Husqvarna to Expand in South Carolina.

ORANGEBURG – November 4 -- Husqvarna North America, a manufacturer of lawnmowers, chainsaws and other lawn and garden equipment, plans to expand its Orangeburg, SC operations.

 
The company expects to invest $105 million in the plant over the next 13 years, according to the South Carolina Department of Commerce.

"The expansion of our Orangeburg plant will help our company remain competitive and make our operations more efficient," said Michael Jones of Husqvarna North America. "South Carolina has proven to be an ideal fit for our operations, providing us with a thriving business environment, a talented workforce and exceptional access to markets. We look forward to expanding our manufacturing operations in South Carolina in the near future."

Husqvarna North America is in the process of adding equipment to its Orangeburg, which currently produces riding garden tractors, tillers and similar products. The added equipment will allow the plant to assemble new products including the company’s zero-turn-radius lawnmowers.

Husqvarna will make its investment in two phases. 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 company's Orangeburg plant has been in operation since the early 1970s, and Husqvarna is the largest employer in the county.

"Husqvarna has been an integral part of the Orangeburg County economy for nearly four decades," U.S. Rep. James Clyburn (D-S.C.) said. "This expansion is further evidence of its commitment to the community. Orangeburg County officials have worked hard to attract new investments. This announcement is an indication that their efforts are paying off, and I believe other companies will follow Husqvarna's lead in making Orangeburg home."

Briggs and Stratton Merges Generator and Power Equipment Business Units

Briggs and Stratton Corp.’s recent decision to merge two of its business units has led to job cuts in the company’s management ranks.

The Wauwatosa-based manufacturer of small engines and outdoor power equipment is merging its Home Power and Yard Power groups into a single unit, company spokeswoman Laura Timm said.

“We made some staffing changes to streamline the group’s functions as part of this strategic move,” she said. “This included eliminating a limited number of management positions.”

Timm declined to reveal the exact number of jobs that were cut or the names of the executives whose positions were eliminated, citing privacy issues.

Briggs and Stratton’s Home Power Group included generators and pressure washers, while the Yard Power Group had been made up of the Simplicity, Snapper and Ferris brands of products and assets that the company bought from Murray Inc.

The consolidated Products Group will be led by Harold Redman Sr., a senior vice president at Briggs and Stratton who had been president of the Home Power Products Group. Vincent Shiely had served as president of the Yard Power Products Group. The company wouldn’t comment on whether Shiely was one of the executives who lost their jobs.

“We are confident that this new structure creates a solid business model that will allow our team to better serve our customers and consumers with products, programs and services,” Timm said.

News of the reorganization came shortly after Briggs and Stratton reported a fiscal first-quarter loss of $8.1 million, or 16 cents per share, as consumer spending remained weak.

The performance, which exceeded analysts’ expectations, represented a slight improvement from the same period last year, when the company reported a net loss of $8.7 million.

Sales for the three-month period rose 2.9 percent to $334.1 million.

Generac Reports Third Quarter 2010 Earnings

WAUKESHA, WISCONSIN, (November 4, 2010) - Generac Holdings Inc., a leading designer and manufacturer of backup power generation products, today reported financial results for its third quarter ended September 30, 2010.

Third Quarter 2010 Highlights

- Net sales increased year-over-year by 11.4% to $160.7 million as compared to $144.3 million in the third quarter of 2009.

- Net income increased year-over-year by 60.6% to $23.0 million as compared to $14.3 million for the third quarter of 2009; Adjusted net income increased 35.3% to $36.7 million from $27.1 million in the third quarter of 2009.

- Net cash provided by operating activities improved 50.0% year-over-year, from $24.3 million to $36.5 million during the third quarter 2010.

- Diluted net income per common share was $0.34 per share; Adjusted diluted net income per common share was $0.55 per share.

- The Company successfully launched its new economy home standby product, CorePowerTM Series, establishing a new lower opening price for the category.

"Despite the difficult operating environment which persisted throughout the third quarter of 2010, we achieved a double digit year-over-year increase in net sales, driven by increased sales for both our residential and industrial products.

Although we have not had the benefit of major outage activity this summer, improved industrial market conditions and our ability to expand distribution and create awareness for our residential products have helped us drive strong revenue growth in our business." said Aaron Jagdfeld, President and Chief Executive Officer of Generac.

Residential product sales of $101.0 million increased 12.6% in the third quarter 2010 from $89.7 million in the third quarter last year. This year-over-year increase was driven primarily by our marketing programs for home standby generators, continued expansion of our residential products distribution network, and a shift towards in-season buying.

