Bombardier founding family to profit from BRP’s first dividend and sale of shares

MONTREAL – Bombardier’s controlling family will soon receive a multimillion-dollar return from its investment in BRP Inc., a recreational products manufacturer that was spun off as an independent company from Bombardier Inc.

The Beaudoin-Bombardier family, which owns 41.2 million multiple-voting shares of BRP in addition to its holdings in Bombardier, will receive $3.3 million from a new quarterly dividend to be paid by BRP next month.

The family could also earn up to $129 million by cashing in some of its BRP stock as part of the snowmobile maker’s plan to buy back and cancel up to $350 million worth of shares.

Affiliates of U.S.-based Bain Capital — which helped the family buy BRP from Bombardier — will also receive dividends and participate in the stock buyback. Bain currently has about 31.7 million BRP shares.

Both controlling shareholders, which together own 65.3 per cent of BRP shares, intend to sell some of their stock to maintain their proportionate holdings after the company buys back shares before the end of July. The price per share will be determined through a Dutch auction process.

BRP chief executive Jose Boisjoli said the family and Bain — which collectively control the company through multiple-voting shares — will be involved equally in the share buyback.

BRP’s publicly traded shares (TSX:DOO) reached an all-time high of $37.87 early Thursday after the dividend, buyback and financial results were announced. The stock was up 13.1 per cent at $37.17 in afternoon trading in Toronto.

The maker of Ski-Doo snowmobiles, Sea-Doo watercraft and other recreational equipment raised its growth estimates for fiscal 2018 after posting record first-quarter revenues.

The company also posted a first-quarter net loss, but attributed that to the impact of unfavourable currency fluctuations on the value of its long-term debt.

Boisjoli told analysts before the company’s annual meeting that its financial capacity and flexibility “has sufficiently increased to deliver on our growth objective while enhancing the return to our shareholders.”

BRP had a net loss of $19 million or 17 cents per share for the period ended Jan. 31, compared to a year-earlier profit of $110.7 million or 96 cents a share. Revenue rose to $956.2 million from $929.9 million.

On an adjusted basis, BRP said it had normalized income of 25 cents per share, better than the nine cents per share forecast by analysts polled by Thomson Reuters.

Chief financial officer Sebastien Martel said BRP’s initial dividend will be adjusted as the business and its profitability grow.

“Our objective is to continue to provide good returns to shareholder, and we will be adjusting the dividend payout in line with the results that we will be delivering,” he said, adding there is no targeted payout.

BRP hiked its guidance for the year. It is now expecting revenue from all business units will be four to six per cent above fiscal 2017 — four percentage points higher than previous guidance.

Similarly, BRP raised its adjusted net income growth forecast to a range of between 10 per cent and 16 per cent, from the previous range of seven per cent to 13 per cent.