Carlisle to Sell Tire Business for $375 Million

CHARLOTTE -- Oct. 21 -- Charlotte-based Carlisle Cos. said Monday that a New York company is buying its tire division in a $375 million deal that will take Carlisle out of the business on which it was founded.

American Industrial Partners is expected to pay cash for the company’s transportation products segment, Carlisle said. The deal still needs regulatory approval.

When it released second-quarter results in July, Carlisle announced that it was seeking a buyer for the segment, which has produced disappointing results. Specifically, Carlisle has lamented that Chinese tire manufacturers have made it hard for it to grow profit margins for lawn and garden tractor tires – what Carlisle refers to as “outdoor power equipment.”

Carlisle, in the second-quarter announcement, described its transportation products segment, which makes the tires, as “no longer a strategic asset.” Among other things, the segment also makes tires for all-terrain vehicles and boat and horse trailers, but not for use on automobiles.

In a statement Monday, David Roberts, Carlisle president and CEO, described the segment as “not core to Carlisle’s growth strategy nor supportive of our long-term operating profit goals and expectations.” He said the sale will help Carlisle invest in faster-growing businesses with higher profit margins.

In 2012, the transportation products segment had sales of $778 million and a profit margin of 6.7 percent, down from 9.4 percent in 2003 and below the double-digit margins the company’s other segments produced last year.

Carlisle has said the sale of the segment will reduce its employment by one-third. Carlisle employs roughly 12,000 worldwide. Of those, about 4,400 work for the transportation products segment.

No Carlisle tires are made in Charlotte, so the company has said it does not expect jobs in the region to be lost in a sale. The tires the company makes in China are assembled to wheels in a plant in Aiken, S.C., that employs 188 people. The company also has plants elsewhere in the U.S. One in Clinton, Tenn., makes tires for all-terrain vehicles.

Started in 1917 in Carlisle, Pa., Carlisle has its roots in selling inner tubes for automobiles, but it has grown into other lines of business since then.

It will have four remaining segments after the sale: Its construction materials segment makes roofing products. Another sector makes cable and wires for commercial and military aircraft. Another sells brake and friction systems used mostly by the mining, construction and agricultural industries. Another sector provides dishes, cookware and other supplies to restaurants and hospitals.

The sale is expected to be finalized in the first quarter.

Deon Roberts         www.charlotteobserver.com

Briggs and Stratton Corporation Reports Improved First Quarter Sales; Reaffirms Full Year Guidance

MILWAUKEE, Oct. 17 -- Briggs and Stratton Corporation today announced financial results for its first fiscal quarter ended September 29, 2013.

Highlights:

• First quarter fiscal 2014 consolidated net sales were $317.3 million, an increase of $8.3 million or 3% from the prior year.
• Higher North American consumer engine shipments and sales of equipment to dealers increased as consumer demand rebounds from last year's drought.
• Lack of storms in quarter caused lower portable generator sales compared to last year when Hurricane Isaac hit in August.
• Planned engine and products production cuts lowers inventories and reduces margins in the quarter.
• First quarter 2014 adjusted net loss was $16.5 million, $3.3 million higher than the adjusted net loss of $13.2 million in the first quarter of fiscal 2013.

"Our first quarter results were slightly better than we anticipated as we experienced increased consumer demand for lawn and garden equipment leading to higher shipments of engines that power these products and higher shipments of lawn and garden products to our dealers," commented Todd J. Teske, Chairman, President and Chief Executive Officer of Briggs and Stratton Corporation.

"We have also seen continued strength in standby generator sales; however, portable generator sales decreased with Hurricane Isaac landing last year and no significant storm activity this year," continued Teske. 

"Higher retail sales of lawn and garden equipment have helped to reduce channel inventories. We also lowered our inventory by reducing production in the quarter compared to last year.

While this reduced productivity and margins in the near term, our inventory levels are better aligned for manufacturing to retail demand in the upcoming lawn and garden season." 

Consolidated Results:

Consolidated net sales for the first quarter of fiscal 2014 were $317.3 million, an increase of $8.3 million or approximately 3% from the first quarter of fiscal 2013 with sales increases in engines and lawn and garden products, partially offset by lower sales of portable generators.

The fiscal 2014 first quarter consolidated net loss, which includes restructuring charges, was $19.3 million, or $0.41 per diluted share. The first quarter of fiscal 2013 consolidated net loss including restructuring charges was $16.5 million, or $0.35 per diluted share.

Included in the consolidated net loss for the first quarter of fiscal 2014 were pre-tax charges of $3.6 million related to restructuring actions. Included in consolidated net loss for the first quarter of fiscal 2013 were pre-tax charges of $5.1 million also related to restructuring actions.

