Briggs & Stratton Corp.
) provided a sneak peak at its fourth-quarter fiscal 2014 (ended
Jun 29, 2014) sales ahead of its results which is slated to release
after the closing bell on Wednesday, Aug 13, 2014. The company also
announced plans to adjust its Snapper residential product offerings
and consolidate manufacturing facilities to cut down costs.
Fourth Quarter and Fiscal 2014 Preliminary Results
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.
Fiscal 2013 sales had benefitted by $100 million from storm related
engine and generator sales but that did not recur in fiscal 2014.
The Zacks Research Estimate for sales in the fourth quarter is at
$495 million and for fiscal 2014 is currently at $1.86 billion,
both in line with management's expectations. The Zacks Consensus
Estimate for earnings is at 39 cents, reflecting a 75%
year-over-year growth for the fourth quarter of fiscal 2014 while
for fiscal 2014 is at 89 cents, projecting a 4.30% year-over-year
Restructuring Actions Simplify Product Line
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. 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
Consolidation of manufacturing facilities
Briggs & Stratton will also consolidate manufacturing
facilities to reduce the related manufacturing capacity and
expenses. The company will close its McDonough, GA, location which
currently manufactures pressure washers, snow throwers, zero-turn
lawn mowers and smaller lawn and garden tractors. Production
of pressure washers, snow throwers and lawn tractors will be
shifted to the Wauwatosa, WI manufacturing facility, and production
of zero-turn lawnmowers will be moved to its Munnsville, NY
facility. Production is estimated to be completed in
McDonough and transitioned to the other facilities during the first
quarter of calendar 2015.
The closure will affect approximately 475 jobs and Briggs &
Stratton will provide assistance programs, continued benefits and
outplacement services to the affected employees. Shifting
production to the Wauwatosa, WI, facility will add approximately
220 new full-time positions and up to approximately 150 temporary
seasonal employments. Employment at the Munnsville, NY,
facility will however remain at current levels.
Total restructuring charges from these actions is expected at
approximately $30 to $37 million. This includes non-cash
write-downs of approximately $15 to $20 million, to be recorded
during fiscal 2015. Total cash costs related to these actions
are anticipated to be approximately $15 to $17 million, with the
majority of the cash costs being incurred in fiscal 2015.
Products segment sales will however be negatively impacted by
approximately $20 to $25 million in fiscal 2015 and $35 to $45
million annually beginning in fiscal 2016. The company does
not expect a material change in the sales or production volumes of
Briggs & Stratton projects annual savings of approximately $15
to $20 million from these actions. Approximately $5 million to $7
million is expected to be realized in fiscal 2015 while the rest is
to be realized in fiscal 2016 upon completion of the transition in
the fourth quarter of 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 (Sell). Some
better performing stocks worth considering in the sector include
Blount International Inc.
EnPro Industries, Inc.
Altra Industrial Motion Corp.
). While Blount International and EnPro sport a Zacks Rank #1
(Strong Buy), Altra Industrial Motion carries a Zacks Rank #2
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