Briggs & Stratton Announces 1st Quarter Fiscal Year Results

MILWAUKEE – October 22 -- Briggs & Stratton Corporation today announced fiscal 2010 first quarter consolidated net sales of $324.6 million and a net loss of $8.7 million or $0.18 per diluted share. Consolidated net sales decreased $133.5 million or 29% from the prior year while the net loss was $6.7 million greater than the same period a year ago.

The $133.5 million consolidated net sales decrease was primarily the result of weaker shipments of both portable generators and engines. The increase in the net loss of $6.7 million was primarily the result of lower sales volumes in both reportable segments and a less favorable effective tax rate, partially offset by lower production costs and operating expenses.

Engines:

Fiscal 2010 first quarter net sales were $210.4 million, $48.2 million or 19% less than the prior year. This decrease reflects a 22% decrease in engine unit shipments compared to the same period a year ago.

The reduction in engine unit volume was attributable to consumer demand for lawn and garden equipment that was softer than that experienced in the same period a year ago and the decrease in demand for engines for portable generators due to the lack of landed hurricanes this year versus the activity experienced in the first quarter last year.

The fiscal 2010 first quarter loss from operations was $5.9 million, which is $0.4 million more than the $5.5 million loss from operations experienced in the first quarter of fiscal 2009. This increase in the loss from operations over the prior year was the result of a decrease in engine unit shipments and an increased provision for potential uncollectible receivables, offset by lower production costs and operating expenses.

The lower production costs are primarily the result of lower costs for purchased materials and components, lower transportation costs and lower warranty expenses. Operating expenses were lower in the fiscal 2010 first quarter compared to the prior year period, due primarily to planned reductions in selling and engineering expenses.

Power Products:

Fiscal 2010 first quarter net sales were $163.6 million, $91.9 million or 36% less than the prior year. The decrease in sales primarily resulted from decreased sales of portable generators due to the lack of hurricanes making landfall in the United States in this year's first quarter. In addition, unit shipments of all lawn and garden products were soft, especially the premium equipment that we sell through the dealer channel.

The fiscal 2010 first quarter income from operations was $3.6 million, an improvement of $1.0 million from the income from operations of $2.6 million reported in the first quarter of fiscal 2009. This improvement in income from operations between years resulted from lower production costs for materials and components and improved absorption related to the mix of product manufactured, partially offset by lower sales.

General:

Interest expense was lower between years because of lower outstanding borrowings. The effective tax rate was 36% versus the 71% used in the first quarter last year. The effective tax rate for the first quarter of fiscal 2009 was significantly higher than the 2010 period because 2009 included the favorable tax impact of foreign dividends.

Outlook:

The company continues to project that fiscal 2010 net income will be in the range of $40 to $50 million or $0.80 to $1.01 per diluted share. Consolidated net sales are projected to be lower between years primarily due to the absence of hurricane related sales of portable generators and selected price reductions to reflect projected lower commodity costs. Production levels for substantially all products are planned to be lower in fiscal 2010 to decrease our investment in working capital. Operating income margins are projected to be in the range of 4.0% to 5.0%, and interest expense and other income are forecasted at $27 million and $5 million, respectively. The effective tax rate for the full year is projected to be in a range of 31% to 34%.