Industrial and commercial product sales of $49.6 million in the third quarter increased 7.6% from $46.0 million for the comparable period in 2009. This increase was driven by an improvement in our focused end markets and expansion of our distribution.

The Company has also announced the following strategic initiatives designed to improve Generac's long-term growth profile:

- In October 2010, the Company announced it had reached a licensing agreement with Honeywell to be the exclusive licensee of Honeywell branded standby and portable generators. By leveraging Generac's product offering and support network, the Honeywell brand will provide incremental access to underpenetrated channels for the Company including security and HVAC.

- At the recent 2011 Green Industry and Equipment (GIE) Expo in Louisville, KY, the Company announced plans to re-enter the market for residential and contractor grade pressure washers, allowing it to leverage its existing customer base, supply-chain and engineering expertise.

Overall, gross profit margin increased sequentially to 41.9% from 39.0% in the second quarter 2010, but was down from 44.7% in the same period last year.The year-over-year decline in gross margins was mostly attributable to increased commodity costs versus prior year and a higher mix of lower kilowatt residential products sold during the current quarter compared to the prior year quarter.

Operating expenses for the third quarter of 2010 increased 10.9% to $37.6 million compared to $33.9 million in third quarter of 2009. The year-over-year increase in operating expenses was attributable to increased administrative costs related to operating as a public company, non-cash stock compensation expenses, higher engineering and product development costs, and higher variable operating expenses on higher net sales versus prior year.

Adjusted EBITDA of $45.7 million was relatively flat compared to $46.1 million in the third quarter of 2009.Interest expense decreased in the third quarter of 2010 to $6.5 million, compared to $17.2 million in the same period last year due to debt repayments, lower LIBOR rates, and the termination of certain interest rate swap agreements. 

Free cash flow generation remained strong, improving 51.1% year-over-year to $35.2 million during the third quarter 2010 from $23.3 million in the third quarter of 2009.

OUTLOOK

Mr. Jagdfeld concluded, "As we close out 2010, we expect to see continued year-over-year strength from our industrial and commercial products as demand in those markets continues to improve. However, more than offsetting this improvement, we see our fourth quarter 2010 residential product sales down year-over-year as certain customers have approached seasonal stocking for lower kilowatt products more conservatively this year versus last year.Despite this, we remain confident in our longer term growth initiatives including new product launches, continued expansion of our distribution network and our entry into new geographies and markets that will continue to drive sales growth and significant cash flow generation for our business."

Briggs Contract Boosts Pay, But Health Insurance Costs Also Grow

www.jsonline.com

Oct. 22, 2010 -- Briggs and Stratton Corp. workers will lose ground financially under a newly approved labor contract despite a signing bonus and 2% annual raises for the next three years, the head of the union representing the employees said Friday.

A company spokeswoman, however, called approval of the contract "a win-win for everyone."

Members of United Steelworkers Local 2-232 on Thursday voted 211-77 to accept the three-year pact.

"To the public, it may appear that we're getting a raise, but in reality, we're not," said Jesse Edwards, president of Local 2-232.

Employees' increased health insurance costs under the contract more than offset the boost in pay and the one-time, $500-a-person signing bonus, he said.

"We feel that it was a bad contract, but it gives the members a chance to work a little longer and maybe come back after the three years and try to improve the contract," Edwards said.

He said the union leadership made no recommendation to members on the pact. It covers about 350 employees at Briggs' plant in Wauwatosa, where the firm also has its headquarters.

Union-represented workers there average about $16 an hour, Edwards said.

Under the new contract, he said, the amount employees must pay annually in health insurance deductibles before coverage kicks in will rise by $1,200 for a single person and by $1,800 for a family.

He said the contract allows the company to bring in temporary workers to supplement production in the generator division at Wauwatosa as it sees fit.

Major Wisconsin manufacturers increasingly are seeking to use lower-paid temporary, or casual, labor, which gives management production flexibility and cost savings.

Laura Timm, director of corporate communications for Briggs, said by e-mail that the company recently added jobs at Wauwatosa with the introduction of home-generator manufacturing. The new contract reflects the seasonal production of the generators, she said.

Virtually all of Briggs' U.S. employees already have seen or will see the same changes in health insurance plans that the contract with the Steelworkers incorporates, Timm said.

Edwards also said Friday that Briggs plans to move production of engine coils out of Wauwatosa in 2012. The work will go to China and the Dominican Republic, he said. About 20 to 25 Wauwatosa employees now do the coil work, Edwards said.

