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

Briggs and Stratton's "Watershed" Year

Todd Teske, chief executive officer for Briggs and Stratton Corp., said the company has launched more new products than it has ever launched in a year, but the changes the company needed to make to become innovative required a culture shift, and a big one.

Teske talked about how the company changed its innovation strategy at the Innovate To Grow 2014 Manufacturing and Distribution Executive Summit on Wednesday. And the payoff for the 108-year-old Wauwatosa-based company means that it enjoys an 80 percent market share in the markets it occupies.

“It’s interesting, when you look at how people view Briggs and Stratton, it’s generally an engine company … which we are,” Teske said. “But we’re also a company that is going through a lot of transition.”

Because the company makes engines for power equipment, Briggs knew its business was directly tied to the housing market and after the housing boom management realized the need to diversify its business model. Still, the company continued to be order takers, until the Chinese came along and started manufacturing similar products that were exported to the United States and their pricing was much lower than Briggs’. A number of Briggs’ competitors located in the U.S. started going out of business, Teske said.

In studying the cost differences between China and the U.S., the company came to the conclusion that it didn’t have a cost problem; it had a profit problem, Teske said.

“They don’t have to make as much money as we do. Why? Because there are a lot different policies there than here,” Teske said. “There, you employ people and you get paid. Now, I can tell you if we had that policy here in the U.S., you can’t imagine how many employees Briggs and Stratton would have ... because I would be hiring just to make more money.”

After the housing market burst and the country went into a recession, the company realized that housing drove its business in a big way. So Teske asked his team how the company would compete differently, and that’s when the company defined its innovation strategy.

Changing the corporate structure, Teske had its research and development team report directly to him. The team also focused almost all of its attention on meeting emissions standards because it’s in a regulated industry. The company knew that there would be more emissions regulations in the future, but right now there isn’t anything on the books.

“That allowed us to refocus our R and D dollars,” Teske said.

The company focused on two primary elements: reducing noise and making the engines easier to start.

Briggs launched more new products than it has ever launched in a year with Quiet Power Technology, a motor that the company says is 65 percent quieter than a traditional lawnmower motor; POWERflow+, a pressure washer that is high pressure-low flow and low pressure-high flow; Mow 'n' Stow Engine, an engine that can be stored on its side without leaking gas or oil.

Teske said the upcoming season would feature products that are easier to start that use a lithium-ion battery.

“Again, is this an iPod? No. Little things … little things mean big innovation. That’s our journey,” Teske said.

Denise Lockwood         www.bizjournals.com  

Shaunna Balady Joins Briggs and Stratton as VP of Corporate Development

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

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

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

About Briggs and Stratton Corporation

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

Briggs and Stratton Reports Results for Third Quarter and First Nine Months of Fiscal 2014

MILWAUKEE, April 24, 2014 -- Briggs and Stratton Corporation today announced financial results for its third fiscal quarter ended March 30, 2014.

Highlights:

•         Third quarter fiscal 2014 consolidated net sales were $628.4 million, a decrease of $8.9 million or 1.4% from the prior year.
•         Third quarter 2014 consolidated adjusted net income excluding restructuring actions was $38.7 million, or $5.2 million lower than the adjusted net income of $43.9 million in the third quarter of fiscal 2013.
•           Reduced shipments of generators led to a decrease in net sales and diluted earnings per share by an estimated $25 million and $0.06, respectively, in the third fiscal quarter compared to last year which benefitted from replenishment following Hurricane Sandy.
•           Third quarter cash flows from operations improved over $30 million from the prior year; last twelve month cash flows from operations total $221 million.
•          Fiscal 2014 third quarter net debt decreased $122 million from the third quarter of fiscal 2013.

"During our third quarter, we saw increases in shipments of engines for lawn and garden equipment in the U.S. despite below average temperatures and a slow start to the spring retail season this year," commented Todd J. Teske, Chairman, President and Chief Executive Officer of Briggs and Stratton Corporation. "Our U.S. shipments of large engines increased in excess of 10% in the quarter reflecting our gains in retail placement. Higher U.S. lawn and garden engine shipments were offset by reduced engines shipped for generators compared with last year when we were replenishing generator inventories following Hurricane Sandy," continued Teske. "Shipments of lawn and garden products in the quarter decreased in line with industry trends given the slow start to the spring season."  

"We are pleased with the responses so far to our new product introductions this year. Orders for our innovative new engine technologies, including our Quiet Power Technology™, 810CC Commercial Series™ engine and our Mow-n-Stow™ engine have exceeded our pre-season expectations and we are looking forward to additional consumer response this summer. Also, our Powerflow + Technology™ introduction is showing early success."

Teske further stated, "Cash flows from operations continue to be strong due to continued operational focus on reducing our investment in working capital. Last twelve months cash flows from operations are in excess of $220 million and reflect lower inventories of $68 million despite holding higher inventories of portable generators in the current year."

"We believe that the colder than normal temperatures have delayed retail sales of equipment by approximately 3-4 weeks and perhaps longer as we have not yet seen the weather break across the United States. Weather in Europe has been favorable to date. Moving forward this spring, we continue to focus on successfully launching our new and innovative products, closely managing working capital, optimizing the SKUs in our product portfolio and improving our operations to improve our overall margins in both the engines and products businesses," Teske stated.  

Consolidated Results:

Consolidated net sales for the third quarter of fiscal 2014 were $628.4 million, a decrease of $8.9 million or 1.4% from the third quarter of fiscal 2013, due to lower sales of generators and the engines that power them. The quarterly impact of lower replenishment following fewer weather related events creating demand for generators and the related engines was an estimated sales decrease of $25 million.

This decrease was partially offset by higher sales of engines used on U.S. lawn and garden equipment and increased snow thrower sales due to higher snowfall amounts in North America this winter. The fiscal 2014 third quarter consolidated net income, which includes restructuring actions, was $39.2 million or $0.82 per diluted share. The third quarter of fiscal 2013 consolidated net income, which includes restructuring charges, was $38.5 million or $0.78 per diluted share.

The estimated impact of the reduced storm replenishment generator and related engine sales in the quarter was $0.06 per diluted share compared with last year's third fiscal quarter.

