Shaunna Balady Joins Briggs and Stratton as VP of Corporate Development

WAUWATOSA, Wis., July 29 -- Briggs and Stratton Corporation has recently added Shaunna Balady to their executive team as Vice President of Corporate Development. Balady will lead the mergers and acquisitions team, as well as strategic planning activities for the company.

"I'm pleased to welcome Shaunna Balady to our executive team," said Todd Teske, Chairman, President and CEO of Briggs and Stratton. "Shaunna brings unique technical and operational background strength to Briggs and Stratton and she will be instrumental in executing the Company's strategy to invest and grow in geographic expansion."

Balady comes to Briggs and Stratton from GE Home and Business Solutions, where she was the Business Development Leader with primary responsibility in overseeing all M and A activity for the business unit, while formulating the Business' external growth roadmap. Balady also served in strategic planning and acquisition positions at Rockwell Automation and CNH Global. Over her career, she has led and completed over 30 transactions which include product, service and software related deals.

About Briggs and Stratton Corporation

Briggs and Stratton Corporation, headquartered in Milwaukee, Wisconsin, is the world's largest producer of gasoline engines for outdoor power equipment. Its wholly owned subsidiaries include North America's number one marketer of portable generators and pressure washers, and it is a leading designer, manufacturer and marketer of lawn and garden and turf care through its Simplicity®, Snapper®, Snapper Pro® Ferris®, Murray®, Branco® and Victa® brands. Briggs and Stratton products are designed, manufactured, marketed and serviced in over 100 countries on six continents.

Judy Altmaier Talks About Her First Year Heading Exmark and the OPE Market

July 29 – Lawn and Landscape -- Last July, Exmark Manufacturing announced Judy Altmaier as its vice president and general manager. She replaced Rick Olson, who took over as vice president of international business for Exmark’s parent, Toro. After decades of running global operations for Eaton Corp., and a four-year stint at Big Red in Minnesota as vice president of operations, she moved down to Nebraska and into the top spot at Exmark.

We caught up with Atlmaier to discuss what she’s learned in the last 12 months in the GM’s seat, where she sees the mower market moving and why the company has to make so many different kinds of equipment. – Chuck Bowen

Lawn and Landscape: Tell me about your first year in this position. What surprised you the most in the past 12 months?

Judy Altmaier: First of all, I can’t believe it’s been a year already. In my mind and when I talk to people I think, “Ok well I’ve been here about five months.” That’s how much time it feels like. Time has flown because I’m having a great time doing this. I guess what I was surprised with was how much I really truly loved this. This is really a great job and a great division and good product. I knew particularly that the people here are very proud of what they do. But I was surprised at the absolute depth of passion that the entire team has here.

LAWN and LANDSCAPE: Tell me about that decision to put up your hand and say, ‘I want to go head up Exmark.’

Judy Altmaier: Every job happens because there was an opening. When Rick Olsen returned to the headquarters to run the international division, it left an open position. It wasn’t on my list of things to do, but I started thinking about what it would be like to be involved with this business at such an intimate level. From an operations standpoint, I loved what I was doing, but I thought, you know, the time was right for me personally and professionally to jump into Exmark.

LAWN and LANDSCAPE: What have you learned since you joined Exmark?

Well I can tell you it’s a very different look when you’re trying to drive initiatives from an operational standpoint. When you get into a division all of a sudden things become clear. Like, “Oh, now I understand why there have to be all these different products.” I used to joke with the divisions when I was in operations that if I ran marketing as an operations person, we’d have one product, we’d make a lot of them and they’d all be very, very good. That’s how an operations person thinks: You’ve gotta have standardization, communization of parts, everything should look the same. You make a lot of them and it’s gonna be great.

LAWN and LANDSCAPE: When you and I sat down at GIE+EXPO last October, we talked a little bit about what you had planned for Exmark. You said Exmark is already a really well-run company. So when you get up in the morning, what’s at the very top of your to-do list?

I always am wondering if we’re looking out for what our competitors are doing, not that you’d want to build your business model based on what your competitors are doing, but you don’t want anything to sneak up on you that you aren’t expecting – some technology or something that’s way cooler than something we have. I don’t know if that’s a high risk but you’ve gotta think about it.

