Stihl Uses Marketing Analytics to Compete With Big Box Stores

October 29 -- If you're in the market for a chain saw or a leaf blower, you might consider a product from Stihl.

But you won't find the company's products at Home Depot or Lowe's. Stihl operates an independent dealer-only retail distribution program that its leaders say is instrumental in helping the company dominate the gasoline powered outdoor tool category.

But that tactic means Stihl is one step removed from the marketplace. "It's hard for us to get close to the customer," says Ken Waldron, director of marketing. That made it difficult for Waldron, who came from the automotive industry, to prove the returns on his marketing investments.

"When you're working for Chevrolet, you can see very quickly every Monday how many Cavaliers were sold, to whom and in what geography," Waldron says. "It wasn't until I came here that I realized that was a luxury."

Stihl must collect data from many sources, some more complete than others. There is no big market researcher for gas-powered outdoor tools and independent dealers all track sales differently. Stihl belongs to the Outdoor Power Equipment Institute, whose members report on U.S. shipments to wholesalers and retailers. Other third-party research companies track retail sales. And Stihl itself collects product registration and warranty card data. "It takes a bit of doing to understand your performance," Waldron says.

Last year, Stihl deployed Eye on Marketing ROI software from Black Ink to begin analyzing the more than 10 million customer records it has generated since 2000. The goal is to find historical sales trends and help its thousands of independent dealers as they compete with industry Goliaths for customer attention.

In a new program, Stihl has coaxed 5,000 of its retailers to participate in regional marketing campaigns, in part to show potential customers there's an alternative to the big box stores. "We're marshaling this army of retailers who see Home Depot and Lowe's as the enemy," Waldron says. "All of them want to better understand their return on marketing effort." Stihl's analytics will give them "more reason to believe in what we're doing in the face of enormous category killers," he says.

In-depth customer data analysis can raise marketing's profile inside a company, says Laura Ramos, an analyst at Forrester Research. "Better use of data and reporting helps marketers make the transition from the role of brand center to the source of insight."

Stihl identified two customer types: "Eddy Expert," the baby boomer who is familiar with the brand but may soon be aging out of its products, and "William Wannabe," the Generation X or millennial homeowner who represents the next wave of potential Stihl customers.

Stihl has historically focused on boomers. But analysis revealed that if the company had redirected some recent marketing programs to target 30-to-40-year-olds, it could have captured over $200 million in additional sales at retail by increasing the number of customers it has in that age group by just a couple percent, Waldron says.

Such analytics will drive changes in marketing strategies at distributor stores and loyalty programs in 2015. The "ability to profile who is buying, when they are buying and where they are buying, in a far more granular fashion, will allow us to better target our media and messaging investments," Waldron says. "The notion of effective micro-marketing against specific audience segments is no longer fantasy, it is reality."

Stephanie Overby         www.cio.com

ARI Network Services Announces Fiscal 2014 Results

MILWAUKEE -- October 28 -- ARI Network Services, an award-winning provider of data-driven software tools and marketing services that help dealers, distributors and manufacturers Sell More Stuff!™, reported financial results today for its fiscal fourth quarter and fiscal year ended July 31, 2014.

Highlights for the fiscal year 2014 included:

The company reported record revenues of $33.0 million, a 9.7% increase over fiscal year 2013.

Recurring revenues for fiscal 2014 were $30.9 million, a 14.4% increase over fiscal year 2013. As a percentage of total revenues, recurring revenues were 93.6% in fiscal year 2014 versus 89.7% in fiscal year 2013.

EBITDA, a non-GAAP measure, adjusted for non-cash charges, was $3.9 million, or 11.7% of revenue in fiscal year 2014, an increase of 10.4% from fiscal year 2013.

Highlights for the fourth quarter of fiscal year 2014 included:

Revenues for the fourth quarter were $8.5 million, an increase of 4.5% over 3Q14 and 1.1% over the same period last year.

Gross margin was 81.6% in the fourth quarter compared with 80.9% in 3Q14 and 80.8% in the same period last year.

EBITDA, a non-GAAP measure, adjusted for non-cash charges, was $1.4 million or 16.1% of revenue in the fourth quarter. This compares with EBITDA of $1.3 million or 15.4% of revenue in 3Q14 and $1.5 million or 17.7% of revenue in the same period last year.

Cash generated from operations was $1.3 million for the fourth quarter of fiscal 2014, compared with $1.0 million in 3Q14 and $0.9 million for the same period last year.

Fiscal Year 2014 Financials

Fiscal 2014 was a record year for ARI, with revenues of more than $33 million. Total revenue increased 9.7% or $2.9 million during fiscal 2014. Recurring revenues were $30.9 million, a $3.9 million increase over the prior year. The increase in revenue and recurring revenue was primarily driven by growth in the company's website solution offerings, which in fiscal 2014 accounted for 51% of the firm's revenues.

