The Trump tax cut is boosting BRP’s third-quarter profits, one-time adjustments show

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Montreal-based motorcycle-parts maker BRP Ltd. reported a $127.7 million profit for the third quarter of its fiscal year, thanks to a windfall from an adjustment to its deferred tax asset.

The maker of Ski-Doo snowmobiles and Sea-Doo watercraft generated $211.7 million in profit, excluding one-time items, in the same period a year ago. Revenue increased 12% to $1.43 billion.

Shares climbed to the highest level since 2011 on the Toronto Stock Exchange.

The company said Tuesday its decision to adjust an amount held as a deferred tax asset in its U.S. subsidiary has boosted net income.

BRP now expects the effective tax rate for its U.S. operations to be 24% in the current fiscal year, down from 31% previously. The adjustment of the deferred tax asset will result in a $159 million non-cash gain in the third quarter.

The adjusted figure of $181.4 million is 30% higher than the second quarter.

BRP said it expects the guidance range on its free cash flow to be unchanged at between $600 million and $650 million.

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The markets had already sent the stock tumbling on Monday, when BRP cited supply chain disruptions during the summer, primarily in its aerospace division, as a cause for its lower-than-expected third-quarter revenue.

The company has long had a significant global presence. Last year, a parade of motorcycles rolled through the streets of Saudi Arabia, followed by a full-size tuk-tuk decorated with a CRT navigation device and LED lights.

Last month, it opened a five-story building at its Palm Springs, California, campus. The building has a 3,700-square-foot cafe, two exercise rooms, a technology incubator, a space for STEM students and a showroom for its SnowGen product.

By Pat Fuld, CNN Business

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