BRP Down Over 3% After Q1 Earnings - Here's Why

BRP Inc. DOOO shares are trading lower in the premarket session on Friday after the company slashed its FY25 guidance.

The company reported first-quarter adjusted earnings per share of 70 cents, which topped the street view of 66 cents.

BRP reported quarterly revenues of $1.498 billion, above the street view of $1.460 billion.

The company witnessed lower volume across most product lines, driven by decreasing network inventory levels and higher sales programs.

“As the year unfolds, our dealers’ profitability is under more pressure than anticipated given the current macroeconomic context, a more competitive landscape and high interest rates,” said José Boisjoli, President and CEO of BRP.

The decrease, however, was partially offset by a favorable product mix across most product lines and favorable pricing across all product lines.

First quarter gross profit margin percentage decreased by 210 basis points to 23.6% from 25.7% for the three-month period ended April 30, 2023. The decrease was the result of a lower volume sold and higher sales programs.

“For these reasons, we have decided to adjust our production to further reduce network inventory while continuing to maximize retail sales,” Boisjoli added.

Dividend: On May 30, the company declared a quarterly dividend of C$0.21 per share. The dividend will be paid on July 12.

Outlook: BRP sees FY25 revenues of C$8.6 billion to C$8.9 billion (consensus C$9.347 billion), lower than the previously issued guidance of C$9.1 billion to C$9.5 billion. The company sees adjusted earnings per share of C$6-C$7, lower than the prior view of C$7.25 to C$8.25, and against the consensus of C$7.79.

Given its focus on managing network inventory levels, the company expects second quarter normalized EBITDA to be down approximatively mid 20% versus first quarter.

Price Action: DOOO shares are trading lower by 3.56% to $64.00 premarket at last check Friday.

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