Subaru Announces the Appointment of Steve Hartung

LAKE ZURICH, Ill. (Oct. 16, 2012) – Subaru Industrial Power Products is pleased to announce Steve Hartung has been named Director of Strategic Sourcing. Hartung has 18 years of experience in engine manufacturing and sales, and most recently has been responsible for Subaru’s Minneapolis-St. Paul sales territory as a regional sales manager. 

In his new position, Hartung’s primary focus is on strategic sourcing of American-made parts to be used inSubaru V-Twin engines assembled at the Fuji manufacturing plant located in Tokyo, Japan.

In addition to new responsibilities, Hartung continues to act as the regional sales manager for the greater Minneapolis area.

Hartung has been with Subaru Industrial Power Products for two years. For 16 years prior to that, Hartung was the director of manufacturing for Robin America. He managed the manufacturing process for the Wisconsin Robin line of engines, focusing on the V-Twin line of engines for Polaris and Billy Goat.

While he looks forward to the challenges and opportunities in his new role, Hartung remains dedicated to providing exceptional service to his existing client base and the manufacturing of superior products. “Manufacturing always presents interesting challenges.” he said. 

“The innovation and dedication that Subaru Industrial Power Products engineers into each one of its high quality products, and the good people who are working toward the same goals, that have kept me in the manufacturing industry for so many years.”

Briggs CEO Opening Remarks During Recent Earnings Call

October 18, 2012 -- Todd Teske - Chairman, President & CEO

 

“Good morning everyone, and thank you for joining us today. As you saw this morning's earnings announcement first quarter consolidated net sales were $309 million, a decrease of $88 million or 22% from the same quarter last year. The adjusted net loss for the first quarter excluding the $5 million of pre0tax restructuring charges was $13.2 million or $0.28 per share. This adjusted net loss for the quarter is $8 million higher than the first quarter net loss last year of $5.2 million or $0.10 per diluted shares.

The increased loss in the quarter was essentially related to lower overall sales volumes and lower production volumes as we have made the necessary adjustments to lower production levels in order to control inventories. These lower sales and production volumes were partially offset by approximately $10 million of cost savings resulting from our restructuring efforts over the last year.

As we anticipated coming into this fiscal year, sales of lawn and garden equipment continue to be significantly impacted by drought conditions in many areas of the United States. For the 12 months ended in August, industry data show shipments of walks and rides decreased 3% and 1% respectively, bringing us to the lowest level of activity in this industry since 1983. For the quarter, industry data indicates walk mowers were down 8.5%. For July and August, rides were down 21.1%. The September ride numbers have not yet been released.

Channel participants have continue to monitor inventory levels carefully by reducing re-orders for the late summer and early fall in order to limit inventory carried in the next season. While we continue to believe that inventory levels in the channel are elevated compared to one-year ago, channel participants, including OEMs, retailers and dealers generally have been cautious to not add to inventory levels causing issues for next spring.

Macro economic concerns in Europe impacting consumer spending continued to impact our business in the first quarter as well. International shipments to customers for the European lawn and garden market decreased over 60% compared to the same quarter last year. Inventory levels in Europe continue to be elevated for this time of the year and channel participants remain cautious of our consumer spending and inventory commitments heading into the next spring selling season.

Shipments of snow throwers were also lower in the quarter compared to last year’s dealers and retailers had high levels of inventory left over from last year’s exceptionally mild winter; while not significant enough to offset the market declines in lawn and garden, there are some bright spots in the quarter. Portable and standby generator sales benefited from Hurricane Isaac; although, the total impact of Isaac for generators was not as significant of an event compared to Hurricane Irene last year. However, the outages this year continue to highlight the need for dependable backup electrical power causing our standby generator sales to increase nearly 20% in the quarter.

We continue to make progress on improving our market share of commercial engines, which are used in commercial lawn cutting, construction equipment and utility markets. We also continue to execute on our restructuring actions in new product development in order to increase the efficiency of our manufacturing operations and to introduce higher margin products. The actions we announced last year continue to be on budget and on schedule and are delivering the cost savings that we anticipated of $30 million to $35 million for the full fiscal 2013 year.