After removing the impact of these items, the adjusted consolidated net loss for the first quarter of fiscal 2014 was $16.5 million or $0.35 per diluted share, which was $3.3 million higher compared to the first quarter fiscal 2013 adjusted consolidated net loss of $13.2 million or $0.28 per diluted share.

Engines Segment:

Engines Segment fiscal 2014 first quarter net sales were $183.8 million, which was $19.3 million or 11.7% higher than the first quarter of fiscal 2013. This increase in net sales was driven by higher sales of engines used on lawn and garden equipment and related service parts to customers in the North American and European markets due to more favorable late season growing conditions this year. The increase was partially offset by unfavorable sales mix due to fewer sales of larger engines used in snow throwers and in portable generators resulting from a lack of storm activity in the first quarter of fiscal 2014 and unfavorable foreign exchange predominantly related to the Australian dollar.

The Engines Segment adjusted gross profit percentage for the first quarter of 2014 was 14.7%, which was 1.0% lower compared to the first quarter of fiscal 2013. The adjusted gross profit percentage was unfavorably impacted by 2.4% from a 15% reduction in manufacturing volume to reduce inventory.

Unfavorable foreign exchange related to the Australian dollar and Japanese yen also impacted the adjusted gross profit percentage by 0.5%. The decrease was partially offset by an increase to adjusted gross profit of 1.3% related to favorable sales mix of higher margin service parts as well as the contribution of margin generated by the Branco acquisition which closed in the second quarter of fiscal 2013. Margins also benefitted slightly from reduced manufacturing costs and materials costs.

The Engines Segment engineering, selling, general and administrative expenses were $43.3 million in the first quarter of fiscal 2014, an increase of $1.1 million from the first quarter of fiscal 2013 primarily due to higher compensation expense and the addition of expenses from Branco. The increase was partially offset by $1.5 million of lower pension expense in fiscal 2014.

Products Segment:

Products Segment fiscal 2014 first quarter net sales were $153.0 million, a decrease of $20.3 million or 11.7% from the first quarter of fiscal 2013. The decrease in net sales was primarily related to lower sales of portable generators due to no landed hurricanes in the first quarter of fiscal 2014.

Hurricane Isaac occurred in the first quarter of fiscal 2013. In addition, international net sales were lower in the first quarter of fiscal 2014 due to reduced shipments of snow throwers to customers in Europe and unfavorable foreign exchange primarily related to the Australian dollar.  

This decrease was partially offset by favorable late season growing conditions during the first quarter of fiscal 2014 that led to higher sales of lawn and garden equipment through our North American dealer channel, pressure washers and service parts as well as net sales from the Branco acquisition. 

The Products Segment adjusted gross profit percentage for the first quarter of 2014 was 12.8%, which was 0.3% lower than the adjusted gross profit percentage for the first quarter of fiscal 2013. The adjusted gross profit percentage was lower by 0.8% due to a 21% reduction of manufacturing throughput that was planned in order to control inventory in response to lower sales at the outset of the 2013 lawn and garden season. This decrease was partially offset by the margin contributed by the Branco acquisition.

The Products Segment fiscal 2014 fourth quarter engineering, selling, general and administrative expenses were $25.4 million, an increase of $2.0 million from the first quarter of fiscal 2013. The increase was mainly attributable to the additional expenses from Branco.

Corporate Items:

Interest expense for the first quarter of fiscal 2014 was comparable to the same period a year ago.

The effective tax rate for the first quarter of fiscal 2014 was 29.3% compared to 33.6% for the same period in the prior year. The decrease in the effective tax rate for the first quarter of fiscal 2014 compared to the first quarter of fiscal 2013 was primarily driven by non-deductible losses of certain foreign subsidiaries and foreign tax rates that vary from the U.S. statutory rate.

Financial Position:

Net debt at September 29, 2013 was $109.8 million (total debt of $225.0 million less $115.2 million of cash), or $16.6 million lower from the $126.4 million (total debt of $228.0 million less $101.6 million of cash) at September 30, 2012.

Cash flows used in operating activities for fiscal 2014 were $52.9 million compared to $41.4 million in fiscal 2013. The change in operating cash flows was primarily related to changes in working capital needs in fiscal 2014 associated with a lower reduction in accounts receivable partially offset by the benefit of reduced inventory production levels.

Restructuring:

The previously announced restructuring actions remain on schedule. The Company achieved incremental pre-tax savings for the first quarter of $0.7 million. The Company continues to make progress towards moving horizontal engine manufacturing from its Auburn, Alabama plant to China.

