MONTREAL — Shares of recreational products maker BRP Inc. hit an all-time high Thursday after the Quebec-based company raised its financial guidance for a second consecutive quarter as revenues surged in the second quarter driven by higher sales of off-road vehicles and watercraft.
BRP shares peaked at $74.67 in early trading on the Toronto Stock Exchange and were up 7.2 per cent at $69.83 by early afternoon.
The maker of Ski-Doo snowmobiles and Sea-Doo personal watercraft says it now expects its normalized earnings per diluted share for the year to increase 30 to 35 per cent compared with the previous year, up from an earlier prediction for growth of 24 to 30 per cent.
Revenue is now expected to grow 12 to 16 per cent compared with earlier guidance for growth of six to 10 per cent, beating analyst expectations.
The guidance bump marks the second straight quarter that the Valcourt, Que.-based company has raised its revenue forecast.
“Given the positive momentum we are experiencing and the good visibility we have on the back half of the year, we are comfortable increasing our guidance for the end of the year,” BRP president and chief executive Jose Boisjoli said Thursday during a conference call.
Sales of Sea-Doos and side-by-sides — four-wheel-drive off-road vehicles — propelled revenues to a new second-quarter record at the 76-year-old company.
The revised guidance came as BRP’s net earnings fell to $41 million or to 41 cents per share for the quarter ended July 31. That compares with $104 million or 93 cents per share a year ago when the company benefited from a one-time foreign exchange gain on its long-term debt.
Adjusted profit excluding one-time items was $66.4 million or 66 cents per diluted share, up from $22.9 million or 20 cents per diluted share a year ago.
BRP said revenue was nearly $1.21 billion, up 18 per cent from $1.02 billion a year ago.
Desjardins Capital Markets analyst Benoit Poirier said the robust results meant BRP outperformed the industry “in every segment in North America.”
“We believe the company’s performance speaks to management’s ability to introduce compelling products through innovation — a key lever for market share gains,” he wrote in a report.
Some of those gains are coming from BRP’s recent acquisitions AlumaCraft Boat Co. and Manitou Pontoon Boats. Aluminum fishing boats and pontoons — uncharted waters for BRP — comprise more than half of the U.S. boat market, said Boisjoli.
He also weighed in on NAFTA talks, which saw Mexico and the U.S. reach a preliminary bilateral deal this week as Canada scrambles to meet a pending Friday deadline.
The bilateral agreement’s higher regional content thresholds for component parts in automotive products would pose only a limited threat to BRP’s line of ATVs, he said.
“If you’re not in compliance, the total penalty would be in excess of $5 million, so it’s obviously something we can manage through.”
BRP may turn toward Asia to source product parts, Boisjoli added.