MILWAUKEE, April 25, 2018 /PRNewswire/ -- Briggs &
Stratton Corporation (NYSE: BGG) today announced financial results
for its fiscal third quarter ended April 1,
2018.
- Fiscal third quarter net sales were $604
million, an increase of $7
million, or 1.2%, from $597
million for the prior year from continued favorable momentum
in commercial sales and higher sales of generators. The company
estimates that unseasonable spring weather lowered quarterly lawn
and garden sales by approximately $10
million from a year ago, but caused spring storms which
helped elevate generator sales.
- Quarterly gross profit margin of 21.6% (GAAP) and adjusted
gross profit margin of 21.9% decreased from a gross profit margin
of 22.6% last year primarily due to sales mix, higher freight
costs, and lower production volumes.
- Third quarter net income of $31.9
million, or $0.74 per diluted
share (GAAP), included senior note repurchase premiums, business
optimization charges and the impact of implementing tax reform.
Excluding these items, adjusted net income was $36.2 million, or $0.84 per diluted share. Management estimates
that unseasonable weather reduced fiscal 2018 third quarter
earnings by approximately $0.05 per
diluted share from a year ago.
- The company strengthened its capital structure in the third
quarter by making a $30 million
voluntary pension plan contribution and repurchasing approximately
$19.8 million of its high yield
senior notes.
- The Board of Directors authorized an additional $50 million in share repurchases reflecting its
confidence in the company's strategy.
- The company is adjusting its fiscal 2018 earnings outlook
to $1.33 to $1.50 per
diluted share, before business optimization costs, senior note
repurchase premiums and the implementation of tax reform, from
previous guidance of $1.45 to
$1.62 per diluted share due to
the anticipation of certain channel partners reducing inventories
this season to effect a more efficient transition of brands. In
addition, unseasonable spring weather could reduce the company's
fiscal 2018 outlook by up to an incremental $0.20 per diluted share. The magnitude of
the impact of the unseasonal spring weather is expected to be
determined by the timing of the season breaking in the impacted
regions, the pacing of the related retail sales and whether
retailers will commit to an extended selling season.
"We achieved sales growth in the third quarter from higher
generator sales and from our business diversification initiatives
focused on more commercial customers and applications,"
said Todd J. Teske, Chairman, President and Chief Executive
Officer. "This sales growth came about despite the headwind of
unusually high snowfall on the east coast of the U.S. and an
unseasonably cold start to spring in the U.S. and Europe. The
unseasonable spring weather has not yet abated; in fact, there has
been record snowfall across much of the midwestern portion of the
U.S. into the middle of April and continued cool temperatures which
have effectively delayed the start of the spring growing season by
over a month. Although the season has been delayed, we do expect a
solid grass growing season as there is adequate ground moisture in
the areas where lawns are prevalent. Compounding the spring
weather challenges, engine sales for residential mowers were
negatively impacted in the third quarter by actions certain of our
channel partners are taking to prepare for the anticipated
transition of brands next season at a major retailer. This
transition has led to our channel partners taking a cautious
approach to ordering for this season to reduce inventories and
effect a more efficient transition following the end of the
season. While we now expect this brand transition to present
a near-term challenge for us achieving our planned sales this
season, we are confident of our future success in this
category. Homeowners will continue to rely upon our trusted
brand and benefit from our innovative products that make work
easier."
Teske continued, "Looking ahead, we remain confident in our
abilities to achieve our long-term growth and profitability
objectives. More commercial customers are turning to Briggs &
Stratton for the innovation we are bringing to higher-growth
products and solutions which improve the productivity and safety of
workers in commercial cutting, infrastructure, construction and
other demanding jobs. Revenue growth in this area is 13% for the
trailing 12 months. At the same time our position as the leading
and preferred global supplier of power for residential lawn and
garden is secure behind continued innovation. The business
optimization program is on track to deliver $30-35 million in annual profit
improvement."
Outlook:
Updated fiscal 2018 guidance:
- Net sales, excluding any impact from the unseasonable weather
during the second half of fiscal 2018, are expected to be in a
range of $1.89 billion to
$1.94 billion, down from previous
guidance of $1.91 billion to
$1.96 billion, due to expected lower
residential engine sales from certain U.S. and European channel
partners reducing inventories this season, partially offset by
higher generator sales related to the recent east coast power
outages from spring snow storms. The reduction in U.S. channel
inventory is in anticipation of brand changes at a major retailer
and the reduction in Europe
channel inventory is largely due to new emissions requirements on
engines produced beginning in calendar 2019. Unseasonable spring
weather could negatively impact fiscal 2018 full-year net sales by
up to $40 million.