As noted previously, pre-tax restructuring costs for the first quarter of fiscal 2014 were $3.6 million. Pre-tax restructuring cost estimates for fiscal 2014 remain unchanged at $6 million to $8 million. Incremental restructuring savings for fiscal 2014 are expected to be $3 million to $5 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. 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 quarter of fiscal 2014, the Company repurchased 482,926 shares on the open market at an average price of $20.08 per share.

Outlook:

For fiscal 2014, the Company reaffirms its guidance of net income to be in a range of $50 million to $62 million or $1.04 to $1.28 per diluted share prior to the impact of any additional share repurchases and costs related to our announced restructuring actions.

Our fiscal 2014 consolidated net sales are projected to be in a range of $1.88 billion to $2.03 billion. We continue to estimate that the retail market for lawn and garden products will increase 4-6% in the U.S. next season. The estimated incremental impact of exiting the sale of lawn and garden equipment through national mass retailers is approximately $10 million to $15 million of reduced sales in fiscal 2014.

In addition, sales in fiscal 2013 were favorably impacted by sales of portable and standby generators in response to power outages during Hurricanes Isaac and Sandy. The upper end of our earnings projections contemplates a higher market recovery in excess of 10% for the U.S. lawn and garden market, normal snowfall and a landed hurricane.

Operating income margins are expected to improve over fiscal 2013 and be in a range of 4.5% to 5.0% and reflect the positive impacts of the restructuring actions. Interest expense and other income are estimated to be approximately $18 million and $5 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 $50 million to $55 million.   

Is This Retailer Gunning For Amazon?

October 7 -- Is it possible that this down and out retailer has a game plan to take on Amazon.com?  Amazon is by far the leading online retailer, but it might surprise most investors that Sears Holdings is considerably along the path toward being a leading online retailer.

No matter what investors think of the plans that CEO Eddie Lampert has undertaken by limiting spending on sprucing up stores, the company has made plans to become a leading online retailer. Sears has even recently advanced fulfillment services to include same-day delivery or in-store pickup that might offer a compelling advantage over Amazon.

Over the last few years, Sears has seen strong growth in online sales even as the in-store sales have faltered. In addition, the company has obtained high rankings for online-shopping experience and has advanced commerce services for merchants to use the platform similar to Amazon. The question is whether Sears can use its dual presence to bounce back in a way reminiscent of Best Buy's that was all the more impressive given that Best Buy was virtually left for dead at the end of 2012.  Best Buy is now prospering from store-in-a-store offerings and same-day pickup.

With online sales surging 20% in its most recent quarter, Sears investors should glean a glimmer of hope that Sears is transitioning away from a store-based retail approach that will allow it to lease out space in valuable mall locations. By treating the collection of discrete assets individually, Sears can sell valuable brands via online and third-party sellers, as opposed to relying on its dying store locations.

A recent report by Web-research group Baymard Institute ranked Sears eighth out of 100 big e-commerce sites for the quality of its online-shopping "checkout experience." For 2012, the company was the number three mass-merchant retailer behind Amazon and Wal-Mart and the number eight overall retailer.

Sears.com has an incredible 60 million items from marketplace sellers only (marketplace for third-party sellers to use the Sears.com website and checkout process for selling products) and was generating 15 million unique visits a month. At only an estimated $4.2 billion in annual sales, it still remains a far cry from the $61 billion in sales generated by Amazon last year.

Earlier this year, Sears launched a turnkey fulfillment service that offers businesses a simple, cost-effective solution for getting seller orders from Sears Marketplace to customers. Fulfilled by Sears, as the program is called, allows sellers to have their inventory at Sears and allow Sears to pick, pack, and fulfill their orders.

A major advantage is that customers can buy from sellers online and pick up in- store at Sears the same day or opt for same-day delivery. Sellers are able to leverage the vast 2,000 store base in order to get customer orders to them quicker. Suddenly those supposedly dying stores become the ideal distribution locations for online shopping.

Best Buy Turnaround

While Best Buy has struggled as a retailer over the last few years due to the encroachment of Amazon on electronics, the company still has one thing that Sears hasn't produced lately. Best Buy is back to reporting solid profits that make all the difference to any stock.

A big reason for the success has been Best Buy setting up Samsung Experience Shops and Windows Stores to improve the in-store experience and rationalize the square footage with sales of commodity electronic products increasingly moving toward online.

