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  

Generac CEO Aaron Jagdfeld Generates a Champion

Jagdfeld's Keys

•       Has overseen Generac's 400% stock romp.

•       Overcame: The recession of 2008-09.

•       Lesson: Act decisively.

•       "Certain situations call for a healthy sense of urgency. If the situation is important enough, you have to be able to drive people forward at a fast pace."

August 27 -- Aaron Jagdfeld provides plenty of energy with his management style.

Good thing.

Running on his spark, Generac Power Systems overcame the power outage of the recession.

The timing for Jagdfeld was a drag as he started his stint as CEO.

Generac was North America's No. 1 maker of home standby generators, but it was September 2008.

The economy was tanking on the heels of the housing slump that began in 2007 — causing Generac to lose steam.

That was Jagdfeld's cue to rev up the business. Fast.

"I'm a very detail-oriented person and come from the angle of having to know all the details to help me make decisions" Jagdfeld, 41, told IBD. "I take the information and assimilate it quickly into making a decision."

Using that approach, he made the bold decision to re-enter the portable generator market in 2008.

Here's how they work:

Generac's standby generators operate on natural gas or liquid propane and are permanently installed with an automatic transfer switch, which Generac also manufactures.

Its portable generators are fueled by gasoline. They serve as an emergency home backup and are also used for construction and recreational purposes.

That 2008 move came a decade after Generac sold its portable business to Beacon Group.

A non-compete clause with Beacon expired a year before Jagdfeld became CEO — and he seized the chance to move back into the market.

"We needed to be there quickly because the rest of our markets were softening," said Jagdfeld.

By 2012, Generac had reclaimed its spot as North America's No. 1 maker of portable generators, a category it created when it was founded in 1959. Generac is also the leading maker of home and commercial standby generators.

Thanks to Jagdfeld's fast-paced style, Generac emerged from the downturn with vigor.

Business has surged since its February 2010 IPO. In 2012, sales climbed 48.5% to $1.176 billion. Profit leapt 47% to $3.19 a share. That followed a 33.6% rise in profit and 34% pop in sales in 2011.

Its share price has soared along with it, rising 400% since that first day of trading in February 2010.

"That decision to re-enter the portable generator business and speed of action in 2008 were absolutely critical to us staving off any major negative outcomes as a result of the rest of our company's business turning down during that period," said Jagdfeld, who's been with the company since 1994.

Complementing his speed, Jagdfeld weighed that decision to jump back into portable generators carefully, then re-entered the field with a clear understanding of its needs.

The CEO knew that Generac had a long history of making portable generators. And he had a strong knowledge of that product.

Portable generators can be stored and pulled out of storage when necessary. They typically run on gasoline and have outlets on the outside where owners can plug in extension cords and run them to the appliances they want to back up. The generators have to be operated manually during a power outage.

A standby generator is permanently installed and connected to the home's electrical service. When the power goes out, it detects the outage, starts up automatically and delivers power through the home's electrical system. These units typically run on natural gas or liquefied petroleum, so they have long running times and don't typically require refueling.

Jagdfeld knew his firm had heavy resources in engineering, operations, sales and marketing as he entered the portable generator market. Meanwhile, he developed one of the broadest offerings in the industry. And using Generac's long retail relationships, he quickly got its generators into stores.

With a stronger balance sheet after its initial public offering, Generac was able to invest in the inventory to meet heavy demand. That came in handy as buyers bulked up on generators during the massive power outages of Hurricanes Irene in 2011 and Sandy in 2012.

Jagdfeld has been high up the Generac food chain since 2002, when he became chief financial officer. In 2007 he rose to president, a job he maintains along with CEO.

Jagdfeld was instrumental in managing the sale of Generac to CCMP Capital Advisors in a leveraged buyout in 2006. And he led the company's transition to a public company with its 2010 IPO.

"He's had an excellent transition from a private-company CEO to a public-company CEO, which is a major transition,"said KeyBanc Capital Markets analyst Jeffrey Hammond. "The company went public in February 2010 at $13 per share and is now trading in the low $40s, and you have had two special dividends totaling $11 a share — $6 in June 2012 and $5 in June 2013. So the total shareholder return to date has made for a pretty compelling story."

Meanwhile, Jagdfeld planned to keep Generac No. 1 in the home standby generator category. He's done exactly that as chief executive, but it hasn't been easy.

