Highlights
- Revenues of $2,778.0 million, up
14% compared to the same period last year, a record second quarter
for BRP;
- Normalized EBITDA [1] of $473.1 million, up 13% compared to the same
period last year;
- North American Powersports retail sales grew by 41% compared to
the same period last year, once again outperforming the industry
and achieving record highs in terms of market share for PWC, ATV
and SSV;
- Normalized earnings per share – diluted [1] of
$3.21, an increase of $0.27 per share, or 9%, and earnings per share –
diluted of $4.26, an increase of
$1.32 per share, or 45%, compared to
the same period last year; and
- Increasing full year-end guidance for Normalized EPS – diluted
[1] [2] upward by $0.10,
now ranging from $12.35 to
$12.85.
Recent events – Highlights from Club BRP 2024
- The Company launched the all-new Can-Am Maverick
R, setting a new benchmark in the high-end SSV Sport segment.
BRP also announced that it was expanding the Can-Am SSV
lineup with more 4-seaters and entry-level models.
- For 3WV, the Company revealed that it was enhancing the rider
connectivity experience on all Can-Am Spyder F3 and
RT models, which will now feature an all-new 10.25-inch
color touchscreen with Apple CarPlay.
- The Company also introduced the next generation of its iconic
Sea-Doo Spark, and the new class-leading 325 hp
Sea-Doo RXP-X/RXT-X. In addition, it unveiled the new
Sea-Doo Switch Cruise Limited pontoon, with a host of
upgraded technologies.
- On the Marine side, BRP announced that it was bolstering the
Manitou lineup for model
year 24 with the all-new Manitou Explore MAX Dual Engine
model, featuring dual Rotax S150 outboard engines, a larger
MAX Deck and the iDock intuitive piloting
system.
VALCOURT, QC, Sept. 7,
2023 /PRNewswire/ - BRP Inc. (TSX: DOO) (NASDAQ:
DOOO) today reported its financial results for the three- and
six-month period ended July 31, 2023.
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.
"We are pleased with our performance as BRP delivered its
strongest second quarter ever with revenues and Normalized EPS –
diluted [1] increases of 14% and
9%, respectively, over last year. Driven by solid consumer demand,
we significantly outpaced the North American Powersports industry
with an impressive 41% growth at retail, further increasing our
market share in most product categories. We thank our employees for
raising the bar and developing market-shaping products that set us
apart worldwide," said José Boisjoli, President and CEO of BRP.
"We had a very successful BRP Club in August with a significant
number of new model launches. Our reputation for innovation, the
breadth of our portfolio, and a strong dealer network are key
advantages for us in the industry, paving the way for continued
success going forward."
"With our solid momentum, we expect fiscal 2024 to deliver
record revenues and profitability. Reflecting our positive outlook,
we are increasing the range of our financial guidance to Normalized
EPS – diluted [1] between $12.35 and $12.85,"
concluded Mr. Boisjoli.
____________________________
|
[1] See « Non-IFRS
Measures » section of this press release
[2] Earnings per share is defined as "EPS"
|
Financial
Highlights
|
Three-month
periods
ended
|
Six-month
periods
ended
|
(in millions of
Canadian dollars, except per share data and margin)
|
July 31,
2023
|
July 31,
2022
|
July 31,
2023
|
July 31,
2022
|
Revenues
|
$2,778.0
|
$2,438.5
|
$5,207.4
|
$4,247.8
|
Gross Profit
|
697.6
|
602.7
|
1,321.1
|
1,057.1
|
Gross Profit
(%)
|
25.1 %
|
24.7 %
|
25.4 %
|
24.9 %
|
Normalized EBITDA
[1]
|
473.1
|
418.3
|
850.2
|
690.4
|
Net income
|
338.7
|
237.7
|
493.2
|
358.7
|
Normalized net income
[1]
|
255.4
|
237.9
|
447.4
|
375.0
|
Earnings per share –
diluted
|
4.26
|
2.94
|
6.16
|
4.38
|
Normalized earnings per
share – diluted [1]
|
3.21
|
2.94
|
5.59
|
4.58
|
Weighted average number
of shares – diluted
|
79,255,857
|
80,505,043
|
79,828,732
|
81,582,927
|
FISCAL YEAR 2024 UPDATED GUIDANCE & OUTLOOK
The FY24 guidance has been updated as follows:
Financial
Metric
|
FY23
|
FY24 Guidance
[4] vs FY23
|
Revenues
|
|
|
Year-Round
Products
|
$4,827.1
|
Up 16% to
19%
|
Seasonal Products
|
3,440.3
|
Down 2% to Up
1%
|
Powersports PA&A and OEM
Engines
|
1,276.4
|