In that area, the company saw online sales increase 14.2% in the latest quarter. The improvements in online pricing are helping the company maintain market share while providing solutions such as same-day, in-store pickup provides itself and Sears an advantage over Amazon, which only has an online presence.

Bottom Line

While Sears may not be directly gunning for Amazon, the company is clearly focused on using the Internet to sell its products so that it can redevelop valuable real estate into leased space. In this way, the historic retailer isn't throwing away established brands and valuable customers, but at the same time it can generate higher returns on premium mall space.

In addition, it can use existing distribution centers and under-utilized stores to make the online offering not only more attractive to consumers but also to sellers interested in the fulfillment and marketplace offerings that sit alongside the sales and existing operations of the mass-merchant retailer.

The stock may not duplicate the past returns of Best Buy, but the company appears poised to rebound just as much. Neither company appears headed to the graveyard as both have found ways to use the store base to compete more effectively against the all-mighty Amazon.

Mark Holder            www.fool.com    

Briggs and Stratton Announces New Leadership for its European and Russian Operations

MILWAUKEE, Oct. 8 -- Briggs and Stratton Corporation announced that William H. Reitman has been appointed to Senior Vice President and Managing Director - Europe.  Bill has been with Briggs and Stratton for over 20 years, most recently serving as Sr. Vice President, Business Development and Customer Support, overseeing the Company's standby generator business as well as North America and Canadian service and distribution. "Bill's wealth of knowledge of sales, marketing, new business development and service solutions is a natural fit to head our European and Russia operations and continue to grow our business through innovation and distribution in this region", said Todd J. Teske, Chairman, President and CEO.

"As we continue to execute our strategic initiatives to grow the profitability of our business and invest our resources in innovative products, we are always evaluating how we best serve our customers," said Bill Reitman. "I look forward to listening and working with our customers to continue to create value for end users of Briggs and Stratton powered products in the marketplace." Mr. Reitman will lead these efforts through the Company's European Headquarters located in Freienbach, Switzerland.

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, turf care and other power equipment 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.

Briggs and Stratton Employees Reject Contract in Low Vote Turnout

September 7 -- Local Briggs and Stratton Corp. union employees have again rejected a contract proposal in a vote with low turnout.

Workers voted 109-22 to reject the proposal Sunday, said Briggs spokeswoman Laura Timm. That was a lower turnout than the rejected proposal in August in which just 162 voted, out of the approximately 395 employees in Wauwatosa and Menomonee Falls represented by United Steelworkers Local 2-232.

“We are extremely disappointed in (Sunday’s) vote,” Timm said in an email to The Business Journal on Monday. “We have been negotiating with the bargaining committee in good faith and have presented a very fair and equitable offer. It is very unfortunate that member turnout was even less than the last vote, and that it was held on a Sunday afternoon (during a Packer game). Many members have to drive a fair distance and that makes it challenging for them.”

USW Local 2-232 officials could not be immediately reached Monday afternoon. USW Local 2-232 president Jesse Edwards told WITI-TV (Channel 6) on Sunday that there was improvement in the contract’s language but the economics of the deal were “the same or even worse.”

Briggs offered a four-year agreement that would include a $500 ratification bonus and a $500 contribution to each employee’s health savings account in the first year, a 1 percent wage increase and $500 bonus in the second year and 2 percent wage increases in the third and fourth years, Timm said. The health benefit changes would match that of salaried employees, which equates to a 3.8 percent wage improvement over the current plan.

Pensions will be frozen for all hourly and salaried employees at the end of the calendar year, life insurance will be eliminated for future retirees and mandatory Saturday workdays would be increased by two, to 18, in the rejected proposal, Timm said.

“We will meet with the bargaining committee again at a mutually agreeable time to determine what the next steps will be,” Timm said.

Wauwatosa-based Briggs manufactures small engines and outdoor power equipment. In August it reported a wider fourth-quarter net loss on weak sales and higher costs that included expenses for restructuring actions at plants worldwide.

Jeff Engel            www.bizjournals.com     

Generac to Acquire Generator Business from Baldor Electric

WAUKESHA, Wis., Oct 07 -- Generac Holdings Inc., a leading designer and manufacturer of generators and other engine powered products, announced today the signing of a purchase agreement with Baldor Electric Company, a wholly-owned subsidiary of ABB Group, to acquire substantially all of the assets of Baldor's generator products division.

Located in Oshkosh, Wisconsin, Baldor Generators offers a complete line of portable, mobile, standby and prime power generators ranging from 3kW to 2.5MW throughout North America. For almost 50 years, Baldor Generators and its predecessors have served the power generation market with a comprehensive, reliable product offering and flexible operating environment.

