Ski-doo maker BRP reports company-record revenue surge of 71%
• Bombardier Recreational Products Inc. reported revenue of $2.7 billion in the third quarter, a 71 per cent increase from a year earlier and the most in any three-month period in its history.
The Valcourt, Que.based maker of Ski-doo snowmobiles and Sea-doo personal watercraft, “delivered record fiscal 2023 third-quarter results, well ahead of expectations, driven by our team’s solid execution and our operational discipline,” said chief executive José Boisjoli in a news release.
The strong growth was driven by the late shipment of personal watercraft, and the introduction of the Seadoo Pontoon, management told investors during an earnings call on Wednesday. The company also shipped more snowmobiles than last year, and has been adding “bigger ticket” products to its offerings.
Analysts were upbeat about the results. They were “stronger than expected” and “much higher than our estimates,” said Martin Landry, analyst with St. Louis, Mo.-based Stifel Financial Corp.
Sales of BRP’S recreational machines surged 43 per cent, as the company overcame supply chain difficulties that had been hampering its ability to keep up with demand. The company reported net income of $141.6 million in the three months ending Oct. 31, an 11 per cent increase from the same period in 2021 that management attributed to increased production and an exchange-rate gain of $51 million.
The company said “normalized diluted” earnings per share were $3.64, also a record. BRP increased its guidance for the metric by 35 cents per share, to a range of $11.65 to $12 per share, which would represent growth of as much as 21 per cent from the previous fiscal year.
BRP also completed $300 million in share buybacks this year.
“We are in a strong position to sustain growth thanks to our industry-leading brands, relentless innovation, proven performance and quality products,” Boisjoli said.
During the quarter, it wasn’t all smooth sailing for one of Canada’s best-known manufacturers.
BRP endured a cyberattack early in the period, forcing the company to temporarily suspend operations. Information on employees and suppliers was leaked onto the dark web, the company said in a news release. The month after the attacks, BRP announced the appointment of Stéphane Bilodeau to the executive leadership position of chief information officer, where he will be responsible for cybersecurity, IT, data, and programs, according to a news release.
BRP also was plagued by supply constraints that gripped most manufacturers during the pandemic. But Boisjoli came up with an innovative solution, giving its dealers a choice: the company said it could ramp up production, but only by sending dealers an incomplete product, missing a part, because of unreliable supply chains. Once BRP received the missing piece, it would then ship it to dealers, who would retrofit the part at their store.
The move also helped the company contain the supply shock because it “spread the workload between us and the 3,000 dealers around the world,” Boisjoli said in an interview earlier this year.
Stifel analyst Landry said that supply chain and logistics pressures were easing. “We expect BRP to continue to gain market share with its rich pipeline of product innovation,” he said.
“The electrification of the company’s product lines provides investors appealing near-term growth prospects.”
The company has a compound annual growth rate of 38 per cent, which is “probably the best performance in the consumer sector in Canada,” Landry added.