Down 1% to Up 1%
(previously "Up 3% to 7%")
|
Marine
|
489.6
|
Up 5% to 10%
(previously "Up 35% to 40%")
|
Total Company
revenues
|
10,033.4
|
Up 7% to 10%
(previously "Up 9% to 12%")
|
Normalized EBITDA
[1]
|
1,706.3
|
Up 9% to 13%
|
Effective tax rate
[1][3]
|
24.4 %
|
24.5% to
25.5%
|
Normalized earnings
per share – diluted [1]
|
$12.05
|
$12.35 to $12.85 (Up
2% to 7%) (previously "$12.25 to $12.75")
|
Net income
|
865.4
|
~$1,025M to $1,060M
|
Other assumptions for FY24 Guidance
•
|
Depreciation
Expenses:
|
~$385M
|
•
|
Net Financing Costs
Adjusted:
|
~$180M
|
•
|
Weighted average
number of shares – diluted:
|
~79.1M
shares (previously 79.8M)
|
•
|
Capital
Expenditures:
|
~$650M to
$700M (previously $750M to $800M)
|
[1] See "Non-IFRS
Measures" section of this press release.
|
[3] Effective tax rate
based on Normalized Earnings before Normalized Income
Tax.
|
[4] Please refer to the
"Caution Concerning Forward-Looking Statements" and "Key
assumptions" sections of this press release for a summary of
important risk factors that could affect the above guidance and of
the assumptions underlying this Fiscal Year 2024
guidance.
|
FY24 Quarterly Outlook
The Company continues to expect
another solid year, reaffirming its Normalized EBITDA
[1] increase ranging from 9% to 13% compared to the
previous year and anticipates that about 45% of the implied
Normalized EBITDA [1] for the rest of the year will
be generated in the third quarter.
SECOND QUARTER RESULTS
Continued strong deliveries, aided by improvements in the supply
chain and the inflationary environment, allowed the Company to
further build on the momentum created in its first quarter. The
demand for the Company's products remained healthy, as evidenced by
the increase of 41% in the Company's North American retail sales
for Powersports Products during the three-month period ended
July 31, 2023, compared to the same
period last year.
The increase in revenues for the three- and six-month periods
ended July 31, 2023 compared to the
corresponding periods ended July 31,
2022 is mainly explained by high deliveries of units due to
improvements in the supply chain and sustained demand, which is
driven in part by strong SSV, ATV, Sea-Doo pontoon and Snowmobile
retail sales. The supply chain has gradually stabilized, resulting
in production efficiencies, a return to the Company's normal
wholesale delivery pattern and an increase in gross profit margin
compared to the same period last year. However, these increases
were partially offset by more costly sales programs, which are
mostly due to rising interest rates.
Revenues
Revenues increased by $339.5 million, or 13.9%, to $2,778.0 million for the three-month period ended
July 31, 2023, compared to
$2,438.5 million for the
corresponding period ended July 31,
2022. The increase was primarily due to a higher volume of
SSV, ATV and Snowmobile sold, increased deliveries of
Sea-Doo pontoon, as well as favourable pricing across all
product lines, partially offset by higher sales programs, due to
higher interest rates. The increase includes a favourable foreign
exchange rate variation of $81
million.
- Year-Round Products [5] (53% of
Q2-24 revenues): Revenues from Year-Round Products
increased by $103.5 million, or 7.6%,
to $1,461.6 million for the
three-month period ended July 31,
2023, compared to $1,358.1
million for the corresponding period ended July 31, 2022. The increase was primarily
attributable to a higher volume of SSV and ATV sold, as well as
favourable pricing across all product lines, which was partially
offset by higher sales programs. The increase includes a favourable
foreign exchange rate variation of $40
million.
- Seasonal Products [5] (32%
of Q2-24 revenues): Revenues from
Seasonal Products increased by $206.3
million, or 29.8%, to $897.5
million for the three-month period ended July 31, 2023, compared to $691.2 million for the corresponding period ended
July 31, 2022. The increase is
primarily attributable to a higher volume of Snowmobile sold due to
a reduction in supply chain issues that impacted deliveries in the
three-month period ended July 31,
2022, 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 also includes a favourable foreign exchange
rate variation of $27 million.
