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
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