- Net income, excluding any impact from the unseasonable weather,
is expected to be in a range of $57
million to $65 million
(previously $62 million to
$70 million), or $1.33 to $1.50 per
diluted share (previously $1.45 to
$1.62 per diluted share). The
reduction in net income is driven by expected lower engine sales
and production due to reductions in channel inventory as well as
$4.0 million (pre-tax) of higher
freight costs. This outlook is prior to the benefit of share
repurchases and excludes the costs of the business optimization
program, senior note repurchase premiums and the implementation
charge related to tax reform. In addition, unseasonable spring
weather could negatively impact fiscal 2018 full-year net income by
up to $0.20 per share.
- Operating margins are expected to be approximately 5.5% to
5.8%, down from previous guidance of approximately 5.8% to 6.0%,
prior to the impact of costs related to the company's business
optimization program. The reduction in operating margins is driven
by expected lower engine sales and production due to expected
channel inventory reductions as well as higher freight costs. In
addition, unseasonable spring weather could negatively impact
fiscal 2018 operating margins by up to 50 basis points.
- Capital expenditures are expected to be approximately
$100 million, up from previous
guidance of $80 million -
$90 million. The increased spending
is related to the company's business optimization initiative, which
is proceeding well. The company continues to anticipate that fiscal
2019 spend will decrease to approximately $65 million.
- Fiscal 2018 interest expense, excluding premiums paid on the
repurchase of senior notes, is expected to remain unchanged at
$22.5 million. In addition, the
fiscal 2018 effective tax rate is expected to remain unchanged at
29% to 31%, before business optimization expenses, premiums paid on
the repurchase of senior notes and the implementation charge
related to tax reform.
Conference Call Information:
The company will host a conference call tomorrow at 10:00 AM (ET) to review the third quarter
financial results. A live webcast of the conference call will be
available on the company's corporate website:
http://investors.basco.com.
Also available is a dial-in number to access the call real-time
at (877) 233-9136 and enter Conference ID 4737929. A replay will be
offered beginning approximately two hours after the call ends and
will be available for one week. Dial (855) 859-2056 and enter the
Conference ID to access the replay.
Non-GAAP Financial Measures:
This release refers to non-GAAP financial measures including
"adjusted gross profit", "adjusted engineering, selling, general,
and administrative expenses", "adjusted segment income (loss)",
"adjusted net income (loss)", and "adjusted diluted earnings (loss)
per share." Refer to the accompanying financial schedules for
supplemental financial data and corresponding reconciliations of
these non-GAAP financial measures to certain GAAP financial
measures.
Safe Harbor Statement:
This release contains certain forward-looking statements that
involve risks and uncertainties that could cause actual results to
differ materially from those projected in the forward-looking
statements. The words "anticipate", "believe", "estimate",
"expect", "forecast", "intend", "plan", "project", and similar
expressions are intended to identify forward-looking statements.
The forward-looking statements are based on the company's current
views and assumptions and involve risks and uncertainties that
include, among other things, the ability to successfully forecast
demand for its products; changes in interest rates and foreign
exchange rates; the effects of weather on the purchasing patterns
of consumers and original equipment manufacturers (OEMs); actions
of engine manufacturers and OEMs with whom the company competes;
changes in laws and regulations, including U.S. tax reform, changes
in tax rates, laws and regulations as well as related guidance;
changes in customer and OEM demand; changes in prices of raw
materials and parts that the company purchases; changes in domestic
and foreign economic conditions (including effects from the U.K.'s
decision to exit the European Union); the ability to bring new
productive capacity on line efficiently and with good quality;
outcomes of legal proceedings and claims; the ability to realize
anticipated savings from restructuring actions; and other factors
disclosed from time to time in the company's SEC filings or
otherwise, including the factors discussed in Item 1A, Risk
Factors, of the company's Annual Report on Form 10-K and in its
periodic reports on Form 10-Q. The company undertakes no obligation
to update forward-looking statements made in this release to
reflect events or circumstances after the date of this
release.
About Briggs & Stratton Corporation:
Briggs & Stratton Corporation (NYSE: BGG), headquartered in
Milwaukee, Wisconsin, is focused
on providing power to get work done and make people's lives better.