- Powersports PA&A and OEM
Engines [5] (11% of
Q2-24 revenues): Revenues from Powersports
PA&A and OEM Engines increased by $36.7
million, or 14.3%, to $294.2
million for the three-month period ended July 31, 2023, compared to $257.5 million for the corresponding period ended
July 31, 2022. The increase was
mainly attributable to a higher volume of PA&A coming from
strong unit retail sales and sales from businesses acquired in the
second half of Fiscal 2023, combined with favourable pricing. The
increase was partially offset by higher sales programs. The
increase also includes a favourable foreign exchange rate variation
of $11 million.
- Marine [5] (4% of Q2-24
revenues): Revenues from the Marine segment decreased by
$12.6 million, or 9.0%, to
$126.9 million for the three-month
period ended July 31, 2023, compared
to $139.5 million for the
corresponding period ended July 31,
2022. The decrease was mainly due to a lower volume of boats
and PA&A sold as a result of longer production ramp-up related
to the introduction of new products, which have experienced
extended delays due to supply chain issues, unfavourable mix across
most product lines and higher sales programs. The decrease was
partially offset by higher pricing and a favourable foreign
exchange rate variation of $3
million.
[1] See "Non-IFRS
Measures" section of this press release.
|
[5] The inter-segment
transactions are included in the analysis.
|
North American Retail Sales
The Company's North American
retail sales for Powersports Products increased by 41% for the
three-month period ended July 31,
2023 compared to the three-month period ended July 31, 2022. The increase was mainly driven by
an increase in the sales of SSV, ATV, PWC and Snowmobile, given the
reduction in supply chain issues, which had impacted deliveries in
the three-month period ended July 31,
2022.
- Year-Round Products: retail sales increased on a
percentage basis in the low-twenties range compared to the
three-month period ended July 31,
2022. In comparison, the Year-Round Products industry
increased on a percentage basis in the high-single digits over the
same period.
- Seasonal Products: retail sales increased on a
percentage basis in the low-seventies range, low-sixties when
excluding Sea-Doo pontoon, compared to the three-month
period ended July 31, 2022. In
comparison, the Seasonal Products industry increased on a
percentage basis in the low-fifties range over the same
period.
Marine Products retail sales decreased by 44% compared to
the three-month period ended July 31,
2022 as a result of softening consumer demand for the
boating industry and lower product availability of newly introduced
products in comparison with the prior-year period.
Gross profit
Gross profit increased by $94.9
million, or 15.7%, to $697.6
million for the three-month period ended July 31, 2023, compared to $602.7 million for the three-month period ended
July 31, 2022. Gross profit margin
percentage increased by 40 basis points to 25.1% from 24.7% for the
three-month period ended July 31,
2022. The increase was the result of a higher volume sold,
as highlighted above, favourable pricing across all product lines,
a decrease in logistics costs due to more efficiencies in the
supply chain and a reduction in certain material costs. The
increase was partially offset by higher labour costs due to
inflation, as well as higher sales programs. The increase in gross
profit margin percentage was the result of favourable pricing
across all product lines and higher production efficiency coming
from an improved supply chain, partially offset by higher sales
programs. The increase in gross profit includes an unfavourable
foreign exchange rate variation of $11
million.
[5] The inter-segment
transactions are included in the analysis.
|
Operating expenses
Operating expenses increased by $61.9
million, or 24.1%, to $318.8
million for the three-month period ended July 31, 2023, compared to $256.9 million for the three-month period ended
July 31, 2022. The increase was
mainly attributable to higher selling and marketing expenses, which
are mainly due to continued product investment and an increase in
marketing projects, an increase in R&D expenses to support
future growth and higher G&A expenses, mainly related to the
modernization of the Company's software infrastructure. The
increase in operating expenses includes an unfavourable foreign
exchange rate variation of $27
million.
Normalized EBITDA [1]
Normalized EBITDA [1] increased by $54.8 million, or 13.1%, to $473.1 million for the three-month period ended
July 31, 2023, compared to
$418.3 million for the three-month
period ended July 31, 2022. The
increase was primarily due to higher gross profit, partially offset
by higher operating expenses.
