Husqvarna Reports Mixed Yearly Results

February 28 -- Husqvarna, a leading producer of outdoor lawn equipment with a plant in Orangeburg, reported 2010 net sales and operating income for the Americas decreased while sales and income increased for Europe and Asia.

 

Net sales for the Americas fell about 13 percent with effects from adjusted exchange rates resulting in a 7 percent decrease, the company reported in its year-end report. Sales prices were relatively stable during the year, the report stated.

"Demand recovered during the year and we strengthened our market positions for outdoor products in Europe and for construction," Magnus Yngen, Husqvarna president and CEO, said. "After several years of decline, demand recovered also in the U.S. For the group, full-year operating income and margin were significantly above last year's levels. Innovative new products and a strong focus on our dealer network were important contributors to the positive development."

Operating income in the Americas was negatively impacted by lower volumes and costs for distribution and information technology increased as well as costs for merchandising and marketing in an effort to grow sales to dealers.

Operating income was also impacted by the closure of Husqvarna's Beatrice, Neb., plant. The Beatrice facility had about 390 employees. The company consolidated its operations to Orangeburg.

In November, Husqvarna announced it would invest $105 million at its Old Elloree Road plant (Orangeburg) over the next decade and a half.

The first phase will involve a $30 million investment to be completed by Dec. 31, 2013, and the second phase will involve a $75 million investment to be completed by Dec. 31, 2024.

The total market demand in North America increased after four years of decline. Industry shipments increased for most product categories but chainsaws, the report said.

Reduced listing with a major retailer for 2010 had a negative effect on sales throughout the year. Efforts to grow sales in the dealer channel and with other retail accounts were successful but could not compensate for the reduced listings, the report said.

Americas sales in the fourth quarter decreased 5 percent.

In the meantime, sales in Europe and Asia increased by about 6 percent for the year while sales prices were stable during the year.

For 2010, Europe and Asia saw operating income and operating margin increase substantially. The increase was due to higher volumes.

Company-wide, there was a strengthened market share for park and garden products in Europe & Asia/Pacific and for construction products in North America.

There was a strong growth for dealer sales and overall operating income increased by 57 percent.

In the fourth quarter, net sales and operating income improved and operating margin improved to a negative 1.3 percent, up from a negative 10.9 percent margin. The growth for Europe & Asia/Pacific and construction offset lower sales for Americas and all operating income and operating margin improved for all business areas.

Yngen said due to the seasonality of the business, fourth-quarter results account for a relatively small share of annual sales and operating income and is mainly devoted to start-up production for the next season.

He said although market conditions are improving, retailers were still cautious to build inventory in the fourth quarter.

"We expect higher shipments to the trade in the first quarter of 2011, compared with the first quarter of 2010, due to improved listings and a continued focus on dealer sales," Yngen said. "We also expect a continued recovery of end-user demand for forest, park and garden products as well as for construction products."

OPEESA Member Bryan Equipment Sells Five Millionth Stihl Product

February 22 -- Bryan Equipment Sales Inc. recently celebrated a milestone in its history as its five millionth unit, a Stihl BG 55 handheld blower, was sold to Stihl dealer Bair's Inc. in North Canton, Ohio. The dealership will be receiving a BR 600 Stihl Magnum backpack blower signed by Fred Whyte, president of Stihl Inc. and Rick Bryan IV, president of Bryan Equipment.

"We have the greatest amount of pride in Stihl and our Stihl dealers, and it is with their support and the employees of Bryan Equipment Sales Inc. past and present, that this achievement was possible,” said Bryan. “Together we have accomplished this milestone; it has and always will be an honor working for and with such wonderful people and organizations. Here is to the next five million!"

For more than 60 years, Bryan Equipment Sales Inc. has distributed outdoor power equipment tools to full-servicing retailers. As one of the leading distributors in the outdoor power equipment industry, as well as the number one distributor of Stihl power tools in the U.S., Bryan Equipment has aggressively marketed Stihl products for more than 43 years to their six-state region, consisting of Indiana, Kentucky, Michigan, Ohio, middle and western Tennessee and West Virginia.

