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MILWAUKEE, Oct. 18 -- Briggs
& Stratton Corporation today announced financial results for
its first fiscal quarter ended September 30, 2012.
Highlights:
"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:
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:
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.
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Monday, October 22, 2012
Briggs Reports Results for the 1st Quarter of Fiscal 2013
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