Briggs & Stratton Corp.
) reported second-quarter 2013 adjusted earnings per share (EPS)
of 7 cents, well ahead of the Zacks Consensus Estimate of 2 cents
and 40% higher than the year-ago quarter EPS of 5 cents.
Including special items, the company reported a loss of 2 cents
per share compared to earnings of 5 cents in the year-ago
Total revenue dipped 2% year over year to $439 million, and
was well short of the Zacks Consensus Estimate of $448 million.
Increased sales of portable and standby generators in response to
Hurricane Sandy were offset by lower sales of snow throwers and
engines for snow throwers in the U.S. and weak lawnmowers sales
due to exceptionally dry conditions in Australia.
Cost of goods sold improved 4% to $359 million in the quarter.
Adjusted gross profit increased 8% to $80 million. Selling,
general and administrative expenses declined 5.6% to $69 million
in the quarter. Adjusted operating income in the reported quarter
was $10.9 million, a substantial improvement from $0.6 million in
the year-ago quarter.
The Engines segment's sales fell 4% to $274 million on reduced
shipments of engines used on snow thrower equipment in the North
American market and walk mowers in the Australian market.
Furthermore, an unfavorable mix of engines sold that reflected
proportionately lower sales of large engines and reduced pricing
arising from lower year-over-year material costs. Adjusted
operating profit for the segment increased to $13 million from $2
million in the year-ago quarter.
The Product segment reported sales of $197 million, down 8%
from the year-ago quarter. Results were affected by lower demand
for snow thrower equipment and related service parts due to lack
of adequate snowfall in the U.S. and reduced sales of lawn and
garden equipment owing to dry conditions in the North American
and Australian markets. However, higher shipments of portable and
standby generators due to Hurricane Sandy and slightly improved
pricing on lawn and garden equipment sold in the North American
market were the bright spots. The segment reported an adjusted
operating loss of $4.5 million compared with operating income of
$0.6 million in the year-ago quarter.
Cash and cash equivalents were $18.2 million as of Dec 31,
2012 compared with $13.9 million as of Dec 31, 2011. Cash flow
used in operating activities was $75 million during the first
half of fiscal 2013 compared with $165 million in the comparable
period last year. The improvement was primarily based on lower
working capital needs in the most recent period associated with
decreased receivables, lower production levels and planned
inventory reductions, partially offset by contributions to the
pension plan of $16.2 million in fiscal 2013. Debt to
capitalization ratio increased to 28.1% as of Dec 31, 2012 from
25.4% as of Dec 31, 2011.
During the first half of fiscal 2013, Briggs & Stratton
repurchased 1.05 million shares at an average price of $18.26 per
share for a total price of $19.2 million.
Last month, the company completed the aquisition of
Brazil-based Branco for approximately $57 million in cash. Branco
is a leading brand in the Brazilian light power equipment market
with a broad range of outdoor power equipment used primarily in
light commercial applications in Brazil.
The company has been taking steps to reconfigure and reduce
its capacity and costs, diversify its portfolio and expand in
other regions of the world. The company's restructuring program,
started in fiscal 2012, achieved pre-tax savings of $19.1 million
during the first six months of fiscal 2013.
Among other initiatives, the company has made progress toward
finalizing its exit from the Newbern, Tennessee and Ostrava,
Czech Republic manufacturing facilities and the consolidation of
its Auburn, Alabama plant. Given the increased demand for engines
and portable generators from storms that occurred in the first
six months of fiscal 2013, the Auburn plant consolidation will
extend into fiscal 2014.
The total pre-tax costs of these actions are expected to be
$12 to $22 million in fiscal 2013. The company anticipates
annualized pre-tax savings from these restructuring actions to be
$30 to $35 million in fiscal 2013 and $40 to $45 million in
Fiscal 2013 Outlook
For fiscal 2013, the company expects adjusted net income in
the range of $60 million to $75 million, or $1.25 to $1.55 per
share. Net sales for fiscal 2013 are expected to be in the range
of $1.95 billion to $2.15 billion. Operating margin is expected
to be in the range of 5.1% to 5.6%.
Milwaukee, Wisconsin-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 a top manufacturer of portable
generators and pressure washers, and is a leading designer,
manufacturer and marketer of lawn and garden and turf care
through its Simplicity, Snapper, FerrisMurray and Victa
Briggs & Stratton retains a short-term Zacks Rank #3
(Hold). The other companies in the farm machinery industry such
CNH Global NV
Titan International Inc.
) are yet to announce their results for the December quarter.
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