BRP Q3 Results for Fiscal Year 2025

Highlights

Revenues of $1,955.7 million, a decrease of 17.5% compared to last year, resulting from softer demand and continued focus on reducing network inventory levels
Net income of $27.3 million, a decrease of 69.7% compared to last year
Normalized EBITDA¹ of $264.1 million, a decrease of 42.9% compared to last year
Normalized diluted earnings per share^1,2 of $1.16, a decrease of $2.08 per share, and diluted earnings per share of $0.37, a decrease of $0.79 per share, compared to last year
North American retail sales decreased by 11% compared to last year
North American Off-Road Vehicle network inventory has decreased by 22% compared to last year- end, achieving BRP’s objective one quarter ahead of plan
Reaffirming full year-end guidance adjusted for Marine discontinued operations with revenues between $7.6 and $7.8 billion, and normalized earnings per share — diluted^1,2 between $4.25 and $4.75
Following the initiation of a process for the sale of the Marine businesses, the financial results are presented on a continuing basis, excluding Marine discontinued operations, and prior periods are reclassified accordingly.

BRP Inc. reported its financial results for the three- and nine-month periods ended Oct. 31, 2024. All financial information is in Canadian dollars unless otherwise noted. The complete financial results are available on SEDAR+ and EDGAR as well as in the section Quarterly Reports of BRP’s website.

“Our disciplined execution allowed us to deliver results above expectations, despite the macroeconomic context and the promotional intensity in the industry. We were the first powersports OEM to prioritize network inventory depletion, and we are on track to deliver on our objective to reduce levels by 15% to 20% by the end of the current fiscal year. Driven by our second-to-none product line-ups, our solid dealer network and improved inventory position, we are uniquely placed to capture opportunities when the market rebounds,” said José Boisjoli, president and CEO of BRP.

“We have strategically decided to double down on our core powersports activities to protect our long-term profitable growth and to solidify our position as a global leader in the industry. We are investing to continue pushing technologies and innovation, and consumers can expect an exciting pipeline of new products in the coming years,” concluded Boisjoli.

Financial Highlights

(in millions of Canadian dollars, except per share data and margin)

	Three-month periods ended	Three-month periods ended	Nine-month periods ended	Nine-month periods ended
	Oct. 31, 2024	Oct. 31, 2023	Oct. 31, 2024	Oct. 31, 2023
Revenues	$1,955.7	$2,371.0	$5,732.1	$7,351.5
Gross Profit	430.0	643.0	1,344.2	1,973.5
Gross Profit (%)	22.0%	27.1%	23.5%	26.8%
Normalized EBITDA¹	264.1	462.8	800.2	1,360.6
Net Income	27.3	90.1	107.2	628.9
Net Loss from Discontinued Operations	(20.5)	(27.0)	(100.6)	(72.6)
Normalized Net Income¹	85.2	252.1	277.6	743.6
Diluted Earnings per Share	0.37	1.16	1.43	7.93
Diluted Normalized Earnings per Share¹	1.16	3.24	3.70	9.38
Basic Weighted Average Number of Shares	73,003,877	76,514,017	73,878,572	77,736,259
Diluted Weighted Average Number of Shares	73,865,152	77,817,364	74,864,967	79,149,406

Fiscal Year 2025 Guidance and Outlook

The Fiscal Year 2025 (FY25) guidance has been adjusted to exclude the financial results of Marine discontinued operations and are as follows:

Financial Metric	FY24	FY25 Guidance vs. FY24
Revenues
*Year-Round Products*	$5,339.4	Down 20% to 22%
*Seasonal Products*	3,410.7	Down 30% to 32%
*PA&A and OEM Engines*	1,213.0	Down 5% to 7%
Total Company Revenues	9,963.1	$7.6B to $7.8 billion
Normalized EBITDA¹	1,793.8	$1,020 million to $1,070 million
Normalized Earnings per Share – Diluted¹	$12.19	$4.25 to $4.75
Net Income	931.9	$150 million to $185 million

Other Assumptions for FY25 Guidance

Depreciation Expenses Adjusted: ~$415 million (compared to $363 million in FY24)
Net Financing Costs Adjusted: ~$185 million (compared to $173 million in FY24)
Effective tax rate ^[1] ^[3]: ~23.5% (compared to 23.9% in FY24)
Weighted average number of shares — diluted: ~75 million shares (compared to $78.5 million in FY24)
Capital Expenditures: ~430 million (compared to $ 517 million in FY24)

¹See “Non-IFRS Measures” section of this press release.

²Earnings per share is defined as “EPS”.

³Effective tax rate based on Normalized Earnings before Normalized Income Tax.

Third Quarter Results

In the context of softer demand and the company’s focus on reducing network inventory levels during the three-month period ended Oct. 31, 2024, the revenues declined compared to the same period last year. The decrease in the volume of shipments, the higher sales programs due to increased promotional intensity and the decreased leverage of fixed costs as a result of reduced production have led to a decrease in the gross profit and gross profit margin compared to the same period last year. This decrease was partially offset by favorable pricing, production efficiencies and optimized distribution costs.

