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BRP Reports Fiscal Year 2021 1st Quarter Results

“The sudden impact of the COVID-19 crisis has brought rapid changes that significantly disrupted our business and forced us to quickly and successfully adjust our plan, thanks to the agility and resilience of our employees, suppliers and dealers."

BRP Inc. reported its financial results for the three-month period ended April 30, 2020. All financial information is in Canadian dollars unless otherwise noted. The complete financial results are available at Sedar, as well as in the Quarterly Reports section of BRP’s website.

“The sudden impact of the COVID-19 crisis has brought rapid changes that significantly disrupted our business and forced us to quickly and successfully adjust our plan, thanks to the agility and resilience of our employees, suppliers and dealers. Today most of our manufacturing and dealers have re-opened for business. With the new travel restrictions and vacation at home trend, our retail is returning strongly and showing very positive signs”, said José Boisjoli, president and CEO at BRP.

Among the operational adjustments made in the current context is the discontinuation of our outboard engine production.

“For our Evinrude employees, let me say that I am very proud of the part they have played over the past years and in particular, their efforts over the past 18 months. Although we have made progress, the impact of COVID-19 has left us no choice. I wish to thank them for their dedication and commitment in helping us create the Marine Group,” concluded Boisjoli. The marine strategy will focus on enhancing the boat business and new technologies to transform this industry.

Highlights for the Three-Month Period Ended April 30, 2020

Revenues decreased by $103.9 million, or 7.8%, to $1,229.8 million for the three-month period ended April 30, 2020, compared with $1,333.7 million for the corresponding period ended April 30, 2019. The revenue decrease was primarily due to lower wholesale of Seasonal Products and Marine products. The lower wholesale is mainly attributable to the COVID-19 pandemic impact, partially offset by a strong start of quarter. The decrease in revenue was partially offset by a favorable foreign exchange rate variation of $13 million.

The Company’s North American retail sales for the three-month period ended April 30, 2020 decreased by 1% compared with the three-month period ended April 30, 2019, mainly due to a decrease in 3WV, outboard engines and snowmobiles. The decrease was partially offset by an increase in SSV and ATV.

Gross profit decreased by $65.5 million, or 21.8%, to $235.1 million for the three-month period ended April 30, 2020, compared with $300.6 million for the corresponding period ended April 30, 2019. The gross profit decrease includes a favorable foreign exchange rate variation of $12 million. Gross profit margin percentage decreased by 340 basis points to 19.1% from 22.5% for the three-month period ended April 30, 2019. The decrease was primarily due to the under- absorption of fixed costs resulting from plant closures and unfavorable pricing and sales programs variation. The decrease was partially offset by a favorable product mix in SSV, PWC and 3WV and a favorable foreign exchange rate variation.

Operating expenses increased by $150.8 million, or 71.3%, to $362.4 million for the three- month period ended April 30, 2020, compared with $211.6 million for the three-month period ended April 30, 2019. The increase was mainly attributable to the $171.4 million impairment charge recorded during the first quarter of Fiscal 2021 for the Marine segment, partially offset by cost reduction initiatives to mitigate the COVID-19 impact.

QUARTERLY REVIEW BY SEGMENT

Powersports

Year-Round Products

Revenues from Year-Round Products increased by $13.3 million, or 2.1%, to $640.3 million for the three-month period ended April 30, 2020, compared with $627.0 million for the corresponding period ended April 30, 2019. The increase was primarily attributable to a strong start of quarter and a favorable foreign exchange rate variation of $8 million, partially offset by the COVID-19 pandemic impact and higher sales programs.

North American Year-Round Products retail sales increased on a percentage basis in the low-teens range compared with the three-month period ended April 30, 2019.

Seasonal Products

Revenues from Seasonal Products decreased by $52.8 million, or 14.1%, to $322.6 million for the three-month period ended April 30, 2020, compared with $375.4 million for the corresponding period ended April 30, 2019. The decrease resulted primarily from the COVID-19 pandemic. The decrease was partially offset by a favourable foreign exchange rate variation of $3 million.

North American Seasonal Products retail sales decreased on a percentage basis in the low-teens range compared with the three-month period ended April 30, 2019.

Powersports PA&A and OEM Engines

Revenues from Powersports PA&A and OEM Engines decreased by $27.8 million, or 15.0%, to $157.5 million for the three-month period ended April 30, 2020, compared with $185.3 million for the corresponding period ended April 30, 2019. The decrease was mainly attributable to the COVID-19 pandemic with dealers closed or having limited activities.

Marine

Revenues from the Marine segment decreased by $39.2 million, or 25.9%, to $112.1 million for the three-month period ended April 30, 2020, compared with $151.3 million for the corresponding period ended April 30, 2019. The decrease was mainly due to the COVID-19 pandemic, partially offset by the acquisition of Telwater Pty Ltd during Fiscal 2020.

North American outboard engine retail sales decreased on a percentage basis in the mid-forties range compared with the three-month period ended April 30, 2019.

FY21 Financial Outlook

BRP is expecting the COVID-19 situation to have the biggest impact on FY21 Q2 with a gradual improvement through Q3 and Q4.

Link: BRP

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