Fishing & Boating News

BRP Reports Financial Results For 1st Quarter, Fiscal Year 2005


(Jun. 30, 2004 - Saint Bruno, Québec,)

Highlights:

  • - Revenues increased by 22.3% to $630.9 million for Q1 FY05, from $515.8 million in Q1 FY04
  • - Substantial increase in consolidated adjusted EBITDA to $32.2 million for Q1 FY05 from ($0.4) million in Q1 FY04
  • - Launch of new products:
    • E-TEC(TM) 200, 225 and 250 HP outboard engines
    • Ski DooÆ Mach ZÆ and the Lynx(TM) R evo
    • Sea DooÆ 3D(TM)
  • - Implementation of cost reduction plan

Saint Bruno, Québec, June 29, 2004 - Bombardier Recreational Products Inc., recently branded as "BRP", today announced that its revenues reached $ 630.9 million for the first quarter of FY05 compared to $515.8 million for last year's first quarter, an increase of 22.3%.

These results are mainly due to the decision to postpone watercraft production and deliveries from the latter part of fiscal year ended January 31, 2004 to first quarter of fiscal year 2005 and the increase in ATV and outboard engine sales which more than offset the unfavourable foreign exchange impact.

Consolidated adjusted EBITDA, as reconciled in the attached schedules, has reached $32.2 million compared to ($0.4) million for the same period last year. This improvement results mainly from the impact of additional revenues and lower operating expenses.

Our cash position for the first quarter is strong and stands at $152.5 million as of April 30. At that date, there were no borrowings under our revolving credit facility and availability stood at $250.0 million, less issued letters of credit of $32.2 million.

"These results confirm the continued demand for our innovative products, a very encouraging trend for our company", said JosÈ Boisjoli, BRP's Chief Executive Officer. "I am pleased to see that although foreign exchange fluctuations had an expected negative impact on our results, it was largely offset by increased deliveries of our products. I am also satisfied that we were able to improve our consolidated adjusted EBITDA and our cash position as compared to last year", he added.

Snowmobile 2004 retail season ended in March with increased deliveries in both the North American (NA) and European markets, which contributed to consolidate our position as the industry leader. BRP believes it is also well positioned for the next season with the launch of our new Ski-Doo Mach Z for the NA and European markets and the Lynx R evo for Europe.

ATV (all-terrain vehicle) revenues in the first quarter 2004 increased by 47.0%, compared to the same period last year. This is mainly due to our OutlanderTM series and the MAXTM family of products as well as to the increased revenues outside NA, which have become a major driver of this industry.

Watercraft revenues increased by 35.0% during the first quarter 2005 compared to the first quarter 2004. This was mainly caused by the production shift to match the watercraft selling season. The Sea-Doo RXPTM model continues to generate great interest while the recently introduced Sea-Doo 3D has taken centre stage in specialised "Gen Y" magazines as well as in the general press.

Marine engines revenues have increased by 11.0% when compared to the first quarter of last year.

The EvinrudeÆ E TEC is making its mark in the outboard engine business. The larger E TEC engines, 200, 225 and 250 HP, were introduced to the market in February and have been well received by both the media and the dealer network.

Combining all the best attributes of 2-stroke and 4-stroke engines, E TEC is the outboard engine technology-of-the-future. These engines are reliable, quieter and cleaner, in addition to being powerful, fuel efficient, lightweight and requiring no dealer scheduled maintenance for the first three years.

Utility vehicles sales remained flat for the period although bookings for next season have increased over last year.

Parts and Accessories sales increased by 6.5% over last year, reflecting a better snowmobile season.

Gross profit percentage of revenues has decreased to 14.3% from 16.0% when compared to the same quarter in fiscal 2004. Gross profit decrease was caused primarily by the unfavourable impact of a stronger Canadian dollar in relation to the U.S. dollar.