Consolidated net sales for the first nine months of fiscal 2014 were $1.36 billion, a decrease of $23.0 million or 1.7% from the first nine months of fiscal 2013, due to lower sales of generators and the engines that power them.  The impact of fewer weather related events creating demand for generators and the related engines was an estimated sales decrease of $90 million.

This decrease was partially offset by higher sales of engines used on U.S. lawn and garden equipment, increased sales of pressure washers and sales from Branco, which was acquired mid-year in fiscal 2013. The fiscal 2014 nine months consolidated net income, which includes restructuring actions, was $20.5 million or $0.43 per diluted share. The first nine months of fiscal 2013 consolidated net income, which includes restructuring charges, was $21.4 million or $0.44 per diluted share.

The estimated impact of the reduced storm generator and related engine sales in the first nine months of fiscal 2014 was $0.20 per diluted share compared with last year's first nine months which included the benefit of Hurricanes Isaac and Sandy.

Non-GAAP Financial Measures

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

Engines Segment:

Engines segment net sales of $452 million in the third fiscal quarter were essentially unchanged from the prior year. Total engine volumes shipped in the quarter were approximately the same between years at 3.2 million units. Net sales increased on higher sales of engines used on lawn and garden equipment for the North American market, partially offset by lower sales of engines used in generators and for products in Latin America and Australia. New innovations, including Quiet Power Technology™ ("QPT™"), Mow-and-Stow™ and Ready Start® for Ride product launches, have been introduced to the market for the spring selling season.

Engines segment adjusted income from operations in the third fiscal quarter was $59.6 million, a decrease of $2.9 million from the prior year. Engines adjusted gross profit margins improved in total by approximately 20 basis points due to improved product sales mix of larger engines and an absorption benefit of approximately 30 basis points on 4% higher production in the quarter compared to last year.

Partially offsetting these improvements were higher manufacturing and shipping costs in the quarter. Engineering, selling, general and administrative increased $3.7 million due to increased compensation expense and higher sales and marketing expenses in our international regions.

Products Segment

Products segment net sales of $205.2 million in the third fiscal quarter decreased by $26.4 million or 11% from the prior year. This decrease was due to lower sales of generators as a result of fewer weather related events during fiscal 2014, decreased sales of lawn and garden equipment due to exiting sales of lawn and garden equipment to mass retailers and a delay in the selling season, and unfavorable foreign exchange related to the devaluation of the Australian Dollar and Brazilian Real.

Partially offsetting these decreases were higher net sales of snow throwers and related service parts due to higher snowfall amounts in North America this winter. New innovations, including Powerflow + Technology™ for pressure washers, have been introduced to the market for the spring selling season and are contributing to higher pressure washer sales compared with last year at improved margins.

Products segment adjusted loss from operations in the third fiscal quarter was $4.9 million, a change of $6.0 million from the prior year adjusted income from operations. Products adjusted gross profit margins decreased in total by 110 basis points due to an unfavorable foreign exchange impact of approximately 130 basis points and a 6.5% reduction in manufacturing throughput that led to an unfavorable absorption impact of approximately 70 basis points.

Partially offsetting this reduction were improvements of 50 basis points due to increased manufacturing efficiencies, including incremental restructuring savings and improved product sales mix through the U.S. dealer channel. Engineering, selling, general and administrative increased $0.5 million due to increased compensation expense and higher advertising related to new product launches.

Corporate Items:

Interest expense for the third quarter and first nine months of fiscal 2014 was comparable to the same periods a year ago.

The effective tax rate for the third quarter of fiscal 2014 was 26.1% compared to 27.6% for the same respective period of fiscal 2013.  The tax rate for the third quarter of fiscal 2014 included a taxpayer election which provided the Company a $2.9 million tax benefit that was previously unavailable, as well as a benefit of $0.7 million from income related to foreign operations subject to different statutory tax rates. 

The tax rate for the third quarter of fiscal 2013 included benefits for the reenactment of the U.S. federal research and development and other credits in the amount of $1.0 million, foreign tax credits in the amount of $0.5 million, and $1.7 million from income related to foreign operations subject to different statutory rates. 

Financial Position:

Net debt at March 30, 2014 was $117.8 million (total debt of $225.0 million less $107.2 million of cash), or $122.1 million lower than the $239.9 million (total debt of $262.5 million less $22.6 million of cash) at March 31, 2013. Cash flows used in operating activities for the first nine months of fiscal 2014 were $14.0 million compared to $73.8 million in fiscal 2013.

The improvement in operating cash flows was primarily related to changes in working capital needs in fiscal 2014 associated with improvements in managing outstanding accounts receivable and reducing required inventory levels. In addition, no contributions to the pension plan were made in fiscal 2014 compared to $29.4 million in the first nine months of fiscal 2013.

Restructuring:

The previously announced restructuring actions are nearing their conclusion as planned.  The restructuring actions for the third quarter resulted in pre-tax income of $0.8 million related to the reduction of an estimated reserve related to plant closure costs. Net pre-tax restructuring costs for the first nine months of fiscal 2014 were $5.1 million; the cost estimates for fiscal 2014 remain unchanged at $6 million to $8 million. Incremental pre-tax restructuring savings for the first nine months of fiscal 2014 were $1.8 million; the incremental savings estimate for fiscal 2014 also remains unchanged at $2 million to $4 million.  

Share Repurchase Program:

On August 8, 2012, the Board of Directors of the Company authorized up to $50 million in funds associated with the common share repurchase program with an expiration date of June 30, 2014. On January 22, 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 with an extension of the expiration date to June 30, 2016.

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 2014, the Company repurchased 1,479,626 shares on the open market at an average price of $20.32 per share.

Outlook :

Due to the slow start to the spring lawn and garden selling season in North America following an unusually cold winter season, we are revising our fiscal 2014 net income projections to be in the range of $43 million to $50 million or $0.88 to $1.04 per diluted share.  These net income projections exclude the impact of any additional share repurchases and costs related to our announced restructuring actions. 

