|
Related Topics
|
Category: Stock Market and BRP Inc.
Date: 30 August 2019 Stock Price: $46.40 (Canadian Dollars) Note all Dollars in this article is in Canadian Dollar unless stated otherwise We take a look at the 2nd quarter earnings report of their 2020 fiscal year of BRP Inc. the snowmobile and watercraft manufacturers.
|
About BRP Inc.
We create innovative ways to move – on snow, on water, on asphalt or dirt – even in the air.
Headquartered in the Canadian town of Valcourt, Quebec, BRP has been reimagining the way you access your world since 2003 and beyond. Building on a tradition of ingenuity and intense customer focus that go all the way back to 1937, we operate manufacturing facilities in Canada, the United States, Mexico, Finland, and Austria. We have a total workforce of more than 12,500 driven, resourceful people.
Our portfolio of industry-leading and distinctive products comprises Ski-Doo and Lynx snowmobiles, Sea-Doo watercraft, Can-Am on and off-road vehicles, Alumacraft boats, Manitou pontoons, Evinrude marine propulsion systems, and Rotax engines for karts, motorcycles and recreational aircraft. We support our product lines with a dedicated parts, accessories and clothing business, to fully enhance your riding experience.
Headquartered in the Canadian town of Valcourt, Quebec, BRP has been reimagining the way you access your world since 2003 and beyond. Building on a tradition of ingenuity and intense customer focus that go all the way back to 1937, we operate manufacturing facilities in Canada, the United States, Mexico, Finland, and Austria. We have a total workforce of more than 12,500 driven, resourceful people.
Our portfolio of industry-leading and distinctive products comprises Ski-Doo and Lynx snowmobiles, Sea-Doo watercraft, Can-Am on and off-road vehicles, Alumacraft boats, Manitou pontoons, Evinrude marine propulsion systems, and Rotax engines for karts, motorcycles and recreational aircraft. We support our product lines with a dedicated parts, accessories and clothing business, to fully enhance your riding experience.
Financial overview of BRP Inc's latest earnings report
Numbers highlighted by management:
In addition, during the three-month period ended July 31, 2019:
Numbers we are interested in: (for the quarter and in Canadian Dollars):
- Revenues of $1,459.5 million, an increase of $252.5 million or 20.9%;
- Gross profit of $327.8 million representing 22.5% of revenues, an increase of $47.7 million;
- Net income of $93.3 million, an increase of $52.3 million, which resulted in a diluted earnings per share of $0.96, an increase of $0.55 per share or 134.1%;
- Normalized net income[1] of $68.8 million, an increase of $2.4 million, which resulted in a normalized diluted earnings per share[1] of $0.71, an increase of $0.05 per share or 7.6%;
- Normalized EBITDA[1] of $167.7 million, an increase of $23.5 million or 16.3%;
- Increase in guidance for end-of-year with Normalized EPS growth of 18% to 23% compared to last year.
In addition, during the three-month period ended July 31, 2019:
- The Company completed its substantial issuer bid offer launched in May 2019 with the repurchase of 6,342,494 subordinate voting shares for a total consideration of $300.0 million.
- The Company amended its term facility to add a new U.S. $335.0 million tranche for a total principal of U.S. $1,235.0 million.
Numbers we are interested in: (for the quarter and in Canadian Dollars):
- Total Revenues: $ 1.4595 billion (up from $1,207 billion for the same quarter of the previous year)
- Cost of sales: $1.1317 billion (up from $926.9 million for the same quarter of the previous year)
- Gross profit: $327.8 million (up from $280.1 million for the same quarter of the previous year)
- Net income: $93.3 million (up from $41.0 million for the same quarter of the previous year)
- Diluted earnings per share: $0.96 (up from $0.41 for the same quarter of the previous year)
- PE ratio: 12 (assuming current earnings is continued for all four quarters of the fiscal year)
- Dividend declared: $0.10
- Dividend yield: 0.86% (assuming a $0.10 dividend is paid for each quarter of fiscal year)
- Cash and cash equivalents: $270.4 million
- Cash and cash equivalents per share: $2.82
- Cash and cash equivalents makes up 6.1% of the group's current market cap
- Trade and other receivables: $280.9 million
- Trade and other receivables makes up 8% of the group's total assets
- Inventories: $1.076 billion
- Inventories makes up 30.7% of the group's total assets (anything more than 20% makes us a little twitchy)
- Cash generated from operations: $117.1 million
- Cash generated per share from operations: $1.22
- Weighted average number of shares in issue: 95.889 million (down from 98.375 million for the same quarter of the previous year)
- Market Capital: $4.45 billion
Sanderson Farms' management commentary on the results and earnings guidance
Valcourt, Quebec, August 29, 2019 – BRP Inc. (TSX:DOO; NASDAQ:DOOO) today reported its financial results for the three- and six-month periods ended July 31, 2019. All financial information is in Canadian dollars unless otherwise noted. The complete financial results are available at Sedar, as well as in the Quarterly Reports section of BRP’s website.
