Briggs and Stratton Corp to Acquire Branco in Curitiba, Brazil

MILWAUKEE, November 6 -- Briggs and Stratton Corporation  today announced that it has signed a definitive agreement to acquire Companhia Caetano Branco, of Brazil ("Branco") for approximately $60 million dollars, subject to post-closing adjustments.

Founded in 1936, Branco is a leading brand in the Brazilian light power equipment market with a broad range of outdoor power equipment used primarily in light commercial applications in Brazil. Its products including generators, water pumps, and light construction equipment are sold through its independent network of over 1200 dealers throughout Brazil. Branco employs approximately 150 people in Brazil.

Briggs and Stratton anticipates financing the transaction from cash on hand and/or its existing credit facilities. Branco has annual sales of approximately $40 million with operating margins ranging from approximately 13% to 17% across its various product lines. Completion of the transaction is subject to conditions customarily associated with a transaction of this type. The transaction is targeted for closing within the next three to four months.

"This acquisition brings two great companies with incredible brand strength together. It is also another step in executing our strategy to expand in developing regions of the world in order to expand our product portfolio in higher margin categories and to diversify our geographic footprint," said Todd Teske, Chairman, President and CEO of Briggs and Stratton Corporation.

"This is a very positive outcome for Branco customers and Briggs and Stratton. The Branco business is a leading brand in Brazilian light power equipment with a very strong distribution network in Brazil.  Its brand strength and current operational performance can only add to the strength of a company like Briggs and Stratton," stated Denise Remor, CEO of Branco.

"We view this acquisition very positively for Briggs and Stratton and for all of the stakeholders in each entity – employees, customers and shareholders. With Branco's brand strength, employees and customer base, we will have an established, well performing company located in a country that has aggressive infrastructure needs and a history of higher growth opportunities, which can only add to the strength of our company," said Todd Teske.

Superstorm Sandy Means Business for Milwaukee-Area Firms

November 2 -- Wisconsin generator manufacturers expect to feel the effects of superstorm Sandy for months as demand for their products grows in its aftermath.

Superstorm Sandy’s path of destruction across the East Coast and inland was rare both in its geographic scope and number of people affected, generator manufacturers said.

Generac Holdings Inc. estimated that at its peak, Sandy was expected to leave 8 million without power — 2 million more than Hurricane Irene last year, said Aaron Jagdfeld, president and chief executive officer of Generac, which makes home standby and portable generators.

“The devastation is just substantial and the impact of this storm, although Irene impacted a lot of people, this one impacted even more,” said Todd Teske, chairman, president and CEO of Wauwatosa-based Briggs and Stratton Corp., whose products include home standby and portable generators. “From my experience, this is as big of a storm as we’ve seen in several years.”

Briggs and Stratton ramped up production of generators over the past couple of weeks, authorizing overtime and planning to hire temporary workers, Teske said.

“We’re shipping out virtually around the clock,” Teske said.

Teske expected this storm to follow the pattern of other major storms and increase immediate demand for Briggs and Stratton portable generators, followed by higher demand for its home standby generators.

Other Wisconsin generator makers have been extremely busy over the past couple of weeks and expect that to continue.

Kohler Co., a Kohler-based privately held company whose products include standby generators, could see an impact on sales for up to six months, said Melanie Tydrich, Kohler senior channel manager of residential and light commercial products.

“We’re looking to build more (generators) than we had planned to” in previous production estimates, Tydrich said.

Genesee-based Generac expects Sandy to increase demand for its home standby generators over the next six to 12 months, Jagdfeld said.

The storm has prompted Generac to make plans to hire about 100 production workers and put manufacturing operations in a Jefferson facility that it initially intended to use for warehousing and distribution, Jagdfeld told The Business Journal Oct. 31.

The 252,500-square-foot facility, 900 N. Parkway in Jefferson’s North Industrial Park, is expected to be operational by Jan. 1, Jagdfeld said. He expects the company to add between 100 and 200 new employees total over the next year between its Whitewater and Jefferson facilities.

