The BRP earnings call for Q4 and the full year for FY2020 revealed continued strong growth. Annual revenue increased 15% to $6,053 million (CA$) primarily driven by shipments of Year-Round products which includes side-by-sides. Net income increased by 63% and North American BRP retail sales for Seasonal Products and Year-Round Products increased 15%. BRP retail sales outpaced the industry in North America and International markets. For Q4 2020 total revenues improved 7.3% to $1,615.9 and net income jumped 57.1% to $118.2. Management stated that they met key five-year revenue and earnings goals a year ahead of schedule.
BRP Earnings Call Highlights
The following are some of the highlights of the Q4 2020 BRP earnings call that relate to side-by-sides.
- BRP North American powersports retail sales increased 15% for FY2020 compared to mid-single digits for the industry
- Side-by-side vehicle retail sales increased low thirty % compared to high-single digit %
- International side-by-side retail sales increased by over 30%
- Powersports Parts & Accessories revenue increased double digit %
- Management anticipates line speed reductions or temporary closures to adapt to demand during the current crisis
- The company is not issuing financial guidance for FY2021 because of uncertainty driven by the COVID-19 virus
- About 20% of Can-Am’s US sales are in seven key oil states, which will be hit by the steep drop in oil prices
Learn more: Seekingalpha.com (Earnings call transcript)
SVR’s Take
BRP continued their long streak of strong quarters as they continue to gain market share in the side-by-side market. They have emerged as the number one rival to Polaris. In large part this is because of a steady introduction of new models that meet customer needs. They are the only company that has come close to matching Polaris’ pace of new model introductions.
However, both companies are going to be challenged by the corona virus crisis as well as the sharp drop in oil prices. The oil rich states were a drag on the market several years ago when there was a less severe drop in oil prices. Tariff and flooding troubles in the farming states only adds to the problem. The effects of the corona virus are unclear at this point but are likely to be severe. Furthermore, products like side-by-sides that significantly rely on discretionary income are likely to be disproportionately affected.
Marc Cesare, Smallvehicleresource.com