Briggs & Stratton Corporation
), reported third-quarter 2013 adjusted earnings of 89 cents per
share, a decrease of 10% from the prior-year quarter's earnings
of 99 cents per share. The results also missed the Zacks
Consensus Estimate of $1.08.
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On a reported basis, earnings declined 2.5% to 78 cents per share
from the prior-year quarter's earnings of 80 cents per share.
Earnings in the reported quarter include restructuring charges of
11 cents per share compared with 19 cents in the year-ago
Net sales decreased 11.5% year over year to $637 million in the
reported quarter and fell short of the Zacks Consensus Estimate
of $696 million. The year-over-year decline in sales was
attributable to reduced sales of engines and products to
international regions as well as to the company's decision to
stop selling lawn and garden products to large mass retailers in
Cost of sales decreased 12% to $504 million in the reported
quarter. Gross profit was $126.8 million compared with $127.1
million in the prior-year quarter. Gross margin, however,
expanded 220 basis points (bps) year over year to 19.8% in the
Engineering, selling, general and administrative expenses
declined 4% to $70 million in the quarter. Adjusted operating
income increased 5% to $56 million in the quarter from $53
million in the year-ago quarter. Operating margin contracted 140
bps year over year to 8.8%.
: Net sales at the Engines Segment dropped 9.3% to $452 million,
due to reduced shipments of engines used on walk and ride
equipment in European and North American markets and unfavorable
foreign exchange, partly offset by replenishment sales of
generator engine in the U.S. Adjusted operating profit for the
segment decreased to $62 million from $65 million in the year-ago
: The Product segment reported sales of $231 million, down 17.7%
from the year-ago quarter. Results were affected by the company's
exit from the sale of lawn and garden equipment through national
mass retailers, a decrease in sales of lawn and garden equipment
and pressure washers in North America and continued drought
conditions in parts of Australasia. These negatives were partly
offset by increased sales from the acquisition of Branco. The
segment reported an adjusted operating profit of $1 million
compared with $8.7 million in the year-ago quarter.
Cash and cash equivalents were $22.6 million as of Mar 31, 2013
compared with $16.4 million as of Apr 1, 2012. Cash flow used in
operating activities was $73.8 million or the first nine months
of fiscal 2013 compared with $166.7 million in the comparable
period last year. The improvement was primarily based on lower
working capital needs in the first nine months of fiscal 2013
associated with decreased receivables and inventory.
Debt-to-capitalization ratio increased to 27.8% as of Mar 31,
2013 from 26.9% as of Apr 1, 2012.
During the first nine months of fiscal 2013, Briggs &
Stratton repurchased 1.2 million shares at an average price of
$18.96 per share for a total price of $22.7 million.
In the third quarter of fiscal 2013, the company entered into an
agreement to sell Ostrava, Czech Republic manufacturing facility.
The company's restructuring program achieved pre-tax savings of
$19.1 million during the first six months of fiscal 2013. Among
other initiatives, the company has made progress in finalizing
its exit from the Newbern, Tennessee manufacturing facility and
the move of horizontal engine manufacturing from its Auburn,
Alabama plant to China.
The total pre-tax costs of these actions are expected to be $20
to $22 million in fiscal 2013. The company anticipates annualized
pre-tax savings from these restructuring actions to be $32 to $37
million in fiscal 2013 and $40 to $45 million in fiscal 2014.
Briggs & Stratton has revised the net income projections for
fiscal 2013. The company now reduced its adjusted net income
range of $56 million - $65 million from its previous guidance of
$60 million - $75 million. Forecast for earnings per share has
also been reduced from the range of $1.25 to $1.55 per share to
the band of $1.16 to $1.33 per share.
Outlook for net sales also changed from the previous range of
$1.95 billion to $2.15 billion to the new range of $1.95 billion
to $2.0 billion. Operating margins expectations have also revised
from the range of 5.1% to 5.6% to the band of 4.8% to 5.3%.
Based in Milwaukee, Wisconsin, 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 number one
manufacturer of portable generators and pressure washers, and is
a leading designer, manufacturer and marketer of standby
generators, along with lawn, garden and turf care products
through its popular brands.
Briggs & Stratton currently retains a short-term Zacks Rank
#4 (Sell). Other companies in the machinery and farm industry
with favorable Zacks Ranks are
Alamo Group, Inc.
CNH Global NV
). Each of them carries a Zacks Rank #2 (Buy).