Lastly, we’ve had the opportunity to host over 400 of our Simplicity, Snapper and Ferris dealers over the past several weeks at dealer open houses, where we have showcased over 40 new product introductions to be launched at the dealers next spring. The reactions of our dealers have been extremely positive and our teams are excited to get these new products launched in the coming months.”

…Looking forward to the remainder of the fiscal year, we are reaffirming our fiscal year 2013 projections for net income to be in the range of $60 million to $75 million or $1.25 to $1.55 per diluted share prior to the impact of any share repurchase activity and cost related or announced restructuring programs in pension curtailment.

We continue to be cautious with respect to the magnitude and pace of the economic recovery both here in the US and abroad, both the level of sustained consumer confidence and the ongoing impact if any of the drought conditions in the US. We are projecting net sales to be in a range of $1.95 billion to $2.15 billion which takes into consideration lower sales of approximately $100 million due to exiting the sale of lawn and garden products to national retailers and lower sales of snow throwers in the current year due to adequate inventory in the channel going into this fall.

On a more encouraging note, housing fundamentals continue to improve which is projected to have a positive impact on future [mode] of sales. Our fiscal year 2013 forecast contemplates the US lawn and garden market being higher by 4% to 6%, assuming the current drought conditions do not persist in the next season. We are currently in discussions with all of our key customers regarding product lineups for the 2013 spring and summer selling season, and we should have a better idea of placement at our fiscal 2013 second quarter conference call.

Consolidated operating margins are forecasted to be in the range of 5.1% to 5.6%. The improved operating margins include the benefit of over $30 million of savings as a result of our restructuring activities announced in fiscal year 2012. Offsetting these savings is higher pension expense in fiscal year 2013 of approximately $12 million caused by lower discount rates used to value the liabilities of the plant.

We expect the remaining restructuring savings and the incremental pension expense to be incurred ratably over the remainder of fiscal year 2013. While we do not provide guidance with respect to our quarters, I believe it is important to emphasize a few factors that will negatively impact our fiscal second quarter as compared to last year.

First, second quarter fiscal year 2012, included significant generators shipments due to power outages occurring during the period. We do not include such storm activity in our outlook. Second, we have announced that we will take additional days off in our McDonough plant, control inventories and the tool to plant for the new product introductions that we mentioned earlier. This will negatively impact our production rates and fixed cost absorption.

And third, many channel participants are being cautious with building inventories ahead of the season. Accordingly, we will be closely monitoring our productions to maintain reasonable levels of inventory. Therefore, we believe there will be some shift in orders and productions from the second quarter into the third quarter and from the third quarter into the fourth quarter.

Having said this; all of this factors are included in our outlook for the full fiscal year. From cash flow standpoints, cash flows are estimated to be higher in fiscal 2013 due a higher earnings and additional cash generator from net working capital reductions of approximately $80 million to a $100 million primarily related inventory reductions partially offset by required contributions of approximately $30 million to our pension plan.

Lastly, we anticipate that capital expenditures in fiscal 2013 will be in the range of $50 million to $60 million.”