Gross margin for fiscal year 2014 was 80.7% versus 78.0% last year, with the increase being largely attributable to the growth in the firm's recurring revenues which have a higher gross profit.

The company recorded an operating profit of $0.4 million in fiscal 2014 versus an operating loss of $0.2 million in fiscal 2013. Net loss for the fiscal year was $102,000 or ($0.01) per share, compared with a net loss of $753,000 or ($0.08) per share last year.

Management Discussion

Roy W. Olivier, President and Chief Executive Officer of ARI, commented, "Fiscal 2014 was a year of growth and accomplishments for ARI. We recorded the highest revenue in company history and were able to grow EBITDA 10% versus the prior year. In the early part of our fiscal year, we acquired DUO Web Solutions and through that were able to re-launch our Digital Marketing Services offering, which we expect to be one of our key drivers of organic growth in fiscal 2015.

In December of 2013, we successfully re-listed on the Nasdaq Capital Market and recently were added to the Russell Microcap Index. Throughout the year, we were also able to enhance our product offerings and expand our customer base in our primary growth verticals of automotive tire and wheel and home medical equipment, which we entered during fiscal 2013."

Mr. Olivier continued, "Subsequent to the end of our fiscal year, we completed the acquisition of TCS Technologies. This acquisition further solidifies our leadership position in the automotive tire and wheel industry and expands our product offerings. We are excited about the growth prospects of this acquisition as we look ahead to fiscal 2015."

William Nurthen, Chief Financial Officer of ARI, commented, "The company experienced marked improvement in profitability and cash flow in the back half of fiscal 2014. EBITDA for the third and fourth quarters of fiscal 2014 were 15.4% and 16.1%, respectively, and the fourth quarter performance was inclusive of more than $100,000 in charges related to the company's acquisition of TCS. In addition, cash flow from operations for the last two quarters combined was $2.4 million which was the best six-month performance in the company's history."

Kathie Buono to Become Briggs and Stratton's VP, Secretary and General Counsel

October 27 -- Kathie Buono, who was named managing partner of Quarles and Brady LLP's Milwaukee office in March, will join Briggs and Stratton Corp. in February 2015 as vice president, secretary and general counsel, replacing the retiring Robert Heath.

Buono, 53, is one of the highest-profile women among Milwaukee's largest law firms and worked more than 28 years at Quarles, primarily in the corporate services practices group. She succeeded Ann Murphy as the Milwaukee office's managing partner.

Briggs and Stratton is one of Buono's clients.

"It was obviously sudden and unexpected," Buono said Monday of her latest career move.

She declined further comment and deferred further questions to Briggs and Stratton, the Wauwatosa-based manufacturer of small-engines, generators and lawn-and-garden equipment. Buono's role as an outside counsel to Briggs has included securities and acquisitions work, said Briggs spokeswoman Laura Timm.

"We know how well-qualified she is and she'll be a tremendous asset to Briggs and Stratton," Timm said.

Buono said she will remain at Quarles and Brady through the end of 2014. There was no immediate word on her successor as managing partner at the Milwaukee office, which is metro Milwaukee's second-largest law firm.

Heath, 66, will remain at Briggs and Stratton for the transition to Buono through June 2015.

Heath has been vice president and general counsel of Briggs since 2001 and was named secretary in 2002.

www.bizjournals.com    

The Toro Company to Acquire Boss Professional Snow and Ice Management Business

BLOOMINGTON, Minn.-- Oct. 27, 2014-- The Toro Company today announced that it has entered into a definitive agreement to acquire the BOSS^® professional snow and ice management business of privately-held Northern Star Industries, Inc. The transaction is subject to customary closing conditions, including regulatory approvals, and currently is expected to close during Toro’s fiscal 2015 first quarter.

Based in Iron Mountain, Michigan, BOSS designs, manufactures and sells snowplows, salt and sand spreaders, and related parts and accessories, for light and medium duty trucks, ATVs, UTVs and loaders. BOSS sales in 2014 are anticipated to be approximately $125 million. To learn more about BOSS, visit www.bossplow.com.

“With the addition of BOSS to our existing market-leading professional contractor businesses, we are even better positioned to strengthen and grow our relationships with these important customers by providing them with the innovative and durable equipment and high-quality service they need for each season,” said Michael J. Hoffman, Toro’s chairman and chief executive officer. “We’ve long been interested in the professional snow and ice management category. We are impressed with BOSS’ solid business performance and we are optimistic about the opportunities for growth through product line expansion and in international markets.”

“Through this acquisition, we will gain another strong professional contractor brand, a portfolio of reliable counter-seasonal equipment, efficient manufacturing operations and a well-established and broad North American distribution channel for these products,” said Hoffman. “In addition, BOSS brings a talented and experienced management team, a passionate and dedicated team of employees and a culture of innovation and customer service that is similar to our own.”

