Mr. Jose Boisjoli reports

BRP REPORTS FISCAL YEAR 2024 FIRST QUARTER RESULTS

BRP Inc. has released its financial results for the three-month period ended April 30, 2023. The complete financial results are available on SEDAR and EDGAR, as well as in the quarterly reports section of BRP's website.

"Fiscal 2024 is off to a good start for BRP. We delivered a solid first-quarter performance with record revenue for that period and a 43-per-cent increase in normalized EPS [earnings per share], diluted. Once again, we outpaced the North American power sports industry thanks to sustained consumer demand for our strong and well-diversified product portfolio," said Jose Boisjoli, president and chief executive officer of BRP.

"We recently celebrated our 10th anniversary as a publicly traded company, and we are proud of our achievements over that period. Our revenues tripled, normalized EPS, diluted, grew eight fold and our power sports market share almost doubled. Moreover, we created significant value for shareholders with a 368-per-cent share price appreciation as of the anniversary date, and $2.7-billion in capital distributions through dividends and share repurchases.

"Driven by a regular flow of new product introductions, and with many others in their early stage of growth, the future is very promising for BRP. Over the short term, our focus is on executing and optimizing efficiencies, and we remain on pace to deliver on our financial guidance for this year," concluded Mr. Boisjoli.

Fiscal year 2024 updated guidance and outlook

The FY 2024 guidance has been updated as shown in the associated table.

Other assumptions for FY 2024 guidance:

• Depreciation expenses: approximately $385-million (previously, approximately $375-million);
• Net financing costs adjusted: approximately $180-million;
• Weighted average number of shares, diluted: approximately 79.8 million shares (previously approximately 80.5 million);
• Capital expenditures: approximately $750-million to $800-million.

First quarter results

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. The demand for the company's products continued to be healthy, as evidenced by the increase of 3 per cent in the company's North American retail sales for power sports products during the first quarter of fiscal 2024 compared with the same period last year.

The increase in revenues for the three-month period ended April 30, 2023, compared with the first quarter of fiscal 2023, is mainly explained by high deliveries of units for the upcoming retail season. During that period, BRP experienced strong PWC (personal watercraft), Sea-Doo pontoon, and SSV (side-by-side vehicle) 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 with the same period last year.

Revenues

Revenues increased by $620.1-million, or 34.3 per cent, to $2.42-billion for the three-month period ended April 30, 2023, compared with $1,8-billion for the corresponding period ended April 30, 2022. The increase in revenue was primarily due to a higher wholesale volume of SSV, PWC and 3WV (three-wheeled vehicles), as well as a favourable product mix and favourable pricing across all product lines, partially offset by higher sales programs. The increase includes a favourable foreign exchange rate variation of $94.8-million:

• Year-round products (55 per cent of Q1 2024 revenues): Revenues from year-round products increased by $398.9-million, or 42.7 per cent, to $1,33-billion for the three-month period ended April 30, 2023, compared with $934.4-million for the corresponding period ended April 30, 2022. The increase was primarily attributable to a higher volume of SSV and 3WV sold due to additional capacity and due to supply chain issues experienced in the prior year that impacted product availability, as well as favourable pricing and product mix across all product lines, which was partially offset by higher sales programs. The increase includes a favourable foreign exchange rate variation of $63-million.
• Seasonal products (28 per cent of Q1 2024 revenues): Revenues from seasonal products increased by $283.2-million, or 69.3 per cent, to $691.9-million for the three-month period ended April 30, 2023, compared with $408.7-million for the corresponding period ended April 30, 2022. 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, as well as increased deliveries of the Sea-Doo pontoon. The increase was also attributable to favourable pricing across all product lines, partially offset by higher sales programs. The increase includes a favourable foreign exchange rate variation of $16-million.
• Power sports PA&A (parts, accessories and apparel) and OEM (original equipment manufacturer) engines (12 per cent of Q1 2024 revenues): Revenues from power sports PA&A and OEM engines decreased by $58.7-million, or 17.1 per cent, to $284.9-million for the three-month period ended April 30, 2023, compared with $343.6-million for the corresponding period ended April 30, 2022. 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 favourable foreign exchange rate variation of $11-million.
• Marine (5 per cent of Q1 2024 revenues): Revenues from the marine segment decreased by $9.9-million, or 7.5 per cent, to $122.3-million for the three-month period ended April 30, 2023, compared with $132.2-million for the corresponding period ended April 30, 2022. The decrease in revenues from the marine segment was mainly due to a lower volume of boats and PA&A sold as a result of supply chain disruptions, and a longer production ramp-up related to the introduction of new products. The decrease was partially offset by a favourable product mix of boats sold, as well as higher pricing and a favourable foreign exchange rate variation of $5-million.

