"Generac Suffers An Earnings Brownout

April 30 -- For most companies, tough weather conditions are always a negative. In the power-generator industry, though, companies like Generac Holdings have often thrived when bad storms bring power lines down and leave millions of residents without electricity from the grid. Still, coming into Thursday morning's first-quarter financial report, Generac investors were nervous about the fact that despite the cold winter, relatively few storm events had a major impact on the grid. As it turned out, Generac's quarter did fall short of what most investors had expected, but other factors that many wouldn't have thought of played a role in holding back the generator maker's results. Let's look more closely at Generac's latest results and what they mean for its future.

Generac's first-quarter performance reflected a considerable slowdown for the generator specialist. Revenue of $311.8 million was down almost 9% from year-ago levels, which was considerably worse than the 5% sales decline that most of those following the stock were looking to see. The impact on earnings was even more severe, with adjusted net income falling by about a third and earnings per share of $0.49 falling 20% below the consensus estimate among shareholders.

Neither of Generac's two major product lines performed well. The Commercial and Industrial division suffered the larger decline in revenue, with sales dropping 15% as Generac cited a decline in shipments to its customers in two key industries. Yet sales were also sluggish on the residential side, with revenue falling more than 4% on weaker than expected levels of power outages across its geographical market. In addition, tough winter conditions hampered installation efforts for many residential customers, slowing the rate of natural demand for the market.

Other factors also hit Generac. Gross margins fell 2 percentage points to 32.9%, with Generac having to absorb some costs due to the slowdown in key ports on the West Coast. Increased marketing and advertising expenses pushed operating expenses up more than 6% from the year-ago quarter.

CEO Aaron Jagdfeld took a long-term view on responding to the tough conditions. "The rapid decline in oil and gas related investment," Jagdfeld said, "coupled with continued softness in capital spending in the telecom sector had a negative impact on our [commercial and industrial] product shipments during the quarter." Jagdfeld noted the challenges of having multiple end markets perform badly at the same time.

Even with the winter having fallen short of expectations, Generac thinks that times will get better. As Jagdfeld put it, "Despite a softer demand environment in the near term, we remain focused on driving awareness for our products, expanding and developing out distribution, launching innovative new products, and controlling costs."

Still, improvement will take time, and the poor start to the year led Generac to cut its guidance for 2015. Generac now expects roughly flat sales for the year, even under the assumption that a slow power-outage environment in the first half of 2015 will give way to more typical conditions later in the year. Adjusted operating earnings are also likely to see growth disappear for the year, according to the company.

The good news, though, is that Generac has left itself far better diversified than it was in the past. With solid exposure to both industrial and residential applications, Generac isn't entirely vulnerable to the vagaries of the weather.

Still, investors were unhappy with Generac's results, sending the stock plunging 8% in the first two hours of pre-market trading following the announcement. Without the storm-driven demand that Generac has had in several past years, the company will have to prove to shareholders that it can keep growing even when Mother Nature doesn't make the need for its products eminently clear.

Dan Caplinger     www.fool.com

Generac Reports First Quarter 2015 Results

WAUKESHA, Wis. -- Apr. 30, 2015-- Generac Holdings Inc., a leading designer and manufacturer of power generation equipment and other engine powered products, today reported financial results for its first quarter ended March 31, 2015.