Briggs & Stratton is the world's largest producer of gasoline
engines for outdoor power equipment, and is a leading designer,
manufacturer and marketer of power generation, pressure washer,
lawn and garden, turf care and job site products through its Briggs
& Stratton®, Simplicity®, Snapper®, Ferris®, Vanguard™,
Allmand®, Billy Goat®, Murray®, Branco®, and Victa® brands. Briggs
& Stratton products are designed, manufactured, marketed and
serviced in over 100 countries on six continents. For additional
information, please visit www.basco.com and
www.briggsandstratton.com.
BRIGGS &
STRATTON CORPORATION AND SUBSIDIARIES
|
Consolidated
Statements of Operations for the Periods Ended
March
|
(In Thousands,
except per share data)
|
|
|
|
Three Months
Ended March
|
|
Nine Months
Ended March
|
|
|
FY2018
|
|
FY2017
|
|
FY2018
|
|
FY2017
|
NET SALES
|
|
$
604,069
|
|
$
596,965
|
|
$
1,379,599
|
|
$
1,311,998
|
COST OF GOODS
SOLD
|
|
473,796
|
|
462,194
|
|
1,090,196
|
|
1,029,299
|
Gross
Profit
|
|
130,273
|
|
134,771
|
|
289,403
|
|
282,699
|
|
|
|
|
|
|
|
|
|
ENGINEERING, SELLING,
GENERAL AND ADMINISTRATIVE
EXPENSES
|
|
79,885
|
|
78,279
|
|
244,490
|
|
223,373
|
EQUITY IN EARNINGS OF
UNCONSOLIDATED AFFILIATES
|
|
713
|
|
1,079
|
|
6,438
|
|
7,318
|
Income from
Operations
|
|
51,101
|
|
57,571
|
|
51,351
|
|
66,644
|
|
|
|
|
|
|
|
|
|
INTEREST
EXPENSE
|
|
(8,617)
|
|
(5,521)
|
|
(19,167)
|
|
(15,159)
|
OTHER
INCOME
|
|
1,079
|
|
844
|
|
2,483
|
|
1,679
|
Income before Income
Taxes
|
|
43,563
|
|
52,894
|
|
34,667
|
|
53,164
|
|
|
|
|
|
|
|
|
|
PROVISION FOR INCOME
TAXES
|
|
11,675
|
|
17,075
|
|
34,163
|
|
16,242
|
Net Income
|
|
$
31,888
|
|
$
35,819
|
|
$
504
|
|
$
36,922
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.74
|
|
$
0.83
|
|
$
0.00
|
|
$
0.86
|
Diluted
|
|
$
0.74
|
|
$
0.83
|
|
$
0.00
|
|
$
0.86
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE
SHARES OUTSTANDING
|
|
|
|
|
|
|
|
|
Basic
|
|
42,064
|
|
42,076
|
|
42,108
|
|
42,217
|
Diluted
|
|
42,307
|
|
42,175
|
|
42,362
|
|
42,271
|
Supplemental
International Sales Information
|
(In
Thousands)
|
|
|
|
Three Months
Ended March
|
|
Nine Months
Ended March
|
|
|
FY2018
|
|
FY2017
|
|
FY2018
|
|
FY2017
|
International sales
based on product shipment destination
|
|
$
160,653
|
|
$
171,565
|
|
$
432,538
|
|
$
440,179
|
BRIGGS &
STRATTON CORPORATION AND SUBSIDIARIES
|
Consolidated
Balance Sheets as of the End of March
|
(In
Thousands)
|
|
CURRENT
ASSETS:
|
FY2018
|
|
FY2017
|
Cash and Cash
Equivalents
|
$
56,165
|
|
$
52,097
|
Accounts Receivable,
Net
|
259,472
|
|
298,990
|
Inventories
|
438,492
|
|
413,572
|
Prepaid Expenses and
Other Current Assets
|
35,953
|
|
22,178
|
Total Current
Assets
|
790,082
|
|
786,837
|
|
|
|
|
OTHER
ASSETS:
|
|
|
|
Goodwill
|
164,213
|
|
161,823
|
Investments
|
50,224
|
|
49,535
|
Other Intangible
Assets, Net
|
98,021
|
|
101,847
|
Deferred Income Tax
Asset
|
34,886
|
|
85,007
|
Other Long-Term
Assets, Net
|
20,932
|
|
19,182
|
Total Other
Assets
|
368,276
|
|
417,394
|
|
|
|
|
|
|
|
|
PLANT AND
EQUIPMENT:
|
|
|
|
At Cost
|
1,161,535
|
|
1,086,778
|
Less - Accumulated
Depreciation
|
762,186
|
|
742,240
|
Plant and Equipment,
Net
|
399,349
|
|
344,538
|
|
$
1,557,707
|
|
$
1,548,769
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts
Payable
|
$
202,822
|
|
$
212,974
|
Short-Term
Debt
|
131,556
|
|
62,300
|
Accrued
Liabilities
|
157,895
|
|
144,023
|
Total Current
Liabilities
|
492,273
|
|
419,297