Net Income
Net income increased by $101.0 million, or 42.5%, to $338.7 million for the three-month period ended
July 31, 2023, compared to the
$237.7 million for the three-month
period ended July 31, 2022. The
increase was primarily due to a higher operating income, lower
income tax expense and a favourable impact of the foreign exchange
rate variation on the U.S. denominated long-term debt, partially
offset by an increase in financing costs.
SIX-MONTH PERIOD ENDED JULY 31,
2023
Revenues
Revenues increased by $959.6 million, or 22.6%, to $5,207.4 million for the six-month period ended
July 31, 2023, compared to
$4,247.8 million for the
corresponding period ended July 31,
2022. The increase was primarily due to a higher volume of
SSV, PWC, ATV and Snowmobile sold, increased deliveries of Sea-Doo
pontoon, favourable product mix across all product lines except
Snowmobile and SSV, as well as favourable pricing across all
product lines. The increase was partially offset by higher sales
programs. The increase includes a favourable foreign exchange rate
variation of $176 million.
Normalized EBITDA [1]
Normalized EBITDA [1] increased by $159.8 million, or 23.1%, to $850.2 million for the six-month period ended
July 31, 2023, compared to
$690.4 million for the six-month
period ended July 31, 2022. The
increase was primarily due to higher gross profit, partially offset
by higher operating expenses.
Net Income
Net income increased by $134.5 million, or 37.5%, to $493.2 million for the six-month period ended
July 31, 2023, compared to
$358.7 million for the six-month
period ended July 31, 2022. The
increase was primarily due to a higher operating income, lower
income tax expense and a favourable impact of the foreign exchange
rate variation on the U.S. denominated long-term debt, partially
offset by an increase in financing costs.
LIQUIDITY AND CAPITAL RESOURCES
The Company generated net cash flows from operating activities
totaling $748.2 million for the
six-month period ended July 31, 2023
compared to a usage of $1.0 million
for the six-month period ended July 31,
2022. The increase was mainly due to favourable changes in
working capital and lower income taxes paid.
The Company invested $220.4
million of its liquidity in capital expenditures to add
production capacity and modernize the Company's software
infrastructure to support future growth. Given the revised guidance
for Marine, the Company decided to postpone the construction of its
boat manufacturing plant in Chihuahua City, Mexico, by 12 months with an expected start of
production in Spring of 2026.
During the six-month period ended July
31, 2023, the Company also returned $238.5 million to its shareholders through
quarterly dividend payouts and its share repurchase programs for
the six-month period ended July 31,
2023.
[1] See "Non-IFRS
Measures" section of the press release
|
Dividend
On September 6, 2023,
the Company's Board of Directors declared a quarterly dividend of
$0.18 per share for holders of its
multiple voting shares and subordinate voting shares. The dividend
will be paid on October 13, 2023 to
shareholders of record at the close of business on September 29, 2023.
CONFERENCE CALL AND WEBCAST PRESENTATION
Today at 9 a.m. ET, BRP Inc. will
host a conference call and webcast to discuss its FY24 second
quarter results. The call will be hosted by José Boisjoli,
President and CEO, and Sébastien Martel, CFO. To listen to the
conference call by phone (event number 52909951), please dial 1
(888) 396-8049 (toll-free in North
America). Click here for International numbers.
The Company's second quarter FY24 webcast presentation is posted
in the Quarterly Reports section of BRP's website.
About BRP
BRP Inc. 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 and off-road vehicles, Alumacraft and Quintrex boats,
Manitou pontoons and 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 CA$10 billion from over 130 countries and a global
workforce of close to 23,000 driven, resourceful people.
