A day before releasing its fourth quarter and fiscal 2014
Briggs & Stratton Corp.
) delivered on its commitment to enhance returns for its
shareholders by announcing a 4% dividend hike and a $50 million
share repurchase program. Shares of Briggs & Stratton however
dipped 1.40% a day ahead of the results as the company's guidance
for the fourth quarter remains below expectations.
Briggs & Stratton's board of directors have approved a 4%
increase in its quarterly cash dividend to 12.5 cents per common
share from the prior quarterly dividend of 12 cents per share. The
increased dividend will be paid on Oct 1, 2014 to shareholders of
record at the close of business on Sep 17, 2014.
The dividend increase comes after a gap of 2 years. Briggs &
Stratton had last declared a 9% increase to the current payout of
12 cents per share on Aug 8, 2012. This move will take the dividend
yield from the current 2.52% to 2.63%. Briggs & Stratton has
outscored its peers like Lindsay Corporation (
), AGCO Corporation (
) and Alamo Group, Inc. (
) with respective dividend yield of 1.34%, 0.89% and 0.57%. The
quarterly dividend payout will cost the company approximately $5.84
Briggs & Stratton's board of directors also authorized an
additional $50 million share repurchase program that will be in
force till Jun 30, 2016. Depending on market conditions, the
company will repurchase shares using available cash, on the open
market or in private transactions from time to time.
On Jul 10, 2014, Briggs & Stratton provided with a sneak
peak at its fourth-quarter fiscal 2014 (ended Jun 29, 2014) sales
ahead of its results. The company also announced plans to adjust
its Snapper residential product offerings and consolidate
manufacturing facilities to cut down costs.
The producer of gasoline engines for outdoor power equipment
expects net sales to grow 4% year over year to $495 million in the
fourth quarter, while for fiscal 2014 sales are expected to remain
flat at $1.86 billion compared with the prior fiscal. The Zacks
Consensus Estimate for sales in the fourth quarter is at $495
million and for fiscal 2014 it is currently at $1.86 billion, both
in line with management's expectations. The Zacks Consensus
Estimate for earnings is at 35 cents, reflecting a 57%
year-over-year growth for the fourth quarter of fiscal 2014 while
for fiscal 2014 it is at 85 cents, projecting a 8.6% year-over-year
In order to improve the operating performance of its Products
business, Briggs & Stratton is planning to simplify its Snapper
product line and reduce offerings of certain low volume and
lower-priced Snapper lawn and garden products, beginning in the
2016 lawn & garden season. The company will instead focus on
the premium residential products through its Snapper and Simplicity
brands and commercial products through its Snapper Pro and Ferris
brands that generate higher margins and returns.
Briggs & Stratton will also consolidate manufacturing
facilities to reduce the related manufacturing capacity and
expenses. Total restructuring charges from these actions is
expected at approximately $30 to $37 million. Briggs & Stratton
projects annual savings of approximately $15 to $20 million from
these actions, starting from fiscal 2015.
Milwaukee, WI-based Briggs & Stratton is the world's largest
producer of gasoline engines for outdoor power equipment. Its
wholly owned subsidiary, Briggs & Stratton Power Products Group
LLC, is North America's top manufacturer of portable generators and
pressure washers. This subsidiary is a leader in designing,
manufacturing and marketing of standby generators and lawn, garden
and turf care products through its popular brands.
Currently, Briggs & Stratton has a Zacks Rank #5 (Strong
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