Generac has experienced a 17 percent compounded annual growth rate in home standby generator sales over the past decade, but only 2.5 percent of U.S. households have standby generators, Jagdfeld said.

 www.bizjournals.com     Jeff Engel

Superstorm Business Helps Generac Add Jobs Sooner in Jefferson

Madison - November 1 -- Waukesha-based Generac Power Systems will add about 100 jobs and begin making generators in Jefferson earlier than planned because of increased business related in part to the East Coast superstorm.

Generac President and CEO Aaron Jagdfeld said he wanted to start manufacturing operations by Jan. 1, pending state approvals, at a Jefferson building that the company originally intended to use mostly as a warehouse. Vacant for the past three years, the building must be stocked with manufacturing equipment, requiring some "pretty serious capital spending" by Generac, Jagdfeld said.

To prepare, the company already has made wiring and electrical changes in the building and added lights better suited to manufacturing purposes. The site also will need an electrical upgrade and fuel storage capacity for the testing of products.

Without the increased orders due to the storm-related power outages and some new work making power washers that Generac recently picked up, limited manufacturing would not have begun at the Jefferson facility until probably six to nine months into 2013, Jagdfeld said.

Generac already hired about 50 temporary workers this week to help with increased orders at the company's Whitewater manufacturing plant. Some of those workers will be offered permanent positions eventually, Jagdfeld said, and the 100 or so new hires will be made in the next two months.

The company plans to host two job fairs to help find workers, the first in about 30 days in Whitewater, and the second a month later in Jefferson. Details on the job fairs are still being worked out, Jagdfeld said.

 www.madison.com           Wisconsin State Journal

Husqvarna Interim Report January - September 2012

Hans Linnarson, Husqvarna President And CEO:

“Demand in our two largest markets continued to be challenging during the third quarter. In North America, sales were negatively impacted by the worst drought conditions for many years. In Europe, demand was adversely affected by a cautious consumer sentiment and continued unfavorable weather conditions. As expected, preseason demand for seasonal products such as snow throwers was soft.

We were able to deliver a better result in comparison to last year. Group operating income for the third quarter increased to SEK 182m (113), with Americas reporting improved result while sales and income for Europe and Asia/Pacific declined. Construction continued to improve, both in terms of sales and income.

I am also pleased to note the continued positive progress in our cash flow, which is one of our top priorities. Year to date operating cash flow rose to SEK 1,595m (-328), with clear improvements across the Group mainly from working capital improvements.

As we enter the low season, we intensify preparation of the Group for 2013; securing new product launches and enhanced customer service as well as measures to improve efficiency by reducing the fixed cost base and increasing flexibility throughout the Group. More details will be communicated during the fourth quarter 2012.

Looking ahead, we see many of our trade partners managing their inventory levels conservatively,

as the global economic uncertainty is expected to continue for 2013.”

Third Quarter

•           Net sales amounted to SEK 5,841m (6,410). Adjusted for exchange rate effects, net sales declined -8%.

•           Operating income increased 61% to SEK 182m (113).

•           Operating cash flow improved to SEK 1,503m (894).

•           Earnings per share increased to SEK 0.19 (0.10).

First Nine Months

•         Net sales amounted to SEK 26,358m (25,363). Adjusted for exchange rate effects, net sales increase  1%.

•           Operating income increased 25% to SEK 2,233m (1,787).

•           Operating cash flow improved to SEK 1,595m (-328).

•           Earnings per share increased to SEK 2.65 (2.12).

Third Quarter

Net sales

Net sales for the third quarter decreased by -9% to SEK 5,841m (6,410). Adjusted for exchange rate effects, net sales for the Group declined by -8%, for Europe and Asia/Pacific by -6%, for Americas by -14%, while Construction increased by 3%.

Operating income

Operating income for the third quarter increased by 61% and amounted to SEK 182m (113) and the corresponding operating margin rose to 3.1% (1.8). Operating income increased for Construction and Americas.

Operating income was positively affected mainly by lower costs for materials and lower expenses for selling and administration, while the decline in sales and changes in exchange rates impacted negatively.

