favorable pricing across all product lines, partially offset by higher sales programs. The increase includes a favorable foreign exchange rate variation of CN$16 million.

Powersports PA&A and OEM Engines revenues, which comprised 12 percent of total revenues for the quarter, decreased 17.1 percent, to CN$284.9 million for Q1, compared to CN$343.6 million for the corresponding Q1 period last year. The decrease in revenues was mainly attributable to a lower volume of sales. The decrease in sales volume was mainly attributable to higher sales of snowmobile PA&A last year, driven by late unit deliveries in the season and lower dealer orders. The decrease includes a favorable foreign exchange rate variation of CN$11 million.

Marine segment revenues, 5 percent of total revenue, decreased 7.5 percent to CN$122.3 million for the first quarter, compared to CN$132.2 million for the corresponding first quarter last year. The decrease in revenues from the Marine segment was mainly due to a lower volume of boats and PA&A sold due to supply chain disruptions and a longer production ramp-up related to the introduction of new products. The decrease was partially offset by a favorable product mix of boats sold, higher pricing and a favorable foreign exchange rate variation of CN$5 million.

North American Retail Sales
BRP’s North American retail sales for Powersports Products increased by 3 percent year-over-year for the three-month period. The increase was mainly driven by an increase in the sales of PWC and SSV.

Year-Round Products retail sales decreased on a percentage basis in the low-single digits in Q1 compared to the three-month period ended April 30, 2022. In comparison, the Year-Round Products industry recorded a high-single-digit decrease versus the year-ago period.

Seasonal Products retail sales posted a mid-single-digit increase in Q1 compared to the year-ago period excluding pontoons. In comparison, the Seasonal Products industry recorded an increase on a percentage basis in the mid-single digits over the same period.

Marine Products retail sales decreased by 39 percent compared to the three-month period ended April 30, 2022, due to lower product availability.

Gross profit margin increased by 60 basis points to 25.7 percent of sales from 25.1 percent for the three-month period ended April 30, 2022. The increase in gross profit was said to be the result of a favorable volume of SSV, 3WV, and PWC sold along with favorable pricing, a decrease in logistics costs due to more efficiencies in the supply chain, and a favorable product mix across product lines. The increase was reportedly partially offset by higher materials and labor costs due to inflation, as well as higher sales programs. The increase in gross profit margin percentage was also said to result from a favorable product mix of PWC and 3WV, favorable pricing across all product lines and higher production efficiency coming from an improved supply chain, partially offset by higher sales programs.

Operating expenses increased 34.1 percent to CN$341.6 million for the reported quarter, compared to CN$254.8 million for the prior-year quarter. The increase in operating expenses was said to be mainly attributable to an increase in R&D expenses to support future growth, higher G&A expenses mainly related to the modernization of the Company’s software infrastructure and higher selling and marketing expenses mainly attributable to continued product investments. The increase in operating expenses includes an unfavorable foreign exchange rate variation of CN$14 million.

Normalized EBITDA increased 38.6 percent to CN$377.1 million for the quarter, compared to CN$272.1 million for the year-ago quarter. The increase was said to be primarily due to higher gross profit partially offset by higher operating expenses, mostly in R&D and selling and marketing.

Net income increased 27.7 percent to CN$154.5 million for the first quarter, compared to CN$121.0 million for the year-ago quarter. The increase was reportedly due primarily to higher operating income and lower income tax expense, partially offset by an increase in financing costs and an unfavorable impact of the foreign exchange rate variation on the U.S.-denominated long-term debt.

The company generated net cash flows from operating activities totaling CN$258.8 million for the three-month period ended April 30, 2023 compared to a usage of CN$333.1 million for the three-month period ended April 30, 2022. The increase was said to be mainly due to improved changes in working capital and lower income taxes paid.

BRP invested CN$117.8 million of its liquidity in capital expenditures to add production capacity and modernize the company’s software infrastructure to support future growth and also returned CN$63.8 million to its shareholders through quarterly dividend payouts and share repurchase programs.

Photo courtesy See-Doo