Our market projections for the U.S. market remain at 4-6% higher than last year's season. The lower end of our range contemplates a later start to the spring lawn and garden selling season in the U.S., which could potentially have the impact of extending the season past the end of our fiscal year end and into our fiscal 2015. The higher side of our guidance contemplates a U.S. market higher than 6% for the season assuming that we capture these sales in our fiscal fourth quarter.

Our fiscal 2014 consolidated net sales are projected to be in a range of $1.88 billion to $1.92 billion. Excluding the impact of restructuring charges, operating income margins are estimated to be in a range of 3.8% to 4.2% and interest expense and other income are forecasted to be approximately $18 million and $7 million, respectively. Excluding the impact of restructuring charges, the effective tax rate for the year is anticipated to be in a range of 28% to 29%. We anticipate capital expenditures for the year to be approximately $45 million to $50 million.  

Briggs and Stratton Event in Poplar Bluff, MO, Celebrates $8M Phase 1 Milestone

POPLAR BLUFF, Mo. – February 21 -- Corporate visitors, a luncheon, plant tours and a ribbon cutting ceremony highlighted the celebration marking the completion of the first phase of the $36 million investment Briggs and Stratton Corporation is making in its small engines manufacturing plant in Poplar Bluff, Mo.

The $8 million Phase I project involved extensive remodeling and the moving of machines from the west production facility into the main plant.

"Wow! One word sums it up. It is really remarkable to see what you folks have done," said Todd Teske, president, chairman and chief executive officer at Briggs and Stratton's corporate headquarters in Milwaukee, Wis. "All your hard work was really worth it."

Employees wore T-shirts with the words, "I survived the remodel 2014."

After touring the plant, Teske said he was "very pleased with what this place has become and what it will become in the future" when the production of two new engines starts over the next two years.

"I'm proud of all of you for all your hard work," Teske said. "This plant is one of our shining stars."

Briggs and Stratton also is celebrating the 25th anniversary of its plant in the Poplar Bluff Industrial Park.

"We are celebrating our 25th year here and we are looking forward to a long and bright future in Poplar Bluff," said Mark Melloy, the plant manager.

Teske talked with plant and community leaders during the luncheon and to all the employees in the afternoon.

He also showed a video touting new innovations and new products, including a new engine that is 60 percent quieter and a lawnmower with collapsing handles that can be hung on the wall.

"It takes up 70 percent less floor space in a garage," Teske said.

He also thanked community leaders for their support of Briggs and Stratton.

Community leaders attending the luncheon were Mayor Ed DeGaris; Steve Halter, president of the Greater Poplar Bluff Area Chamber of Commerce;, state Rep. Todd Richardson; Dr. Devin Stephenson, president of Three Rivers College and chamber board chairman; and Dr. Wesley Payne, TRC vice president of learning.

Teske said Briggs and Stratton has been spending a lot of money on training.

"We have been training a lot of people," Teske said. "Our people need a different skill set now."

While discussing domestic and foreign markets, Teske expects to continue to see a recovery from two years ago when sales were down due to the drought. He said the U.S. market was up 3 percent last year and he is hoping for a 4-6 percent growth this year depending on the weather.

Chamber members conducted a ribbon cutting ceremony under a new red banner prior to touring the plant.

During the remodeling project, some interior walls were removed to create more production space and re-arrange the production lines to increase the plant's efficiency.

Now the Briggs workers are able to expand production in less space.

Production space has decreased from 410,000 square feet to 310,000 square feet, according to Melloy.

"The 100,000-square foot west building will now be used for a warehouse," Melloy said.

Briggs and Stratton has added 200 employees over the past nearly two years and now has 1,050.

Joe Wright, senior vice president of Briggs and Stratton and president of the Engine Products Group, spoke briefly.

"I know how hard each of you has worked. Don't let up," Wright said. "We have a long way yet to go. We have to carry on to the finish line and make sure we do it right."

Jesse Sumrall, technical services manager, and Marcus Braddock, the new production control manager, led one of the tour groups.

The starting point was large stacks of 2,500-pound aluminum blocks, which are melted. The molten aluminum flows to 25 die cast machines that make the parts for the small engines.

He and Braddock, who recently moved to Poplar Bluff from a Toyota plant in Mississippi, explained how the seven machine lines and the two assembly lines have been changed to improve the plant's efficiency.

David Silverberg           http://www.dailystatesman.com/

Briggs and Stratton Provides Market Update and Revises Fiscal 2013 Guidance

MILWAUKEE, July 26, 2013 -- Briggs and Stratton Corporation today announced that it expects to report net sales and earnings below the guidance provided for fiscal 2013.

•          Consolidated net sales for the fourth quarter and fiscal year 2013 are expected to be approximately    $475 million and $1.86 billion, respectively
•  ·      Production levels lowered in response to OEM production schedules to control inventories
•  ·      U.S. sales in line with industry estimates for engines and products; Europe market softness continues
•          Engine market share in line with original guidance

·         Excluding charges related to restructuring actions, legal settlements, and other non-cash charges, revised fourth fiscal quarter and fiscal 2013 adjusted diluted earnings per share is estimated to be approximately $0.17 to $0.21 per share and $0.88 to $0.92 per share, respectively

·         Outlook for an improved fiscal 2014 on a strengthening U.S. lawn and garden market, lower channel inventories, and continued expansion and growth in certain international markets; European outlook remains cautious

"An extremely slow start to the spring lawn and garden season and a cautious approach to managing inventories after last year's drought has impacted the U.S. and European markets through the end of June," commented Todd J. Teske, Chairman, President and CEO of Briggs and Stratton Corporation.  "In response to the lower retail sales, almost all channel participants including mass retailers, dealers, and equipment OEMs have been cautiously managing inventories and therefore have been slow to re-order for the current season.  Equipment OEMs have reduced production levels compared to last year and thus we reduced our engine production in the quarter negatively impacting absorption of plant operating costs in the near term," continued Teske.  "On a positive note, we have seen the retail market strengthening in May and June and continuing into July as we compare to last year's drought-impacted summer season and we believe inventory levels at our dealers are in great shape heading into our next fiscal year."