First Quarter 2015 Highlights

• Net sales were $311.8 million during the first quarter of 2015 as compared to $342.0 million in the prior-year first quarter.
• Residential product sales were $156.8 million during the first quarter as compared to $164.0 million in the prior-year quarter, primarily due to lower portable generator shipments resulting from a decline in power outage severity compared to the prior year.
• Commercial & Industrial (C&I) product sales were $133.8 million during the first quarter as compared to $157.4 million in the prior-year quarter, primarily due to a decline in shipments to telecom national account customers and, to a lesser extent, oil & gas markets.
• Net income during the first quarter of 2015 was $19.7 million, or $0.28 per share, as compared to $34.7 million, or $0.50 per share, for the same period of 2014. Adjusted net income, as defined in the accompanying reconciliation schedules, was $34.1 million, or $0.49 per share, as compared to $50.7 million, or $0.72 per share, in the first quarter of 2014.
• Adjusted EBITDA, as defined in the accompanying reconciliation schedules, was $57.1 million as compared to $77.5 million in the first quarter last year.
• Cash flow from operations in the first quarter of 2015 was $25.3 million as compared to $36.4 million in the prior year quarter. Free cash flow, as defined in the accompanying reconciliation schedules, was $18.7 million as compared to $31.4 million in the first quarter of 2014.
• For the trailing four quarters, including the first quarter of 2015, net sales were $1.431 billion; net income was $159.6 million; adjusted EBITDA was $316.9 million; cash flow from operations was $241.9 million; and free cash flow was $205.6 million.
• During the first quarter of 2015, the Company made a voluntary pre-payment of term loan debt of $50 million. Total liquidity at March 31, 2015 was strong with cash and cash equivalents on hand of $150.1 millionand approximately $150 million available on the Company’s ABL revolving credit facility. Total net debt to adjusted EBITDA, as defined in the accompanying reconciliation schedules, at the end of the first quarter was 2.8 times.

“The first quarter of this year was particularly challenging with several of the end markets we serve performing below our expectations,” said Aaron Jagdfeld, President and Chief Executive Officer. “With an extremely low power outage environment and difficult winter weather, shipments of residential products were weaker than expected. In addition, the rapid decline in oil and gas related investment coupled with continued softness in capital spending in the telecom sector also had a negative impact on our C&I product shipments during the quarter.

Despite a softer demand environment in the near term, we remain focused on driving awareness for our products, expanding and developing our distribution, launching innovative new products and controlling costs.”

Additional First Quarter 2015 Highlights

Residential product sales for the first quarter of 2015 were $156.8 million as compared to $164.0 million for the first quarter of 2014. The decline was primarily driven by a power outage severity environment during the quarter that was well below normalized levels and prior year, resulting in fewer shipments of portable generators. Additionally, although shipments for home standby generators were approximately flat during the quarter, heavy snow and colder temperatures in certain key regions limited growth for the category as installations were slowed by these conditions.

C&I product sales for the first quarter of 2015 were $133.8 million as compared to $157.4 million for the comparable period in 2014. The decline was primarily due to reduced shipments to telecom national account customers in the current year as a result of lower capital spending by certain of these customers and, to a lesser extent, reduced sales into oil & gas markets. Partially offsetting these declines were contributions from recent acquisitions and growth in Latin America.

Gross profit margin for the first quarter of 2015 was 32.9% compared to 34.9% in the prior-year first quarter. The decline was driven by a number of factors including a temporary increase in certain costs associated with the slowdown of activity in west coast ports, unfavorable absorption of manufacturing overhead-related costs, mark-to-market adjustments on commodity forward contracts, and the impact from recent acquisitions. These declines were partially offset by a more favorable mix of residential products.

Operating expenses for the first quarter of 2015 increased $3.5 million, or 6.4%, as compared to the first quarter of 2014. The increase was primarily driven by increased marketing and advertising expenses and the addition of recurring operating expenses associated with recent acquisitions.

2015 Outlook Update

As a result of current end market conditions, the Company is revising its prior guidance for revenue growth and adjusted EBITDA margins for the full year 2015.

Net sales for 2015 are now expected to be approximately flat as compared to the prior year, primarily the result of a power outage severity environment that is expected to remain below normal during the first half of the year, with the assumption of a return to more normalized baseline levels of outage activity during the second half.

Adjusted EBITDA for 2015 is also expected to be approximately flat as compared to the prior year, resulting in EBITDA margins of approximately 23.0% for the full year. Free cash flow is expected to remain strong for the full year 2015 due to an attractive margin profile, low cost of debt, favorable tax attributes and capital-efficient operating model.

“Although market conditions have been difficult so far in 2015, we believe many of these headwinds to be temporary in nature as the numerous long-term growth opportunities that impact our business remain firmly in place,” continued Mr. Jagdfeld.

“We have become a more diversified company in recent years, with a strong balance sheet and the capability to generate significant free cash flow, providing us with the flexibility to drive our Powering Ahead strategic plan forward.”

