DEAR SHAREHOLDERS,

Fiscal 2016 has been a year marked by solid product introductions, flawless execution of our projects, and gains across all of our product lines. We faced a challenging environment, inciting us to demonstrate our agility and capacity to innovate. We resolutely pursued the rigorous execution of our plan and I am proud to report that we have delivered the best financial results in BRP’s history.

Revenues for the year increased to $3.8B, mainly driven by strong U.S. sales in our Year-Round Products and PAC categories. Our Normalized EBITDA¹ was up to $460M, resulting in normalized earnings per share¹ of $1.71, a 4% increase over last year or a 10% growth at the same income tax rate.

We disclosed our strategic priorities for the next four years, based on three specific long-term approaches: growth, agility and Lean enterprise. This roadmap will allow us to deliver strong shareholder value. The team is clearly aligned on these three priorities and is focused on driving results.

¹ See Non-IFRS measures section in Shareholder Information.

OUR STRATEGIC PRIORITIES

GROWTH

ACCELERATE CAN-AM GROWTH

DEFINE THE NEXT WAVE OF GROWTH

AGILITY

IMPLEMENT ONE-PIECE FLOW, A MODULAR APPROACH AND A MORE FLEXIBLE SUPPLY CHAIN TO BETTER SERVE OUR CONSUMERS AND DEALERS

LEAN ENTREPRISE

IMPLEMENT NEW CORE TECHNOLOGIES AND DRIVE MARGIN IMPROVEMENT ON NEW PRODUCTS LAUNCHED

Growth

We have implemented a structured framework to set in play our course of action over the next few years by identifying opportunities to stimulate growth across three axes:

  • growing market share in our existing six product lines,
  • opening new segments in our current markets, and
  • adding to our existing product offering by implementing an aggressive new product, new market strategy.

We are currently centering our resources on capturing the full potential of the Can-Am brand in the U.S. We are targeting to double our off-road business over the next five years, and last September, I promised to release a new Can-Am side-by-side vehicle every six months for the next four years. The introduction in FY2016 of the Can-Am Defender vehicle, our entry into the largest segment of the side-by-side market, was just the beginning.

It isn’t enough to grow our product lines; we also need to enhance our dealer network and increase our brand awareness. Accordingly, we added 105 new Can-Am dealers in North America this past year, improving our Can-Am side-by-side and Spyder network coverage by 28% in the past three years. We are also increasing Can-Am brand awareness with our involvement in NASCAR, announced in September 2015. This sponsorship is already demonstrating its potential in the first few months of 2016.

It isn’t enough to grow our product lines; we also need to enhance our dealer network and increase our brand awareness. Accordingly, we added 105 new Can-Am dealers in North America this past year, improving our Can-Am side-by-side and Spyder network coverage by 28% in the past three years.

NEW POWERSPORTS DEALERS ADDED IN NORTH AMERICA

105

NEW EVINRUDE DEALERS ADDED IN NORTH AMERICA

72

NEW EVINRUDE BOAT BUILDERS ADDED IN NORTH AMERICA

16

SIDE-BY-SIDE AND SPYDER COVERAGE IN NORTH AMERICA OVER THE PAST THREE YEARS

+28%

Agility

The consumer is at the heart of our success, and this includes both our dealers and the end-consumers who actually use the products we manufacture. By becoming more agile in our manufacturing processes, BRP will respond to the needs of both consumers.

Our Juárez 2 manufacturing site in Mexico is the best example of our agility where BRP’s new modular approach and the implementation of one-piece flow has allowed for a more predictable order-to-delivery process, letting dealers provide the right product at the right time. All new products are now developed with this approach, which enables us to fulfill our commitment to launch a new side-by-side model every six months for the next four years.

Agility also goes beyond manufacturing systems and processes; it also applies to our everyday decisions. For instance, we were able to demonstrate this during the 2015-16 winter when the El Niño weather pattern impacted the snowmobile industry in some regions of North America. We significantly reduced that impact through aggressive promotions. This decisional agility helped us boost sales and we ended the season with our highest North American market share since the industry began recording them.

All new products are now developed with our new modular approach, which enables us to fulfill our commitment to launch a new side-by-side model every six months for the next four years.

The consumer is at the heart of our success

Lean enterprise

We are implementing more and more new technologies, helping us render our processes and procedures more efficient and driving costs down. From our information technology to manufacturing systems and design process right down to quality assurance, dealer network coverage and big data, we are using cutting-edge systems to improve margins, develop new procedures and become more effective across our business units.

In Austria and in Canada, we are remodelling our facilities to increase our operational efficiency with new technology. In fact, our team in Austria adapted plasma coating processes used by some automotive OEMs to our products, allowing us to design more energy-efficient engines. In our Juárez 2 facility and in Valcourt, we have implemented new, more efficient frame welding systems.

We aim to do more with less, become more effective in our decisions from a manufacturing standpoint, as well as across our administrative functions and with our suppliers.

The BRP team has always risen to the challenge. I am very proud of being part of it.

José Boisjoli, President and Chief Executive Officer

About the BRP team

BRP’s culture is all about performance; our talented employees are passionate about their work. This helps us navigate our demanding industry where innovation, in terms of products or processes, is the first, and last, key to success. Despite the demands of this high performance environment, the BRP team has always risen to the challenge. I am very proud of being part of it.

I’m also very happy with the strong results on the health and safety front. Once again, we surpassed last year’s record performance in workplace accident rate, outstripping our own ambitious target to reach another world-class result. Congratulations and thank you to the health and safety teams in all our sites!

The BRP story is one of strong success, but our ambition pushes us on. Our execution in the first year of our 2020 plan was flawless. Our plan for the future is to stay the course on this path to growing our company and become more agile and Lean, across our manufacturing sites as well as our business units and functions.

Together, we are determined to meet or surpass the goal we have set.

 

José Boisjoli

President and Chief Executive Officer