Timm said Briggs has had coils made in the Dominican Republic for "a very long time."

"We continue to evaluate the best possible source for coils both domestically and internationally," she said.

Husqvarna Interim Report January - September 2010 - Excerpts

Stockholm October 22, 2010

Magnus Yngen, President and CEO:

”End-user demand continued to recover in most of our markets during the quarter. Sales as well as operating income for the Group as a whole increased. Europe & Asia/Pacific and Construction showed strong performances. Operating income for Americas was negative due to lower sales and increased costs. Despite a recovery in the market, our sales for Americas decreased due to the reduced listings of low-end lawn mowers with a major retailer in North America for the 2010 season.

Strong growth in sales to the dealer channel continued to be an important driver for the Group’s positive earnings development during the year, as were innovative new product launches. Our estimate is that we have gained market shares for lawn and garden products during the season in Europe.

In the fourth quarter, which is the smallest quarter of the year for the Group, we expect Group shipments to be slightly higher than in the fourth quarter of 2009.”

THIRD QUARTER

Net sales

Net sales for the third quarter increased by 3% to SEK 6,907m (6,709).  Adjusted for exchange-rate effects, sales increased by 5%. Prices were unchanged. Europe & Asia/Pacific accounted for 6 percentage points of the adjusted increase and Construction for 1 percentage point while Americas accounted for a decrease of 2 percentage points.

Efforts to grow sales in the dealer channel continued to be successful and increased double digit both in Europe and Asia/Pacific and in Americas. In North America, the reduced listings with a major retailer for the 2010 season had a negative impact on sales, which were partly offset by sales to other accounts. Sales of forestry and construction products are relatively more important in the third and fourth quarter when the gardening season in most of our markets normally comes to an end. Sales of garden products in the third quarter predominantly consist of replenishment orders from the trade.

Operating income

Third quarter operating income increased by 137% compared to the corresponding quarter 2009 and amounted to SEK 411m (173). Currency had a positive effect of approximately SEK 17m and the net positive effect from items affecting comparability was SEK 59m. Adjusted operating income increased by SEK 162m.

The increase in operating income for the Group was mainly a result of a favorable mix as well as higher sales. Selling and administrative costs increased, mainly due to higher distribution and IT costs. The operating margin, excluding items affecting comparability, increased to 5.9% (3.5). Third quarter operating income 2009 included restructuring charges of SEK 59m.

Operating income and operating margin for Europe  and Asia/Pacific and Construction increased. Operating income and operating margin for Americas decreased, due to lower sales and production volumes as well as higher distribution and IT costs.

Changes in exchange rates, including both translation and transaction effects net of hedging, had a total positive effect on operating income of SEK 17m (-74). Hedging contracts had a positive effect of SEK 36m (-30).

FIRST NINE MONTHS

Net sales

Net sales for the first nine months declined by 6% to SEK 27,446m (29,342). Adjusted for exchange-rate effects, sales were unchanged. Prices were also unchanged. Europe & Asia/Pacific accounted for a sales increase of 2 percentage points of the adjusted change and Americas for a negative 3 percentage points while Construction’s contribution was 1 percentage point. Efforts to grow sales in the dealer channel continued to be successful.

Operating income

Operating income for the first nine months increased by 21% compared to the first nine months of 2009 and amounted to SEK 2,508m (2,075). Currency had a positive effect of approximately SEK 130m and the net negative effect from items affecting comparability was SEK 95m. Adjusted operating income increased by SEK 398m.

Operating income 2010 includes charges of SEK 207m for the previously announced closure of one factory in North America and one in Greece and costs related to a legal case in North America. For further information see page 6. The first nine months of 2009 included items affecting comparability totaling SEK 112m related to restructuring charges.

The increase in operating income was mainly a result of favorable mix and currency effects, lower costs for direct material and higher sales, which was partly offset by higher IT and distribution costs. The operating margin, excluding items affecting comparability, increased to 9.9% (7.5)

NET FINANCIAL ITEMS

Net financial items for the third quarter amounted to SEK -101m (-65) and for the first nine months to SEK -258m (-433). The higher net financial cost in the third quarter is mainly due to a negative mark-to-market impact of the interest rate component in the Group’s hedge contracts. The improvement for the first nine months is primarily due to lower net debt. The average interest rate on borrowings at the end of the third quarter was 3.6% (3.2).

INCOME AFTER FINANCIAL ITEMS

Income after financial items for the third quarter increased by 187% to SEK 310m (108) corresponding to a margin of 4.5% (1.6). For the first nine months income after financial items increased by 37% to SEK 2,250m (1,642) corresponding to a margin of 8.2% (5.6).

