PowerSports Business

October 2, 2017

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FINANCE 14 • October 2, 2017 • Powersports Business www.PowersportsBusiness.com Record revenue increase of 20 percent; X3 leads off-road growth BRP Inc. reported its financial results for the three- and six-month periods ended July 31, 2017. All financial information is in Canadian dollars unless otherwise noted. "Our team's execution has once again been excellent this quarter, leading to very posi- tive financial results," said José Boisjoli, presi- dent and CEO. "We are clearly seeing the effect of our product inno- v a t i o n s t r a t e g y t h a t responds to consumer needs as our side-by-side business, particularly the new Maverick X3 and Defender vehicles, is performing well in all regions, and our all- terrain and watercraft products are providing better than expected results in many countries around the world." "BRP continues to outpace the off-road industry, due in part to the excellent momen- tum in our dealer network, which is an impor- tant factor in our success. The continued growth of our off-road business provided a solid first half and helped balance yearly prof- itability," Boisjoli continued. "For the back end of FY2018, I am confident that our retail momentum will continue as planned, lead- ing to the successful delivery of our guidance, which was adjusted to reflect the impact of our recent SIB." Revenues increased by $170.9 million, or 20 percent, to $1,027.0 million for the three- month period ended July 31, 2017, compared with $856.1 million for the corresponding period ended July 31, 2016. The revenue increase was mainly due to higher wholesale in Year-Round Products and Seasonal Prod- ucts. The increase includes a favorable foreign exchange rate variation of $8 million. Gross profit increased by $41.7 million, or 24.2 percent, to $213.7 million for the three- month period ended July 31, 2017, compared with $172.0 million for the corresponding period ended July 31, 2016. The gross profit increase includes an unfavorable foreign exchange rate variation of $4 million. Gross profit margin percentage increased by 70 basis points to 20.8 percent from 20.1 percent for the three-month period ended July 31, 2016. The increase in gross profit margin percentage was primarily due to a favorable product mix in SSV and a higher volume of SSV and PWC sold, partially offset by higher sales program costs driven by the increase in retail sales and higher production costs. Revenues increased by $197.2 million, or 11 percent, to $1,983.2 million for the six-month period ended July 31, 2017, compared with $1,786.0 million for the corresponding period ended July 31, 2016. The revenue increase was primarily attributable to higher wholesale of Year-Round Products and Seasonal Prod- ucts. The increase includes a favorable foreign exchange rate variation of $7 million. Gross profit increased by $54.8 million, or 15 percent, to $420.9 million for the six-month period ended July 31, 2017, compared with $366.1 million for the corresponding period ended July 31, 2016. The gross profit increase includes a favorable foreign exchange rate variation of $5 million. Gross profit margin Boisjoli: 'Excellent,' 'very positive' fiscal Q2 for BRP Stock Price Percent Company Ticker 9/8/17 Change ArvinMeritor ARM $20.65 11.1% Polaris Industries, Inc. PII $98.09 9.8% Universal Technical Institute UTI $3.55 3.8% Honda Motor Corp. ADR HMC $28.46 3.3% Dover Corporation DOV $87.30 2.6% Cooper Tire & Rubber CTB $33.45 -1.0% Brunswick Corp. BC $52.39 -4.4% General Electric Co. GE $23.82 -5.5% Deere & Company DE $117.30 -7.4% Assurant, Inc. AIZ $90.77 -11.5% POWERSPORTS BUSINESS WINNERS AND LOSERS MARKET WATCH Change 9/8/17 from 7/27 % Change Powersports Business Index 268.844 -8.15 -2.94% Dow Jones Index 189.593 1.89 1.01% S&P 500 Index 167.530 -0.76 -0.45% Source: Wells Fargo Securities LLC NORTHWEST -1.4% Parts Department 0.5% Service Department 1.5% Major Units 1.1% Overall WEST -0.5% Parts Department 1.7% Service Department 7.9% Major Units 5.5% Overall MIDWEST 2.4% Parts Department 7.4% Service Department 4.8% Major Units 4.1% Overall NORTHEAST -1.7% Parts Department -1.6% Service Department -1.2% Major Units -1.3% Overall SOUTH -2.4% Parts Department 0.6% Service Department 2.0% Major Units 1.2% Overall UNITED STATES -0.4% Parts Department 2.0% Service Department 3.4% Major Units 2.4% Overall DEALER FINANCIAL SNAPSHOT See BRP, Page 16 STOCK MARKET WATCH AUGUST 2017 Same Store Sales for 1,662 CDK Global Rec- reation dealers increased 2.4 percent overall in August, when compared to the same month in 2016. The West saw the largest increase overall, up 5.5 percent. The Northeast was the only region to see an overall decrease, down 1.3 percent in August. The Midwest, North- west, South and West saw increases overall, in service and in major unit sales. PARTS SALES In parts, 831 dealers were up and 831 down. SERVICE SALES Service sales saw 859 dealers up and 756 down. MAJOR UNIT SALES 791 dealers were up, and 698 were down in major unit sales. FOR MORE ON THE SAME STORE SALES DATA For more information on this report and other industry data, contact: cdkrecreation.com/dataservices 0 50 100 150 200 250 300 12/30/16 1/20/17 2/22/17 3/10/17 4/7/17 5/4/17 5/19/17 6/16/17 7/21/17 8/11/17 9/8/17 PSB INDEXED DOW JONES INDEXED S&P 500 INDEXED STOCK MARKET ACTIVITY JOSÉ BOISJOLI Sea-Doo sales helped BRP post record fiscal Q2 revenues. Photo courtesy of BRP

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