Soon before he took over the firm's top post, rivals started knocking on the space more aggressively. Generac was "probably vulnerable" to this renewed push because his firm's product line hadn't been updated in years, he noted.

So Jagdfeld made his own push, ordering a redeveloping of Generac's products to create "the line of the future." The company changed the look of its products on its website. It added tech features to ensure the generator could be installed closer to the home, to adhere to national fire codes.

Jagdfeld also structured a sales team to better serve retailers.

"We made a big bet and spent millions of dollars to create a sales force," he said. "We put about 25 people into field at the time. That helped strengthen our relationships with distributors and helped fend off the competitive threat."

Thanks to those moves, Generac still holds the top slot among generator sellers with a 70% share.

Russ Minick, executive vice president of Generac's residential products, lauds his boss' management: "I have worked a few places and see Aaron as having a high-energy, high-pace style. We stretch and get a lot done compared to a lot of companies because of the pace he sets."

Jagdfeld admits 2010 probably wasn't the best environment for an IPO. The stock market wasn't making it easy for new issues.

But that didn't stop the man in his tracks. After all, his German name means hunting field. "We looked at it as though the company had a lot of long-term potential, but needed to fix the capital structure permanently," he said. "We saw an IPO as a way to pay down more debt and get the balance sheet in a better place. That's why we priced at the bottom of the range. We believed in the long-term opportunity."

The CEO and his team got that message across — and the IPO was on its way upward.

So was Jagdfeld, who uses his energetic communication to spark employees. "I can get people pretty excited about things by talking about the good things about the company," he said.

Generac, headquartered in Waukesha, Wis., produces inverter generators, commercial backup generators, industrial backup power systems and power washers. They're made across four facilities in southeastern Wisconsin. Instead of dealerships or stores of its own, Generac sells its machines in national home and hardware stores.

Jagdfeld, a native of Milwaukee, holds a bachelor's degree in business administration from the University of Wisconsin. He joined the audit practice at Deloitte & Touche and discovered Generac, which was a client. He saw its growth potential right away.

In 1994, after he had been with Deloitte a year, he got a call from Generac's chief financial officer to join the team. He leapt and got on board the firm's finance department that May.

Jagdfeld was drawn to Generac because of its generator. "I liked to take things apart as a kid to see how they worked," he said. "I like to understand the details about the mechanical nature of products."

Generac's manufacturing environment and the process of making its machines especially piqued his curiosity. Now he's generating even more interest as CEO.

Marilyn Much, Investor’s Business Daily             www.news.investors.com          

The Toro Company Reports Fiscal 2013 Third Quarter Results

•       Third quarter sales increase to $510 million and net earnings per share increase to $0.68
•       Quarterly results strengthened by improved market conditions and increased demand for residential and landscape contractor products
•      Company raises full-year earnings outlook on the strength of margin improvement

BLOOMINGTON, MN -- Aug. 22, 2013-- The Toro Company today reported net earnings of $40.1 million, or $0.68 per share, on a net sales increase of 1.2 percent to $509.9 million for its fiscal third quarter ended August 2, 2013. In the comparable fiscal 2012 period, the company delivered net earnings of $40.5 million, or $0.67 per share, on net sales of $504.1 million.

For the first nine months, Toro reported net earnings of $149.9 million, or $2.53 per share, on a net sales increase of 2.4 percent to $1,659.1 million. In the comparable fiscal 2012 period, the company posted net earnings of $129.3 million, or $2.13 per share, on net sales of $1,619.4 million.

“For the quarter, our results were strengthened by a summer growing season with favorable temperatures and precipitation levels as compared to last year’s severe drought conditions,” said Michael J. Hoffman, Toro’s chairman and chief executive officer. “The more desirable weather helped us drive retail sales across most of our businesses and, in particular, our residential business. 

In addition to realizing sales delayed in the prior quarter by adverse spring weather conditions, our residential business benefited from increased demand for our new and innovative products, including our Timecutter® zero turn radius riding products and our recently introduced line of lithium-ion battery-powered string and hedge trimmers.”

“As anticipated, the Tier 4 diesel engine transition—which caused a significant portion of our professional sales to be accelerated into our first quarter from later quarters as we’ve historically seen—continued to impact the quarterly results for our professional business. Year-to-date our results are solid and our business fundamentals remain sound. 