So we spend a lot of time looking at other peoples’ products to just check out their quality and their technology. But then we spend a tremendous amount of time thinking about growing, what will we look like 10 years from now, and how do we have to be prepared? It’s not just about product then. You have a bigger company and bigger division then you need to think about all the things you need to support it. Do you have the right systems? Do we have the right depth strength? Those are the things that I spend a lot of my thinking time on. And is the customer going to value something, ultimately, that is different than what they value now?

LAWN and LANDSCAPE: Can you give me a look into the future and where you see Exmark moving and what contractors might expect?

Probably not in the way that you would like me to, frankly. I would say we’ll continue to focus on technology and operator comfort, and way to help our commercial cutters be more productive and fuel efficient. And one more thing is some green technology, I know you just spoke with Gary Busboom at length about propane, you know all those things are very near and dear and we continue to work on every single day.

Steve Jobs said about the iPhone, people don’t know what they want until they see it. It’s probably the same with mowers. People didn’t know they needed this until we brought it out and said look how cool this is, look how much this is going to help, look how much this is going to save you. So we also need to make sure we’re not getting caught up in the coolness of it. Ultimately that’s not valued by the customers and a waste of time and energy on probably the wrong area, and it’s a delicate balance.

LAWN and LANDSCAPE: So, tell me, I’m interested to hear your opinion about Jacobson acquiring Dixie Chopper. What did you think about that when you heard about that?

I thought it was surprising. I thought it was just an interesting move. You might be surprised to know that they didn’t call me to ask my opinion before they did it, so I wasn’t involved in that decision. I thought it was an interesting time for them to jump in. I don’t know if their revenues are down or they’re losing market share in their other business, so maybe that’s why this is interesting to them. But I think with this one, time will tell. I don’t know what they plan to do with it.

LAWN and LANDSCAPE: VallleyCrest is a Toro account and Brickman is an Exmark account. What does the KKR deal mean for you at Exmark?

I don’t know that we can predict what it will mean. I think we have to focus – it doesn’t really do me any good to spend time worrying about that. I think what I need to spend time on is focusing on being the supplier to Brickman, to ValleyCrest, to new customers. Provide the products that they want to use and can count on, be reliable every single day. We have to continue to bring value to those very important customers – all of them, the big ones and the small ones. And then I think the details will work themselves out.

LAWN and LANDSCAPE: You’ve got a really Zen approach to things.

I don’t know if I have Zen, but I do have a philosophy that you’ve got to understand what’s in your circle of control. There are a lot of things in my circle of concern, but there are only a few things in my circle of control. So I might as well spend my time and energy on those things I can impact and manage and that I can be responsible for. Everything else is very important, but if I focus on the things that matter, that’s the right formula. Time will tell if that’s true, too.

LAWN and LANDSCAPE: I know a lot of people, if one of their largest customers acquired their next largest customer, they’d be freaking out. And we’ve had that happen in our business. It can be a bit startling and surprising. It makes the sales guys worry too.

Yeah I’m not really a freak-out kind of person.

LAWN and LANDSCAPE: I can tell.

If you ever see me freaking out, it’s big.

LAWN and LANDSCAPE: That’s when I should hide.

Well yeah, I don’t even know what I would do if I was freaking out. At the end of the day, whether I freak out, or have a meltdown, or throw a temper tantrum, at the end of the day I don’t get much control of what they do. So all I can do is make sure that we don’t lose focus. As long as I continue to wait, I wait as Exmark continues to bring things that our customers want, like EFI technology that gives them tremendous fuel savings, or we listen to them for what they need on their machines for better productivity. As long as we’re doing that and delivering that, I have to think that that’s the right approach. If we just start developing products and throwing them at them and saying, “here use this,” instead of asking them what they need, that would be an operation of our fundamental approach and I don’t think we’re gonna move from what we did well, which is listening to our customers.

LAWN and LANDSCAPE: Can you share anything about what you’re doing for GIE+EXPO this year?

Well I don’t know that I’m going to be terribly helpful. My quick answer is if people know what to expect, why would they show up?

LAWN and LANDSCAPE: You’ve got to give me something to write about Judy!

