BRP hopes warmer weather will boost watercraft sales just as winter helped Ski-Doos

MONTREAL – Recreational vehicle maker BRP Inc. is counting on a return of warm in North America and Europe to kick-start sales of its personal watercraft just as a cold winter boosted interest in its iconic Ski-Doo snowmobiles.

“We were very happy with the long winter for snowmobile but the cold spring was tough for the summer products,” CEO Jose Boisjoli said Thursday during the Quebec-based company’s first conference call since going public.

The maker of specialized off-road and highway vehicles (TSX:DOO) as well as Sea-Doo watercraft reported record first-quarter revenues of $804.3 million — up 5.5 per cent from the same time last year.

Excluding the sale of its sport boat business last fall, revenues were up 11.9 per cent.

Sales were helped by a $13-million gain from the translation of sales in U.S. dollars.

Seasonal products revenues decreased 18.5 per cent to $206.7 million, mostly from a $44-million reduction in sport boat revenues.

Revenues for year-round products increased 27.4 per cent to $404.7 million as it introduced new models such as the Can-Am three-wheeled Spyder ST and the Maverick side-by-side vehicle.

While industry sales were down mid-single digits, BRP said Spyder sales were up although they failed to meet initial expectations.

About half the company’s sales are in year-round products, 26 per cent in seasonal, 12 per cent in propulsion systems and 12 per cent in parts and clothing. The United States accounts for more than half of sales, Canada about 18 per cent and 31 per cent elsewhere.

Boisjoli said the long winter provided good snowmobile orders that will help shipments in the second half of the year.

“The flip side of the long winter is the cold spring that we are having so far in Europe and North America. As of now our retail for watercraft and outboard engine are behind last year,” he said.

“I still believe that the summer could turn warmer and better and we could have a long summer and all this trend could turn around.”

BRP’s net income fell year-to-year but its adjusted profit was up.

Net income fell to $25.7 million from $54.6 million while BRP’s normalized net income, which adjusts for the impact of foreign exchange and other items, rose by 7.7 per cent to $53.4 million or 52 cents per share.

“Overall our first-quarter global sales were right in line with expectations and our normalized net income was slightly better than what we had planned,” Boisjoli told analysts.

BRP said its outlook for the 2014 financial year calls for annual normalized profit of between $1.45 and $1.50 per share.

“The year started off well and we are pleased to be a public company and give our new shareholders the opportunity to share in our success,” he said.

It’s the first financial report since the company, based in Valcourt, Que., listed its shares on the Toronto Stock Exchange. The stock closed down a penny at $24.49 on Thursday, but well above the IPO price of $21.50.

BRP is building a second production site in Mexico. Its propulsion products, including Evinrude outboard and Rotax engines, are distributed in 105 countries. It employs about 6,800 people around the world.

The business was spun off from Bombardier Inc. (TSX:BBD.B) in 2003 when it was sold to members of the Bombardier and Beaudoin families, U.S. private equity firm Bain Capital and the Caisse de depot for $960 million.

Prior to the IPO, a subsidiary of Bain owned half the company, the Beaudier group had a 35 per cent stake and the Caisse a 15 per cent holding. Excluding any overallotment of shares, the public will own 16.6 per cent of all shares but hold just 3.2 per cent of total voting power.