About Generac

Since 1959, Generac has been a leading designer and manufacturer of a wide range of power generation equipment and other engine powered products. As a leader in power equipment serving residential, light commercial, industrial, oil & gas, and construction markets, Generac's power products are available globally through a broad network of independent dealers, distributors, retailers, wholesalers and equipment rental companies, as well as sold direct to certain end user customers.

Lawn and Disorder, A Growing Menace

April 24 -- Many wondrous things have sprung from the human mind: penicillin, hovercraft, the hammered dulcimer, zero-coupon bonds. But when humankind strikes out, it strikes out in a big way.

A case in point: the lawn.

The lawn is arguably the most foolish, destructive, annoying entity on Earth. Lawns consume such a gigantic portion of California’s water usage that getting rid of them could single-handedly solve the drought problem. Well, maybe. Well-maintained, comely lawns—nurtured by noxious chemicals—destroy natural habitats and discourage larks and hummingbirds and magpies and snowy egrets from stopping by, and make neighbors’ lawns look ugly and stupid and proletarian.

Lawns consume enormous amounts of manpower. That money could be better spent on higher education or tasty snacks. And because people often get home from work late in the evening, the sound of their mowers puncturing the stillness infuriates their neighbors, resulting in bawling infants, ruinous lawsuits and many, many homicides. This is also true of lawn mowers that puncture the primaveral stillness.

Uncut lawns ruin a neighborhood’s image, because broken bottles and trash and corpses start to accumulate on them. Not taking care of one’s lawn is one of the most explicitly antisocial activities a human being can engage in. Such negligence indicates that the homeowner is a slob. And the whole point of lawns in the first place was to get mankind to stop being a slob.

The history of the human lawn is reasonably straightforward. Early men cut down the high grasses so that they could see the saber-toothed tigers coming. They didn’t do it for aesthetic reasons—because early humans, as noted, were slobs. Occupants of feudal castles also chopped down the high grass, fearing that if it was left untended they would not realize that Birnam Wood had come to Dunsinane until it was too late.

The point is, lawns originally had some social function: They helped ward off predators. But from that point on, lawns became purely ornamental. Rich people had lawns—more like pastures—because they wanted to show that they were so wealthy they didn’t need to grow crops on their land. But then the lower classes got into the act, because they thought a patch of green in front of their hovels would make their ugly daughters seem more marriageable.

“It’s not a lawn,” they would tell suitors stopping by for stewed tea and moldy scones. “It’s a meadow.”

Soon everyone and his brother had lawns, and most of them looked absolutely terrible by mid-August, because only farmers had a scythe to chop them down—and farmers, who do not believe in lawns, never lend out their scythes. Eventually the rotary lawn mower was invented. It is easily the most idiotic machine ever. Over the years, millions of people have derived immense pleasure from the flat iron, the cotton gin and the eight-track tape player. But no one ever got any fun out of a rotary lawn mower.

Most famous civilizations got along just fine without lawns. The Franks did not have lawns. Neither did the Hittites. Socrates definitely did not have a lawn, nor did Sargon the Great. Interestingly enough, it was ornate, ostentatious lawns that helped bring about the French Revolution, because the sans-culottes thought the aristocracy had planted all those lawns in Versailles just to make fun of their hideous, fallow fields.

The lawn—like the ice box, the weekly newsmagazine or the harpsichord—is basically a useless vestige of a bygone era. Mankind would be a whole lot better off if lawns had never been invented. They are wasteful, phony and ubiquitous. Let’s replace them with tarmac right now.

Joe Queenan’s Moving Targets column          www.wsj.com

Briggs and Stratton Reports Results for the Third Quarter and First Nine Months of Fiscal Year 2015

Highlights:

•       Third quarter fiscal 2015 consolidated net sales were $619.0 million, a decrease of $9.4 million or 1.5% compared to the prior year
•     Third quarter fiscal 2015 consolidated adjusted net income was $39.2 million, an improvement from the adjusted net income of $38.7 million in the third quarter of fiscal 2014
•     Third quarter fiscal 2015 adjusted diluted earnings per share was $0.86, an improvement from the adjusted diluted earnings per share of $0.81 in the prior year
•      Tax credits recognized in third quarter benefited earnings by $4.7 million
•     Fiscal 2015 earnings guidance lifted to $1.27 to $1.43 per diluted share before restructuring and acquisition expenses from previous guidance of $1.20 to $1.35 per diluted share.

