Briggs & Stratton Corporation
) fell 5.7% on Oct 17, after it reported adjusted loss per share
of 35 cents for first-quarter fiscal 2014, ended Sep 29, 2013.
This compares unfavorably with the Zacks Consensus Estimate of
loss per share of 31 cents and 28 cents loss in the year-ago
quarter. Lower production at the Engines and Products segments
were responsible for a wider loss.
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On a reported basis, Briggs & Stratton posted loss of 41
cents per share compared with a loss per share of 35 cents in the
prior-year quarter. Reported loss in the quarter included
restructuring charges of 6 cents per share compared with 7 cents
per share in the year-ago quarter.
Net sales grew 3% year over year to $317 million in the first
quarter, surpassing the Zacks Consensus Estimate of $304 million.
The year-over-year increase was driven by a rise in sales of
engines and lawn and garden products, partially offset by lowered
sales of portable generators.
Cost of sales crept up 3.8% year over year to $269.9 million.
Adjusted gross profit was $47.4 million compared with $49 million
in the prior-year quarter. Adjusted gross margin contracted 90
basis points (bps) year over year to 15%.
Engineering, selling, general and administrative expenses
increased 4.8% year over year to $68.8 million. Adjusted loss
from operation was $21.3 million compared with $16.7 million in
the year-ago quarter.
Net sales in this segment went up 11.7% year over year to $183.8
million, led by higher sales of engines used in lawn and garden
equipment, and related service parts in the North American and
European markets. This was partially offset by negative sales mix
due to fewer sales of larger engines and the negative impact of
foreign exchange. Adjusted loss from operation for the segment
was $16 million, flat with the year-ago quarter.
The Product segment reported sales of $153 million, down 11.7%
from the year-ago quarter. Results were affected by lower sales
of portable generators, reduced shipments of snow throwers in
Europe and negative currency translations. But this was partially
offset by higher sales of lawn and garden equipment as well as
pressure washers and service parts, and increased sales from the
Branco acquisition. The segment reported an adjusted loss of $5.8
million compared with a loss of $0.72 million in the year-ago
Cash and cash equivalents were $115 million as of Sep 29, 2013
compared with $101.6 million as of Sep 30, 2012. As of Sep 29,
2013, cash used in operating activities was $52.9 million
compared with $41.4 million as of Sep 30, 2012. The higher use of
operating cash flows was primarily related to lower reduction in
accounts receivable, partially offset by the benefit of lower
inventory production levels.
Net debt as of Sep 29, 2013 was $109.8 million, lower than $126.4
million as of Sep 30, 2012. Debt-to-capitalization ratio
contracted to 26% as of Sep 29, 2013 from 27% in the prior-year
quarter. During first-quarter fiscal 2014, the company
repurchased 482,926 shares for $9.7 million.
Briggs & Stratton achieved pre-tax savings of $0.7 million
during the first quarter. The company is making good progress
toward moving horizontal engine manufacturing from its Auburn,
Alabama plant to China.
Pre-tax restructuring costs for fiscal 2014 are expected to be
within $6 million to $8 million. The company also anticipates
savings of $3 million to $5 million from these restructuring
actions in fiscal 2014.
Briggs & Stratton reaffirmed its net income guidance of $50
million to $62 million for fiscal 2014. The company also restated
its earnings per share range of $1.04 to $1.28. Net sales were
reiterated at $1.88 billion to $2.03 billion for 2014. It is also
estimates that the retail market for lawn and garden products
will increase 4-6% in the U.S.
Operating income margins were revised from 4-5% to 4.5-5%,
reflecting positive impacts of the restructuring actions. Capital
expenditures were also maintained at $50 million to $55
Milwaukee, Wis. 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 also leads in
the designing, manufacturing and marketing of standby generators,
and lawn, garden and turf care products through its popular
Briggs & Stratton currently has a Zacks Rank #3 (Hold).
Alamo Group, Inc.
) belongs to the industrial products sector and is yet to
announce its third quarter results.
Other stocks in the same industry with a favorable Zacks rank are
) with Zacks Rank #1 (Strong Buy) and
) with Zacks Rank #2 (Buy).