Last Updated 7/13/2004
Bombardier Recreational Products Inc. (BRP), today announced its financial results for the fiscal year ended January 31, 2004. On December 18, 2003, in a transaction sponsored by Bain Capital, the Bombardier family, La Caisse de Depot et Placement du Quebec (CDP), a newly created entity named Bombardier Recreational Products Inc. (BRP) acquired from Bombardier Inc. its recreational products business.
The financial results described and presented below represent the combined results of the recreational products business of Bombardier Inc. from February 1, 2003 to December 18, 2003 and the results of BRP from December 19, 2003 to January 31, 2004 ("combined year").
For the combined year 2004, consolidated revenues were stable at $2.5 billion Cdn compared to last year, which is mainly due to BRP's decision to lower dealer inventories and shift watercraft production into the early part of fiscal year 2005. Consolidated Adjusted EBITDA, adjusted for certain items and impacts related to purchase accounting, amounts to $193.1 million for the combined year 2004, compared to $181.1 million for the previous year, an improvement of 6.6%.
BRP reported a net income of $12.7 million for the combined year 2004 compared to $114.8 million last year. This reduction arises mainly by the fair valuing of the assets, liabilities and foreign exchange contracts on December 18, 2003, as required at the time of acquisition of the recreational products business, by a decision to postpone watercraft production and deliveries and by higher warranty costs related to the recall of model year 1992 to 1996 watercraft fuel tanks. In addition, fiscal year 2003 was positively impacted by changes in estimates related to the acquisition of the assets of the outboard engine business of Outboard Marine Corporation as well as a change in accounting policies related to sales promotions and incentive programs.
"We are excited by our 2004 product introductions and we are now ready to capitalize on our leadership position in the snowmobile and watercraft markets. Our highly diversified portfolio of innovative products including the 2-up Max family of ATVs and our Evinrude® E TECTM outboard engine technology continue to be well accepted by our customers," said Jose Boisjoli, President and Chief Executive Officer. "Based on our product offering and our strong position in the market place, we look at fiscal year 2005 with confidence," he added.
Snowmobile sales have increased by 13% compared to 2003 despite lower shipments in order to reduce dealer inventory level. This is mainly due to BRP's exciting line-up based on the REVTM platform, which has been a great success ever since it was launched in 2002. With these positive results, BRP, with Ski-Doo® and Lynx™ snowmobiles, remains the number one manufacturer in the world.
Watercraft sales have decreased by 22% compared to fiscal year 2003. This is the result of BRP's decision to shift watercraft production and deliveries to the early part of fiscal year 2005, to better match retail activities. However, Sea-Doo® watercraft continue to be the world leader with exciting, high performance and cleaner products. With the introduction of the RXP™ watercraft, BRP expects to maintain its leadership position in the market place.
ATV sales have increased by 63% over last year due to a more complete line-up including very innovative products such as the 2-up Max family, which is gaining a higher level of acceptance in the market place. BRP's sales to Deere & Company have also contributed to these positive results.
Marine engine sales have decreased by 4% over last year. This is due to the strength of the Canadian dollar versus the US dollar, which has more than offset the increase in volume of product deliveries. The E TEC family of products enjoys high customer acceptance and is quickly making headway in all of BRP's markets. In 2003, the 40-, 50-, 75- and 90-hp models were introduced. E-TEC is the latest technology combining all of the best attributes of 2 stroke and 4 stroke engines. These engines are reliable, quiet and cleaner, in addition to being powerful, fuel efficient, lightweight and requiring no dealer scheduled maintenance for the first three years.
As for the Utility Vehicles, sales declined by 15% due to lower deliveries of snowgrooming units in North America as a result of poor snow conditions during winter 2002-2003.
Commenting on the overall BRP situation, Mr. Boisjoli concluded: "We are aiming at generating more synergies and reducing our global operating expenses through our new consolidated operational structure. A closer relationship with our dealers, a more focused marketing strategy and the identification of new sources of supply combined with our innovative, state-of-the-art families of products, give us a strong footing going forward."
Bombardier Recreational Products Inc. is a world leader in design, development, manufacturing, distributing and marketing of Sea Doo® watercraft and sport boats, Ski Doo® and Lynx™ snowmobiles, Johnson® and Evinrude® outboard engines, direct injection technologies such as Evinrude E TEC™, Bombardier* all-terrain vehicles (ATV), Rotax™ engines and karts, as well as Bombardier* utility vehicles.