“We delivered another solid financial performance and record second-quarter results, driven by the success of Can-Am on- and off-road vehicles, with our side-by-side category driving robust growth in North America and Western Europe in particular,” stated José Boisjoli, President and CEO. “Quarter after quarter we have been outpacing the powersports industry and this quarter was no exception. Our efforts and commitment to build our side-by-side strategy over the past four years are paying off and we intend to maintain our strong pace of innovation,” he added
Declaration of dividend
The Board of Directors approved a quarterly dividend of $0.10 per share for holders of its multiple voting shares and subordinate voting shares. The dividend will be paid on October 11, 2019 to shareholders of record at the close of business on September 27, 2019. The payment of each quarterly dividend remains subject to the declaration of that dividend by the Board of Directors. The actual amount, the declaration date, the record date and the payment date of each quarterly dividend are subject to the discretion of the Board of Directors.
Fiscal Year 2020 Guidance
The table below sets forth BRP’s financial guidance for Fiscal Year 2020 which reflects the adoption of the new IFRS 16 - Leases (“IFRS 16”) standard effective as of February 1, 2019. Under IFRS 16, operating lease expenses are recorded as depreciation and interest expense rather than operating costs within Normalized EBITDA[1] . No restatement of prior periods was made.
“We delivered another solid financial performance and record second-quarter results, driven by the success of Can-Am on- and off-road vehicles, with our side-by-side category driving robust growth in North America and Western Europe in particular,” stated José Boisjoli, President and CEO. “Quarter after quarter we have been outpacing the powersports industry and this quarter was no exception. Our efforts and commitment to build our side-by-side strategy over the past four years are paying off and we intend to maintain our strong pace of innovation,” he added
Declaration of dividend
The Board of Directors approved a quarterly dividend of $0.10 per share for holders of its multiple voting shares and subordinate voting shares. The dividend will be paid on October 11, 2019 to shareholders of record at the close of business on September 27, 2019. The payment of each quarterly dividend remains subject to the declaration of that dividend by the Board of Directors. The actual amount, the declaration date, the record date and the payment date of each quarterly dividend are subject to the discretion of the Board of Directors.
Fiscal Year 2020 Guidance
The table below sets forth BRP’s financial guidance for Fiscal Year 2020 which reflects the adoption of the new IFRS 16 - Leases (“IFRS 16”) standard effective as of February 1, 2019. Under IFRS 16, operating lease expenses are recorded as depreciation and interest expense rather than operating costs within Normalized EBITDA[1] . No restatement of prior periods was made.
BRP Inc (TSE: DOO) stock price history
The image below, obtained from Google, shows the stock price history of BRP Inc. for the last 5 years. And it has been a relatively good performance for stock holders over this time period. The stock traded at $25 a share 5 years ago and today is trading at $46.40 a share. That's a gain of almost 86% over the last 5 years. However it is trading at well below its 52 week high which was $74.67. Infact its trading at closer to its 52 week low ($32.36) than its 52 week high.
BRP Inc. (TSE: DOO) latest stock valuation
Based on the group's latest earnings report and the updated earnings guidance provided we have a target price for BRP Inc stock of $74.20 a share. Which is well above its current trading price and close to its 52 week high. We feel the current trading price provides a good buying opportunity for long term fundamental investors to buy into BRP Inc.