|
|
|
|
|
OTHER
LIABILITIES:
|
|
|
|
Accrued Pension
Cost
|
197,749
|
|
297,170
|
Accrued Employee
Benefits
|
21,787
|
|
22,649
|
Accrued
Postretirement Health Care Obligation
|
29,547
|
|
31,126
|
Other Long-Term
Liabilities
|
53,737
|
|
43,320
|
Long-Term
Debt
|
202,332
|
|
221,682
|
Total Other
Liabilities
|
505,152
|
|
615,947
|
|
|
|
|
SHAREHOLDERS'
INVESTMENT:
|
|
|
|
Common
Stock
|
579
|
|
579
|
Additional Paid-In
Capital
|
75,001
|
|
73,269
|
Retained
Earnings
|
1,089,364
|
|
1,093,323
|
Accumulated Other
Comprehensive Loss
|
(280,546)
|
|
(330,293)
|
Treasury Stock, at
Cost
|
(324,116)
|
|
(323,353)
|
Total Shareholders'
Investment
|
560,282
|
|
513,525
|
|
$
1,557,707
|
|
$
1,548,769
|
|
|
|
|
BRIGGS &
STRATTON CORPORATION AND SUBSIDIARIES
|
Consolidated
Statements of Cash Flows
|
(In
Thousands)
|
|
|
Nine Months Ended
March
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
FY2018
|
|
FY2017
|
Net Income
|
$
504
|
|
$
36,922
|
Adjustments to
Reconcile Net Income to Net Cash Used in Operating
Activities:
|
|
|
|
Depreciation and
Amortization
|
43,756
|
|
42,177
|
Stock Compensation
Expense
|
5,312
|
|
4,560
|
Loss on Disposition
of Plant and Equipment
|
1,595
|
|
610
|
Provision for
Deferred Income Taxes
|
24,744
|
|
7,574
|
Equity in Earnings of
Unconsolidated Affiliates
|
(9,068)
|
|
(7,318)
|
Dividends Received
from Unconsolidated Affiliates
|
9,810
|
|
8,186
|
Pension Cash
Contributions
|
(30,000)
|
|
-
|
Changes in Operating
Assets and Liabilities:
|
|
|
|
Accounts
Receivable
|
(25,948)
|
|
(110,978)
|
Inventories
|
(62,780)
|
|
(27,553)
|
Other Current
Assets
|
(3,430)
|
|
584
|
Accounts Payable,
Accrued Liabilities and Income Taxes
|
11,287
|
|
30,041
|
Other, Net
|
15,198
|
|
(11,269)
|
Net Cash
Used in Operating Activities
|
(19,020)
|
|
(26,464)
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
Capital
Expenditures
|
(77,483)
|
|
(48,780)
|
Proceeds Received on
Disposition of Plant and Equipment
|
339
|
|
1,014
|
Cash Paid for
Acquisitions, Net of Cash Acquired
|
(1,800)
|
|
-
|
Proceeds on Sale of
Investment in Marketable Securities
|
-
|
|
3,343
|
Increase to
Restricted Cash
|
(9,053)
|
|
-
|
Net Cash
Used in Investing Activities
|
(87,997)
|
|
(44,423)
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
Net Borrowings on
Revolver
|
131,556
|
|
62,300
|
Long Term Note
Payable
|
7,685
|
|
-
|
Debt Issuance
Costs
|
(1,154)
|
|
-
|
Treasury Stock
Purchases
|
(8,710)
|
|
(17,924)
|
Repayment of Long
Term Debt
|
(19,781)
|
|
-
|
Payment of
Acquisition Contingent Liability
|
-
|
|
(1,625)
|
Stock Option Exercise
Proceeds and Tax Benefits
|
3,943
|
|
4,751
|
Payments Related to
Shares Withheld for Taxes for Stock Compensation
|
(1,147)
|
|
(1,739)
|
Cash Dividends
Paid
|
(12,007)
|
|
(12,028)
|
Net Cash
Provided by Financing Activities
|
100,385
|
|
33,735
|
|
|
|
|
EFFECT OF EXCHANGE
RATE CHANGES
|
1,090
|
|
(590)
|
NET DECREASE IN CASH
AND CASH EQUIVALENTS
|
(5,542)
|
|
(37,742)
|
CASH AND CASH
EQUIVALENTS, Beginning
|
61,707
|
|
89,839
|
CASH AND CASH
EQUIVALENTS, Ending
|
$
56,165
|
|
$
52,097
|
Liquidity and Capital Resources:
Net debt at April 1, 2018 was
$278.8 million (total Long-Term Debt
and Short-Term Debt, excluding related debt issuance costs, of
$334.8 million less $56.2 million of cash), compared with
$233.4 million (total Long-Term Debt
and Short-Term Debt, excluding debt issuance costs, of $285.4 million less $52.1
million of cash) at April 2,
2017.