MILWAUKEE – April 23 -- "While sales were relatively consistent with last year, we continued to make progress on introducing new products and improving our operations," commented Todd J. Teske, Chairman, President and Chief Executive Officer of Briggs and Stratton Corporation.  Teske continued, 

"The restructuring of our Products business to focus on higher margin products and streamline our manufacturing operations has contributed to improved Products segment earnings of nearly $5 million in the quarter and $20 million for our fiscal year to date. We also launched several innovative products this spring including our new EXi engine that never requires oil changes and our new In-Start lithium-ion electric starting technology providing users with our easiest push button starting engine ever."

Consolidated Results:

Consolidated net sales for the third quarter of fiscal 2015 were $619.0 million, a decrease of $9.4 million or 1.5% from the third quarter of fiscal 2014. Engines shipped to third party OEM customers increased slightly in the quarter; however, shipments to our Products segment were down in the quarter due to higher shipments earlier in the year to enable production in advance of the McDonough plant closure. 

The strengthening of the US dollar, predominantly against the Australia dollar, Brazilian real and Euro, led to an unfavorable foreign exchange impact on sales of $6.7 million. In addition, net sales were unfavorably impacted by reduced generator sales and unfavorable mix of engines shipped.

Net sales benefited by higher sales in international markets, particularly Australia and Europe, and the results of the Allmand acquisition, which closed in August of this fiscal year. The fiscal 2015 third quarter consolidated net income, which includes restructuring expenses and acquisition-related charges, was $33.9 million or $0.75 per diluted share. The third quarter of fiscal 2014 consolidated net income, which included restructuring charges, was $39.2 million or $0.82 per diluted share. The fiscal 2015 third quarter consolidated net income includes a tax benefit of $4.7 million related to incremental research and development tax credits, partially offset by an unfavorable foreign exchange impact of approximately $3.4 million.

Consolidated net sales for the first nine months of fiscal 2015 were $1.36 billion, a decrease of $6.4 million or 0.5% from the first nine months of fiscal 2014.  The decrease is due to reduced shipment volumes of engines to OEM customers in North America due to slightly elevated channel inventories, lower generator sales from a lack of major power outages, and an unfavorable foreign exchange impact of approximately$14.0 million, predominantly due to the weakening of the Euro, Australian dollar, and Brazilian real. 

The decrease in net sales was partially offset by higher sales in Europe and Australia, higher sales of commercial lawn and garden equipment and pressure washers in North America, and the results of the Allmand acquisition.

The fiscal 2015 nine months consolidated net income, which includes $24.9 million of restructuring expenses and acquisition-related charges, was $25.6 million or $0.56 per diluted share. The first nine months of fiscal 2014 consolidated net income, which included$5.1 million of restructuring charges, was $20.5 million or $0.43 per diluted share. The fiscal 2015 nine months consolidated net income includes an unfavorable foreign exchange impact of approximately $5.4 million, partially offset by a tax benefit of $5.0 million related to incremental research and development tax credits.

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 equity in 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:

		Three Months Ended Fiscal March				Nine Months Ended Fiscal March
(In Thousands)		2015		2014		2015		2014
Net Sales		$ 432,248		$ 452,359		$ 857,067		$ 901,858
Gross Profit as Reported		$   98,885		$ 107,930		$ 189,580		$ 187,423
Restructuring Charges		-		(774)		-		2,622
Adjusted Gross Profit		$   98,885		$ 107,156		$ 189,580		$ 190,045
Gross Profit % as Reported		22.9%		23.9%		22.1%		20.8%
Adjusted Gross Profit %		22.9%		23.7%		22.1%		21.1%
Segment Income as Reported		$   54,928		$   62,071		$   59,967		$   54,805
Restructuring Charges		-		(774)		-		3,047
Adjusted Segment Income		$   54,928		$   61,297		$   59,967		$   57,852
Segment Income % as Reported		12.7%		13.7%		7.0%		6.1%
Adjusted Segment Income %		12.7%		13.6%		7.0%		6.4%

Net sales were $432.2 million in the third quarter of fiscal 2015, a decrease of $20.1 million or 4.5% from the prior year. Total engine volumes shipped in the quarter decreased by 1.6% or approximately 50,000 engines. Engines shipped to third party OEM customers increased slightly in the quarter; however, shipments to our Products segment were down in the quarter due to higher shipments earlier in the year to enable production in advance of the McDonough plant closure. Net sales also decreased due to an unfavorable sales mix. Despite an unfavorable foreign exchange impact of $4.3 million, largely due to the weakening of the Euro, sales into the European market increased on improved placement of our engines and as channel inventories were low following an improved lawn and garden season last season.