I know. I’m sorry. You can say we’re going to have some really cool stuff. We’re going to bring all of our latest and newest, and a couple of things that no one has seen yet. It’ll be fun, and beyond that I won’t tell you anymore.

http://www.lawnandlandscape.com/       

Husqvarna Interim Report January - June 2014

Stockholm July 16, 2014

Kai Wärn, President and CEO:

“Husqvarna Group has delivered a strong first half of the year. Operating income for the second quarter increased by 35% to SEK 1,384m (1,022) and the margin rose to 12.5% (10.0). As in the first quarter, the positive development was driven by a combination of strong demand and impact from the Accelerated Improvement Program.

From a market demand perspective, Europe benefitted from positive weather conditions in the second quarter, while North America was challenged by a late spring and high trade inventory situation entering the quarter. Still, operating profit for Americas increased 41% to SEK 220m and the operating margin rose to 5.0% (3.7), mainly driven by cost reductions, productivity and mix improvements. 

For Europe and Asia/Pacific the operating income rose 38% to SEK 1,101m and the operating margin recovered to 19.1% (15.5), primarily as a result of higher sales volume and a good development within the core brands Husqvarna and Gardena and in prioritized product areas such as robotic lawn mowers and watering equipment. Construction had yet another strong quarter with operating income increasing 21%, driven by continued profitable growth across most markets.

A large share of the result improvement is attributable to activities in our Accelerated Improvement Program. The positive signs in the first quarter have all trended into the second quarter; the reduction of direct material costs is sustained and we are driving favorable mix by prioritizing our premium brands and product leadership areas, as well as growth in the dealer channel, especially in the U.S.

In June we announced a new organization which gradually will be implemented and fully effective by January 1, 2015. The new organization will follow the brand dimension for three forest and garden divisions with global profit and loss responsibility:  Husqvarna, Gardena and Consumer Brands. 

The Construction division will continue in its current form. Group functions will also be established in order to secure Group wide synergies and scale benefits, such as in sourcing, logistics and technology. In addition to providing better accountability and increased speed in decision making, the new organization will facilitate increased focus on key differences essential for market leadership in the different customer segments targeted by each division.

Keeping the momentum in the Accelerated Improvement Program remains key. From a demand perspective the third quarter may be more challenging in terms of comparison with prior year, as 2013 benefitted from a favorable garden season.”

Second quarter

·         Net sales increased to SEK 11,045m (10,227). Adjusted for exchange rate effects, net sales increased 7%.

·         Operating income increased 35% to SEK 1,384m (1,022), including total negative impact from changes in exchange rates of SEK -3m, compared to the second quarter 2013.

·         Sales and operating income were higher for all business areas.

·         Earnings per share increased to SEK 1.70 (1.15).

·         Operating cash flow increased to SEK 2,282 (1,915).

·         The net debt/equity ratio improved to 0.60 (0.75).

SECOND QUARTER

Net sales

Net sales for the second quarter 2014 increased by 8% to SEK 11,045m (10,227). Adjusted for exchange rate effects, net sales for the Group increased 7%, by 10% for Europe and Asia/Pacific, by 4% for Americas and by 8% for Construction.

Operating income

Operating income for the second quarter increased 35% to SEK 1,384m (1,022), corresponding to an operating margin of 12.5% (10.0). Operating income and margin rose for all business areas.

Operating income was positively impacted primarily by the higher sales volume, reduction of direct material costs and improved productivity. Costs for selling and administration as a percentage of sales declined, although logistics and marketing costs increased as a result of the higher sales activity.

Changes in exchange rates had a total negative impact on operating income of SEK -3m compared to the second quarter 2013.

Financial items net

Financial items net amounted to SEK -110m (-106), of which net interest amounted to SEK -96m (-105). The average interest rate on borrowings at June 30, 2014, was 3.5% (3.9).

Income after financial items

Income after financial items increased to SEK 1,274m (916) corresponding to a margin of 11.5% (9.0).

Taxes

Tax amounted to SEK -299m (-255), corresponding to a tax rate of 23% (28) of income after financial items.

Earnings per share

Income for the period increased 48% to SEK 975m (661), corresponding to SEK 1.70 (1.15) per share.