“We are thrilled to celebrate Bryan Equipment as they mark such a milestone in their history,” said Whyte. “We have been partners in this industry for more than 40 years and are proud to call them a part of the Stihl family.”

Generac Reports Fourth Quarter and Full-Year 2010 Results

WAUKESHA, WISCONSIN, (February 18, 2011) - Generac Holdings Inc., a leading designer and manufacturer of backup power generation products, today reported financial results for its fourth quarter and full year ended December 31, 2010.

Fourth Quarter 2010 Highlights

• Net sales increased year-over-year by 4.6% to $161.0 million as compared to $154.0 million in the fourth quarter of 2009.
• Cash flow remained strong as net cash provided by operating activities increased 6.4% to $31.4 million as compared to $29.5 million for the fourth quarter 2009.
• Net income increased year-over-year by 55.8% to $18.6 million as compared to $11.9 million for the fourth quarter of 2009; Adjusted net income increased 27.2% to $33.0 million from $25.9 million in the fourth quarter of 2009.
• Diluted net income per common share was $0.28 per share; Adjusted diluted net income per common share was $0.49 per share.
• Debt pre-payment of $74.2 million during the fourth quarter 2010.

Full-Year 2010 Highlights

• Net sales increased year-over-year by 0.8% to $592.9 million as compared to $588.2 million in fiscal 2009.
• Net cash provided by operating activities totaled $114.5 million for the full year 2010 compared to $74.6 million in the prior year, a 53.4% increase.
• Net income increased year-over-year by 32.2% to $56.9 million as compared to $43.1 million for the year ending 2009; Adjusted net income increased 38.6% to $115.9 million from $83.6 million for the year ending 2009.
• Total debt reduction of $434.3 million for the full year 2010, representing a 39.8% reduction from December 31, 2009.

"I am very proud of our accomplishments in 2010 which enabled us to deliver net sales growth for the third consecutive year, generate strong cash flows, and position the Company for growth moving forward," said Aaron Jagdfeld, President and Chief Executive Officer of Generac. "Despite certain headwinds, sales of our residential generators proved resilient throughout the year and we built a strong foundation for the future through the introduction of new products and the addition of new distribution outlets. Sales of our commercial and industrial products rebounded nicely this year and delivered solid double-digit year-over-year growth in the second half of 2010. Throughout the year, we continued to invest in our business by making strong commitments to research and development and through the addition of several key hires in our sales, marketing and service functions. These investments will allow us to maintain our position as the innovation leader in the standby generator market and support our strategic growth initiatives. Our attractive cash flows and stronger balance sheet will provide us the flexibility to drive our business in 2011 and beyond."

Residential product sales of $99.9 million for the fourth quarter of 2010 were down 1.7% on a year-over-year basis due to certain retail customers approaching their inventory levels more conservatively compared to the fourth quarter of 2009. This trend was partially offset by an increase in seasonal stocking by certain other distribution partners. For the full fiscal year 2010, residential product sales of $372.8 million increased 0.6% from $370.7 million in the prior year, driven by the continued expansion of the Company's residential products distribution network, successful new product launches, and a continued increase in the awareness of the product category, all of which were offset by continued weakness in U.S. residential investment.

Commercial and industrial product sales for the fourth quarter of 2010 increased 16.9% to $52.4 million from $44.8 million for the comparable period in 2009, driven by our expanded distribution network for these products and renewed growth in several key end markets, with health care, telecom, and data center applications showing the greatest improvement. For the full year 2010, commercial and industrial product sales were down 2.0%, but displayed strong momentum in the second half as end markets began to recover.

Fourth quarter 2010 gross profit margin decreased to 39.6% from 41.3% in the same period last year, which was primarily attributable to increased commodity and material costs. Gross margin for the full year was 40.0%, which was consistent with 2009 gross margin.