Adjusted segment income in the third quarter of fiscal 2015 was $54.9 million, a decrease of $6.4 million from the prior year. The adjusted gross profit percentage was 22.9% in the third quarter of fiscal 2015, a decrease of 80 basis points from the prior year. Manufacturing throughput decreased by 6% during the quarter which reduced adjusted gross profit margins by approximately 140 basis points. The decrease was largely timing related as we accelerated production to earlier quarters in fiscal 2015 in order to accommodate the footprint restructuring of our Products segment and to build engine inventories in advance of beginning production of the EXi engine platform in the second fiscal quarter.

In addition, unfavorable foreign exchange, primarily related to the Euro, reduced adjusted gross profit margins by 70 basis points. Partially offsetting the lower adjusted gross profit margins were the previously announced retirement plan changes, which improved fiscal 2015 adjusted gross profit margins by $3.2 million, or 70 basis points. Manufacturing efficiency improvements in fiscal 2015 also helped offset the decrease in adjusted gross profit margins.

Engineering, selling, general and administrative expenses decreased $2.2 million largely due to the retirement plan changes. Higher compensation expense in fiscal 2015 was offset by the benefit of the movement in foreign exchange rates.

Products Segment:

		Three Months Ended Fiscal March				Nine Months Ended Fiscal March
(In Thousands)		2015		2014		2015		2014
Net Sales		$ 211,135		$ 205,160		$ 576,313		$ 529,724
Gross Profit as Reported		$   19,908		$   22,365		$   64,505		$   62,149
Restructuring Charges		7,088		-		20,780		2,082
Acquisition Related Charges		-		-		1,172		-
Adjusted Gross Profit		$   26,996		$   22,365		$   86,457		$   64,231
Gross Profit % as Reported		9.4%		10.9%		11.2%		11.7%
Adjusted Gross Profit %		12.8%		10.9%		15.0%		12.1%
Segment Loss as Reported		$    (8,128)		$    (4,913)		$  (20,125)		$  (16,783)
Restructuring Charges		8,031		-		23,261		2,082
Acquisition Related Charges		110		-		1,641		-
Adjusted Segment Income (Loss)		$           13		$    (4,913)		$      4,777		$  (14,701)
Segment Loss % as Reported		-3.8%		-2.4%		-3.5%		-3.2%
Adjusted Segment Income (Loss) %		0.0%		-2.4%		0.8%		-2.8%

Net sales were $211.1 million in the third quarter of fiscal 2015, which was an increase of $6.0 million or 2.9% from the prior year. This increase was due to higher sales in international markets, increased commercial lawn and garden equipment sales in the North American market and the results of the Allmand acquisition.  Growing conditions in the Australia market improved in fiscal 2015, which led to increased net sales. Partially offsetting the increase was an unfavorable foreign exchange impact of $2.4 million, primarily related to the weakening of the Australian dollar and Brazilian real. In addition, generator sales decreased due to fewer major power outages.

Adjusted segment income in the third quarter of fiscal 2015 was $0.0 million, an improvement of $4.9 million from the prior year adjusted segment loss. The adjusted gross profit percentage of 12.8% increased by 190 basis points year over year.  Manufacturing throughput for the first three quarters of fiscal 2015 increased by over 20%. 

This favorable absorption of fixed costs led to an improvement of approximately 190 basis points in the third quarter.  In addition, favorable sales mix improved adjusted gross margins due to a focus on selling higher margin lawn and garden equipment and the benefit of the Allmand acquisition. Partially offsetting the increase in adjusted gross profit margins was an unfavorable foreign exchange impact of approximately 80 basis points primarily due to the weakening of the Australian dollar and Brazilian real.