"Acquiring Baldor Generators is a great strategic fit for Generac's business, providing us immediate access to a larger industrial product line to better support the North American and global power generation markets," said Aaron Jagdfeld, President and Chief Executive Officer of Generac. "By offering additional power solutions up to 2.5MW, this acquisition improves our competitive position in the marketplace by increasing the addressable market that our distribution partners can serve."

Jagdfeld continued, "Investing in the Baldor Generator business accelerates our organic efforts to increase our share of the commercial and industrial power generation market while also adding significant production and test capacity for future growth. With our enhanced scale and focus, we believe we can execute on the meaningful revenue and cost synergies that we have identified to date."

Following the close of the transaction, the employees of Baldor Generators will become employees of Generac and the Oshkosh, WI facility will become part of Generac's manufacturing footprint. Although the Baldor brand name is not included past a transitionary period, Generac will continue to support Baldor Generator's existing customers and distribution network going forward. The acquisition is expected to close in the fourth quarter of 2013, pending standard closing conditions. The terms of the transaction were not announced.

About Generac

Since 1959, Generac has been a leading designer and manufacturer of a wide range of generators and other engine powered products. As a leader in power equipment serving residential, light commercial, industrial and construction markets, Generac's power products are available internationally through a broad network of independent dealers, retailers, wholesalers and equipment rental companies.

About Baldor Electric Company

Baldor Electric Company markets, designs and manufactures industrial electric motors, mechanical power transmission products and drives. Baldor, a member of the ABB Group, is headquartered in Fort Smith, Arkansas.

Propane Distributors Seek To Boost Demand with Lawn Mowers

September 19 -- The propane industry has set its sights on that symbol of American middle-class achievement: the lawn mower.

Blame it in part on the natural-gas drilling boom, which has left distributors scrambling to find new ways to increase demand for propane.

A liquid cousin to natural gas, propane is best known for home heating and backyard barbecues, although it is also used in the chemical industry and as a fuel in farm equipment. It is easier to transport in liquid form than natural gas, so it generally served areas disconnected from natural-gas pipelines.

But when domestic natural-gas production took off late last decade as companies found ways to economically tap into vast shale formations, more pipelines were built and the steady decline in propane's domestic market share accelerated.

To protect their turf, propane distributors focused first on improving the performance of farm equipment to keep agricultural customers happy. Now, the industry sees propane's role as a fuel for small engines as a growth area, says Roy Willis, head of the Propane Education and Research Council.

By promoting the benefits of propane lawn mowers—which have lower emissions, are cheaper to run and last longer—the group is betting it can grow to a 3% share of all commercial mowers sold in the U.S. by 2016 from 1% now. That would goose propane consumption by the machines to 23.8 million gallons by 2016 from about 7.9 million gallons this year.

Though propane mowers can cost more than comparable gasoline mowers (about 10% more in some cases), they can last two to three years longer because they burn so much cleaner, says Ivan Giraldo, president of landscape-maintenance firm CleanScapes Inc., which has used propane mowers in San Antonio and Austin, Texas, since 2006.

How much the push into lawn mowers will help propane retailers remains to be seen. The market for propane in mowers is much smaller than the residential market, so the industry has a lot of ground to cover. In addition, the U.S. has become a net exporter of propane in recent years—supplying countries such as Mexico, Brazil, Ecuador and Chile with propane for residential heating and cooking. That is starting to push wholesale prices up from their historically low levels of recent years, threatening propane retailers' margins.

Exports grew to about 8.7 million barrels in July 2013 from 2.7 million in July 2010, according to data provider IHS Waterborne Energy. And big exporters such as Enterprise Products Partners LP and Targa Resources Partners LP are expanding capacity in anticipation of even more growth.

Rusty Braziel, an energy-supply analyst with RBN Energy LLC, says that isn't sitting well with the propane distributors he spoke with this summer. "They were a pretty depressed bunch by the time I was through."

Tom Fowler             www.online.wsj.com    

For Stens, Move into New Building Pays Off

JASPER, Ind. – September 16 -- It’s only been a few months since Stens moved into its new facility, but the Jasper, Ind.-based company’s top executive said the move is already paying off.

Stens distributes replacement parts for lawn mowers, chain saws, golf carts and other outdoor power equipment.

Because of company growth over the years, employees were spread out among three different buildings, but the move allowed them to come back under the same roof, said Stens President Peter Ariens.

In late June, Stens moved into the former Columbus Container building, a 208,000-square-foot facility that Stens purchased and renovated. On Monday, the company hosted a ribbon-cutting to celebrate the move.