Briggs Reports Results for the 1st Quarter of Fiscal 2013

MILWAUKEE, Oct. 18 -- Briggs & Stratton Corporation today announced financial results for its first fiscal quarter ended September 30, 2012. Highlights: First quarter fiscal 2013 consolidated net sales were $309.0 million, or 22.2% lower than the first quarter of fiscal 2012. Fiscal 2013 first quarter consolidated net loss excluding restructuring charges was $13.2 million, $8.0 million higher than the net loss of $5.2 million in the first quarter of fiscal 2012. The Company recorded pre-tax restructuring charges of $5.1 million ($3.3 million after tax or $0.07 per diluted share) during the three months ended September 30, 2012. Retirement plan changes announced to focus employee retirement savings on the defined contribution 401(k) plan. "While our first quarter results are down from a year ago, they are in line with our expectations. Unusually dry conditions in the United States and the continued economic issues in Europe resulted in lower volumes compared to last year," commented Todd J. Teske, President and Chief Executive Officer of Briggs & Stratton Corporation. "In order to manage inventory levels, we executed on our plans to proactively reduce production levels in our manufacturing plants. The reduced sales into the lawn and garden market were only partially offset by the impact of generator shipments resulting from Hurricane Isaac, which had less of an impact than Hurricane Irene did last year."  Teske continued, "We continue to execute our restructuring program announced last year which resulted in savings of $9.8 million during the quarter, in line with our expectations. Overall, we continue to be on track with our plan for the full fiscal year and are reaffirming our fiscal year sales and earnings guidance."  Consolidated Results: Consolidated net sales for the first quarter of fiscal 2013 were $309.0 million, a decrease of $88.3 million or 22.2% from the first quarter of fiscal 2012. Fiscal 2013 first quarter consolidated net loss including restructuring charges was $16.5 million, or $0.35 per diluted share. The first quarter of fiscal 2012 consolidated net loss was $5.2 million, or $0.10 per diluted share. Included in the consolidated net loss for the first quarter of fiscal 2013 were pre-tax charges of $5.1 million ($3.3 million after tax or $0.07 per diluted share) related to previously announced restructuring actions. After considering the impact of the restructuring charges, the adjusted consolidated net loss for the first quarter of fiscal 2013 was $13.2 million or $0.28 per diluted share, which was $8.0 million or $0.18 per diluted share higher compared to the first quarter fiscal 2012 consolidated net loss of $5.2 million or $0.10 per diluted share. There were no restructuring costs in the first quarter of fiscal 2012.  Engines Segment:  Three Months Ended Fiscal September  (In Thousands) 2012 2011      Engines Net Sales $ 164,515 $ 203,378      Engines Gross Profit as Reported $   24,712 $   36,882 Restructuring Charges 1,091 -      Adjusted Engines Gross Profit $   25,803 $   36,882      Engines Gross Profit % as Reported 15.0% 18.1%      Adjusted Engines Gross Profit % 15.7% 18.1%      Engines Loss from Operations as Reported $  (17,504) $    (5,477) Restructuring Charges 1,091 -      Adjusted Engines Loss from Operations $  (16,413) $    (5,477)      Engines Loss from Operations % as Reported -10.6% -2.7%      Adjusted Engines Loss from Operations % -10.0% -2.7% Engines Segment fiscal 2013 first quarter net sales were $164.5 million, which was $38.9 million or 19.1% lower than the first quarter of fiscal 2012. This decrease in net sales was primarily driven by a 16% reduction in unit shipment volumes mainly to lawn and garden OEMs in the North American and Asian markets resulting from drought conditions in North America and economic uncertainty in the global markets, an unfavorable mix of engines sold that reflected proportionately lower sales of large engines and unfavorable foreign exchange of $1.9 million, partially offset by improved engine pricing. The Engines Segment adjusted gross profit percentage for the first quarter of 2013 was 15.7%, which was 2.4% lower compared to the first quarter of fiscal 2012. The adjusted gross profit percentage was unfavorably impacted by 2.8% due to a mix of products sold that reflect proportionately lower sales of large engines, 2.1% due to reduced absorption on 16% lower production volumes and unfavorable absorption rates driven by proportionately lower production of large engines and 0.6% due to unfavorable foreign exchange. These reductions in gross profit percentage were partially offset by a 1.4% benefit due to increased pricing and 1.7% from cost savings as a result of restructuring actions initiated in fiscal 2012.  