Engines Segment:

•          Fourth fiscal quarter 2013 Engines segment net sales are expected to be approximately $300 million
•         Total engines shipped in the quarter were approximately 1.9 million units compared to approximately   2.1 million units in the prior year
•       Production totaled approximately 1.6 million units in the quarter compared to approximately 2.0 million in the prior year
•           Ending engine unit inventories were approximately 1.4 million compared to approximately 1.3 million units last year

Through the end of June 2013, the Company estimates that the retail market for walk and riding mowing equipment has decreased by approximately 3-5% compared to the last season.   The lower retail sales due to a late spring in the U.S. and Europe have not yet recovered in the current season.  Estimates of U.S. industry shipments to retailers of walk mowers are consistent with last year through June while shipments of riding mowers has increased by approximately 3%.   The Company expects that by the end of the current season, retail sales of mowing equipment will be flat to slightly up for the season.   Certain equipment OEMs have reduced inventories compared to the prior year in response to lower than anticipated retail sales.

Products Segment:

•         Fourth fiscal quarter 2013 Products segment net sales are expected to be approximately $203 million
•          Manufacturing throughput reduced 15% in the quarter compared to the prior year in order to control inventories
•          Domestic product inventories decreased by approximately $50 million compared to the prior year 
•         Dealer inventories are below average of last several years
• 
  

The  majority of the decrease in net sales compared to the prior year is due to our previously announced decision to exit the sale of lawn and garden equipment to U.S. mass market retailers.  This was partially offset by higher sales of lawn and garden equipment to our dealers in the U.S. and increased sales in Brazil due to our acquisition of Branco in December of 2012.  Production levels in the products plants were also reduced to lower inventories resulting in lower absorption of fixed manufacturing costs in the near term. 

Financial Position:

Net debt at June 30, 2013 is anticipated to be approximately $37 million.   Expected cash flows from operations for fiscal 2013 is approximately $160 million.   

Presentation to House Energy and Commerce Committee by Todd Teske, Briggs CEO

A PRESENTATION BY MR. TODD J. TESKE, PRESIDENT, CHAIRMAN and CEO, BRIGGS and STRATTON CORP. TO THE HOUSE ENERGY AND COMMERCE SUBCOMMITTEE ON ENERGY AND POWER

July 19, 2013

One Page Summary: 

Five reasons why EPA should revisit its conditional certification of E-15:

1. Research has shown, and EPA has agreed, that use of E15 in small non-road engines can have harmful and costly consequences on small engines and outdoor power equipment.

2. Research on warning label effectiveness suggests that an E-15 warning label will do very little to mitigate misfueling.

3. Behavioral studies of customers at the gas pump conclude that consumers overwhelmingly favor the lowest priced option, regardless of the consequences.

4. Misfueling due to lack of education to consumers regarding the proper use of E-15 will be significant.

5. The use of Biofuels or “drop-in fuels” has been tested and could prevent misfueling.

If public policy requires that the federal government drive the market for alternative fuels, Briggs and Stratton urges that the policy be amended to more fully support the development and use of biofuels, from any feedstock, which are intended for use as “drop-in fuels” which provide a safe fuel for both legacy and newly manufactured small engines and outdoor power equipment.

At a minimum we recommend that the reform legislation rescind the partial waiver for E15, and establish gasoline blended with up to 10% ethanol as the general purpose domestic fuel. The legislation should also require that all considerations to increase domestic biofuel levels in the future be subject to a formal EPA rulemaking whereby the market’s ability to safely distribute, retail and consume such fuel is provided for.

July 19, 2013

Written Testimony of Mr. Todd J. Teske, President, Chairman and CEO, Briggs and Stratton Corporation

Chairman Whitfield, Ranking Member Rush, Congressman Barrow and distinguished Members of the Committee, thank you for soliciting Briggs and Stratton’s perspective on the issues raised by the EPA’s implementation of the Renewable Fuels Standard. I have been extremely impressed by the Committee’s workmanlike approach to educate itself, and the public, on the challenge which the RFS presents to manufacturers, consumers and the environment. The Outdoor Power Equipment Institute, on which I currently serve as Chairman, has submitted formal comments in response to the Committee’s white papers. My statement, which is submitted strictly in my capacity as Chairman and CEO of Briggs and Stratton, will attempt to define that challenge as it pertains to small engine manufacturers and offer suggestions on how to protect consumers from significant economic and environmental damage.

Briggs and Stratton Corporation, which is headquartered in Milwaukee, Wisconsin, is the world’s largest producer of gasoline engines for outdoor power equipment. We are a leading designer, manufacturer and marketer of pressure washers, generators, lawn and garden, turf care and other power equipment through its Briggs and Stratton, Simplicity®, Snapper®, Ferris®, Murray®, Branco® and Victa® brands. Briggs and Stratton products are designed, manufactured, marketed and serviced in over 100 countries by 6,200 employees. Approximately 5,300 of those employees work here in the United States. As a U.S. based manufacturer, our company is proud to be celebrating its 105th anniversary this year and continues to manufacture over 85% of its products here in America.

Briggs and Stratton’s long standing commitment to the environment remains a key focus for our business. We continue to manufacture our products with recycled materials that are highly efficient and with reduced emissions. Since 1995, we have reduced our emissions by 75% and, after completing the phase in of our new product offering, will achieve an additional 35% reduction in those emissions by January, 2014. In 2007, we signed a pledge with the Department of Energy to reduce our energy consumption by 25% over 10 years. Just 6 years later, we have already cut our consumption by 20%. These are just a few of the many examples that demonstrate our commitment to the environment.

Below are five factors justifying rescission of EPA’s conditional certification of E-15 :

1. Research has shown, and EPA has agreed, that use of E15 in small non-road engines can have harmful and costly consequences on small engines and outdoor power equipment. 

Briggs and Stratton has conducted extensive testing on levels of ethanol above 10%. Increasing levels of ethanol in gasoline result in increased levels of alcohol. Alcohol has inherent properties that cause issues with our engines and they become more acute with increasing alcohol content.