www.brp.com
@BRPNews
Ski-Doo, Lynx, Sea-Doo, Can-Am, Rotax, Alumacraft, Manitou, Quintrex, and the BRP logo are
trademarks of Bombardier Recreational Products Inc. or its
affiliates. All other trademarks are the property of their
respective owners.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements in this press release, including, but not
limited to, statements relating to the Company's Fiscal Year 2024,
including financial guidance and outlook and where it stands with
respect to it, and related assumptions of the Company (including
revenues, Normalized EBITDA, Effective Tax Rate, Normalized
earnings per share, net income, depreciation expense, net financing
costs adjusted, weighted average of the number of shares diluted
and capital expenditures), statements relating to the revised
guidance for Marine and its impact on the boat manufacturing plant
in Chihuahua City, including the postponed construction and
expected time of start of production, statements relating to the
declaration and payment of dividends, statements about the
Company's current and future plans, and other statements about the
Company's prospects, expectations, anticipations, estimates and
intentions, results, levels of activity, performance, objectives,
targets, goals or achievements, priorities and strategies,
financial position, market position, including its ability to gain
additional market share, capabilities, competitive strengths,
beliefs, the prospects and trends of the industries in which the
Company operates, the expected sustained demand for the Company's
products and services and sustainable growth, research and product
development activities, including the expectation of regular flow
of new product introductions, their projected design,
characteristics, capacity or performance, expected scheduled entry
to market and the anticipated impact of such product introductions,
expected financial requirements and the availability of capital
resources and liquidities or any other future events or
developments and other statements that are not historical facts
constitute forward-looking statements within the meaning of
Canadian and United States
securities laws. The words "may", "will", "would", "should",
"could", "expects", "forecasts", "plans", "intends", "trends",
"indications", "anticipates", "believes", "estimates", "outlook",
"predicts", "projects", "likely" or "potential" or the negative or
other variations of these words or other comparable words or
phrases, are intended to identify forward-looking
statements.
Forward-looking statements are presented for the purpose of
assisting readers in understanding certain key elements of the
Company's current objectives, goals, targets, strategic priorities,
expectations and plans, and in obtaining a better understanding of
the Company's business and anticipated operating environment.
Readers are cautioned that such information may not be appropriate
for other purposes; readers should not place undue reliance on
forward-looking statements contained herein. Forward-looking
statements, by their very nature, involve inherent risks and
uncertainties and are based on a number of assumptions, both
general and specific, as further described below.
Many factors could cause the Company's actual results, level
of activity, performance or achievements or future events or
developments to differ materially from those expressed or implied
by the forward-looking statements, including, without limitation,
the following factors, which are discussed in greater detail under
the heading "Risk Factors" of its Annual Information Form:
the impact of adverse economic conditions including in the
context of recent significant increases of interest and inflation
rates; any decline in social acceptability of the Company and its
products, including in connection with the broader adoption of
electrical or low-emission products; fluctuations in foreign
currency exchange rates; high levels of indebtedness; any
unavailability of additional capital; any supply problems,
termination or interruption of supply arrangements or increases in
the cost of materials, including as a result of the military
conflict between Russia and
Ukraine; the inability to attract,
hire and retain key employees, including members of the Company's
management team or employees who possess specialized market
knowledge and technical skills; any failure of information
technology systems, security breach or cyber-attack, or
difficulties with the implementation of new systems, including the
Company's new ERP; the Company's reliance on international sales
and operations; the Company's inability to successfully execute its
growth strategy; unfavourable weather conditions and climate change
more generally; the Company's seasonal nature of its business and
some of its products; the Company's reliance on a network of
independent dealers and distributors; any inability of dealers and
distributors to secure adequate access to capital; any inability to
comply with product safety, health, environmental and noise
pollution laws; the Company's large fixed cost base; any failure to
compete effectively against competitors or any failure to meet
consumers' evolving expectations; any failure to maintain an
effective system of internal control over financial reporting and
to produce accurate and timely financial statements; any inability
to maintain and enhance the Company's reputation and brands; any
significant product liability claim; any significant product repair
and/or replacement due to product warranty claims or product
recalls; any failure to carry proper insurance coverage; the
Company's inability to successfully manage inventory levels; any
intellectual property infringement and litigation; the Company's
inability to successfully execute its manufacturing
strategy or to meet customer demand as a result of
manufacturing capacity constraints; increased freight
and shipping costs or disruptions in transportation and shipping
infrastructure; any failure to comply with covenants in financing
and other material agreements; any changes in tax laws and
unanticipated tax liabilities; any impairment in the carrying value
of goodwill and trademarks; any deterioration in relationships with
employees; pension plan liabilities; natural disasters; volatility
in the market price for the Subordinate Voting Shares; the
Company's conduct of business through subsidiaries; the significant
influence of Beaudier Group and Bain Capital; and future sales of
Subordinate Voting Shares by Beaudier Group, Bain Capital,
directors, officers or senior management of the Company. These
factors are not intended to represent a complete list of the
factors that could affect the Company; however, these factors
should be considered carefully. Unless otherwise stated, the
forward-looking statements contained in this press release are made
as of the date of this press release and the Company has no
intention and undertakes no obligation to update or revise any
forward-looking statements to reflect future events, changes in
circumstances, or changes in beliefs, unless required by applicable
securities regulations. In the event that the Company does update
any forward-looking statements contained in this press release, no
inference should be made that the Company will make additional
updates with respect to that statement, related matters or any
other forward-looking statement. The forward-looking statements
contained in this press release are expressly qualified by this
cautionary statement.