JANUARY – JUNE

Net sales

Net sales for January – June increased by 8% to SEK 20,730m (19,251). Adjusted for exchange rate effects, net sales for the Group increased by 7%, for Europe and Asia/Pacific by 8%, for Americas by 6%, while sales for Construction increased by 9%.

Operating income

Operating income for January – June increased 34% to SEK 2,287m (1,710) and the corresponding operating margin rose to 11.0% (8.9). Operating income and margin rose for all business areas.

Operating income for the first half year was positively impacted primarily by the higher sales volume, reduction of direct material costs, improved productivity and favorable mix. Logistics and marketing costs rose as a result of the higher sales activity.

Changes in exchange rates had a total negative impact on operating income of SEK -48m compared to January - June 2013.

Financial items net

Financial items net amounted to SEK -206m (-192), of which net interest amounted to SEK -178m (-195).

Income after financial items

Income after financial items increased to SEK 2,081m (1,518) corresponding to a margin of 10.0% (7.9).

Taxes

Tax amounted to SEK -490m (-390), corresponding to a tax rate of 24% (26) of income after financial items.

Earnings per share

Income for the period increased 41% to SEK 1,591m (1,128), corresponding to SEK 2.77 (1.96) per share.

OPERATING CASH FLOW

Operating cash flow for January - June increased to SEK 2,282m (1,915). Cash flow from operations, excluding changes in operating assets and liabilities, increased due to the higher result. Cash flow from changes in operating assets and liabilities decreased, mainly as a result of inventory changes. The increase in capital expenditure was mainly related to the new manufacturing facility for chainsaw chains in Huskvarna.

FINANCIAL POSITION

Group equity as of June 30, 2014, excluding non-controlling interests, amounted to SEK 12,556m (11,591), corresponding to SEK 21.9 (20.2) per share.

Net debt decreased to SEK 7,603m (8,733) as of June 30, 2014, of which liquid funds amounted to

SEK 2,330m (1,940) and interest-bearing debt amounted to SEK 8,525m (9,209), excluding pensions. The major currencies used for debt financing are SEK and USD. Net debt decreased by SEK 200m during the last twelve months as a result of changes in exchange rates.

The net debt/equity ratio improved to 0.60 (0.75) and the equity/assets ratio rose to 40% (38).

On June 30, 2014, long-term loans including financial leases amounted to SEK 5,421m (7,515) and short-term loans including financial leases to SEK 2,792m (1,487). Long-term loans consist of SEK 3,463m (4,939) in issued bonds, and bank loans and financial leases of SEK 1,958m (2,576).

The major part of the bonds and bank loans mature in 2016 - 2018. During the second quarter 2014 the Group amortized a loan amounting to SEK 500m with original maturity in March 2015. The Group also has an unutilized SEK 6 bn syndicated revolving credit facility, with maturity in 2016.

PERFORMANCE BY BUSINESS AREA

Europe and Asia/Pacific

Net sales for Europe and Asia/Pacific increased by 12% in the second quarter. Adjusted for exchange rate effects, net sales increased by 10%.

Efforts to grow sales of premium brands, in the prioritized product areas and sales channels, continued to develop well. Watering products and robotic lawn mowers were the products with the best development. Market demand in Europe was positively impacted by favorable weather conditions in both the first and second quarters.

Operating income for the second quarter increased 38% to SEK 1,101m (800) and the operating margin improved to 19.1% (15.5), mainly as a result of the higher sales volume, favorable product and channel mix, reduction of direct material costs and improved productivity.

Changes in exchange rates had a positive year-on-year impact of SEK 30m on operating income in the second quarter and SEK 35m in the first half year.

Americas

Net sales for Americas increased by 3% in the second quarter 2014. Adjusted for exchange rate effects, net sales increased by 4%.

Market demand in the first half of the year was hampered by a late spring and challenging early summer weather conditions in the U.S. Demand also suffered from high trade inventory levels entering the second quarter, following the strong sell-in to the trade in the first quarter.

Sales increased in the U.S. and Latin America, with a slightly better development for handheld products than for the wheeled products in the second quarter. Dealer channel sales continued to develop strongly, accounting for the majority of the total sales increase in the quarter as well as for the first six months.