Increasing the alcohol in fuel changes the air-fuel ratio (enleanment) in our carbureted engines. E-15 fuel, by definition would have an alcohol content ranging from 0 to 15%. Our engines would have great difficulty in meeting both emissions and performance expectations with this type of alcohol range. Enleanment will also result in higher operating temperatures that will lower engine life due to issues such as valve sealing, piston scoring, and head gasket leakage, just to name a few. Ethanol is also hydroscopic (absorbs water). Increased levels of water will cause the engine to run poorly, and will also cause corrosion by means of acidic attack, galvanic activity, and chemical interaction. Ethanol will also cause other problems such as reduced fuel storage life, starting issues and reduced fuel economy.

The Department of Energy (DOE) also conducted testing. After testing E-15 on a representative sample of small non-road engines, including Briggs and Stratton powered generators and power washers, the DOE found that small engines experienced a variety of difficulties with intermediate blends of ethanol. Most engines performed worse in several metrics when running on higher ethanol blends – engines often had higher operating temperatures, higher exhaust temperatures, and NOx emission rates. Higher operating temperatures, lead to increased wear and tear and more frequent maintenance. Moreover, 7 out of the 11 engines behaved “poorly” or “erratically”, according to DOE’s report, with incidents of unstable speeds, stalling, and clutch engagement at idle. As a result of this testing, small engines were specifically excluded by EPA from the E-15 Waiver.

2. Research on warning label effectiveness suggests that an E-15 warning label will do very little to mitigate misfueling.

In response to our concerns and the concerns of other interested parties, EPA has issued a mandatory warning label for pumps that distribute E-15. Given the body of research on the effectiveness of warning labels, we believe that this warning will not prevent consumers from misfueling their engines with the E-15 blend, and, with no one else liable, will leave the equipment owner liable for the damage to their products. Warning labels have been the subject of many research studies, with results often showing little change in consumer behavior. To address this concern, there are standards and testing protocol that have been completed. The Association for Consumer Research further reports that warning labels are considerably less likely to be successful when applied to products that consumers use frequently and feel comfortable with, e.g. gas pumps. If consumers visit their local gas station and do not realize that the ethanol blend has been increased, this research would indicate that they are unlikely to heed the warning label on the pump. There has been no testing done by EPA to validate the effectiveness of the warning label, which is not consistent with recognized safety standards such as ANSI.

When the U.S. transitioned from leaded gasoline to unleaded gasoline in the 70s and 80’s, new cars running on unleaded gasoline were designed with different fuel tanks to be incompatible with older leaded gasoline in an effort to prevent misfueling. There is no such “transition” plan or tangible differentiation in place for E-15 and it is solely up to the consumer to know what fuel is appropriate for their automobile, lawn mower, generator, pressure washer, etc.

3. Behavioral studies of customers at the gas pump conclude that consumers overwhelmingly favor the lowest priced option, regardless of the consequences.

Historical evidence suggests that when faced with a range of prices at the pump, consumers are far more likely to choose the lowest-priced option despite potential damages to their engines. As previously mentioned, when the United States transitioned from leaded gasoline to unleaded gasoline in the 70’s and 80’s, new cars running on unleaded gasoline were designed with different fuel tanks, to be incompatible with older leaded gasoline pumps. Additionally, car buyers were educated at the point of purchase about the new fuel. Even with those prevention and education measures, the EPA reported that in 1983 – ten years after the introduction of unleaded gasoline – misfueling rates remained as high as 15.5%. The New York Times reported that “customers would go out of their way to pump leaded gas if it was just a few cents cheaper. What they gain at the pump they lose at the repair shop in higher maintenance costs.” If high rates of misfueling still occurred when physical obstacles were in place, we believe that a simple warning label next to the pump will not yield better results. Similarly, the National Bureau of Economic Research reports very strong price elasticity of demand in its own study on the use of premium vs. regular gasoline during times of high gasoline prices. When gasoline prices increased, consumers switched to less expensive, regular gasoline even though premium gasoline was recommended for their vehicles. NBER concludes that households are nearly 20 times more sensitive to the income effect for gasoline than to equivalent effects from other sources.

4. Misfueling due to lack of education to consumers regarding the proper use of E-15 will be significant.

EPA has instructed stakeholders to “develop a broad public education and outreach campaign that provides both consumers and retailers with the information they need to avoid misfueling.” Briggs and Stratton is already taking steps to educate its customers about proper fueling for its products and has introduced additives and E-0 gasoline products to assist consumers with selecting the proper fuel. Briggs and Stratton does not feel it, nor the outdoor power equipment industry, should be held solely responsible for educating tens of millions of Americans of the dangers of misfueling, especially when many already own products which are incompatible with E-15. In a recent study, AAA found that 95% of Americans had not heard of the new E-15 waiver. In a separate study by the National Association of Convenience Stores, it was clear that consumers were confused by E-15; many believed that E-15 had higher fuel economy than E-10. And the study also found that of participants who said they would consider fueling their cars with E-15, 60% of them owned cars for which E-15 is incompatible and prohibited. Despite our best efforts at education and prevention, we believe the risk of misfueling will be substantial, and damage to our products will be irreversible. We risk losing decades of trust and our brand reputation as a manufacturer of quality, reliable products while owners will not get the value they expected when

they purchased the product.

5. The use of Biofuels or “drop-in fuels” has been tested and could prevent misfueling.

Small engines and outdoor power equipment are not designed, warranted, or EPA-approved to operate on gasoline containing more than 10% ethanol. Briggs and Stratton fully supports the development and use of biofuels, from any feedstock, which are “drop-in fuels”. Drop in fuels, by definition, meet existing gasoline specifications and are ready to “drop-in” to infrastructure, minimizing compatibility issues. These fuels are capable of satisfying the additional growth in

biofuel use, while also providing a safe and highly performing general fuel for both legacy and newly manufactured small engines and outdoor power equipment. We have conducted extensive testing with a drop-in isobutanol blended gasoline which demonstrated evidence that such fuels can provide the performance and operational criteria necessary, without demonstrating any negative effects. Drop in fuels had not yet materialized when the RFS was developed in previous market conditions and the EPA was compelled to grant the partial waiver to meet the statutory targets using ethanol. E-15 will not provide compliance with current RFS targets and will require EPA to continue to revise fuel standards creating uncertainty in the marketplace and for manufacturers and increasing misfueling risks to consumers. Misfueling will result in economic harm to all parties and void product warranties. Ever changing targets will result in less efficient

investment of manufacturing resources and more costly products.

