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Despite a weak powersports vehicle market, Canadian manufacturer BRP (NASDAQ: DOOO) is looking for sales to rise across all of its segments in fiscal year 2020 as new product introductions and new acquisitions drive revenue higher.
The vehicle and marine products maker will be reporting its first-quarter earnings on Thursday, May 30, but it expects most of its gains to be weighted to the back half of the year, while a lot of the costs for new projects will be borne during the first two quarters.
Let's take a look at what investors can expect from BRP when it releases its results.
The three-wheeled Can-Am Ryker has been a strong seller for BRP. Image source: BRP.
Off-road strength
The powersports vehicle maker has been gaining market share in all of the segments in which it competes. It saw 23% growth last year in its year-round vehicle segment that produces its Can-Am-branded ATVs, side-by-sides (SSVs), and three-wheeled motorcycles, though growth was not even.
BRP introduced two new SSV platforms last year and launched a new three-wheeler, the Can-Am Ryker, which it credits with helping to lift vehicle sales in the fourth quarter as well as boosting sales of parts, accessories, and clothing.
The unit is performing better than rival Polaris Industries (NYSE: PII), which is seeing sales of its Slingshot three-wheeled vehicle collapse. Although Polaris is committed to fixing the business and turning sales around, CEO Scott Wine is also keeping it on a short leash, saying if sales didn't improve soon, he'd pull the plug on it.
The Ryker, though, is expected to see its sales momentum carry forward into the first quarter, along with a continued push from SSVs. ATVs are in flux, but where Polaris is facing slowing sales, BRP says it still anticipates sales to grow modestly this year and notes it is taking market share.
A chill over snowmobiles and boats
In seasonal products, which include its Ski-Doo and Lynx snowmobiles and Sea-Doo lineup of personal watercraft vehicles, BRP had a rough winter as snowfalls were inconsistent. Ski-Doo retail sales were down by low single-digit percentages in the fourth quarter as a result, and that's left snowmobile inventories higher than expected.
Overseas, though, sales were much better, as Ski-Doo revenue in Europe was higher, as well as in Russia, because BRP began direct-selling there for the first time and opened a new office. BRP uses the direct distribution model in 21 other countries, including the U.S., Canada, China, Germany, and Japan.
The new marine segment it created after acquiring two boat manufacturers last year could be a big winner for BRP. While its Evinrude engine business was down last quarter and retail sales for Alumacraft Boat were down around 20%, the Manitou pontoon boat maker is up about 50%.