Operating income for the second quarter increased to SEK 220m (156) and the corresponding margin rose to 5.0% (3.7), mainly due to lower direct material costs, improved productivity and favorable mix, which partly was offset by higher logistics costs.

Changes in exchange rates had a negative year-on-year effect of SEK -26m on operating income in the second quarter and SEK -62m in the first half year.

Construction

Net sales for Construction increased by 8% in the second quarter 2014. Adjusted for exchange rate effects, the increase in sales was also 8%.

Market demand for construction products in most main markets continued to develop positively also in the second quarter. Sales increased in all markets, with the best development in region rest of the world, primarily driven by continued strong growth in Brazil, and in Europe.

Operating income increased to SEK 121m (100), mainly as a result of the higher sales volume. The corresponding operating margin improved to 13.7% (12.3).

Changes in exchange rates had a negative year-on-year effect of SEK -8m on operating income in the second quarter and SEK -21m in the first half year.

NEW ORGANIZATION AS OF JANUARY 1, 2015

Husqvarna Group will establish a new organization for its forest and garden operations which follows the brand dimension with a global profit and loss responsibility. The Construction division will continue in its current form. The new organization will be implemented gradually and fully effective as of January 1, 2015. Implementation costs and redundancies will be limited.

The forest and garden operations will be organized in three global brand divisions representing three different business models;

·         Husqvarna (including Zenoah), which are dealer channel centric brands that enjoy strong recognition across many different forest and garden product segments, primarily for professionals and demanding consumers. Net sales for the division in 2013 represented approximately 52% of Group net sales.

·         Gardena, which is a retail centric brand with strong “must have” recognition in the consumer watering segment. Net sales for the division in 2013 represented approximately 13% of Group net sales.

·         Consumer Brands. This division includes all other Group brands, such as PoulanPro, McCulloch and Flymo. Net sales for the division in 2013 represented approximately 25% of Group net sales.

The divisions will have global profit and loss, cash flow and balance sheet responsibility. Most operational activities will primarily be organized within the brand divisions. To secure synergies and strategic alignment, a Group Operations division and global staff functions such as Business Development and Technology Office will be established.

The Construction division, which represents around 10% of Group net sales, will not be impacted by the organizational changes in the forest and garden operations.

In the Group’s external financial reporting, the segment reporting will comprise four divisions; the three forest and garden divisions Husqvarna, Gardena and Consumer Brands, and the Construction division, as of January 1, 2015. The new organization results in new cash generating units, which potentially creates a need for impairment of intangible assets. Any such consequences will be communicated when known.

PARENT COMPANY

Net sales January - June 2014 for the Parent Company, Husqvarna AB, amounted to SEK 7.107m (6,430), of which SEK 5,578 (4,981) referred to sales to Group companies and SEK 1,529m (1,449) to external customers.

Income after financial items amounted to SEK 829m (1,012). Income for the period was SEK 505m (907). Investments in tangible and intangible assets amounted to SEK 263m (227). Cash and cash equivalents amounted to SEK 795m (432) at the end of the quarter. Undistributed earnings in the Parent Company amounted to SEK 17,085m (17,466).

Briggs and Stratton Moves 370 Jobs to Wauwatosa WI Plant

WAUWATOSA, WI - July 16 - As part of the company's plans to shut down a Georgia facility and consolidate its manufacturing operations, Briggs and Stratton Corp. announced July 10 it will be hiring 220 full-time workers and 150 seasonal workers at its Wauwatosa facility at 3300 N. 124th St.

After the transition in early 2015, the Wauwatosa facility will be producing pressure washers, tractors and snow throwers. The Journal Sentinel reported the company will not have to expand the plant's footprint.

Alderman Craig Wilson, whose district includes the facility, said the new jobs could only mean good things for Wauwatosa, even if they don't all go to local residents.

"It will get more people familiar with Wauwatosa, and maybe they'll decide to buy lunch in town," Wilson said. "Beyond that, one thing we're getting better at is helping foster that culture of a strong business community."

Wilson said city officials have in the past considered different visions for this more industrial area of Wauwatosa. Redevelopment there could bring a higher density of property value and therefore more tax revenue.

"There's a tremendous amount of industrial space and I think we all know those spaces aren't used the way they used to be," Wilson said. "It's something we need to keep an eye on."