The Engines Segment engineering, selling, general and administrative expenses were $42.2 million in the first quarter of fiscal 2013, a decrease of $0.1 million from the first quarter of fiscal 2012 primarily due to lower compensation costs of $2.3 million as a result of the previously announced global salaried employee reduction, partially offset by $1.4 million of increased pension expense compared to the same period last year.    Products Segment:  Three Months Ended Fiscal September  (In Thousands) 2012 2011      Products Net Sales $ 173,297 $ 235,282      Products Gross Profit as Reported $   18,716 $   27,611 Restructuring Charges 4,035 -      Adjusted Products Gross Profit $   22,751 $   27,611      Products Gross Profit % as Reported 10.8% 11.7%      Adjusted Products Gross Profit % 13.1% 11.7%      Products Income (Loss) from Operations as Reported $    (4,756) $      2,293 Restructuring Charges 4,035 -      Adjusted Products Income (Loss) from Operations $       (721) $      2,293      Products Income (Loss) from Operations % as Reported -2.7% 1.0%      Adjusted Products Income (Loss) from Operations % -0.4% 1.0%   Products Segment fiscal 2013 first quarter net sales were $173.3 million, a decrease of $62.0 million or 26.3% from the first quarter of fiscal 2012. The decrease in net sales was primarily due to lower sales volumes of portable generators due to fewer storm related sales compared to the same period a year ago, reduced pre-season sales of snow equipment due to high inventory levels resulting from the unusually mild winter last year and reduced sales of lawn and garden equipment due to drought conditions in North America. This decrease was partially offset by higher shipments of home standby generators as well as internationally and improved pricing. The Products Segment adjusted gross profit percentage for the first quarter of 2013 was 13.1%, which was 1.4% higher compared to the first quarter of fiscal 2012. The adjusted gross profit percentage was improved by 2.5% due to increased pricing and a favorable mix of lawn and garden sales through the dealer channel, 0.3% from favorable foreign exchange and 2.4% from cost savings as a result of restructuring actions initiated in fiscal 2012. This was partially offset by 0.3% from higher manufacturing costs and 3.5% unfavorable absorption on 44% lower production throughput as we continue to manage inventories. The Products Segment fiscal 2013 first quarter engineering, selling, general and administrative expenses were $23.5 million, a decrease of $1.8 million from the first quarter of fiscal 2012. The decrease was attributable to lower compensation costs of $0.6 million as a result of the previously announced global salaried employee reduction and a planned reduction of spend in advertising costs and professional services in response to the softness in the global markets. Corporate Items: Interest expense for the first quarter of fiscal 2013 was $4.5 million, or $0.1 million higher compared to the same period a year ago. The effective tax rate for the first quarter of fiscal 2013 was 33.6% or $8.4 million of tax benefit compared to negative 25.3% or $1.1 million of tax expense for the first quarter of fiscal 2012. The first quarter of fiscal 2012 reflected a tax expense in spite of a loss before taxes as the Company was unable to record a benefit for losses at certain of our foreign subsidiaries. During the first quarter of fiscal 2013, these foreign subsidiaries improved their profitability, resulting in the most recent quarter effective tax rate to be in line with the effective rate expected for the full fiscal year. Financial Position: Net debt at September 30, 2012 was $126.4 million (total debt of $228.0 million less $101.6 million of cash), an increase of $36.6 million from the $89.8 million (total debt of $228.0 million less $138.2 million of cash) at October 3, 2011. Cash flows used in operating activities for the fiscal 2013 first quarter were $41.4 million compared to $56.3 million in the fiscal 2012 first quarter. The change in cash flows used in operating activities was primarily related to lower working capital needs in the most recent period and incremental contributions to the pension plan of $5.5 million in fiscal 2013. Approximately $19 million of the September 30, 2012 balance of accounts receivable is due to delayed funding under the Company's dealer inventory financing facility executed during fiscal 2012 with GE Capital, Commercial Distribution Finance. The delayed funding to the Company reduces the overall cost of funds. Retirement Plan Changes: The Company today announced that it will amend its defined benefit and defined contribution 401(k) retirement plans for U.S., non-bargaining employees. The defined benefit pension plan amendment freezes accruals for all non-bargaining employees effective January 1, 2014. The defined contribution 401(k) plan amendment increases the Company's maximum matching contribution from 3.5% to 4.0% of pay and offers all domestic non-bargaining employees a Company non-elective contribution equal to 3.0% of the employee's pay. This amendment is also effective as of January 1, 2014. "Focusing Briggs & Stratton's support of our employees' retirement savings on the 401(k) plan provides our employees with a competitive retirement benefit while delivering us with greater certainty regarding the cost and funding of plan benefits," said Todd J. Teske, Chairman, President and CEO.  "The enhanced 401(k) Company contributions will continue to help us attract and retain talented people and will help encourage and reward greater levels of employee saving."  The Company expects to recognize a pre-tax curtailment charge of approximately $2.0 million in the second quarter of fiscal 2013 related to the defined benefit plan change. Restructuring: The Company's execution of its previously announced restructuring actions remains on schedule. In the first fiscal quarter of 2013, the Company completed the sale of its dormant manufacturing facility in Jefferson, Wisconsin and a land parcel adjacent to its Ostrava, Czech Republic plant. In addition, the Company has made progress towards finalizing its exit from the Newbern, Tennessee and Ostrava, Czech Republic manufacturing facilities. The Company anticipates completion of its Auburn, Alabama plant consolidation by the end of fiscal 2013. As noted previously, pre-tax restructuring costs for the first quarter of fiscal 2013 were $5.1 million. The total estimated pre-tax expense related to restructuring actions in fiscal 2013 is expected to be $12 million to $22 million. In addition, the Company continues to anticipate pre-tax savings associated with restructuring actions of $30 million to $35 million in fiscal 2013 and $40 million to $45 million in fiscal 2014. Share Repurchase Program: On August 10, 2011, the Board of Directors of the Company authorized up to $50 million in funds for use in a common share repurchase program with an expiration of June 30, 2013. On August 8, 2012 the Board of Directors of the Company authorized up to an additional $50 million in funds associated with the common share repurchase program and an extension of the expiration date to June 30, 2014. The common share repurchase program authorizes the purchase of shares of the Company's common stock on the open market or in private transactions from time to time, depending on market conditions and certain governing loan covenants. During the first quarter of fiscal 2013, the Company repurchased 726,745 shares on the open market at an average price $17.73 per share as compared to repurchasing 219,200 shares on the open market at an average price of $14.23 per share during the first quarter of fiscal 2012. Outlook: For fiscal 2013, the Company continues to project net income to be in a range of $60 million to $75 million or $1.25 to $1.55 per diluted share prior to the impact of any additional share repurchases and costs related to our announced restructuring programs and pension curtailment. The Company previously indicated that it would exit sales of lawn and garden products to national mass retailers. The estimated impact of exiting this business in fiscal 2013 is approximately $100 million of reduced sales. Although sales in the first quarter of fiscal 2013 were favorably impacted by sales of generators in response to power outages during Hurricane Isaac, drought conditions in a significant portion of the U.S. have continued to impact the lawn and garden season considerably in the U.S. into the fall, offsetting the storm benefit. Our fiscal 2013 consolidated net sales are projected to be in a range of $1.95 billion to $2.15 billion. Operating income margins are expected to improve over fiscal 2012 and be in a range of 5.1% to 5.6% and reflect the positive impacts of the restructuring programs announced during fiscal 2012. Interest expense and other income are estimated to be approximately $18 million and $7 million, respectively. The effective tax rate is projected to be in a range of 31% to 34% and capital expenditures are projected to be approximately $50 million to $60 million.    About Briggs & Stratton Corporation: Briggs & Stratton Corporation, headquartered in Milwaukee, Wisconsin, is the world's largest producer of gasoline engines for outdoor power equipment.  Its wholly owned subsidiary Briggs & Stratton Power Products Group, LLC is North America's number one manufacturer of portable generators and pressure washers, and is a leading designer, manufacturer and marketer of lawn and garden and turf care through its Simplicity®, Snapper®, Ferris®, Murray® and Victa® brands. Briggs & Stratton products are designed, manufactured, marketed and serviced in over 100 countries on six continents.