Operating expenses for the fourth quarter of 2010 were $37.6 million compared to $34.3 million in the same period last year. For the full year 2010, operating expenses were $147.1 million compared to $137.3 million in 2009. Of this increase, $6.4 million was related to non-cash stock compensation expense to account for the time based vesting of equity awards issued in conjunction with our initial public offering. The remaining quarterly and full year operating expense increases were primarily driven by incremental engineering and product development investments and increased administrative costs associated with operating as a public company.

Adjusted EBITDA of $42.7 million in the fourth quarter 2010 decreased from $44.1 million in the same period last year. For the full year 2010, Adjusted EBITDA decreased to $156.2 million, compared to $159.1 million in 2009, as modest sales growth and consistent gross margins were more than offset by increased investment in the business. Adjusted EBITDA margins remained strong in fiscal 2010 at 26.4%.

Interest expense decreased in the fourth quarter of 2010 to $6.6 million, compared to $17.2 million in the same period last year, contributing to our strong net income growth. For the full year 2010, interest expense was $27.4 million compared to $70.9 million in 2009, due to debt repayments, lower LIBOR rates, and the termination of certain interest rate swap agreements.

Free cash flow, defined as net cash provided by operating activities less capital expenditures, was $26.1 million in the fourth quarter of 2010, a 6.5% decrease over the same period last year as we increased working capital and capital expenditure investment during the current year quarter. For the full year 2010, free cash flow increased by 49.6% to $104.9 million compared to $70.1 million in 2009. In the fourth quarter of 2010, the Company used $74.2 million of its cash flow to make a voluntary debt pre-payment on its first lien credit facility. Following this debt pre-payment, at December 31, 2010, the Company had $657.2 million of debt outstanding with $78.6 million of cash on hand.

OUTLOOK

Mr. Jagdfeld concluded, "Our long-term growth strategy, which we refer to as "Powering Ahead", includes four key objectives of growing the residential standby generator market, gaining industrial market share, expanding our product offering to diversify our end markets, and expanding into new geographies. We have identified and started to implement initiatives to support each of these strategic objectives, and over the next several years, we believe we will make substantial progress towards achieving our long-term growth goals."

"In 2011, while we do not expect a near-term recovery in U.S. residential investment and we are not forecasting any major outage events, we do expect growth from our residential products through additional new product introductions and increased domestic and international distribution. For our commercial and industrial products, we anticipate continued strength in 2011 led by increasing demand across certain end markets, improving market share and expanding distribution into new geographies. We are anticipating higher input costs in 2011 as a result of rising commodity prices and continued weakness in the US dollar.  We intend to offset these higher costs with selective price increases and continued focus on cost reduction. As a result, we remain optimistic that we can deliver moderate sales growth overall in 2011 while maintaining attractive gross margins and continuing to invest prudently in our operating infrastructure to support our long-term strategic growth plans."

Generac Asset Purchase by Briggs Didn't Include Liability

February 16 -- An asset purchase limited to one division of the seller doesn’t include liabilities stemming from products made before the division became an entity separate from the rests of the seller’s business.

Wisconsin Court of Appeals Judge Joan F. Kessler wrote for the court, “We find no provision in the Agreement by which [the buyer] assumed liability for products [the seller] manufactured and sold prior to the creation of the division.”

Generac Power Systems Inc. originally manufactured only large generators. In the early 1960s, it began adding portable generators and other portable products to its product line. In early 1997, Generac created a Portable Products Division with the intent of selling it. In 1998, it did sell the division to GPPC Inc., which in turn sold it to Briggs and Stratton Corp. in 2001.

The asset purchase agreement between Generac and GPPC (which the parties agreed is binding on Briggs), provided that the buyer agreed to assume the liabilities that relate to the “Division,” which is consistently defined in the agreement as Generac’s Portable Pro-ducts Division.

In 2005, a product liability action was filed against Generac in Alabama federal court, alleging that a portable gas generator made in 1992 was defective.

Generac tendered its defense to Briggs, but Briggs declined to accept the defense. Instead, Briggs filed suit in Wisconsin state court, seeking a declaration that it was not liable.

The circuit court granted the declaration, and on Feb. 8, the Court of Appeals affirmed.