KEY ASSUMPTIONS
The Company made a number of economic, market and operational
assumptions in preparing and making certain forward-looking
statements contained in this press release, including without
limitation, the assumptions underlying the Company's environmental,
social and governance targets, goals and initiatives under its
CSR25 program, which are set out in the "Forward-Looking
Statements" section of its Corporate Social Responsibility report,
as well as the following assumptions: reasonable industry growth
ranging from slightly down to slightly up, that assumes an
improved supply chain environment compared to last year; market
share will remain constant or moderately increase; stable global
and North American economic conditions, a limited impact from the
military conflict between Russia
and Ukraine and the COVID-19
pandemic; main currencies in which the Company operates will remain
at near current levels inflation is expected to remain
elevated, in-line with central banks projections; there will
be no significant changes in tax laws or free trade arrangements or
treaties applicable to the Company; the Company's margins, will
remain at current levels; the supply base will remain able to
support product development and planned production rates on
commercially acceptable terms in a timely manner; no new trade
barriers will be imposed amongst jurisdictions in which the Company
carries operations; the absence of unusually adverse weather
conditions, especially in peak seasons. The Company cautions that
its assumptions may not materialize and that global economic and
political conditions, combined with one or more of the risks and
uncertainties discussed herein, may render such assumptions,
although believed reasonable at the time they were made,
inaccurate. Such forward-looking statements are not guarantees of
future performance and involve known and unknown risks,
uncertainties and other factors which may cause the actual results
or performance of the Company or the industry to be materially
different from the outlook or any future results or performance
implied by such statements.
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, these measures
consider 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
|
|
|
Normalized effective
tax rate
|
Based on Normalized net
income before Normalized income tax expense
|
|
|
Normalized earnings per
share – basic & diluted
|
Calculated by dividing
the Normalized net income by the weighted average number of shares
– diluted
|
|
|
The Company believes non-IFRS measures are important supplemental
measures of financial performance because they eliminate items that
have less bearing on the Company's financial performance and thus
highlight trends in its core business that may not otherwise be
apparent when relying solely on IFRS measures. The Company also
believes that securities analysts, investors and other interested
parties frequently use non-IFRS measures in the evaluation of
companies, many of which present similar metrics when reporting
their results. Management also uses non-IFRS measures in order to
facilitate financial performance comparisons from period to period,
prepare annual operating budgets, assess the Company's ability to
meet its future debt service, capital expenditure and working
capital requirements and also as a component in the determination
of the short-term incentive compensation for the Company's
employees. Because other companies may calculate these non-IFRS
measures differently than the Company does, these metrics are not
comparable to similarly titled measures reported by other
companies.
The Company refers the reader to the tables below for the
reconciliations of the non-IFRS measures presented by the
Company to the most directly comparable IFRS measure.
Reconciliation Tables
The following tables present the reconciliation of non-IFRS
measures compared to their respective IFRS measures:
|
|
|
Three-month
periods
ended
|
|
Six-month
periods
ended
|
(in millions of
Canadian dollars)
|
July
31,
2023
|
July
31,
2022
|
|
July
31,
2023
|
July
31,
2022
|
|
|
|
|
|
|
|
Net
income
|
$338.7
|
$237.7
|
|
$493.2
|
$358.7
|
Normalized
elements
|
|
|
|
|
|
Foreign exchange (gain)
loss on long-term debt and lease liabilities
|
(77.6)
|
(0.1)
|
|
(33.8)
|
16.0
|
Gain on NCIB
|
(3.2)
|
—
|
|
(3.2)
|
(1.8)
|
Costs related to
business combinations [2]
|
1.7
|
1.0
|
|
6.6
|
2.1
|
Other
elements
|
—
|
(0.2)
|
|
0.2
|
1.1
|
Income tax adjustment
[1] [3]
|
(4.2)
|
(0.5)
|
|
(15.6)
|
(1.1)
|
Normalized net
income [1]
|
255.4
|
237.9
|
|
447.4
|
375.0
|
Normalized income tax
expense
|
80.2
|
82.5
|
|
132.8
|
131.8
|
Financing costs
adjusted
|
47.2
|
27.6
|
|
91.3
|
44.1
|
Financing income
adjusted
|
(2.9)
|
(1.5)
|
|
(4.4)
|
(2.5)
|
Depreciation expense
adjusted
|
93.2
|
71.8
|
|
183.1
|
142.0
|
Normalized EBITDA
[1]
|
$473.1
|
$418.3
|
|
$850.2
|
$690.4
|
|
|
|
|
|
|
|
[1] See
"Non-IFRS Measures" section.