Changes in exchange rates had a total negative effect on operating income of approximately SEK -69m, compared with the third quarter 2011, of which transaction effects amounted to SEK -130m (-44), translation effects amounted to SEK 0m (8) and change in value of currency hedging contracts amounted to SEK 43m (18).

In the third quarter 2011, operating income was negatively impacted by SEK -83m, of which SEK -38m referring to costs directly related to production disturbances, SEK -24m referring to costs for the closure of a production facility in Spain and SEK -21m referring to the termination of the former CEO’s contract.

First Nine Months

Net sales

Net sales for the first nine months increased by 4% to SEK 26,358m (25,363). Adjusted for exchange rate effects, net sales for the Group increased by 1%, for Americas by 8%, for Construction by 6%, while sales for Europe and Asia/Pacific decreased by -4%.

Operating income

Operating income for the first nine months increased by 25% to SEK 2,233m (1,787) and the corresponding operating margin rose to 8.5% (7.0). Operating income increased for Americas and Construction.

Operating income was positively affected mainly by lower production costs and improved pricing, while product mix had a negative impact, partly due to weather related lower sales of consumer watering products.

Changes in exchange rates had a total positive effect on operating income of approximately SEK 35m, compared with the first nine months of 2011, of which transaction effects amounted to SEK -195m (38), translation effects amounted to SEK 0m (1) and change in value of currency hedging contracts amounted to SEK 135m (-134).

In the first nine months of 2011, operating income was negatively impacted by SEK -368m referring to costs directly related to production disturbances, of which SEK -323m affected Americas and SEK -45m affected Europe and Asia/Pacific, as well as items affecting comparability of SEK -64m referring to Construction, and costs related to the termination of the former CEO’s contract of SEK -21m.

Financial Items Net

Net financial items for the third quarter amounted to SEK -80m (-89) and for the first nine months to SEK -307m (-277). The average interest rate on borrowings at the end of the third quarter was 4.0% (4.1).

Income After Financial Items

Income after financial items for the third quarter increased to SEK 102m (24) corresponding to a margin of 1.8% (0.4). For the first nine months, income after financial items increased to SEK 1,926m (1,510) corresponding to a margin of 7.3% (6.0).

Taxes

Taxes for the first nine months amounted to SEK -404m (-290), corresponding to a tax rate of 21% (19) of income after financial items.

Earnings Per Share

Income for the third quarter increased to SEK 105m (55), corresponding to SEK 0.19 (0.10) per share. Income for the first nine months increased to SEK 1,522m (1,220), corresponding to SEK 2.65 (2.12) per share.

Operating Cash Flow

Due to the seasonality of the Group’s operations, operating cash flow is normally negative in the first quarter followed by positive cash flow in the second and third quarters. Operating cash flow for the first nine months improved to SEK 1,595m (-328), mainly due to higher income after financial items and a reduction of operating working capital, which was positively impacted by lower inventory and trade receivables.

Financial Position

Group equity as of September 30, 2012, excluding non-controlling interests, amounted to SEK 11,976m (12,813), corresponding to SEK 20.91 (22.37) per share. Group equity was negatively affected by exchange differences on translating foreign operations to SEK amounting to SEK -911m.

Net debt as of September 30 amounted to SEK 6,355m (6,628) of which liquid funds amounted to SEK 1,285m (1,632) and interest bearing debt amounted to SEK 7,640m (8,260). The major currencies used for debt financing are SEK and USD. In the first nine months, net debt increased by SEK 30m as a result of changes in exchange rates.

The net debt/equity ratio amounted to 0.53 (0.51) and the equity/assets ratio to 44% (44).

On September 30, 2012, long-term loans including financial leases amounted to SEK 5,089m (5,516) and short-term loans including financial leases to SEK 2,306m (2,445). Long-term loans consist of SEK 2,572m (2,723) in issued bonds, and bank loans of SEK 2,497m (2,793). Long term bonds and long term bank loans mature in 2014 and onwards. The Group also has an unutilized SEK 6 bn syndicated revolving credit, with maturity in 2016.

Performance By Business Area Q3

Europe and Asia/Pacific

Net sales for Europe and Asia/Pacific in the third quarter decreased by -10%. Adjusted for exchange rate effects, net sales decreased by -6%. For the first nine months, sales decreased by -5%. Adjusted for exchange rate effects, the decline was -4%.