North American retail sales

The company's North American retail sales for power sports products increased by 3 per cent for the three-month period ended April 30, 2023, compared with the three-month period ended April 30, 2022. 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 compared with the three-month period ended April 30, 2022. In comparison, the year-round products industry recorded a decrease on a percentage basis in the high-single digits over the same period.
• Seasonal products: Retail sales increased on a percentage basis in the mid-single digits compared with the three-month period ended April 30, 2022, when 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 per cent compared with the three-month period ended April 30, 2022, as a result of lower product availability.

Gross profit

Gross profit increased by $169.1-million, or 37.2 per cent, to $623.5-million for the three-month period ended April 30, 2023, compared with $454.4-million for the corresponding period ended April 30, 2022. Gross profit margin percentage increased by 60 basis points to 25.7 per cent from 25.1 per cent for the three-month period ended April 30, 2022. The increase in gross profit was the result of a favourable volume of SSV, 3WV and PWC sold, along with favourable pricing, a decrease in logistics costs due to more efficiencies in the supply chain and favourable product mix across product lines. The increase was partially offset by higher materials and labour costs due to inflation, as well as higher sales programs. The increase in gross profit margin percentage was the result of favourable product mix of PWC and 3WV, favourable pricing across all product lines, and higher production efficiency coming from an improved supply chain, partially offset by higher sales programs.

Operating expenses

Operating expenses increased by $86.8-million, or 34.1 per cent, to $341.6-million for the three-month period ended April 30, 2023, compared with $254.8-million for the three-month period ended April 30, 2022. The increase in operating expenses was mainly attributable to an increase in R&D (research and development) expenses to support future growth, higher G&A (general and administrative) 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 unfavourable foreign exchange rate variation of $14-million.

Normalized EBITDA (earnings before interest, taxes, depreciation and amortization)

Normalized EBITDA increased by $105-million, or 38.6 per cent, to $377.1-million for the three-month period ended April 30, 2023, compared with $272.1-million for the three-month period ended April 30, 2022. The increase was primarily due to higher gross profit partially offset by higher operating expenses, mostly in R&D, and selling and marketing.

Net income

Net income increased by $33.5-million, or 27.7 per cent, to $154.5-million for the three-month period ended April 30, 2023, compared with the $121-million for the three-month period ended April 30, 2022. The increase was primarily due to a higher operating income and lower income tax expense, partially offset by an increase in financing costs and an unfavourable impact of the foreign exchange rate variation on the U.S.-denominated long-term debt.

Liquidity and capital resources

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

The company invested $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 $63.8-million to its shareholders through quarterly dividend payouts and its share repurchase programs.

Dividend

On May 31, 2023, the company's board of directors declared a quarterly dividend of 18 cents per share for holders of its multiple voting shares and subordinate voting shares. The dividend will be paid on July 14, 2023, to shareholders of record at the close of business on June 30, 2023.

Conference call and webcast presentation

Today at 9 a.m. ET, BRP will host a conference call and webcast to discuss its FY 2024 first quarter results. The call will be hosted by Mr. Boisjoli, president and CEO, and Sebastien Martel, chief financial officer. To listen to the conference call by phone (event No. 53112848), please dial 1-888-396-8049 (toll-free in North America).

The company's first quarter FY 2024 webcast presentation is posted in the quarterly reports section of BRP's website.

About BRP Inc.

BRP is a global leader in the world of powersports products, propulsion systems and boats built on over 80 years of ingenuity and intensive consumer focus. Through its portfolio of industry-leading and distinctive brands featuring Ski-Doo and Lynx snowmobiles, Sea-Doo watercraft and pontoons, Can-Am on-road and off-road vehicles, Alumacraft and Quintrex boats, Manitou pontoons, Rotax marine propulsion systems, as well as Rotax engines for karts and recreational aircraft, BRP unlocks exhilarating adventures and provides access to experiences across different playgrounds. The company completes its lines of products with a dedicated parts, accessories and apparel portfolio to fully optimize the riding experience. Committed to growing responsibly, BRP is developing electric models for its existing product lines and exploring new low-voltage and human-assisted product categories. Headquartered in Quebec, Canada, BRP has annual sales of $10-billion from over 130 countries and a global work force of close to 23,000 driven, resourceful people.

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