The court began by setting forth the general rule that a corporation which purchases the assets of another corporation does not succeed to its liabilities An exception exists when the purchasing corporation expressly or implicitly agrees to assume that liability.

In light of the agreement’s consistent use of “Division,” and the definition of that term in the agreement limiting it to the Portable Products Division, the court held that Briggs could not be held liable for liabilities arising from a product made before the division was created.

The court explained: “Because the Division did not exist until Jan. 1, 1997, Generac could not have owned or operated the Division before that time. The Closing Date identified in the Agreement is June 30, 1998. Thus the Assumed Liabilities for which Briggs agreed to be responsible must relate to Generac’s ownership or operation of the Division between Jan. 1, 1997 and June 30, 1998.”

What the court held

Case: Briggs & Stratton Power Products Group, LLC v. Generac Power Systems, Inc., No. 2010AP344

Issues: Is a corporation that purchases a division of another corporation responsible for unknown liabilities arising from products made before the division was created?

Holdings: No. Where the asset purchase agreement narrowly defined the division of the corporation being sold, the buyer cannot be liable for products not made by that division.

The Toro Company Reports 2011 First Quarter Results

o   Quarterly sales increased nearly 16 percent fueled by strong growth in all professional businesses o   Net earnings per share up 66 percent to $0.53 o   Record level of new products drives early season demand o   Company raises full-year guidance BLOOMINGTON, Minn., Feb 17, 2011 -- The Toro Company (NYSE: TTC) today reported net earnings of $17.3 million, or $0.53 per share, on net sales of $383.2 million for its fiscal first quarter ended January 28, 2011. In the comparable fiscal 2010 period, the company delivered net earnings of $10.9 million, or $0.32 per share, on net sales of $331.4 million. "Fiscal 2011 is off to a good start," said Michael J. Hoffman, Toro's chairman and chief executive officer. "We are pleased with the ongoing recovery of our professional businesses driven by excitement around our new innovations and improving market conditions. Significant snowfalls drove strong retail demand for snow products, which helped the quarter, and also provided revenue for landscape contractor customers which will support purchases of mowing equipment as we head into spring." SEGMENT RESULTS Professional Professional segment net sales for the fiscal 2011 first quarter totaled $258.3 million, up 21.4 percent from the same period last year. Shipments were up across all professional businesses on improved customer optimism and strong acceptance for new products. Golf development and existing renovation projects around the world accelerated demand for golf equipment and precision irrigation systems. Early orders for landscape maintenance equipment to channel partners grew in anticipation of a strong selling season. Worldwide sales for micro irrigation products continued to strengthen on increased penetration of these water-saving technologies. Professional segment earnings for the fiscal 2011 first quarter were $37.9 million, up 46.9 percent from last year's first quarter. Residential Residential segment net sales for the fiscal 2011 first quarter totaled $123.3 million, up 5.6 percent from the same period last year. Growing consumer confidence had a positive impact on revenues. Shipments for riding products were up on the successful introduction of a new line of innovative zero turn mowers, while strong snowfall and expanded placement drove demand for snow products. These improvements were somewhat offset by difficult weather conditions in Australia that impacted sales of Pope-branded products, along with lower initial orders of walk power mowers in an effort by retailers to time shipments closer to retail demand. Residential segment earnings for the fiscal 2011 first quarter were $11.4 million, down 15.3 percent from last year's first quarter. REVIEW OF OPERATIONS Gross margin for the fiscal 2011 first quarter improved 60 basis points to 35.7 percent from the prior year period. The increase in gross margin was primarily driven by favorable product mix and higher production volumes, which were somewhat offset by raw material inflation. Selling, general and administrative (SG&A) expense for the fiscal 2011 first quarter was up $12.8 million, or 13.3 percent from the same period last year, but declined as a percent of sales to 28.6 percent from 29.2 percent. The decline in SG&A as a percent of sales reflects further leveraging of costs over increased sales volumes, which was somewhat muted by higher warranty expense. Interest expense for the fiscal 2011 first quarter was $4.1 million, down 3 percent compared with the same period last year. The effective tax rate for the fiscal 2011 first quarter was 29.3 percent compared with 33.6 percent in last year's first quarter. The lower tax rate was primarily due to the retroactive extension of the Federal Research and Engineering Tax Credit. Accounts receivable at the end of the fiscal 2011 first quarter totaled $171.2 million, up slightly from the same period last year, on a sales increase of nearly 16 percent. Net inventories for the first quarter were $239.7 million, up 25.5 percent from the prior year period. Trade payables were $149.7 million, up 36.6 percent compared with last year. BUSINESS OUTLOOK "Customer confidence in our markets is continuing to build," said Hoffman. "Professional customers are beginning to reinvest in their businesses, and we are well positioned with a record level of new products to drive retail demand and increase our market share. While always mindful of the impact of Mother Nature on our business, we are optimistic about the selling season ahead." The company now expects fiscal 2011 net earnings to be about $3.40 per share on a revenue increase of about 7 percent. For its fiscal 2011 second quarter, the company expects to report net earnings of about $1.58 per share. About The Toro Company The Toro Company is a leading worldwide provider of turf and landscape maintenance equipment, and precision irrigation systems, to help customers care for golf courses, sports fields, public green spaces, commercial and residential properties, and agricultural fields.