“As a privately-held business in a smaller community, it is essential to us that BOSS transition to a company that not only is well-positioned to take us to the next level but also shares our commitment to innovation, customers, employees and the communities in which we live and work,” said David Brule II, President of BOSS. “We are impressed with Toro, its rich 100 year history and consistent record of performance. Overall, it is a great fit for us. On behalf of myself and the entire BOSS team, we look forward to the next phase of the BOSS journey as part of the Toro family.”

The purchase price is approximately $227 million, which Toro will pay primarily in cash except for $30 million that will be paid in the form of a three-year unsecured promissory note. Toro plans to fund the cash portion of the purchase price with cash on hand and borrowings under a new five-year unsecured revolving credit facility that includes a senior term loan. Toro expects this acquisition to be slightly accretive to fiscal 2015 earnings.

About The Toro Company

The Toro Company (NYSE: TTC) is a leading worldwide provider of innovative turf, landscape, rental and construction equipment, and irrigation and outdoor lighting solutions. With sales of more than $2 billion in fiscal 2013, Toro’s global presence extends to more than 90 countries through strong relationships built on integrity and trust, constant innovation and a commitment to helping customers enrich the beauty, productivity and sustainability of the land. Since 1914, the company has built a tradition of excellence around a number of strong brands to help customers care for golf courses, sports fields, public green spaces, commercial and residential properties and agricultural fields. More information is available at www.thetorocompany.com.

Husqvarna Interim Report January - September 2014

Stockholm October 22, 2014

Kai Wärn, President and CEO:

“Husqvarna Group’s positive trend from the first half year continued into the seasonally smaller third quarter. Total Group sales increased by 3%, adjusted for changes in exchange rates.

Operating income for the third quarter increased by 46% to SEK 301m (206), and the margin rose to 4.4%, driven by improvements across all business areas. On Group level, the favorable development was supported by reduced material costs, higher sales volume and improved productivity. Cash flow was solid, and the net debt/equity ratio improved to 0.50 (0.57).

From a business area perspective, currency adjusted sales for Americas and Construction increased by 6% respectively, while Europe & Asia/Pacific was flat. In terms of earnings, Europe & Asia/Pacific reported higher results and improved margin, Americas’ turn-around showed steady progress reducing the operating loss in the quarter by more than half, and Construction sustained its profitable growth.

As previously communicated, the Group’s current focus is to increase the operating margin from approximately 5% in 2013 to 10% in 2016. On a year-to-date basis, the operating margin has improved by close to 2 percentage points. The positive development has largely been enabled by a successful execution of the Accelerated Improvement Program, which primarily aims to cut product cost by reducing material costs, and improve product mix by focusing on core brands and on products where the Group has leadership positions.

We are now taking the final steps of preparing for next season. Keeping the momentum in the execution of the Accelerated Improvement Program is the priority for 2015. In parallel, the new brand based organization will be fully operational as of January 1, 2015, and forms the base for taking steps towards expansion beyond 2015.

From a short term demand perspective, we expect the fourth quarter to show a stable development compared to the corresponding quarter prior year.”

Third quarter

Net sales increased to SEK 6,785m (6,349). Adjusted for exchange rate effects, net sales                  increased 3%.
Operating income increased 46% to SEK 301m (206). Sales, operating income and margin                improved for all business areas.
Earnings per share increased to SEK 0.31 (0.16).
Operating cash flow amounted to SEK 1,286 (2,001).
The net debt/equity ratio improved to 0.50 (0.57).

THIRD QUARTER

Net sales

Net sales for the third quarter 2014 increased by 7% to SEK 6,785m (6,349). Adjusted for exchange rate effects, net sales for the Group increased by 3%, 6% for Americas and Construction respectively, while Europe & Asia/Pacific was unchanged.

Operating income

Operating income for the third quarter increased by 46% to SEK 301m (206), corresponding to an operating margin of 4.4% (3.2). Operating income and margin improved for all business areas.

Operating income was positively impacted primarily by reduction of direct material costs, higher sales volume and improved productivity.

Changes in exchange rates had a total negative impact on operating income of SEK -12m compared to the third quarter 2013.

Financial items net

Financial items net amounted to SEK -70m (-111), of which net interest amounted to SEK -89m (-95). The average interest rate on borrowings as of September 30, 2014, was 3.5% (4.4).

Income after financial items

Income after financial items increased to SEK 231m (95) corresponding to a margin of 3.4% (1.5).

Taxes

Tax for the third quarter amounted to SEK -55m (-3).

Earnings per share

Income for the period increased to SEK 176m (92), corresponding to SEK 0.31 (0.16) per share.

JANUARY – SEPTEMBER

Net sales

Net sales for January - September increased by 7% to SEK 27,515m (25,600). Adjusted for exchange rate effects, net sales for the Group increased by 6%, for Europe & Asia/Pacific by 5%, for Americas by 6%, and sales for Construction increased by 8%.