TAXES

Taxes for the first nine months amounted to SEK -377m (-287), corresponding to a tax rate of 17% (17) of income after financial items. The tax rate is affected by utilization of tax-losses carried forward. The utilization of tax-losses carried forward are mainly related to the third quarter.

EARNINGS PER SHARE

Income for the third quarter increased by 209% to SEK 402m (130), corresponding to SEK 0.70 (0.23) per share after dilution. For the first nine months, the increase was 38% and amounted to SEK 1,873m (1,355), corresponding to SEK 3.25 per share (2.50). Due to the rights issue implemented in 2009, the average number of shares for the first nine months of 2010 has increased compared with the first nine months of 2009.

OUTLOOK FOR THE FOURTH QUARTER 2010

Due to seasonality, the fourth quarter is the smallest quarter of the year in terms of sales and operating income. Inventories in the trade of the Group’s products at the end of the third quarter were estimated to be on low levels in both the dealer and retail channels. To date in 2010, end-user demand has increased in most markets compared to the preceding season. However, the trade remains reluctant to build inventory.

The positive development for Europe & Asia/Pacific and for Construction is expected to continue, while shipments in Americas are expected to be down. In total, Group shipments in the fourth quarter of 2010 are expected to be slightly higher than in the fourth quarter of 2009.

PERFORMANCE BY BUSINESS AREA

As of 1 January 2010, external reporting comprises three business areas:

• Europe & Asia/Pacific, comprising forestry and garden products sold in Europe, Asia and the

Pacific region.

• Americas, comprising forestry and garden products sold in North America and Latin America

• Construction, comprising products for the global construction and stone industries.

Restatement of the third quarter 2009 between Americas and Europe & Asia/Pacific

Operating income for the third quarter as well as for the first nine months 2009 has been restated between Americas and Europe & Asia/Pacific due to correction of an intercompany transaction. The restatement had no impact on the Group’s operating income.

Third quarter operating income for Europe and Asia/Pacific has been restated from SEK 135m to SEK 190m and the first nine months of 2009 from SEK 1,649m to SEK 1,704m. Operating income for the third quarter for Americas has been restated from SEK 47m to SEK -8m and for the first nine months of 2009 from SEK 597m to SEK 542m.

Europe & Asia/Pacific

Sales for Europe & Asia/Pacific in the third quarter increased 8%. Adjusted for exchange-rate effects the sales increase was 11%. In the first nine months, sales decreased 1%. Adjusted for exchange-rate effects, sales in the first nine months increased by 5%. Prices were unchanged.

Sales to the dealer channel developed strongly throughout the first nine months. Most regions, except for UK and France, had higher sales than in the preceding year. Several new products, including Husqvarna branded lawn mower range, mini rider and an expanded Automower® range, contributed to the increase.

Sales of watering products were also strong. It is estimated that the Group gained market share in Europe

during the first nine months.

Operating income and operating margin increased substantially in the third quarter. Performance was especially strong for watering products and accessories. The higher operating income was mainly a result of higher sales and an improved mix.

Operating income for the first nine months the preceding year was charged with restructuring costs amounting to SEK 111m, whereof SEK 59m in the third quarter. Operating margin for the first nine months, excluding items affecting comparability, increased to 17.0% (12.9).

Americas

Sales for Americas in the third quarter decreased 4%. Adjusted for exchange-rate effects the decrease was 5%. In the first nine months, sales decreased 14%. Adjusted for exchange-rate effects, sales in the first nine months decreased by 7%. Prices were stable during the period.

The reduced listings with a major retailer in North America for the 2010 season had a negative effect on sales, especially for low-end lawn mowers. Efforts to grow sales in the dealer channel and with other retail accounts continued to pay off, but could not compensate for all of the reduced listings.

Operating income in the third quarter was negative and the margin amounted to -3.7% (-0.3). Operating income was negatively affected by lower sales and production volumes and higher costs for distribution and IT.

Operating income for the first nine months in 2010 includes items affecting comparability amounting to SEK 160m. SEK 110m is related to the closure of the factory in Beatrice and the transfer of the production to the Group’s plant in Orangeburg in the second quarter. SEK 50m is related to the settlement of an engine-capacity lawsuit in the first quarter. Operating margin for the first nine months, excluding items affecting comparability, decreased to 3.1% (4.1)

Construction

Sales for Construction in the third quarter increased 6%. Adjusted for exchange-rate effects the sales increase was 8%. In the first nine months, sales increased 2%.  Adjusted for exchange-rate effects, sales in the first nine months increased by 7%.

