Reading through BRP's (CA:DOO) first-quarter 2024 earnings report issued on Thursday, what's clear is that despite recessionary threats, the Quebec-based company continues to deliver record results. 

On the top line, revenue in the quarter was 34% higher than a year ago, reaching $2.43 billion. At the same time, its normalized earnings before interest, taxes, depreciation and amortization (EBITDA) was 39% higher year-over-year to $377 million. (All figures in Canadian dollars, unless otherwise specified.)

Revenues, at $150 million (+7%), were higher than the analyst estimates, while its normalized earnings per share (EPS) of $2.38 beat the consensus by 6 cents (3%).

Investors holding DOO stock are looking at a year-to-date decline of almost 10%, 20% lower from its 52-week high of $120.51 a share hit in February. Still, at a share price in the mid-90's, long-term holders have done nicely from the early pandemic low of $19.75 in April 2020.

Trading at less than 1x sales, investors can buy BRP stock at a reasonable price based on its historical price-to-sales multiple. 

Good Start

CEO José Boisjoli, not surprisingly, was very happy with the company’s start to fiscal 2024.

“Fiscal 2024 is off to a good start for BRP. We delivered a solid first-quarter performance with record revenue for that period and a 43% increase in Normalized EPS – diluted,” Boisjoli stated in BRP's press release. 

“Once again, we outpaced the North American Powersports industry thanks to sustained consumer demand for our strong and well diversified product portfolio.”

The company’s year-round products have been the growth driver for its overall business for several years. However, the quarter’s results remind investors that its seasonal products (snowmobiles, personal watercraft) aren’t having a problem contributing to the top and bottom lines. 

In Q1 2024, seasonal products had revenue of $691.9 million, nearly 70% higher than Q1 2023, accounting for 28% of BRP’s overall revenue. It seems customers can’t get enough Sea-Doo’s. Even the Sea-Doo pontoon boat was in high demand.

Year-Round Contributors

However, it is the year-round products that get all the glory. Accounting for 55% of revenue, its sales in the quarter jumped 43% to $1.33 billion. While supply chain issues pushed some sales from Q4 2023 into the first quarter, helping to bump growth, the segment still managed to generate higher volumes in the quarter despite higher prices. 

Like many other businesses in North America, it appears BRP is facing little price resistance from customers. As a result, its gross margin increased by 60 basis points in the quarter to 25.7%. 

The considerable debate about whether profit gouging is taking place will likely continue for the remainder of 2023 and into 2024. However, there is no question BRP has benefited from consumers accepting higher prices. 

In the meantime, the company reiterated its 2024 guidance. 

Steady as She Goes

“BRP reiterated its FY24 guidance, which calls for EPS to range between $12.25 to $12.75, up 2-6 per cent year-over-year,” The Globe and Mail reported Stifel analyst Martin Landry’s comments.  

“North American industry retail sales had a slow start this year with unfavorable weather but appear to have accelerated recently with BRP’s retail sales up more than 25 per cent year-over-year in April and up nearly 50 per cent year-over-year in May.”

Landry said he expected the markets to react positively to the quarter’s overall results. 

The only fly in the ointment is BRP’s marine segment. The company has supply chain issues, so it cut the segment's 2024 revenue growth by 10 percentage points from 47.5% at the midpoint of its previous guidance to 37.5%. 

Otherwise, the company’s results demonstrate why it is one of Canada’s best mid-cap stocks over the long haul.