Operating income

Operating income for January – September increased by 35% to SEK 2,588m (1,916) and the corresponding operating margin rose to 9.4% (7.5). Operating income and margin rose for all business areas.

Operating income for the first nine months was positively impacted by the higher sales volume, reduction of direct material costs, improved productivity and favorable mix.

Changes in exchange rates had a total negative impact on operating income of SEK -60m compared to January - September 2013.

Financial items net

Financial items net amounted to SEK -276m (-303), of which net interest amounted to SEK -267m (-290).

Income after financial items

Income after financial items increased to SEK 2,312m (1,613) corresponding to a margin of 8.4% (6.3).

Taxes

Tax amounted to SEK -545m (-393), corresponding to a tax rate of 24% (24) of income after financial items.

PERFORMANCE BY BUSINESS AREA

Europe & Asia/Pacific

Net sales for Europe & Asia/Pacific increased by 3% in the third quarter. Adjusted for exchange rate effects, net sales were unchanged.

Handheld products such as chainsaws, and electrical products including robotic lawn mowers, developed positively in the quarter, while sales of watering products declined, largely as a result of a late season for watering products prior year.

Sales of snow throwers were also down, mainly related to a decline in Russia.

Operating income for the third quarter increased 8% to SEK 309m (285) and the operating margin improved to 9.4% (8.9), mainly driven by reduction of direct material costs.

Changes in exchange rates had a negative year-on-year impact of SEK -14m on operating income in the third quarter and a positive impact of SEK 20m for January - September.

Americas

Net sales for Americas increased by 11% in the third quarter 2014. Adjusted for exchange rate effects, net sales increased by 6%.

Market demand developed favorably in the U.S. Sales increased in the U.S. and Latin America, with a continued positive development in the dealer channel.

The operating loss for the quarter decreased to SEK -55m (-122) and the corresponding margin recovered to -2.1% (-5.2), mainly due to lower direct material costs and the higher sales volume.

Changes in exchange rates had a negative year-on-year effect of SEK -2m on operating income in the third quarter and SEK -63m for January - September.

Construction

Net sales for Construction increased by 11% in the third quarter 2014. Adjusted for exchange rate effects, the increase in sales was 6%.

Sales growth in North America continued to be strong as a result of market share gains and favorable market demand. Sales in Europe also developed positively, while sales in the rest of the world were in line with the corresponding quarter prior year.

Operating income increased to SEK 109m (86), mainly as a result of the higher sales volume and a favorable product mix.

The corresponding operating margin improved to 12.6% (10.9).

Changes in exchange rates had a positive year-on-year effect of SEK 4m

Acquisition Of Assets In Neta Industries (Australia)

Husqvarna Group has acquired the assets of Neta Industries, Pty, Ltd. (“Neta”) for approximately SEK 25m.

Neta has approximately 50 employees and is one of Australia’s leading providers of mobile watering and specialty irrigation products, and will serve as the Group’s platform for the micro-drip irrigation market in Australia.

Financial impact in 2014 will be limited. Acquired sales amount to approximately SEK 100m on an annual basis. The purchase price allocation is preliminary.

Management Change

Ulf Liljedahl, CFO of Husqvarna Group since 2011, has decided to leave the Group as of end of February, 2015. Ulf Liljedahl has been appointed President and CEO of Volito Group. The search for a successor has been initiated.

Generac Acquires Pramac America Assets

October 23 -- Waukesha-based Generac Power Systems has acquired some assets of Kearney, Neb.-based Pramac America LLC, from Siena, Italy-based Pramac Industries Inc.

The transaction price was not disclosed.

Pramac America manufactures and distributes portable generators, water pumps and other related products under the Pramac, Powermate, DeWalt and Porter Cable brands under a licensing agreement with the U.S., Canada and Mexico.

Generac purchased the Powermate brand, working capital and equipment from Pramac. It will also assume the licensing agreement for the DeWalt and Porter Cable brands. The entity will be renamed Powermate America LLC.

Pramac previously announced it will close its Kearney facility. That closure will still happen, Generac said, but it will retain the Marietta, Ga. location and operate the business from there.

Generac acquired the assets to expand its portable engine powered tools offerings.

“It will provide even greater distribution opportunities for both companies and allow Generac to leverage our combined scale and strength to create value for our customers in sourcing, distribution, manufacturing and product design,” a Generac spokesman said.

www.biztimes.com    

Analyst: Briggs and Stratton 'Mixed With Takeaways' on Earnings

October 20 -- Briggs and Stratton Corp., a Wauwatosa-based engine manufacturer, missed on analysts' revenue expectations after reporting its first quarter 2015 earnings, but one analyst pointed to its record level products gross margins as a positive sign for the company.

Timothy Wojs, financial analyst with Robert W. Baird and Co. Inc., Milwaukee, said Briggs and Stratton's earnings report offered somewhat mixed news.