Ariens Sno-Tek Snow Blowers Recalled By LCT and CPS

WASHINGTON, D.C. – February 17 -- The U.S. Consumer Product Safety Commission and Health Canada, in cooperation with the firm named below, today announced a voluntary recall of the following consumer product. Consumers should stop using recalled products immediately unless otherwise instructed. It is illegal to resell or attempt to resell a recalled consumer product.

Name of Product: Sno-Tek snow blowers

Units: About 1,500 in the U.S. and 300 in Canada

Importer: Liquid Combustion Technology, LLC (LCT), of Travelers Rest, S.C.

Manufacturer: Ariens, of Brillion, Wis.

Hazard: The snow blower's engine is missing a safety shield above the side mounted electric starter, posing a laceration hazard to consumer's fingers.

Injuries/Incidents: None reported.

Description: The recalled snow blowers have a LCT StormForce engine with "Sno-Tek" printed across a metal handlebar plate. Snow blowers with model numbers 920402 and 920403 and UPC codes 5105803094 and 5105803095 are included in this recall. Only snow blowers with engine model number PW1HK18650781DE-ABGOQUVE1M with serial numbers ranging from 1065H04008325A through 1065H04012104A are affected by this recall. The product model number and UPC codes are printed on a label attached to the outside of the gear box near the left wheel.

Sold at: Home Depot and Ariens authorized dealers nationwide and HD.com in Canada from August 2010 through September 2010 for between about $700 and $800.

Manufactured in: Snow blower in United States, engine in China

Remedy: Consumers should stop using these snow blowers and contact LCT for a free repair kit and installation instructions or return them to an authorized LCT service center location for a free repair. LCT's Service Network toll free number is (800) 558-5402

Consumer Contact: For additional information, contact LCT at (800) 552-8094 between 9 a.m. and 5 p.m. ET Monday through Friday or visit the firm's website at www.LCTUSA.com

Ariens Shifts Snow Throwers From Canada To Hard-hit Northeast

BRILLION -- Feb. 2 -- Things have been busy at the Ariens Co. in Brillion.

The company makes snow throwers and operates a hotline for customers. When it snows, call volume picks up. When it snows across a huge portion of the U.S., call volume soars.

"Most regional snowstorms increase our call volume by 30-40% for 2 or 3 days," Ariens spokeswoman Ann Stilp said in an e-mail. "National storms like we have this week can push it over 50%."

The No. 1 problem being called into the hotline is machines ingesting things other than snow, ". . . rugs, newspapers, tarps, etc.," Stilp said.

The company has also adjusted to a storm pattern that has continually pounded the Northeast.

"We moved Sno-Thro units from Canada (which is not getting its normal amount of snow) to a Boston dealer who sold 700 Sno-Thro machines Tuesday," Stilp said.  