Briggs and Stratton Corporation’s Request To The Committee

For the past three years we have worked closely with our Congressman, Jim Sensenbrenner, in an effort to rescind the certification of E-15 until such time as the National Academy of Science can convene a peer review panel to evaluate EPA’s action and recommend alternative approaches which protect consumers and the environment. Briggs and Stratton urges this Committee to work in a bi-partisan, bi-cameral manner to pass reform legislation through revisions to the RFS which will align domestic goals for biofuel use with the market’s ability to produce, distribute and consume such fuels. At a minimum we recommend that the reform legislation rescind the partial waiver for E-15, and establish gasoline blended with up to 10% ethanol as the general purpose domestic fuel. The legislation should also require that all considerations to increase domestic biofuel levels in the future be subject to a formal EPA rulemaking whereby the market’s ability to safely distribute, retail and consume such fuel is provided for.

OPEI Announces 2013-2014 Officers and Board of Directors

The Outdoor Power Equipment Institute (OPEI) recently announced its 2013-2014 Officers and Board of Directors during the OPEI Annual Meeting in Williamsburg, VA, June 18-20, 2013.

Officers for the 2013-2014 year include:

OPEI chairman - Todd Teske, chairman, president & CEO, Briggs & Stratton

OPEI vice chair - Paul Mullet, president, Excel Industries

OPEI secretary/treasurer - Lee Sowell, president of outdoor products, Techtronic Industries, N.A., Inc.

“OPEI is entering this new fiscal year stronger than ever, both organizationally and financially,” said Kris Kiser, president and CEO of OPEI. “The OPEI Board reflects the impressive scope and breadth of our membership. Our membership is at a record high, representing small engine manufacturers with a range of power sources, utility vehicle manufacturers, and a myriad of small engine equipment manufacturers and suppliers serving a broad range of industries and uses.”

"OPEI’s long history and strong membership put us in a unique position to make sure we are bringing good quality high value products to the marketplace,” said OPEI chair, Todd Teske. “Our collective strength to influence legislation in order to protect our employees and consumers and to communicate accurate information about our industry will continue to be our focus into the future. For the over hundred million consumers who use our products, we want them to know we are working hard for them.”

Continuing their service on the OPEI Board are:

Immediate past chairman - Daniel Ariens, president & CEO, Ariens Company

Marc Dufour, president, Club Car

Peter Hampton, president, Active Exhaust Corporation

Jean Hlay, president and chief operating officer, MTD Products Inc.

Steven Bly, executive vice president, Echo Inc.

Ed Cohen, vice president of Government & Industry Relations, Honda North America

Michael Hoffman, chairman, chief executive officer, The Toro Company

Tim Merrett, vice president, AT&T Global Platform Turf & Utility, Deere & Company

Fred Whyte, president, Stihl Incorporated

New to the board this year are:

Tom Cromwell, president, Kohler Engines, Kohler Company

John Cunningham, president, Consumer Products Group, Stanley Black & Decker, Inc.

Briggs and Stratton Reports Results for the 3rd Quarter and 1st Nine Months of Fiscal 2013

MILWAUKEE -- April 19 -- Briggs and Stratton Corporation today announced financial results for its third fiscal quarter and first nine months ended March 31, 2013.

Highlights:

Third quarter fiscal 2013 consolidated net sales were $637.3 million, or 11.5% lower than the third quarter of fiscal 2012.

Fiscal 2013 third quarter consolidated net income excluding restructuring charges was $43.9 million, or $5.6 million lower than the adjusted net income of $49.5 million in the third quarter of fiscal 2012.

The Company's restructuring program started in fiscal 2012 achieved pre-tax savings of $28.8 million during the first nine months of fiscal 2013.

The Company recorded pre-tax restructuring charges of $6.6 million ($5.4 million after tax or $0.11 per diluted share) during the third quarter of fiscal 2013.

"We continue to see soft demand across international markets for engines and products due to macroeconomic concerns weighing on the minds of consumers and unfavorable weather conditions particularly in Australasia.  Brazil continues to be a bright spot for growing our international products business as our Branco acquisition is performing as anticipated," commented Todd Teske, Chairman, President and Chief Executive Officer of Briggs and Stratton Corporation.

"Here in the U.S., the spring lawn and garden season has been delayed by at least a few weeks due to a prolonged cold and wet spring in many parts of the country. This is significantly different from last year when we had an unusually early start to spring with very warm weather across the country.  The drought that impacted our industry so significantly last season appears to be improving east of the Mississippi River which is encouraging for the upcoming season. Despite a later start to spring compared to last year, we are optimistic that the U.S. market will be in line with our anticipated growth projections of 4 to 6%."

Consolidated Results:

Consolidated net sales for the third quarter of fiscal 2013 were $637.3 million, a decrease of $82.8 million or 11.5% from the third quarter of fiscal 2012. Fiscal 2013 third quarter consolidated net income including restructuring charges was $38.5 million, or $0.78 per diluted share. The third quarter of fiscal 2012 consolidated net income including restructuring charges was $39.9 million, or $0.80 per diluted share.

Sales of engines and products to international regions decreased by approximately $37 million compared to last years' third quarter. The majority of the remaining decrease in sales in the quarter was due to our decision to no longer sell lawn and garden products to large mass retailers in the U.S.  

Included in consolidated net income for the third quarter of fiscal 2013 were pre-tax charges of $6.6 million ($5.4 million after tax or $0.11 per diluted share) related to previously announced restructuring actions. Included in consolidated net income for the third quarter of fiscal 2012 were pre-tax charges of $19.8 million ($9.6 million after tax or $0.19 per diluted share) also related to the restructuring actions. After considering the impact of the restructuring charges, the adjusted consolidated net income for the third quarter of fiscal 2013 was $43.9 million or $0.89 per diluted share, which was $5.6 million or $0.10 per diluted share lower compared to the third quarter fiscal 2012 adjusted consolidated net income of $49.5 million or $0.99 per diluted share.