The market for construction products improved in both North America and Europe during the first nine months.

Sales to rental companies increased. A number of new products have been successfully launched during the year and the Group’s market shares are estimated to have increased.

Operating income and margin in the third quarter improved, mainly as a result of higher sales and production volumes as well as new products with higher margins. The third quarter operating income includes a cost of SEK 16m related to a legal settlement. Operating margin for the third quarter increased to 5.9% (4.3).

Operating income for the first nine months was charged with restructuring costs amounting to SEK 47m, whereof all was charged in the second quarter. Operating margin for the first nine months, excluding items affecting comparability and the above mentioned charge of SEK 16m, increased to 5.7% (-2.6).

PARENT COMPANY

Net sales in the first nine months of 2010 for the Parent Company, Husqvarna AB, amounted to SEK 8,416m (7,049), of which SEK 6,452m (5,352) referred to sales to Group Companies and SEK 1,964m (1,697) to external customers. Income after financial items amounted to SEK 2,505m (2,187). Income for the first nine months was SEK 2,093m (1,857).

Investments in tangible and intangible assets for the first nine months amounted to SEK 205m (191). Cash and cash equivalents amounted to SEK 503m (1,311) at the end of the period. Undistributed earnings in the Parent Company at the end of the period amounted to SEK 17,985m (16,416). A dividend payment to shareholders in the amount of SEK 574m (0) was made during the second quarter.

RESTRUCTURING

In the second quarter 2010, the Group announced further restructuring in line with its strategy which includes increasing efficiency by consolidating the manufacturing footprint. The factory in Beatrice, Nebraska, will be closed and the production will be transferred to the factory in Orangeburg, South Carolina. The factory for construction equipment in Athens, Greece will also be closed.

Annual savings from the initiatives will amount to SEK 60m and will be realized gradually with full effect from the first quarter of 2012. Second-quarter operating income was charged with SEK 157m, of which the closure of the Beatrice factory accounted for SEK 110m.

In October 2009, the Group announced the implementation of a number of structural changes in 2009-2011. These measures are aimed at eliminating overlaps and increase efficiency within production and administration and involve consolidation of production in Sweden and the US, and of the sales organization in Europe & Asia/Pacific. The total cost of these measures amounts to SEK 399m and annual savings from these activities are expected to amount to approximately SEK 400m, and will be realized gradually from the second half of 2010 with full effect from the first quarter of 2012. Capital expenditure related to the restructuring is expected to amount to approximately SEK 400m, of which a new plant in Poland will account for approximately SEK 250m.

In September 2008, an initiative to reduce fixed costs through personnel cut-backs was announced. The total costs for the cut-backs were SEK 369m and the annual savings are SEK 450m as of the third quarter 2009.

Operational risks

Operational risks include general economic conditions, as well as trends in consumer and professional spending, particularly in North America and Europe, where the majority of the Group’s products are sold.

An economic downturn in these markets may have an adverse effect on Group sales and earnings. Shifts in product technology as well as shifts in distribution structure could also have a negative impact on Group sales and earnings.

Demand for the Group’s products is also dependent on weather conditions. Dry weather can reduce demand for such products as lawn mowers and tractors, but can stimulate demand for irrigation products.

Demand for chainsaws normally increases after storms and during cold winters.

Husqvarna’s operations are also subject to seasonal variations. Demand for consumer garden products and commercial lawn and garden products normally peaks in the second quarter, while the peak season for chainsaws is normally in the third quarter. Husqvarna has adapted its production processes and supply chain to respond to these conditions. However, parameters such as cash flow and production levels follow the seasonal variations in demand, which results in relatively greater risk exposure for the Group over short periods of time.

The Group is currently implementing a number of structural changes as well as a new organization.  Restructuring and organizational changes always involve the risk of creating higher costs than anticipated and losing key personnel.

Financial risks

Financial risks refer primarily to exchange rates, interest rates, financing, and credit risks. Risk management within the Husqvarna Group is regulated by a financial policy established by the Board of Directors. A higher indebtedness resulting from the seasonality of the Group’s operations involve greater exposure to changes in exchange rates and interest rates, as well as financing risks.

Acquisitions

Husqvarna has completed a number of acquisitions. Although the Group has historically demonstrated ability to successfully integrate acquired businesses, such integration always involves certain risks. Net sales can be adversely affected and costs can be higher than anticipated.