BRP Inc (NASDAQ: DOOO) stock rose over 3.27% on November 25th, 2020 (Source: Google finance) after the company posted stronger than expected results for the third quarter of FY 21. The company posted the gross margin of 29.1%, which represents a 220 basis point expansion, driven by favorable impacts from volume, mix, pricing and sales programs, and partly offset by unfavorable foreign exchange rate variations. The normalized EBITDA has increased 30% to $349 million, due to improved adjusted gross profit margin and lower operating expenses, on the back of the cost saving measures we have implemented earlier this year to mitigate the COVID impact. The company generated free cash flow generation of $228 million in the quarter, as the company ended the third quarter with $1.3 billion of cash on the balance sheet. Geographically, revenues were up 6% in Canada, up 7% in the United States and down 10% in international due to having very low level of yard inventory in many regions.
DOOO in the third quarter of FY 21 has reported the adjusted earnings per share of $2.13, beating the analysts’ estimates for the adjusted earnings per share of $1.41. The company had reported the adjusted revenue growth of 1.9 percent to $1.67 billion in the third quarter of FY 21, beating the analysts’ estimates for revenue of $1.60 billion. The rise in revenue is on back of lower sales programs due to a favorable retail environment and a favorable product mix, which was partially offset by a lower volume of products sold due to the replenishment of inventory at International.
The Company’s North American retail sales for powersports vehicles grew 16% for the third quarter 2020 driven by Year-Round Products and snowmobile, partially offset by PWC. North American boat retail sales grew 4% compared with the three-month period ended October 31, 2019. For the period, gross profit increased by 10.2%, to $486.9 million with 220 basis points expansion in gross profit margin to 29.1%
Additionally, the company declared a quarterly dividend of $0.11 per share, payable on January 14, 2021 to shareholders of record at the close of business on December 31, 2020.
The company now expects normalized earnings per share between $5.00 and $5.25 for the year, up from earlier guidance of between $3.65 and $3.95. The company expects total revenue is expected to be down in the range of 1% to 5% for fiscal 2021 and net income is expected to be in the range of $225M to $250M.