Due to continued unfavorable weather and economic uncertainty, sales declined in the European markets as trade inventory levels were conservatively managed. Pre-season demand for snow throwers was, as anticipated, soft.

Operating income for the third quarter amounted to SEK 225m (291) and the operating margin amounted to 7.3% (8.5). For the first nine months the operating income amounted to SEK 2,062m (2,185) and the margin remained at a high level, 15.7% (15.9).

Operating income for the third quarter was negatively impacted mainly by the lower sales volume, unfavorable mix and changes in exchange rates.

Changes in exchange rates had a negative year-on-year effect on operating income of SEK -39m in the third quarter and a positive impact of SEK 73m for the first nine months.

Americas

Net sales for Americas in the third quarter decreased by -11%. Adjusted for exchange rate effects, net sales decreased by -14%. For the first nine months, sales increased by 15%. Adjusted for exchange rate effects, the increase was 8%.

The drought weather conditions in the US had substantial negative effect on industry demand and sales of lawn care equipment declined. Pre-season demand for snow throwers was also soft, partly due to trade inventory left from the previous season.

Operating income for the third quarter improved to SEK -99m (-172) and the corresponding operating margin was -5.0% (-7.7). Operating income was positively impacted mainly by lower costs for materials as well as lower costs for selling and administration, while the lower sales volume had a negative effect.

For the first nine months, operating income increased to SEK 67m (-364) and the corresponding operating margin was 0.6% (-3.8).

Changes in exchange rates had a negative year-on-year effect on operating income of SEK -30m in the third quarter as well as for the first nine months.

Construction

Net sales for Construction in the third quarter increased by 3%.  Adjusted for exchange rate effects, the increase was also 3%. For the first nine months, sales increased by 9%. Adjusted for exchange rate effects, the increase was 6%.

The higher sales were primarily driven by the U.S. market where construction activity rose for residential and infrastructure construction, although at a slower pace than previously in the year. Sales were also positively impacted by market share gains.

Construction market conditions across Europe, especially in southern Europe, were difficult as the uncertain economic development continued. Sales decreased, partly due to lower demand from rental operators. Emerging markets had a mixed development.

Operating income for the third quarter increased to SEK 89m (50) and the operating margin improved to 11.7% (6.7), mainly as a result of improved pricing and factory productivity, as well as items affecting comparability of SEK -24m that was charged to operating income in the first quarter 2011.

Operating income for the first nine months increased to SEK 213m (108) and the operating margin increased to 9.2% (5.1). Operating income for the first nine months of 2011 was charged with items affecting comparability of SEK -64m.

Changes in exchange rates had a negative year-on-year impact on operating income in the third quarter of SEK -2m and a negative effect of SEK -11m in the first nine months.

In the third quarter Husqvarna acquired the remaining 20% of Hebei Husqvarna Jikai Diamond Tools Co., Ltd for SEK 46m.

Parent Company

Net sales in the first nine months 2012 for the Parent Company, Husqvarna AB, amounted to SEK 8,955m (8,906), of which SEK 6,962m (6,794) referred to sales to Group companies and SEK 1,993m (2,112) toexternal customers.

Income after financial items amounted to SEK 1,504m (937). Income for the period was SEK 1,390m (838).

Investments in tangible and intangible assets amounted to SEK 235m (237).

Cash and cash equivalents amounted to SEK 34m (109) as of September 30, 2012.

Undistributed earnings in the Parent Company amounted to SEK 17,915m (17,500).

Conversion Of Shares

According to the company's articles of association, owners of A-shares have the right to have such shares converted to B-shares. Conversion reduces the total number of votes in the company.

In July 2012, 6,036 A-shares were converted to B-shares at the request of shareholders. The total number of registered shares in the company at September 30, 2012 amounted to 576,343,778 shares of which 127,770,610 were A-shares and 448,573,168 were B-shares.

In October 2012, another 71,552 A-shares were converted to B-shares at the request of shareholders. The total number of votes thereafter amounts to 172,563,530.