"FQ1 results were mixed with takeaways for both bulls and bears," Wojs wrote. "Bulls likely point to record products gross margin, while bears likely point to another revenue miss."

The company reported a loss of $15.3 million in the first quarter of fiscal 2015, or 34 cents per share, compared with $19.3 million, or 41 cents per share, during the same period last year.

Sales for the first quarter were $292.6 million, a decrease of $24.7 million, or 7.8 percent, compared with the first quarter of fiscal 2014.

Wojs pointed to how analysts' expectations were still relatively low, but that an "upside/downside remains favorable for longer-term, patient investors," he wrote.

Todd Teske , chief executive officer and president of Briggs and Stratton, said its production levels are higher in the current year because it is seeing strong orders for its large engines, which go into riding equipment, it is building inventory for a new small-engine platform, and increasing the inventory from its products group to prepare for the closure of its McDonough, Ga., facility.

Dave Rodgers, chief financial officer and senior vice president of Briggs, said that while the company still reported a loss in earnings, it wasn't as great as last year.

"As a reminder, we typically report a net loss in our first fiscal quarter due to the seasonal nature of our engines business and related lawn and garden portion of our products business," Rodgers said.

With the company realizing savings in its employee retirement plans, streamlining its operations, and the recent acquisition of towable light towers and industrial heater manufacturer Allmand Bros. Inc., Wojs pointed out an upside for long-term investors.

"While we understand the bears' case, our positive stance on the shares is based on our view that expectations are relatively low such that upside/downside remains favorable for longer-term, patient investors. …We see a reasonable range of $16-$26 (per share) in 12 months," he wrote.

Denise Lockwood     www.bizjournals.com

Kohler Engines Names New Pesident

October 21 -- Following former Kohler Engines president Tom Cromwell’s appointment to group president at Kohler Co.’s Power Group in September, the company has promoted Brian Melka to the role of president of Engines Americas.

Melka assumes full responsibility for the engines business in the Americas region, establishing strategic direction, managing operational demands, driving growth and profitability objectives, and attracting and developing talent. In addition, he will have worldwide responsibility for new product development, marketing and overall growth of the gasoline engines product lines. Melka joined Kohler in 2013 in the role of vice president.

Prior to Kohler, he served in numerous senior capacities at Milwaukee-based Rexnord Corp., where he most recently held the role of vice president of global mining and product management. Before joining Rexnord, he spent more than 12 years working for various Rhode Island-headquartered Textron Inc. businesses including Greenlee Textron and Jacobsen Textron.

Melka holds a bachelor’s degree in finance from the University of Wisconsin-Madison and a master’s degree in business administration from the University of Wisconsin-Whitewater.

Kohler Engines manufactures small engines for riding lawn mowers, garden tractors, walk-behind lawn mowers, concrete construction equipment, outdoor power equipment, welders, pressure washers and other products.

Headquartered in Kohler, Kohler Co. is a global leader in the manufacture of kitchen and bath products, engines and power systems, furniture, cabinetry and tile. It also owns and operates two five-star hospitality and golf resort destinations in Kohler and St Andrews, Scotland.

www.biztimes.com        

CPSC, Briggs and Stratton Recall Snaper Rear Engine Riding Mowers

October 15, 2014

Recall Summary

Name of product: Brigg and Stratton Snapper Rear Engine Riding Mower

Hazard: Weld on drive axle can fail resulting in loss of brake control, posing an injury hazard.

Remedy: Repair

Consumer Contact: Briggs and Stratton Corporation at (800) 935-2967 from 7:45 a.m. to 4:30

p.m. CT Monday through Friday, or online at www.Briggsandstratton.com and click on "Recall

Alert Notice" for more information.

Recall Details

Units: About 8,500

Description: This recall involves six models of Briggs and Stratton Snapper Rear Engine Riding

Mowers. The mowers are red with a black fuel tank, steering wheel and seat. The name Snapper

is printed on both sides of the mower. The model and serial numbers are on a label on the engine

platform under the right side of the seat.

The following models and serial number ranges are included.

Model Number              Serial Number Range

7800918                        2016447188 - 2016485206

7800920                        2016443919 - 2016568930

7800932                        2016462619 - 2016481454

7800950                        2016611952 - 2016766052

7800951                        2016624456 - 2016765000

7800954                        2016603229 - 2016775752

Incidents/Injuries: Briggs and Stratton has received two reports of brake failure, related to failed

weld. No injuries have been reported.

Remedy: Consumers should immediately stop using the recalled mowers and contact an

authorized Snapper service dealer for a free repair.

Sold at: Family Farm stores, Power Equipment Direct and Briggs and Stratton Snapper dealers

nationwide from April 2013 through May 2014 for between $1,300 and $2,000.

Manufacturer: Briggs and Stratton Power Products Group, LLC, of Milwaukee, Wis.