It was also caused by the unfavourable impacts resulting from the acquisition and mainly related to; (i) inventory sold during the period which had been increased in value to distributor selling prices; (ii) the unfavourable impact resulting from the settlement of foreign exchange contracts; and (iii) the amortization of intangible assets acquired. These two elements more than offset the positive impact of additional volume and a better mix of watercraft and ATV products in our Power Sports Segment.

Net loss for the three-month period ended April 30, 2004 was $35.7 million compared to a net loss of $16.5 million for the same period in fiscal 2004. The variation in net loss was primarily related to unrealised foreign exchange loss on long term debt, to non-recurring related items resulting from purchase accounting and to increased interest expense on long term-debt and accretion in carrying value of redeemable preferred shares.

"2004 is the beginning of a new era for BRP. Our cost reduction plan is ongoing and will contribute to increase our profitability going forward. As we work to retain the confidence of our customers with innovative products we are consolidating our leadership position in our traditional markets and growing our presence in the others", concluded Boisjoli.

BRP is a world leader in the design, development, manufacturing, distribution and marketing of Sea DooÆ watercraft and sport boats, Ski DooÆ and Lynx(TM) snowmobiles, JohnsonÆ and EvinrudeÆ outboard engines, direct injection technologies such as Evinrude E TEC(TM), Bombardier* all-terrain vehicles (ATV), Rotax(TM) engines and karts, as well as BRP industrial vehicles.

This release refers to non-GAAP financial measures, such as EBITDA and Consolidated Adjusted EBITDA. "EBITDA" is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA includes the further adjustments described below. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. Our Senior Credit Agreement and the indenture governing our Senior Subordinated Notes contain covenants tied to similar measures. We believe that EBITDA and Consolidated Adjusted EBITDA, adjusted for certain items and impacts resulting from purchase accounting, are a fair representation of and provide information with respect to our ability to service our debt. However, they should not be considered as substitutes for, or superior to, measures of financial performance prepared in accordance with GAAP.

This release contains certain forward-looking statements with respect to our financial condition, results of operations and business. All of these forward-looking statements, which can be identified by the use of terminology such as "subject to," "believe," "expects," "may," "will," "should," "can," or "anticipates," or the negative thereof, or variations thereon, or comparable terminology, or by discussions of strategy which, although believed to be reasonable, are inherently uncertain. Factors which may materially affect such forward-looking statements include: (i) slow or negative growth in the recreational products industry; (ii) interruption of business or negative impact on sales and earnings due to acts of war, terrorism, bio-terrorism, civil unrest or disruption of mail service; (iii) adverse publicity regarding safety issues; (iv) increased competition; (v) increased costs; (vi) loss or retirement of key members of management; (vii) increases in the cost of borrowings and unavailability of additional debt or equity capital; (viii) changes in general worldwide economic and political conditions in the markets in which BRP may compete from time to time; (ix) the inability of BRP to gain and/or hold market share of its wholesale and/or retail customers anywhere in the world; (x) the inability of BRP's clients to obtain and/or renew insurance; (xi) exposure to, and expense of defending and resolving, product liability claims and other litigation; (xii) the ability of BRP to successfully implement its business strategy; (xiii) the inability of BRP to manage its retail, wholesale, manufacturing and other operations efficiently; (xiv) consumer acceptance of BRP's products; (xv) fluctuations in foreign currencies, including the Canadian Dollar; (xvi) import-export controls on sales to foreign countries; (xvii) introduction of new federal, state, local or foreign legislation or regulation or adverse determinations by regulators anywhere in the world; (xviii) the mix of BRP's products and the profit margins thereon; and (xix) other factors beyond BRP's control.

Readers are cautioned not to place undue reliance on forward-looking statements. BRP cannot guarantee future results, trends, events, levels of activity, performance or achievements. BRP does not undertake and specifically declines any obligation to update, republish or revise forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrences of unanticipated events.

Æ, TM Trademark of Bombardier Recreational Products Inc. or its subsidiaries. * Trademark of Bombardier Inc. used under license.