Although the infusion of jobs does not bring a change in use or property value, Wilson said he still thought it would be a valuable move for the community.

"This is even better, in a sense," Wilson said. "Sure we have budgeting and levy issues, but at the same time, any time you have a local business trying to grow, it certainly benefits the community and reputation of Wauwatosa."

Rory Linnane      http://www.wauwatosanow.com/   

Briggs and Stratton to Adjust Snapper Residential Product Offerings and Consolidate Manufacturing Facilities

MILWAUKEE, July 10, 2014 -- Briggs and Stratton Corporation announced today that beginning in the 2016 lawn and garden season, it will narrow its assortment of lower-priced Snapper consumer lawn and garden equipment and consolidate its products manufacturing facilities in order to further reduce costs. 

The Company will continue to focus on premium residential products to customers through its Snapper and Simplicity brands and commercial products through its Snapper Pro and Ferris brands. 

The Company will close its McDonough, Georgia location and consolidate production into existing facilities in Wisconsin and New York.  Production of pressure washers, snow throwers and lawn tractors will move to its Wauwatosa, Wisconsin manufacturing facility, and production of zero-turn lawnmowers will be moved to its Munnsville, New York facility.  Production is estimated to be completed in McDonough and transitioned to the other facilities during the first quarter of calendar 2015. 

The Company's dealer product offerings under the Snapper Pro, Simplicity and Ferris brands as well as sales of Snapper and Murray branded lawn and garden products at Walmart are unaffected by these announcements.

"While we have seen improved sales of our lawn and garden equipment during our fiscal 2014, in an effort to improve the operating performance of our Products business, we believe it is necessary to simplify our Snapper product line, reduce our offerings of certain low volume and lower-priced Snapper lawn and garden products and reduce the related manufacturing capacity and expenses," commented Todd J. Teske, Chairman, President and Chief Executive Officer of Briggs and Stratton Corporation.  "We will continue executing our strategy to focus on those premium products that generate higher margins and returns for our shareholders," continued Teske.

The McDonough, Georgia facility currently manufactures pressure washers, snow throwers, zero-turn lawn mowers and smaller lawn and garden tractors.  These changes will affect approximately 475 employees over the course of the next several months. The Company will provide assistance programs, continued benefits and outplacement services to the affected employees.  

Moving production of pressure washers, riding lawn tractors and snow throwers to the Wauwatosa, Wisconsin facility will add approximately 220 new full time positions and up  to approximately 150 temporary seasonal employees.  Employment at the Munnsville, New York facility is estimated to remain at current levels.

The Company anticipates total restructuring charges related to these actions of approximately $30 to $37 million, including non-cash write-downs of approximately $15 to $20 million, to be recorded during fiscal 2015.  Total cash costs related to these actions are anticipated to be approximately $15 to $17 million, with the majority of the cash costs being incurred in fiscal 2015. 

Total annual cost savings as a result of these actions are anticipated to be approximately $15 to $20 million with approximately $5 million to $7 million expected to be realized in fiscal 2015 and the remainder realized in fiscal 2016 upon completion of the transition in the fourth quarter of fiscal 2015.  

Products segment sales are estimated to be lower by approximately $20 to $25 million in fiscal 2015 and $35 to $45 million annually beginning in fiscal 2016 as a result of these actions.  The Company does not expect a material change in the sales or production volumes of engines as a result of this announcement.

Fiscal 2014 Sales Commentary:

The Company's fiscal year ended on June 29, 2014.  The Company anticipates reporting fourth quarter fiscal 2014 consolidated net sales of $495 million, a 4% increase over fourth quarter fiscal 2013 consolidated net sales of $477 million.

The Company also anticipates reporting fiscal 2014 full year consolidated net sales of $1.86 billion, consistent with net sales in fiscal 2013, despite approximately $100 million in storm- related engine and generator sales in fiscal 2013 that did not recur in fiscal 2014.

Fiscal 2014 net sales results included in this release are preliminary and are subject to completion of fiscal year end closing and auditing procedures.  The Company is planning to release its fourth quarter and fiscal 2014 financial results after the close of the markets on Wednesday August 13, 2014.