Having everyone working in the same space again has improved employee communication and creativity, Ariens said. Since the move, he said, employees have had more success coming up with new ideas and programs.

“The creative juices just flow so much better and they can bounce things off each other all through the day,” Ariens said.

The new space will also give Stens room for growth, Ariens said.

Stens first announced its plans in December 2011. At that time the company said it planned to hire up to 98 new employees by the end of 2015.

Based on those plans, the Indiana Economic Development Corp. offered Stens up to $750,000 in conditional tax credits, and the city of Jasper offered a 10-year tax abatement.

Ariens said his company is still on track to meet its job-creation goals, and has begun filling some positions.

According to information on the IEDC’s website, as of the end of last year, Stens was about one-third of the way to its goal, having added 37 of the planned 98 jobs.

Analyst Sees "Short-Term Opportunity in Briggs and Stratton"

Overview

Briggs and Stratton is the largest manufacturer of small gasoline-powered air-cooled engines for outdoors equipment. Eighty-four percent of the company's sales are to original equipment manufacturers (OEMs) for use in this equipment. Briggs and Stratton also manufactures generators and lawn mowers amongst a multitude of other garden equipment.

Financials

Briggs and Stratton maintains a leveraged balance sheet with $226 million in long-term debt. With $188 million of cash on had, the company can easily cover its fiscal obligations, and the leverage should work in favor of the investor.

As a mature company, Briggs and Stratton has generated exceptionally steady revenues over the past decade. Nonetheless, revenues have declined in eight of the past ten years.

A similar trend of declining cash flows is also of concern. In light of this, management has finally taken action and has begun significant restructuring activities which have clouded the results of the past two years. In 2013, revenues declined from $2.1 billion to $1.9 billion.

The company's income was impacted by $18.8 million in restructuring charges, and by over $90 million in goodwill impairment. $29 million in cash was also funneled to the company's underfunded pension, further hurting results.

Nonetheless, gross margins increased from 16.3% to 17.7%, something that the company attributes to lower costs and increase working capital efficiencies.

The company has aggressively returned capitol to shareholders with a variable cash dividend along share repurchases. In 2013, the company returned over $30 million in cash to shareholders via these share repurchases.

Positive Trends

While the market for landscaping equipment is relatively stable, there are indications of potential strength in the near-term future. With the strengthening economy, sales of consumer goods are rising, and that should definitely benefit Briggs and Stratton.

Although market data on year-over-year sales of lawn mowers is not widely available, by tracking interest by means of Google (GOOG) search popularity (limited to United States searches), we see a steady sinusoidal trend with consistent amplitude for three years from 2010-2012.

While interest reached the same nadir on the off-season, in 2013 interest in lawn mowers increased by almost 25% from the prior three seasons.

The divergence from the trends in lawn mower interest alone can be considered a statistical fluke, but a few more searches indicate similar trends across the industry.

Extrapolating sales from search terms is not possible, but overall, enormously increased interest in the term will almost definitely indicate future increases in sales.

In another chart, we can see the drastic effect which storms have on interest and sales of emergency generators. The peaks in the chart below directly correlate with significant storms. While the current hurricane season has been surprisingly quite, experts have predicted an above-average hurricane season. Thus, generators are a wildcard for the company and cannot be accurately incorporated into sales models.

On the heels of Briggs and Stratton's first loss in a decade, the shares are trading at a reasonable 0.5 times sales and 13.6 times expected 2014 earnings. Historically, share price has been steadily correlated with profitability, and for this reason they have underperformed this year.

An anticipated return to profitability, along with the heavily positive indicators for sales should drive the shares higher in the short-term. In the longer term, results will be dependent on management's ability to effectively restructure the company and compete in a mature industry, along with secular economic conditions in the market overall.

Marc Gilbert          www.seekingalpha.com  

The Toro Company Expands Headquarters

BLOOMINGTON, MN - Sep. 5, 2013 - The Toro Company. a leading worldwide provider of turf, landscape, rental and construction equipment, and irrigation and outdoor lighting solutions, broke ground today on a $25 million expansion in Bloomington, Minnesota that the company has called home for over 50 years. The project begins the process of expanding the company’s product development and test capacities, demonstrating its continued commitment to innovation.

“We are investing in our Bloomington facility to enable our businesses to continue to meet the needs of our customers,” said Michael J. Hoffman, Toro’s chairman and chief executive officer. “With the anticipated growth of our businesses, through ongoing product development and the addition of recent acquisitions taking us into new markets, this investment will help to expand our technical capacity and further the innovation our customers expect. As we celebrate our Centennial next year, this project will help position us for the future and reinforce our commitment to innovation, our customers, and our employees.”