The company’s North American quarterly retail sales were down 11% for the three-month period ended Oct. 31, 2024. The decrease is mainly explained by softer demand in both Seasonal and Year-Round Products.

Revenues

Revenues decreased by $415.3 million, or 17.5%, to $1,955.7 million for the three-month period ended Oct. 31, 2024, compared to the $2,371.0 million for the corresponding period ended Oct. 31, 2023. The decrease in revenues was primarily due to a lower volume sold across all product lines, as a result of softer demand and continued focus on reducing network inventory levels, as well as higher sales programs. The decrease was partially offset by favorable pricing across most product lines. The decrease includes a favorable foreign exchange rate variation of $15 million.

Year-Round Products (53% of Q3-FY25 revenues): Revenues from Year-Round Products decreased by $144.2 million, or 12.2%, to $1,036.4 million for the three-month period ended Oct. 31, 2024, compared to $1,180.6 million for the corresponding period ended Oct. 31, 2023. The decrease in revenues from Year-Round Products was primarily attributable to a lower volume sold across all product lines, as a result of softer demand and continued focus on reducing network inventory levels, as well as higher sales programs. The decrease was partially offset by favourable product mix in side-by-side vehicles (SSV), and favorable pricing across all product lines. The decrease includes a favorable foreign exchange rate variation of $12 million.

Seasonal Products (32% of Q3-FY25 revenues): Revenues from Seasonal Products decreased by $252.8 million, or 29.1%, to $615.9 million for the three-month period ended Oct. 31, 2024, compared to $868.7 million for the corresponding period ended Oct. 31, 2023. The decrease in revenues from Seasonal Products was primarily attributable to a lower volume sold across all product lines, as a result of softer demand and continued focus on reducing network inventory levels, as well as higher sales programs on Snowmobile and Personal Watercraft (PWC), and unfavorable product mix across all product lines. The decrease was partially offset by favorable pricing on Snowmobile and PWC.

PA&A and OEM Engines (15% of Q3-FY25 revenues): Revenues from PA&A and OEM Engines decreased by $18.3 million, or 5.7%, to $303.4 million for the three-month period ended Oct. 31, 2024, compared to $321.7 million for the corresponding period ended Oct. 31, 2023. The decrease in revenues from PA&A and OEM engines was primarily attributable to a lower volume sold due to a high network inventory level in Snowmobile and to a decrease in retail in other product lines. The decrease was partially offset by favourable pricing on PA&A. The decrease also includes a favourable foreign exchange rate variation of $3 million.

North American Retail Sales

The company’s North American retail sales decreased by 11% for the three-month period ended Oct. 31, 2024 compared to the same period last year. The decrease is mainly explained by softer demand in both Seasonal and Year-Round Products.

North American Year-Round Products retail sales decreased on a percentage basis in the high- single digits compared to the three-month period ended Oct. 31, 2023. The North American Year-Round Products industry decreased on a percentage basis in the low-single digits over the same period.
North American Seasonal Products retail sales decreased on a percentage basis in the mid-teens range compared to the three-month period ended Oct. 31, 2023. The North American Seasonal Products industry decreased on a percentage basis in the mid-teens range over the same period.

Gross Profit

Gross profit decreased by $213.0 million, or 33.1%, to $430.0 million for the three-month period ended Oct. 31, 2024, compared to $643.0 million for the three-month period ended Oct. 31, 2023. Gross profit margin percentage decreased by 510 basis points to 22.0% from 27.1% for the three-month period ended Oct. 31, 2024. The decreases in gross profit and gross profit margin percentage were the result of a lower volume sold, higher sales programs, decreased leverage of fixed costs as a result of reduced production and higher warranty costs. The decreases were partially offset by favorable pricing across most product lines, as well as production efficiencies and optimized distribution costs. The decrease in gross profit includes a favourable foreign exchange rate variation of $10 million.

Operating Expenses

Operating expenses increased by $9.6 million, or 3.4%, to $295.1 million for the three-month period ended Oct. 31, 2024, compared to $285.5 million for the three-month period ended Oct. 31, 2023. The increase in operating expenses was mainly attributable to higher restructuring and reorganization costs, and impairment charges taken on unutilized assets. The increase was partially offset by lower research and development (R&D) expenses. The increase in operating expenses includes a favourable foreign exchange rate variation of $3 million.

Normalized EBITDA¹

Normalized EBITDA¹ decreased by $198.7 million, or 42.9%, to $264.1 million for the three-month period ended Oct. 31, 2024, compared to $462.8 million for the three-month period ended Oct. 31, 2023. The decrease in normalized EBITDA¹ was primarily due to lower gross margin.

Net Income

Net income decreased by $62.8 million, or 69.7%, to $27.3 million for the three-month period ended Oct. 31, 2024, compared to $90.1 million for the three-month period ended Oct. 31, 2023. The decrease in net income was primarily due to a lower operating income, resulting from a lower gross margin. The decrease was partially offset by a decrease in financing costs, a favorable foreign exchange rate variation on the U.S. denominated long-term debt and a lower income tax expense.

