BRP Market Value

A conversation among Whalers
jimh
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BRP Market Value

Postby jimh » Sat Dec 07, 2019 9:02 am

Bombardier Recreational Products (BRP) stock has risen in price significantly in the past year, and the market capitalization value of BRP is now C$5.6-billion (Canadian dollars), which exceeds the value of their former parent company, Bombardier Inc., whose market value is about C$5-billion. Kudos to BRP for their corporate growth and vision, and their new market capital value.

Cf.: https://www.bloomberg.com/news/articles/2019-11-27/ski-doo-maker-brp-unstoppable-as-value-eclipses-bombardier

I find this interesting, because for a long time there has been dock talk about how Evinrude (a BRP brand) would never be able to survive and that BRP was doomed. Here are some great attempts at fear, uncertainty, and doubt (FUD) from the FUD-meisters:

From a thread back in 2004 discussing some business related announcements from BRP:

...I don't like the smell of this at all. Am I correct in suspecting financial problems?...Maybe they need to raise some more capital by selling off work they previously did themselves?...Are they doing any 4-stroke development at all?


Or from another thread in 2006:

From what I see I give Evinrude & Johnson a year at the most before they go [vulgar expression for death in abbreviation form]. If they don't I will...be surprised....I would like to see Johnson and Evinrude survive but they have a long slippery slope to climb to become profitable.


With engine blocks, gear cases, and electronics being divested and furnished by others, it puts BRP just a little closer to being a "boxmaker."


I hate to break this to you guys, but Bombardier dumped the E-tec/Evinrude line two years ago.


And the FUD kept going. In 2012 we got this warning:

Since big Bombardier unloaded BRP, Bain Capital has now been stuck with BRP/Evinrude for 10 years, and can't get rid of it.


Today BRP and Evinrude are still in business, and they are a publicly traded company with a rising market value.

dtmackey
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Re: BRP Market Value

Postby dtmackey » Sat Dec 07, 2019 7:35 pm

I read through the details in the Bloomberg report, but there's far more information in the BRP filings and they are doing great (I believe I've posted on this in the past), but Evinrude is still very small in their overall performance.

Evinrude will still be around in the future, but my feeling is they will be a minority player in the outboard market due to the ever lasting stigma of the early direct injection 2 strokes that had a high rate of failure and were pushed into the market by Evinrude (under OMC), Mercury and Yamaha with heavy marketing as the solution and technology of the future. Since that time, the market flipped to 4 strokes and the market is polarized.

One segment driving BRP stock performance is SkiDoo snowmobiles where they are the market leader:

Skidoo 47% market share
Polaris 33% market share
Arctic Cat 16% market share
Yamaha 4% market share
(2017 data is the latest I have, but the number have not moved much).

Success of the etec in the snowmobile market has been amazing and the desired choice of power for lightweight, power and simplicity. I have two of them and wouldn't consider a 4 stroke.

There are other segments under BRP with CanAm quads/side-by-sides, Seadoo, CanAm road products and the accessory segment and they all have performed strong.

Evinrude may continue to gain market share, but IMHO will always remain a minority player in the market due to the stigma. It is a shame since the G2 models offer some major advancements over the G1 Etecs. My 2006 Evinrude Etec 250 has been a great motor over the past 13 years and I would not hesitate to buy another.

D-

jimh
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Re: BRP Market Value

Postby jimh » Sun Dec 08, 2019 10:23 am

Somewhat tangential but related to the BRP business in both outboard engines and snow machines:

We have done a lot of recreational boating in northern Lake Huron's North Channel and Manitoulin Island area. There are lots of cruising boat up there in the 10 weeks of nice summer weather. But local merchants have told me that the winter is busier with snow machine enthusiasts. Unlike cruising boats, you cannot eat, sleep, or go to the bathroom on a snow machine. The snow machine enthusiasts fill up the motels, hotels, and restaurants. And once the lake freezes over, they have hundreds of miles of shoreline trails to run and explore. Also, a new snow machine does not cost $100,000--they are much more affordable than new boats. And after a few hours running trails in cold winter weather, the riders all want to get indoors and warm up. As a result, the boating season is something of a slow season for the motels and restaurants up there. For Floridians the Snow-machine market might sound like something minuscule, but in the northern USA and all across Canada there are plenty of them.

NLA01
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Re: BRP Market Value

Postby NLA01 » Sun Dec 08, 2019 10:38 pm

Evinrude makes up only 9.5% of BRP sales with their Recreational vehicles making up the other 90.5 % and their Seadoo sales are way up this year.

Well actually the 9.5 percent in the Marine division.

"The marine industry is composed of marine engines, boats and their respective PAC
businesses. BRP competes in the marine engine product category with the Evinrude outboard engines
and the Rotax engines for jet boats and in the boat product category with the Alumacraft and Manitou
boats. "

dtmackey
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Re: BRP Market Value

Postby dtmackey » Mon Dec 09, 2019 8:42 pm