The 75,000-square foot expansion is scheduled for completion in the summer of 2014. Toro moved to its Bloomington, MN, location in 1952, opening a research and development facility, and later its headquarters in 1962. The last major addition to the facility came in 1997.

The construction effort is being led by Minneapolis-based Ryan Companies US, Inc. and LEO A DALY LLP is the architect on the project.

About The Toro Company

The Toro Company (NYSE: TTC) is a leading worldwide provider of innovative turf, landscape, rental and construction equipment, and irrigation and outdoor lighting solutions. With sales of more than $1.9 billion in fiscal 2012,

Toro’s global presence extends to more than 90 countries through strong relationships built on integrity and trust, constant innovation, and a commitment to helping customers enrich the beauty, productivity and sustainability of the land.

Since 1914, the company has built a tradition of excellence around a number of strong brands to help customers care for golf courses, sports fields, public green spaces, commercial and residential properties, and agricultural fields. More information is available at www.toro.com .

Local Shops Fear Amazon's Expansion

September 4 -- Amazon's notoriously low prices have always given traditional retailers a run for their money. But as the online behemoth builds new warehouses to cut shipping times, small shops are getting even more nervous.

Amazon already has 40 massive fulfillment centers around the country, helping it provide remarkably speedy delivery. "Prime" subscribers get free shipping with even faster delivery: Two days, guaranteed.

But it's about to get even faster, as Amazon builds another five distribution centers this year. The company won't disclose where, but the warehouses are expected to be near several major cities -- including rumored locations outside of Manhattan.

Joe Perrotto owns Power Equipment Plus, an outdoor equipment retailer with three locations, including one outside of Philadelphia. He already keeps a close eye on what Amazon charges for things like lawn mowers and leaf blowers and tries to price his products accordingly. But faster Amazon delivery will squeeze him further.

"They'll have the convenience and immediacy of retail," said Perrotto. "Ultimately, it's going to erode our profitability as we try to offer a price advantage to counter their convenience advantage."

It's the latest in what some view as Amazon's war on small businesses. First came the rock-bottom prices. Then came the Price Check app, allowing shoppers to scan items and compare in-store prices to those on Amazon -- essentially turning independent shops into a showroom for Amazon.

Amazon didn't comment about its impact on small businesses, but spokeswoman Kelly Cheeseman did say new fulfillment centers have boosted local employment and increased demand at restaurants.

For example, Ziggy's Pizza and Sandwich Shop in Gladeville, Tenn., saw its daily deliveries jump 20% this year after Amazon's warehouse opened in a nearby town.

"It's definitely a positive for the community," said Ziggy's owner Adam Shireman.

Other small business owners welcome Amazon's expansion and hope to ride the wave with it.

Sara Selepouchin Villari produces her own line of handcrafted towels and sells them directly to Amazon, which stores them in nine warehouses across the country. It takes care of the orders, shipping and pays Villari a cut.

The more warehouses Amazon adds, the closer she is to her customers.

"During the holidays, it'll be awesome," she said. "When I have customers asking about expedited shipping, I'll be able to point them to Amazon. I'm going to go home and have dinner with my family."

Villari also owns a boutique in Philadelphia, Girls Can Tell, but she's not worried customers will turn to Amazon. While Amazon threatens stores that sell generic items easily found online, Villari has filled her shop with unique artisan products.

"A good boutique has been curated. You're going to stumble upon gifts you never knew existed," she said.

But benefiting from Amazon's new warehouses isn't an option for Meyer Dagmy, owner of the Mashern Army/Navy supply store in New York City. He tried selling through Amazon, but found it almost impossible to sell his goods at prices that could compete online. In some cases, he'd even lose money on a sale.

Now he just hopes Amazon stays away from his specialty: Military and tactical gear.

"Amazon's got bigger fish to fry than me. But if they get into my niche, they could take me out of business," he said. 

www.money.cnn.com

Better Ways to Battle Weeds

August 27 -- Barbara Geltosky has long avoided using chemical herbicides to kill weeds she finds on her half-acre property—until this year.

"We needed the big guns" to try to control the crab grass poking up on the front lawn, says Ms. Geltosky, a retired art teacher in Malvern, Pa. Even so, the herbicide didn't do much good, and the weed "took off insanely."

Weeds are bigger and badder this year in most states east of the Rocky Mountains than in recent memory, horticulture experts say. A particularly wet growing season, following a mild winter and last year's dry summer, has helped weeds flourish, weather experts say.

