Buoyed by a strong balance sheet, Briggs and Stratton Corp. plans to incorporate acquisitions into an aggressive growth plan over the next several years, according to the company’s top executive.
“We’ve got a lot of room and a lot of cash on the balance sheet,” Briggs and Stratton president and chief executive officer Todd Teske said. “I’m really excited about what we can do. We’re not going to go out and do deals for the sake of doing deals. We’re going to do smart deals. But we can grow this company pretty dramatically over the next three to five years.
The Wauwatosa-based manufacturer of small engines and outdoor power equipment, such as lawn mowers and generators and power washers, is considering deals in both developed and emerging markets.
“A lot of it has to do with channel and product,” Teske said. “Part of our strategy is to get into things that have higher margins.”
“Acquisitions in emerging markets could be key to the company’s international growth,” he said.
“As we try to grow internationally, we think it’s important to have a presence there in some way, shape or form,” Teske said.
“Serving a country like Brazil, given its restrictive duty and tariff structure,” he said, “requires an in-country manufacturing presence.”
International sales currently account for about one-third of Briggs and Stratton’s overall revenue, compared with 25 percent three years ago, according to Teske. Nonetheless, the company plans on being judicious when it comes to making deals, Teske said.
“I’m really excited about what we can do, but we aren’t going to go out and do deals just for the sake of doing deals,” he said.
The ultimate goal of the company’s acquisition strategy will be to expand the breadth of its product line or possibly gain access to new distribution channels, he said.
Briggs and Stratton has the financial where-withal to pursue acquisitions that fit with its strategy, Teske said.
He pointed out that the company, which had a market capitalization of about $735 million early the week of Sept. 12, has net debt of just $18 million.
“I’ve been with Briggs for over 15 years and our balance sheet has never been in this good of shape,” Teske said.
At the same time, Briggs and Stratton continues to deal with challenges brought on by a sputtering economy. Teske doesn’t expect a full-fledged economic recovery in the United States to happen for another two years.
“Somebody asked me recently if I see any light at the end of the tunnel. The answer is yes, but it’s way, way off in the distance,” he said. “We’re already seen a double dip in our industry. We were down for four years, up one and then down again this past year here in the United States.”
Briggs and Stratton’s business did get a boost recently as a result of massive power outages along the East Coast caused by Hurricane Irene.
“We ramped up production and met the commitments we had,” Teske said. “I’m not going to kid you. The pipeline is relatively empty right now. We’ve got out plant down in Auburn, AL, cranked up and making as many generators as we can.”
Briggs and Stratton’s generator business, which Teske once led, is reliant upon hurricanes to drive business.
“When there are no hurricanes, this is a tough business to be in ,” he said. “We look at this in three-to-five-year chunks. It is volatile, no question, but you’ve got to be there when people need you.”
“Having government, both at the state and national level, adopt a more “pro-business” agenda also would benefit manufacturers, including Briggs and Stratton,” he said.
“I think Wisconsin is on the right track,” Teske said. “I see the impacts that this pro-business environment has had. It’s been very positive, but it’s still early.”
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