Manufactured in: United States

Briggs and Stratton Reports Improved Results for the First Quarter of Fiscal Year 2015

MILWAUKEE, Oct. 15, 2014 -- Briggs and Stratton Corporation today announced financial results for its first fiscal quarter ended September 28, 2014.

Highlights:

• First quarter fiscal 2015 consolidated net sales were $292.6 million, a decrease of $24.7 million or 7.8% compared to the prior year
• First quarter 2015 consolidated adjusted net loss was $9.3 million, an improvement of 43% from the adjusted net loss of $16.5 million in the first quarter of fiscal 2014
• First quarter fiscal 2015 adjusted diluted loss per share was $0.21, an improvement from the adjusted diluted loss per share of $0.35 in the prior year
• Completed the acquisition of Allmand Bros., Inc., a leading designer and manufacturer of high quality towable light towers, industrial heaters, and solar LED arrow boards, for total consideration of approximately $62 million in cash for all outstanding shares, net of acquired cash
• Fiscal 2015 earnings related to Allmand anticipated to be accretive to earnings per share by $0.07 - $0.08 per diluted share, excluding deal expenses

"As we expected, the first quarter results reflect improved profitability in both the engines and products businesses despite lower engine sales," said Todd J. Teske, Chairman, President and Chief Executive Officer.  

"Coming into the fiscal year, we anticipated that higher channel inventories of lawn and garden equipment would impact our first quarter engine sales compared with last year which benefitted from lower channel inventories and strong late season retail sales of equipment.  Our OEM customers and retailers have taken actions to reduce inventories which impacted our engine sales." 

Teske continued, "Despite the sales decrease, we are pleased with the improved margins in both the engines and products businesses, reflecting the cost cutting actions and our focus on higher margin products, including the acquisition of Allmand." 

Consolidated Results:

Consolidated net sales for the first quarter of fiscal 2015 were $292.6 million, a decrease of $24.7 million or 7.8% from the first quarter of fiscal 2014.  The decrease primarily relates to lower sales of engines resulting from higher channel inventories in North America and lower sales of engines for snow thrower OEM customers in Europe due to adequate inventories following last season.  The decrease in net sales was partially offset by higher sales of pressure washers, snow throwers, lawn and garden equipment and the Allmand acquisition.

The fiscal 2015 first quarter consolidated net loss, which includes restructuring expenses and acquisition related charges, was $15.3 million or $0.34 per diluted share. The first quarter of fiscal 2014 consolidated net loss, which included restructuring charges, was $19.3 million or $0.41 per diluted share.

Non-GAAP Financial Measures and Segment Reporting

This release refers to non-GAAP financial measures including "adjusted gross profit", "adjusted segment income (loss)", and "adjusted net income (loss)".  Refer to the accompanying financial schedules for supplemental financial data and corresponding reconciliations of these non-GAAP financial measures to certain GAAP financial measures.

Beginning in fiscal 2015, the Company is using "segment income (loss)" as the primary measure to evaluate operating performance and allocate capital resources for the engines and products segments. Previously, the Company used income from operations. Segment income (loss) is defined as income (loss) from operations plus earnings of unconsolidated affiliates. The Company has recast prior year amounts for comparability, and has included a reconciliation from consolidated segment income (loss) to income (loss) from operations in the accompanying Adjusted Segment Information table.

Engines Segment:

Engines segment net sales of $153.1 million in the first quarter of fiscal 2015 decreased $30.7 million or 16.7% from the prior year.  Total engine volumes shipped in the quarter decreased by 18.7% or approximately 200,000 engines. Net sales decreased as anticipated due to higher channel inventories in North America at the end of the current lawn and garden season and lower shipments into the European market for snow throwers.

Engines adjusted segment loss in the first quarter of fiscal 2015 was $13.7 million, an improvement of $1.1 million from the prior year. Engines segment adjusted gross profit margins improved 350 basis points year over year on higher manufacturing volume, improved efficiency and lower retirement plan expense.  Engines produced were higher by 12% in the quarter benefitting adjusted gross margins by approximately 230 basis points.  Engine production was increased to support higher demand for large engines for riding equipment to support pre-building of products related to the closure of the McDonough, Georgia facility.  In addition, plant efficiency improvements, cost reductions and a favorable mix of engines produced benefitted adjusted gross margins by approximately 130 basis points.

The previously announced retirement plan changes, which were implemented in January of calendar 2014, improved fiscal 2015 adjusted gross margins by $2.2 million, or 150 basis points.   Partially offsetting this improvement was unfavorable sales mix that reduced adjusted gross margins by 160 basis points.   The retirement plan changes also reduced engineering, selling, general and administrative expenses by $1.6 million.

Products Segment:

Products segment net sales of $166.1 million in the first quarter of fiscal 2015 increased by $13.1 million or 9% from the prior year. This increase was due to higher sales of pressure washers, commercial lawn and garden equipment and snow throwers in the North America market and one month of the Allmand acquisition. Partially offsetting the increase were lower sales of snow throwers in Europe following last year's mild winter and lower generator sales due to adequate channel inventories and no major storm activity.