Boston has had more than 60 inches of snow since December, according to the National Weather Service.

CPSC, Briggs and Stratton Recall Model 40 V-Twin Engines

February 1, 2011

Alert #11-719

The following product safety recall was voluntarily conducted by the firm in cooperation with the CPSC. Consumers should stop using the product immediately unless otherwise instructed. It is illegal to resell or attempt to resell a recalled consumer product.

Name of Product: Briggs & Stratton Model 40 V-Twin Engine


Units: About 50


Manufacturer: Briggs & Stratton Corporation, Milwaukee, Wis.


Hazard: Wear on misrouted wiring may cause it to disconnect from the shut-off device, allowing the engine to continue running when the key is in the "OFF" position or when the operator gets off the seat while the mower is engaged, posing an injury hazard to consumers.


Incidents/Injuries: None reported


Description: The recalled product is a Briggs & Stratton V-twin engine with the date code 100201Y. The engines can be found in the following lawn mowers: Craftsman, model 247:289810; Husqvarna, model 960460016; and Bad Boy, model BBM4826BS. The engine date code is bottom-most number located on the valve cover of the engine. The valve cover is located at the front of the engine near the oil dipstick.


Sold by: Sears, under the Craftsman brand; The Home Depot, under the Husqvarna brand; and Tractor Supply Company, under the Bad Boy brand. The mowers were sold in February 2010 and March 2010 for between $1,500 and $3,500.


Manufactured in: USA


Remedy: Consumers should immediately stop using the riding mowers and contact a Briggs & Stratton Authorized Dealer for free inspection and repair. Consumers with affected Craftsman and Husqvarna models were notified by letter from Sears and Briggs & Stratton. Tractor Supply Company has not notified the purchasers of the affected Bad Boy models.

Consumer Contact: For more information, contact Briggs & Stratton Corporation at (866) 927-3349 between 9 a.m. and 6 p.m. ET Monday through Friday, or visit the firm's website at www.briggsandstratton.com/engines/support/contact

Briggs Reports Strong Sales But Quarterly Loss

January 27 -- With stronger international business, Briggs & Stratton Corp. reported an overall 14.6% sales increase Thursday but a loss in its fiscal second quarter.

The Wauwatosa small-engine maker had a loss of $1.25 million, or 3 cents a share, compared with net income of $3.03 million, or 6 cents, a year earlier. Sales rose to $450.3 million in the quarter ended Dec. 31, an increase of $57.3 million.

The loss was related to a $2.2 million charge for previously announced organization changes and $2.4 million in costs associated with refinancing of senior notes.

Much of the sales increase was from international engine shipments, as well as improved lawn-and-garden and snow-thrower product sales, the company said.

Briggs is maintaining its revised fiscal 2011 outlook of net income in a range of $57 million to $68 million, or $1.13 to $1.35 a share. Sales are expected to be 2% to 4% higher than in fiscal 2010.

"We remain cautiously optimistic about the rate of the economic recovery, both here in the United States and abroad, and about the level of consumer confidence," Briggs CEO Todd Teske said in a conference call with analysts.

After the earnings announcement, Briggs shares closed at $21.15, up 2 cents.

The world's largest small-engine maker has lost some market share because of price increases, Teske said.

"Our discussions with key customers regarding product lineups for the 2011 spring and summer selling season, on the whole, went about as well as expected. Depending on the product mix, we believe we will achieve the expected price increase," he said.

The engine division's sales increased 14.5% in the quarter because of higher international shipments to European and Asian equipment makers. Sales of power products, including snow throwers and pressure washers, were up 13% from a year earlier.

As part of a restructuring, Briggs has established a corporate research and development function that will report to Teske. The focus will be on the next generation of products, he said.

The company has combined the management teams of its home and yard products, trying for greater efficiencies in areas such as manufacturing and product development.

It could be a couple more months before Briggs has more insight into the 2011 lawn-and-garden season. Equipment manufacturers often wait before gearing up for the spring, hoping to get a better sense of consumer spending.