For the first nine months of fiscal 2013, consolidated net sales were $1.385 billion, a decrease of $180.0 million or 11.5% when compared to the same period a year ago. Consolidated net income for the first nine months of fiscal 2013 was $21.4 million or $0.44 per diluted share. Consolidated net income for the first nine months of fiscal 2012 was $37.4 million or $0.74 per diluted share.

Included in consolidated net income for the first nine months of fiscal 2013 were pre-tax charges of $18.4 million ($13.0 million after tax or $0.27 per diluted share) related to the aforementioned restructuring actions. Included in consolidated net income for the first nine months of fiscal 2012 were pre-tax charges of $19.8 million ($9.6 million after tax or $0.19 per diluted share) also related to the restructuring actions.

After considering the impact of the restructuring charges, adjusted consolidated net income for the first nine months of fiscal 2013 was $34.4 million or $0.71 per diluted share, which was a decrease of $12.6 million or $0.22 per diluted share compared to the first nine months of fiscal 2012 adjusted consolidated net income of $47.0 million or $0.93 per diluted share.

Engines Segment

Engines Segment fiscal 2013 third quarter net sales were $451.9 million, which was $46.1 million or 9.3% lower than the third quarter of fiscal 2012. This decrease in net sales was driven by reduced shipments of engines used primarily on walk and ride equipment in European and North American markets as OEM customers manage inventory levels due to a later start to warmer spring weather. Net sales were also lower due to unfavorable foreign exchange of $5.4 million primarily due to a decrease in the value of the Euro in fiscal 2013. These decreases in net sales were partially offset by the timing of generator engine replenishment sales in the U.S. following the recent hurricane season.

The Engines Segment adjusted gross profit percentage for the third quarter of 2013 was 23.5%, which was 1.4% higher compared to the third quarter of fiscal 2012. The adjusted gross profit percentage was favorably impacted by 3.6% due to lower manufacturing costs, partially offset by 1.2% due to unfavorable foreign exchange and by 1% due to unfavorable absorption of fixed manufacturing costs as a result of a 4% reduction in engines built. The lower manufacturing costs resulted from $3.4 million of cost savings as a result of restructuring actions initiated in fiscal 2012, lower material costs, and start-up costs incurred in fiscal 2012 associated with launching our phase III emissions compliant engines.

The Engines Segment engineering, selling, general and administrative expenses were $43.9 million in the third quarter of fiscal 2013, a decrease of $1.3 million from the third quarter of fiscal 2012 primarily due to lower compensation costs of $2.5 million as a result of the previously announced global salaried employee reduction and reduced selling expenses, partially offset by $0.6 million of increased pension expense compared to the same period last year. 

Engines Segment net sales for the first nine months of fiscal 2013 were $890.6 million, which was $96.9 million or 9.8% lower than the same period a year ago. This decrease in net sales was primarily driven by reduced shipments of engines used on snow thrower equipment in the North American market as well as lower sales to OEM customers for the European and Australasian markets. European markets were off considerably given macroeconomic issues and unfavorable weather conditions.  Australasia markets were off due to a significant lack of rainfall in highly populated areas. In addition, sales were lower in fiscal 2013 due to an unfavorable mix of engines sold that reflected proportionately lower sales of large engines, and unfavorable foreign exchange of $9.7 million primarily related to the Euro.

The Engines Segment adjusted gross profit percentage for the first nine months of 2013 was 21.3%, which was 1.4% higher compared to the first nine months of fiscal 2012. The adjusted gross profit percentage was favorably impacted by 3.4% due to lower manufacturing costs, partially offset by 1% due to unfavorable foreign exchange and by 1% due to unfavorable absorption of fixed manufacturing costs as a result of a 5% reduction in engines built. The lower manufacturing costs resulted from $8.1 million of cost savings as a result of restructuring actions initiated in fiscal 2012, lower material costs, and start-up costs incurred in fiscal 2012 associated with launching our phase III emissions compliant engines.

The Engines Segment engineering, selling, general and administrative expenses were $130.0 million in the first nine months of fiscal 2013, or $4.7 million lower compared to the first nine months of fiscal 2012 primarily due to lower compensation costs of $7.4 million as a result of the previously announced reduction of 10% of the global salaried workforce and reduced selling costs in response to the softness in the global markets, partially offset by $2.7 million of increased pension expense compared to the same period last year.

Products Segment

Products Segment fiscal 2013 third quarter net sales were $231.5 million, a decrease of $49.7 million or 17.7% from the third quarter of fiscal 2012. The decrease in net sales was primarily related to our decision to exit the sale of lawn and garden equipment through national mass retailers.  In addition, sales of lawn and garden equipment and pressure washers decreased in North America from last year as a result of a later start to the spring selling season and decreased in international markets due to continued drought conditions in parts of Australasia. The net sales decrease was partially offset by net sales from the acquisition of Branco that were in line with expectations.  

The Products Segment adjusted gross profit percentage for the third quarter of 2013 was 12.0%, which was 1.2% lower than the adjusted gross profit percentage for the third quarter of fiscal 2012. The adjusted gross profit percentage decreased 3.4% due to unfavorable absorption associated with a 35% decrease in production in order to control inventory levels. This decrease was partially offset by a benefit of 1.7% due to cost savings of $4.0 million as a result of restructuring actions initiated in fiscal 2012.                                                                                                   

The Products Segment fiscal 2013 third quarter engineering, selling, general and administrative expenses were $26.8 million, a decrease of $1.7 million from the third quarter of fiscal 2012. The decrease was attributable to lower compensation costs of $0.7 million as a result of the previously announced reduction of 10% of the global salaried workforce, $0.7 million of lower bad debt expense, and reduced selling costs in response to the softness in the global markets.

Products Segment net sales for the first nine months of fiscal 2013 were $602.3 million, a decrease of $129.6 million or 17.7% from the same period a year ago. The decrease in net sales was primarily due to lower sales volumes of snow equipment due to significantly below average snowfall in North America and reduced sales of lawn and garden equipment resulting from prolonged drought conditions in the United States and Australasia. In addition, the decrease in net sales was impacted by our decision to exit the sale of lawn and garden equipment through national mass retailers. The decrease in net sales was partially offset by higher shipments of portable and standby generators in the North American market.