Products adjusted segment income in the first quarter of fiscal 2015 was $0.9 million, an improvement of $6.7 million from the prior year adjusted segment loss. Products adjusted gross profit margins increased by 370 basis points year over year due to improved sales mix and higher manufacturing throughput.  Favorable sales mix improved adjusted gross margins by 220 basis points due to a focus on selling higher margin lawn and garden equipment and the benefit of one month of the Allmand acquisition. 

In addition, manufacturing throughput increased year over year by 55% benefitting adjusted gross margins by approximately 190 basis points.  Throughput is increased due to higher snow thrower production for channel refill in the North America market and higher production of pressure washers and riding mowers to facilitate the upcoming closure of the McDonough, Georgia plant. 

Offsetting the increase in adjusted gross profit margins was an unfavorable foreign exchange impact of approximately 40 basis points primarily due to the devaluation of the Australian dollar.  Engineering, selling, general and administrative expenses increased $1.5 million due to the Allmand acquisition and increased compensation expense, partially offset by $1.2 million in savings related to the restructuring initiative announced in July 2014.

Allmand Bros., Inc. Acquisition:

The Company announced on August 29, 2014, that it had completed the acquisition of Allmand Bros., Inc. for approximately $62 million in cash, net of cash acquired.  Allmand is a leading designer and manufacturer of high quality towable light towers, industrial heaters, and solar LED arrow boards. Allmand, which is included within our Products segment, has annual net sales of approximately $80 million.

Corporate Items:

Interest expense for the first quarter of fiscal 2015 was comparable to the same period a year ago.

The effective tax rate for the first quarter of fiscal 2015 was 40.9%, compared to 29.3% for the same respective period last year. The higher tax rate for the first quarter of fiscal 2015 was primarily driven by the reversal of previously recorded reserves as a result of the effective settlement of the Company's IRS audit for its 2009-2010 consolidated income tax returns.

Financial Position:

Net debt at September 28, 2014 was $163.1 million (total debt of $225.0 million less $61.9 million of cash), or $53.2 million higher than the $109.8 million (total debt of $225.0 million less $115.2 million of cash) at September 29, 2013. Cash flows used by operating activities for fiscal 2015 were $48.9 million compared to $52.9 million in fiscal 2014. 

The slight improvement in operating cash flows was primarily related to an improved net loss and a decrease in accounts receivable due to lower sales, partially offset by higher inventory levels and accounts payable. In addition, the Company paid cash of $62.1 million for the Allmand acquisition in the first quarter of fiscal 2015 compared to no acquisitions in the same respective period last year.

Restructuring:

During the first quarter of fiscal 2015, the Company began implementing the restructuring actions to narrow its assortment of lower-priced Snapper consumer lawn and garden equipment and consolidate its Products segment manufacturing facilities in order to reduce costs.  The Company will close its McDonough, Georgia plant in the second half of fiscal 2015 and consolidate production into existing facilities in Wisconsin and New York.  

Pre-tax restructuring costs for the first quarter of fiscal 2015 were $7.8 million and pre-tax savings were $1.2 million.  Pre-tax restructuring cost estimates for fiscal 2015 remain unchanged at $30 million to $37 million. Total annual cost savings as a result of these actions are anticipated to be approximately $15 million to $20 million with approximately $5 million to $7 million expected to be realized in fiscal 2015 and the remainder realized in fiscal 2016.

Share Repurchase Program:

On January 22, 2014, the Board of Directors of the Company authorized up to $50 million in funds for use in the Company's common share repurchase program. On August 13, 2014, the Board of Directors of the Company authorized up to an additional $50 million in funds for use in the Company's common share repurchase program.

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 2015, the Company repurchased 905,164 shares on the open market at an average price of $19.62 per share. As of September 28, 2014, the Company has remaining authorization to repurchase up to approximately $70 million of common stock with an expiration date of June 30, 2016.

Outlook:

We are increasing our fiscal 2015 projections to include the Allmand acquisition. Previously, we expected net income to be in a range of $50 million to $60 million or $1.07 to $1.27 per diluted share. We are now estimating fiscal 2015 net income to be in a range of $53 million to $63 million or $1.14 to $1.35 per diluted share prior to the impact of acquisition expenses, additional share repurchases, or costs related to our announced restructuring actions.

We are also increasing our projections of consolidated net sales for fiscal 2015 to be in a range of $1.94 billion to $2.0 billion. We continue to estimate that the retail market for lawn and garden products will increase 1-4% in the U.S. next season. Sales estimates do not include the impact of landed hurricanes. 

Operating income margins for fiscal 2015 are expected to improve over fiscal 2014 and be in a range of 4.5% to 5.0% and reflect the positive impacts of the restructuring actions, particularly in the last quarter of the fiscal year. Interest expense and other income are estimated to be approximately $19 million and $7 million, respectively.