"It's part of summertime. But this year it's pretty unbelievable," says Susan Pezzolla, a community horticulture educator in Voorheesville, N.Y., with the Cornell University Cooperative Extension. University cooperative extensions provide services to farmers and home gardeners.

"I don't care how good of a gardener you are, this year you had trouble," says Richard Hentschel, a horticulture educator with the University of Illinois Extension.

Larry Caplan, Evansville, Ind.-based horticulture educator for the Purdue Extension Service, says because the weeds have gotten so bad he has begun encouraging gardeners to get a head start on next year. He says he is recommending that homeowners apply so-called pre-emergent herbicides on their lawns this fall in addition to the usual time of early next spring. Pre-emergents are designed to prevent seeds from sprouting, which is why gardeners are told not to sow grass at the same time.

Many gardeners may be tempted to throw up their hands in despair. But experts say it is a crucial time to wage war on weeds. Summer annuals are beginning to produce seeds in much of the country. Among these are such wide-ranging plants as lamb's quarters (Chenopodium album); redroot pigweed (Amaranthus retroflexus) and large crab grass (Digitaria sanguinalis). Pulling them before they scatter the next generation all over flower beds can prevent lots of headache next year.

Lamb's quarters, for instance, can easily produce 100,000 seeds from a single plant, about 25% of which will germinate in the first year. The other seeds might lay dormant for a few years, eventually bursting into life, says Antonio DiTommaso, a weed ecologist at Cornell University, in Ithaca, N.Y. "Just having one or two plants escape control and you get that kind of seed production."

Winter weeds also will start to appear in the coming weeks, as days get shorter. These include wild mustard (Sinapis arvensis), common chickweed (Stellaria media) and purple deadnettle (Lamium purpureum), all found in much of the U.S. Catching them now before they grow over the winter can save on spring cleanup.

Natasha Hurwitz, a gardener in Silver Spring, Md., says that because the weeds are so bad this year she does "triage" when clearing her community-garden plot. "Anything that has a flower or seeds, I try to get that out of the garden first," she says. Even so, Ms. Hurwitz says it's been demoralizing to see the weeds continue to multiply every time she visits her garden.

"It seems like I just can't weed often enough," she says.

Perennial weeds can be trickier than annuals to control. That's because perennial species often establish deep root systems and will return year after year. The only way to clear them is by pulling up the roots, which in some cases can be nearly impossible.

A particularly frustrating perennial that gardeners have been seeing more of this year is field bindweed (Convolvulus arvensis), a vine that wraps around other plants in the garden. Its root system can burrow 30 feet underground. Spraying it with an herbicide can be tricky because gardeners run the risk of getting the poison on the plant the bindweed is attached to.

Mr. Hentschel, the Illinois horticulture educator, says the best strategy for getting rid of bindweed is to hoe it back every two weeks, exhausting its resources, until it's finally gone. The key is persistence. "You are wearing down its ability to survive," he says. "If you keep that up, you will win."

"It's a real pain," says Gerald Turner, who has been battling bindweed in the vegetable garden at his weekend home in Paris, Va. "When you try to pull it out, you can get 6 inches of root up with it. And you think, great, I've got it. But no, you haven't got it. That's the problem with it," says Mr. Turner, who works as an investment banker in Washington, D.C.

Rainfall has been abundant east of the Rocky Mountains, giving weeds a big boost. From January through July of this year, Southeastern states have received 9.4 inches above average in rainfall, and the Midwest is 5.7 inches above average, making those two regions the second wettest since 1895. Northeastern states have gotten 2.8 inches more rain than average, according to data from the National Oceanic and Atmospheric Administration.

On the other side of the country—west of the Rockies—the story has been much the opposite. Areas considered to be in "moderate to exceptional" drought have expanded by 8% this year, NOAA says.

In California, which has had its driest year to date since 1895, "there are still lots of weeds out here, just not as robust as they'd be in a normal wet year," says Joe DiTomaso, a weed ecologist at the University of California, Davis. Cheatgrass (Bromus tectorum) and medusa head (Taeniatherum caput-medusae), in particular, are considered fire hazards in grassier areas, he says.

Lots of rain in the East has been a boon for weeds in other ways—many gardeners couldn't get outdoors as often to do yard work. James Hodges, senior horticultural agent for the Clemson University Extension Service in Greenwood, S.C., says that on a recent Monday morning he didn't get any phone calls from home gardeners, a rare occurrence. "That's because nobody was out this weekend because it rained," he says. For gardeners, "normal operations have been difficult."

Anne Marie Chaker         www.online.wsj.com