The Products Segment adjusted gross profit percentage for the first nine months of 2013 was 11.9%, which was 0.6% lower compared to the adjusted gross profit percentage of the first nine months of fiscal 2012. The adjusted gross profit percentage decreased 2.6% due to unfavorable absorption associated with a 43% decrease in production volume in order to control inventory levels.

This was partially offset by a 1.8% benefit due to cost savings of $11.1 million as a result of restructuring actions. We reduced production volumes in the first nine months of fiscal 2013 in order to manage inventory levels in response to a decline in near-term market demand. The McDonough, Georgia manufacturing facility was temporarily idled for four weeks in the second quarter of fiscal 2013 to reduce inventory levels in response to a decline in market demand for snow and lawn and garden products and to re-tool the plant for new products to be launched for the spring season.

The Products Segment engineering, selling, general and administrative expenses were $75.6 million in the first nine months of fiscal 2013, a decrease of $4.4 million from the first nine months of fiscal 2012. The decrease was attributable to lower compensation costs of $2.2 million as a result of the previously announced global salaried employee reduction and reduced selling expenses in response to the softness in the global markets.

Corporate Items:

Interest expense was lower compared to the prior year periods by $0.1 million for both the third quarter and first nine months of fiscal 2013.

The effective tax rate for the third quarter and the first nine months of fiscal 2013 was 27.6% and 27.5% respectively, compared to 20.4% and 13.4% for the same respective periods last year. The tax rate for the third quarter of fiscal 2013 is lower than the 35% statutory U.S. rate due to the reenactment of the U.S. federal research and development and other credits in the amount of $1.0 million and foreign tax credits in the amount of $0.5 million which were partially offset by additional taxes of $1.0 million due to non-deductible expenses related to the Ostrava, Czech Republic plant closing. 

The effective tax rate for the first nine months of fiscal 2013 was lower than the 35% statutory U.S. rate due to the aforementioned credits and non-deductible expenses and non-deductible acquisition costs increasing the tax expense by $0.5 million.  The effective rate for the third quarter of fiscal 2012 was lower as a result of recording a net benefit of $3.3 million related to Ostrava plant restructuring charges incurred during that quarter. The effective rate for the first nine months of fiscal 2012 was impacted by the aforementioned restructuring charges and a net benefit of $5.0 million related to the settlement of U.S. audits and the expiration of a non-U.S. statute of limitation period during fiscal 2012.

Financial Position:

Net debt at March 31, 2013 was $239.9 million (total debt of $262.5 million less $22.6 million of cash), or $17.7 million lower from the $257.6 million (total debt of $274.0 million less $16.4 million of cash) at April 1, 2012. Cash flows used in operating activities for the first nine months of fiscal 2013 were $73.8 million compared to $166.7 million in the first nine months of fiscal 2012. The improvement in operating cash flows was primarily related to lower working capital needs in the first nine months of fiscal 2013 associated with less of an increase in accounts receivable and inventory compared to the same period last year.

Restructuring:

The Company's execution of its previously announced restructuring actions remains largely on schedule. In the third quarter of fiscal 2013, the Company entered into an agreement to sell the Ostrava, Czech Republic manufacturing facility. The transaction closed early in the fourth fiscal quarter. The Company continues to make progress towards finalizing its exit from the Newbern, Tennessee manufacturing facility and the move of horizontal engine manufacturing from its Auburn, Alabama plant to China. As noted previously, pre-tax restructuring costs for the third quarter and first nine months of fiscal 2013 were $6.6 million and $18.4 million, respectively. The total estimated pre-tax expense related to restructuring actions in fiscal 2013 is expected to be $20 million to $22 million. In addition, the Company continues to anticipate pre-tax savings associated with restructuring actions of $32 million to $37 million in fiscal 2013 and $40 million to $45 million in fiscal 2014 as compared to 2012.

Share Repurchase Program:

On August 10, 2011, the Board of Directors of the Company authorized up to $50 million in funds for use in a common share repurchase program with an expiration of June 30, 2013. On August 8, 2012 the Board of Directors of the Company authorized up to an additional $50 million in funds associated with the common share repurchase program and an extension of the expiration date to June 30, 2014. 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 2013, the Company repurchased approximately 1.2 million shares on the open market at an average price of $18.96 per share.

Revised Outlook:

Due to continued weakness in consumer spending for outdoor power equipment in our international markets and a significantly reduced market for snow thrower products in the U.S. and Europe, we are revising our fiscal 2013 net income projections to be in a range of $56 million to $65 million or $1.16 to $1.33 per diluted share. These net income projections include the results of the Branco acquisition closed on December 7, 2012 and are prior to the impact of any additional share repurchases and costs related to our announced restructuring programs.

The market growth estimates of 4% to 6% for the U.S. lawn and garden market remain unchanged; however, the lower end of the net income projections contemplate a later start to the spring lawn and garden season in the U.S. which could potentially have the impact of extending the season past fiscal 2013 at the end of June and into the first  quarter of fiscal 2014.

The Company previously indicated that it would exit sales of lawn and garden products to national mass retailers. The estimated impact of exiting this business in fiscal 2013 is approximately $100 million of reduced sales. Although sales in the first nine months of fiscal 2013 were favorably impacted by sales of generators in response to power outages during Hurricanes Isaac and Sandy, drought conditions and a lack of meaningful snowfall in a significant portion of the U.S. prior to February and a reduction in sales demand from many of our international markets have continued to negatively impact shipment volumes, offsetting the storm benefit.

Our fiscal 2013 consolidated net sales are projected to be in a range of $1.95 billion to $2.0 billion.  Operating income margins are expected to improve over fiscal 2012 and be in a range of 4.8% to 5.3% and reflect the positive impacts of the restructuring programs announced during fiscal 2012. Interest expense and other income are estimated to be approximately $18 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 $45 million to $50 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 manufacturer of portable generators and pressure washers, and it is a leading designer, manufacturer and marketer of lawn and garden and turf care through its Simplicity®, Snapper®, Ferris®, Murray®, Branco® and Victa® brands. Briggs and Stratton products are designed, manufactured, marketed and serviced in over 100 countries on six continents.