The effective tax rate is projected to be in a range of 30% to 33% and capital expenditures are projected to be approximately $60 million to $65 million.  

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, turf care and job site products through its Simplicity®, Snapper®, Ferris®, Murray®, Allmand, Branco® and Victa® brands. Briggs and Stratton products are designed, manufactured, marketed and serviced in over 100 countries on six continents.

No Regrets: Stihl Stays Strong in Hampton Roads

VIRGINIA BEACH -- October 13 -- When power-tool maker Stihl was casting for a site for its U.S. headquarters 40 years ago, the choice came down to Hampton Roads, Connecticut and Arkansas.

The German manufacturer decided on this region because of its access to the port and supply of ex-military members, said Nikolas Stihl, grandson of the company's founder, who made his annual visit with other company executives to the Virginia Beach plant last week.

The Stihls have no regrets.

The 150-acre complex off Lynnhaven Parkway is among the city's biggest employers, with about 1,950 workers. It turns out 50 percent of the power tools that Stihl sells worldwide. And it plans to keep making more.

Stihl expects another record year for sales, with an even larger increase than last year's.

Sales rose more than 6 percent in 2013, both domestically and internationally, said Nikolas Stihl and Fred Whyte, president of Stihl Inc., the U.S. division based at the Beach. Worldwide, sales topped $3.3 billion. The company does not provide dollar totals for the United States.

This year, they said, the increase should reach 8 percent. And that, Whyte said, is without a major hurricane, which boosts business with its massive cleanups.

In an hourlong interview at the Cavalier Golf and Yacht Club, Whyte and Stihl - the chairman of the supervisory board of the parent company, Stihl Holding AG and Co. KG - also spoke about the challenge of finding skilled labor in the United States, the brief interlude when Whyte was Stihl's boss and why the company has steered clear of lawn mowers.

The company's distribution strategy, they said, has laid the groundwork for its success: You won't find a Stihl chain saw in a big-box store. They can be bought only at independent dealers - the United States has 8,500 - who also repair the tools.

Stihl, 54, quoted his grandfather, Andreas, who founded the company in 1926: "A chain saw is only as good as its service." Or as Whyte said of the customers who rely on Stihl's products: "If their tools aren't working, they're not making money."

That philosophy partly explains why Stihl isn't in the lawn mower business in the United States and won't enter it.

The dealer system operates on the assumption of fast repairs, Stihl said, and that would be harder to achieve with mowers.

In addition, Whyte said, big-box stores already have 80 percent of U.S. lawn mower sales. And the assembly system for lawn mowers, which Whyte said relies on multiple suppliers, wouldn't jibe with the approach at Stihl, which manufactures most of the parts for its tools.

When asked the biggest disadvantages of operating in the United States, Stihl started with the tax level. Next: The difficulty of finding skilled labor. "The quality of the school system in the United States has decreased a lot," Stihl said.

Whyte pointed to Germany's more rigorous program for training trades people. "You don't just get into a pickup truck, put a sign up and decide to become a maintenance technician," he said.

During the recent recession, Stihl benefited from the downturn in the auto industry, Whyte said. "We recruited significantly... into the Rust Belt and were able to pirate a lot of strong people out there."

Stihl occupies 2.2 million square feet in Virginia Beach. The company does not disclose the number of products manufactured, but Whyte said the plant makes more grass trimmers than any other product. Stihl's other items include brush cutters, hedge trimmers and handheld and backpack blowers.

In terms of sales dollars, 60 percent of the items made in Virginia Beach stay in the United States. The remaining 40 percent is distributed among about 95 other countries.

The plant has 141 robots, performing such tasks as inserting screws and loading pallets. That number will only grow, Stihl said: Any worker whose job becomes obsolete will be shifted to a new one.

Nikolas Stihl, who received a doctorate in mechanical engineering, worked in Virginia Beach for seven months in the early '90s as a product manager. His boss was Fred Whyte, who had taken over in 1992.

"I'm glad I approved his expense reports," Whyte joked.

Stihl described Whyte as a talented manager who is "good at recognizing the strength of his people and letting them play to their strengths." Whyte said, "We just hit it off extremely well. The two of us were instrumental in getting a new chain saw model we needed for the market."

It's still not clear how much longer Stihl will be Whyte's boss.

Whyte had planned to retire last year, but he's still in charge in Virginia Beach, and Stihl said there's no firm date for a transition.

"Mr. Whyte has been instrumental for the success of the company since 1992," Stihl said. "You've seen the growth yourself. It's not easy to replace someone in such a position. We have to be very careful in doing that."

Whyte, 67, said: "I still enjoy what I do every day." But he added that he looked forward one day to "taking care of my personal life, like getting better so I can beat my wife in golf."

Philip Walzer   The Virginian- Pilot    www.hamptonroads.com