Adjusted engineering, selling, general and administrative expenses remained consistent year over year.  Higher spend due to the Allmand acquisition and increased compensation expense was offset by $2.3 million in savings related to the restructuring actions announced in July 2014.

Allmand Bros., Inc. Acquisition:

On August 29, 2014, the Company completed the acquisition of Allmand Bros., Inc. for approximately $60 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 historical annual net sales of approximately $80 million. 

Corporate Items:

The effective tax rates for the third quarter and first nine months of fiscal 2015 were 20.2% and 5.7%, compared to 26.1% and 26.6% for the same respective periods last year.  The tax rates for the third quarter and first nine months of fiscal 2015 were primarily driven by incremental federal research and development (RandD) tax credits related to prior years offset by reserves for unrecognized tax positions for a net tax benefit of $4.7 million and $5.0 million, respectively.  

In addition, the tax rate for the first nine months of fiscal 2015 was impacted by the reversal of previously recorded reserves as a result of the effective settlement of the Company's IRS audit. The tax rates for the third quarter and the first nine months of fiscal 2014 included a taxpayer election filed pursuant to the outcome of a U.S. court case that provided the Company precedent to record a tax benefit of $2.9 million for the permanent exclusion of qualified export activity from prior years' taxable income.

Financial Position:

Net debt at March 29, 2015 was $235.4 million (total debt of $285.1 million less $49.7 million of cash), or $117.6 million higher than the $117.8 million (total debt of $225.0 million less $107.2 million of cash) at March 30, 2014. Cash flows used in operating activities for fiscal 2015 were $52.1 million compared to $14.0 million in fiscal 2014. The increase in operating cash flows used was primarily related to higher inventory levels to facilitate the upcoming closure of the McDonough plant and the introduction of a new engine line in fiscal 2015. In addition, the Company paid cash of $59.9 millionfor the Allmand acquisition in the first nine months of fiscal 2015 compared to no acquisitions in the same respective period last year.

Restructuring:

During the third quarter of fiscal 2015, the Company made progress on implementing the previously announced 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 initiated production of pressure washers at our Milwaukee plant during the third quarter and ceased production at the McDonough, Georgia plant shortly after the end of the third quarter.  Pre-tax restructuring costs for the third quarter and first nine months of fiscal 2015 were $8.0 million and $23.3 million, respectively, and pre-tax savings were $2.3 million and $5.1 million, respectively. 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 authorized up to an additional $50 million in funds for use in the 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 nine months of fiscal 2015, the Company repurchased approximately 2.0 million shares on the open market at an average price of $19.40 per share. As of March 29, 2015, the Company has remaining authorization to repurchase up to approximately $48 million of common stock with an expiration date of June 30, 2016.

Outlook:

We are increasing our estimated earnings for fiscal 2015 to take into consideration the operating results and additional share repurchases during the first three fiscal quarters as well as the tax benefit of $4.7 million recognized in the third quarter for research and development tax credits.  We have also considered the continued strengthening of the U.S. dollar relative to many currencies we sell in outside of the United States.  

We now project our fiscal 2015 full year net income to be in a range of$57 million to $64 million or $1.27 to $1.43 per diluted share prior to the impact of acquisition expenses, additional share repurchases, or costs related to our announced restructuring actions.   We now project consolidated net sales for fiscal 2015 to be in a range of $1.90 billion to $1.95 billion. 

The decrease in the sales guidance is primarily related to slowing growth rates in sales of product in international regions as well as the impact of the strengthening U.S. dollar.  We continue to estimate the retail market for U.S. lawn and garden products will increase an estimated 1-4% in the next season; however, it is possible that sales of lawn and garden products shift to later in the season due to retail sales patterns, retailer reorders, and OEM production schedules.

Operating margins are expected to be in a range of 4.9% to 5.2%, an improvement over fiscal 2014 reflecting the strategic actions taken to focus on higher margin products and the positive impacts of the restructuring actions. Interest expense and other income are estimated to be approximately $19 million and $7 million, respectively. The effective tax rate excluding restructuring charges is projected to be in a range of 25% to 26% and capital expenditures are projected to be approximately $60 million to $65 million.