Our golf and landscape contractor businesses are benefitting from innovative and high performing equipment offerings valued by our end-user customers, we continue to grow our micro irrigation business around the world, and we realized additional sales from increased customer demand for our rental products and newly introduced Toro-branded underground and construction products.”

“Looking ahead, although we are always mindful of the challenges that Mother Nature can create for us, as well as continuing expectations for slow worldwide economic growth, we remain cautiously optimistic about the remainder of our year. We expect favorable sales comparisons to last year’s fourth quarter when limited prior season snowfall in North America and Europe significantly affected demand for our snow thrower products.

Turning to field inventory, despite elevated positions held through the second quarter due to the planned execution of the Tier 4 transition and the resulting impact of the poor spring weather conditions, we believe that recent retail efforts have reduced field inventories across our product lines and at these improved levels we are well positioned for the future. Lastly, we expect that momentum from our productivity efforts and favorable commodity trends, somewhat offset by product mix, should drive additional earnings gains. As a result, today we are refining our full-year revenue outlook and increasing our earnings expectations.”

The company now expects revenue growth for fiscal 2013 to be about 4 percent and net earnings to be about 2.55 per share, or an increase of about 19 percent over fiscal 2012.

SEGMENT RESULTS

Professional

Professional segment net sales for the third quarter totaled $343.9 million, down 4.8 percent from the prior year period. The quarterly sales decrease primarily was attributable to the Tier 4 diesel engine transition and related acceleration of a significant portion of our professional sales into our first quarter from later quarters as historically experienced. Offsetting the decrease, shipments of landscape contractor equipment benefited from increased demand for our zero turn radius products driven by more favorable weather conditions this quarter compared to the drought conditions last year, as well as newly introduced product offerings.

Rental and construction equipment sales were up on increased product demand. Global micro irrigation sales increased on continued demand for more efficient irrigation solutions for agriculture. For the first nine months, professional segment net sales were $1,169.4 million, up 6.2 percent from the comparable fiscal 2012 period.

Professional segment earnings for the third quarter totaled $60.5 million, down 14.2 percent from the prior year period. For the first nine months, professional segment earnings were $233.5 million, up 10.5 percent from the comparable fiscal 2012 period.

Residential

Residential segment net sales for the third quarter totaled $155.5 million, up 14.4 percent from the prior year period. Favorable temperatures and precipitation levels in the quarter led to sales increases across all summer product categories, including riding products, walk power mowers and handheld trimmer and blower products. For the first nine months, residential segment net sales were $477.8 million, down 5.5 percent from the comparable fiscal 2012 period. The year-to-date sales results largely were attributable to the unusually mild 2012/2013 winter season and the late start to spring.

Residential segment earnings for the third quarter totaled $15.1 million, up 50 percent from the prior year period. For the first nine months, residential segment earnings were $51.9 million, up 1.4 percent from the comparable fiscal 2012 period.

OPERATING RESULTS

Gross margin for the third quarter was 34.9 percent, down 40 basis points from the comparable fiscal 2012 period, primarily due to product mix but offset by favorable commodity costs, productivity gains and realized pricing. For the first nine months, gross margin was up 130 basis points to 35.9 percent.

Selling, general and administrative (SG&A) expense as a percent of sales increased 20 basis points for the third quarter to 23.4 percent. For the first nine months, SG&A expense increased 40 basis points as a percent of sales to 22.5 percent.

For both periods, the increase in SG&A as a percent of sales was the result of higher warehousing expense, increased engineering spending and incremental costs from acquisitions, offset by lower warranty expense.

Operating earnings as a percent of sales decreased 60 basis points to 11.5 percent for the third quarter, but was up 90 basis points to 13.4 percent for the year to date.

The effective tax rate for the third quarter was 30.5 percent compared with 31.8 percent in the same period last year. For the year to date comparison, the tax rate decreased to 31.0 percent from 33.3 percent. The decrease in both periods was primarily the result of the reenactment of the Federal Research and Engineering Tax Credit.

Accounts receivable at the end of the third quarter totaled $202.1 million, up 2.6 percent from the prior year period. Net inventories were $258.9 million, up 10.3 percent from the end of last year’s third quarter. Trade payables were $124.2 million, the approximate equivalent of last year.

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.