|
[2]
Transaction costs and depreciation of intangible assets related to
business combinations.
|
[3] Income tax adjustment is related
to the income tax on Normalized elements subject to tax and for
which income tax has been recognized and to the adjustment related
to the impact of foreign currency translation from Mexican
operations.
|
|
(millions of
Canadian dollars, except per share data)
|
Three-month periods
ended
|
|
Six-month periods
ended
|
July
31,
2023
|
July 31,
2022
|
|
July
31,
2023
|
July 31,
2022
|
|
Depreciation expense
reconciliation
|
|
|
|
|
|
Depreciation
expense
|
$95.7
|
$72.8
|
|
$188.1
|
$144.1
|
Depreciation of
intangible assets related to business combinations
|
2.5
|
1.0
|
|
5.0
|
2.1
|
Depreciation expense
adjusted
|
$93.2
|
$71.8
|
|
$183.1
|
$142.0
|
|
|
|
|
|
|
Income tax expense
reconciliation
|
|
|
|
|
|
Income tax
expense
|
$76.0
|
$82.0
|
|
$117.2
|
$130.7
|
Income tax adjustment
[2]
|
(4.2)
|
(0.5)
|
|
(15.6)
|
(1.1)
|
Normalized income
tax expense [1]
|
$80.2
|
$82.5
|
|
$132.8
|
$131.8
|
|
|
|
|
|
|
Financing costs
reconciliation
|
|
|
|
|
|
Financing
costs
|
$47.2
|
$27.8
|
|
$91.5
|
$44.3
|
Other
|
—
|
0.2
|
|
0.2
|
0.2
|
Financing costs
adjusted
|
$47.2
|
$27.6
|
|
$91.3
|
$44.1
|
|
|
|
|
|
|
Financing income
reconciliation
|
|
|
|
|
|
Financing
income
|
$(6.1)
|
$(1.5)
|
|
$(7.6)
|
$(4.3)
|
Gain on NCIB
|
(3.2)
|
—
|
|
(3.2)
|
(1.8)
|
Financing income
adjusted
|
$(2.9)
|
$(1.5)
|
|
$(4.4)
|
$(2.5)
|
|
|
|
|
|
|
Normalized EPS -
basic [1] calculation
|
|
|
|
|
|
Normalized net income
[1]
|
$255.4
|
$237.9
|
|
$447.4
|
$375.0
|
Non-controlling
interests
|
1.0
|
1.2
|
|
1.3
|
1.3
|
Weighted average number
of shares - basic
|
77,874,472
|
78,959,785
|
|
78,357,505
|
80,000,264
|
Normalized EPS -
basic [1]
|
$3.27
|
$3.00
|
|
$5.69
|
$4.67
|
|
|
|
|
|
|
Normalized EPS -
diluted [1] calculation
|
|
|
|
|
|
Normalized net income
[1]
|
$255.4
|
$237.9
|
|
$447.4
|
$375.0
|
Non-controlling
interests
|
1.0
|
1.2
|
|
1.3
|
1.3
|
Weighted average number
of shares - Diluted
|
79,255,857
|
80,505,043
|
|
79,828,732
|
81,582,927
|
Normalized EPS -
diluted [1]
|
$3.21
|
$2.94
|
|
$5.59
|
$4.58
|
[1] See
"Non-IFRS Measures" section.
|
[2] Income
tax adjustment is related to the income tax on Normalized elements
subject to tax and for which income tax has been recognized and to
the adjustment related to the impact of foreign currency
translation from Mexican operations.
|
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SOURCE BRP Inc.