Net Loss from Discontinued Operations

Net loss decreased by $6.5 million, or 24.1%, to $20.5 million for the three-month period ended Oct. 31, 2024, compared to $27.0 million for the three-month period ended Oct. 31, 2023. The decrease in net loss was primarily due to lower operating loss, resulting from lower gross loss and lower operating expenses.

¹See “Non-IFRS Measures” section.

9-Month Period Ended Oct. 31, 2024

Revenues

Revenues decreased by $1,619.4 million, or 22.0%, to $5,732.1 million for the nine-month period ended Oct. 31, 2024, compared to $7,351.5 million for the corresponding period ended Oct. 31, 2023. The decrease in revenues was primarily due to a lower volume sold across all product lines, as a result of softer demand and continued focus on reducing network inventory levels, as well as higher sales programs. The decrease was partially offset by favourable product mix across most product lines and favourable pricing across most product lines. The decrease includes a favourable foreign exchange rate variation of $61 million.

Normalized EBITDA¹

Normalized EBITDA¹ decreased by $560.4 million, or 41.2%, to $800.2 million for the nine-month period ended Oct. 31, 2024, compared to $1,360.6 million for the nine-month period ended Oct. 31, 2023. The decrease in Normalized EBITDA¹ was primarily due to a lower gross margin.

Net Income

Net income decreased by $521.7 million to $107.2 million for the nine-month period ended Oct. 31, 2024, compared to $628.9 million for the nine-month period ended Oct. 31, 2023. The decrease in net income was primarily due to lower operating income, resulting from a lower gross margin. The decrease was partially offset by lower financing costs and a lower income tax expense.

Net Loss from Discontinued Operations

Net loss increased by $28.0 million to $100.6 million for the nine-month period ended Oct. 31, 2024, compared to $72.6 million for the nine-month period ended Oct. 31, 2023. The increase in net loss was primarily due to higher operating loss, resulting from a lower volume sold due to high dealer inventory, softer consumer demand in the industry, higher sales programs and production inefficiencies. The increase in net loss was partially offset by a higher income tax recovery.

Liquidity and Capital Resources

Consolidated net cash flows generated from operating activities totaled $432.9 million for the nine-month period ended Oct. 31, 2024 compared to consolidated net cash flows generated from operating activities of $1,053.2 million for the nine-month period ended Oct. 31, 2023. The decrease was mainly due to lower profitability and unfavorable changes in working capital, partially offset by lower income taxes paid. The unfavorable changes in working capital were the result of maintaining higher provisions, which reflected the industry’s promotional intensity, and maintaining inventory levels.

The company invested $299.4 million of its liquidity in capital expenditures for the introduction of new products and modernization of the company’s software infrastructure to support future growth.

During the nine-month period ended Oct. 31, 2024, the company also returned $261.6 million to its shareholders through quarterly dividend payouts and its share repurchase programs.

Dividend

On Dec. 5, 2024, the company’s board of directors declared a quarterly dividend of $0.21 per share for holders of its multiple voting shares and subordinate voting shares. The dividend will be paid on Jan. 14, 2025 to shareholders of record at the close of business on Dec. 31, 2024.

¹See “Non-IFRS Measures” section of this press release.

Non-IFRS Measures

This press release makes reference to certain non-IFRS measures. 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 management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the company’s financial information reported under IFRS. The company uses non-IFRS measures including the following:

Non-IFRS measures	Definition	Reason for use
Normalized EBITDA	Net income before financing costs, financing income, income tax expense (recovery), depreciation expense and normalized elements.	Assist investors in determining the financial performance of the Company’s operating activities on a consistent basis by excluding certain non-cash elements such as depreciation expense, impairment charge, foreign exchange gain or loss on the Company’s long-term debt denominated in U.S. dollars and foreign exchange gain or loss on certain of the Company’s lease liabilities. Other elements, such as restructuring and wind-down costs, non-recurring gain or loss and acquisition-related costs, may be excluded from net income in the determination of Normalized EBITDA as they are considered not being reflective of the operational performance of the Company.
Normalized net income	Net income before normalized elements adjusted to reflect the tax effect on these elements	In addition to the financial performance of operating activities, this measure considers the impact of investing activities, financing activities and income taxes on the Company’s financial results.
Normalized income tax expense	Income tax expense adjusted to reflect the tax effect on normalized elements and to normalize specific tax elements	Assist investors in determining the tax expense relating to the normalized items explained above, as they are considered not being reflective of the operational performance of the Company.
Normalized effective tax rate	Based on Normalized net income before Normalized income tax expense	Assist investors in determining the effective tax rate including the normalized items explained above, as they are considered not being reflective of the operational performance of the Company.
Normalized earnings per share – diluted	Calculated by dividing the Normalized net income by the weighted average number of shares – diluted	Assist investors in determining the normalized financial performance of the Company’s activities on a per share basis.
Free cash flow	Cash flows from operating activities less additions to PP&E and intangible assets	Assist investors in assessing the Company’s liquidity generation abilities that could be available for shareholders, debt repayment and business combination, after capital expenditure.