Cash flows used in operating activities for the first nine
months of fiscal 2018 were $19.0
million, compared to $26.5
million for the first nine months of fiscal 2017. The
decrease in cash used in operating activities was primarily related
to changes in working capital, including more rapid collections of
accounts receivable partially offset by higher inventory levels due
to timing of shipments. The improvement in operating cash flows was
partially offset by a $30 million
voluntary contribution made to the pension plan in the third
quarter of fiscal 2018.
During the first nine months of fiscal 2018, the company
repurchased approximately 383,000 shares of its common stock
(including approximately 242,000 in the third quarter) on the open
market at an average price of $22.76
per share. As of April 1, 2018, there
was remaining authorization to repurchase up to approximately
$22 million of common stock with an
expiration date of June 29, 2018.
Subsequent to the end of the quarter, the Board of Directors
authorized an additional $50 million
under the share repurchase program with an expiration date of
June 30, 2020. Further, during the
third quarter of fiscal 2018, the company repurchased approximately
$19.8 million of Senior Notes after
receiving unsolicited offers from bondholders.
SUPPLEMENTAL SEGMENT INFORMATION
Engines
Segment:
|
|
|
Three Months
Ended March
|
|
Nine Months
Ended March
|
(In
Thousands)
|
|
FY2018
|
|
FY2017
|
|
FY2018
|
|
FY2017
|
Net Sales
|
|
$
384,292
|
|
$
391,063
|
|
$
790,543
|
|
$
806,298
|
|
|
|
|
|
|
|
|
|
Gross Profit as
Reported
|
|
$
96,780
|
|
$
98,814
|
|
$
183,428
|
|
$
191,373
|
Business
Optimization
|
|
903
|
|
-
|
|
2,031
|
|
-
|
Adjusted Gross
Profit
|
|
$
97,683
|
|
$
98,814
|
|
$
185,459
|
|
$
191,373
|
|
|
|
|
|
|
|
|
|
Gross Profit % as
Reported
|
|
25.2%
|
|
25.3%
|
|
23.2%
|
|
23.7%
|
Adjusted Gross Profit
%
|
|
25.4%
|
|
25.3%
|
|
23.5%
|
|
23.7%
|
|
|
|
|
|
|
|
|
|
Segment Income as
Reported
|
|
$
47,989
|
|
$
50,946
|
|
$
36,590
|
|
$
57,216
|
Business
Optimization
|
|
2,896
|
|
-
|
|
7,243
|
|
-
|
Adjusted Segment
Income
|
|
$
50,885
|
|
$
50,946
|
|
$
43,833
|
|
$
57,216
|
|
|
|
|
|
|
|
|
|
Segment Income % as
Reported
|
|
12.5%
|
|
13.0%
|
|
4.6%
|
|
7.1%
|
Adjusted Segment
Income %
|
|
13.2%
|
|
13.0%
|
|
5.5%
|
|
7.1%
|
Third Quarter Highlights
- Engine sales unit volumes decreased by 7%, or approximately
199,000 engines, in the third quarter of fiscal 2018 compared to
the same period last year. Sales into Europe were lower due to our customers taking
a cautious approach to ordering due to a delayed start of spring
weather and certain channel partners reducing orders to lower
channel inventory levels in advance of new emissions requirements
on the production of engines beginning in calendar 2019. Sales were
also lower in North America due to
certain channel partners taking a cautious approach to ordering
inventory due to a delayed start of spring weather and a desire to
further reduce channel inventory in advance of anticipated brand
transitions next season. These sales decreases were partially
offset by favorable sales mix which included proportionately higher
sales of large engines driven by growth of Vanguard commercial
engines and higher pricing.
- GAAP gross profit percentage compared to last year decreased 10
basis points and adjusted gross profit margins were higher by 10
basis points. Adjusted margins were higher due to favorable sales
mix and plant efficiencies offsetting 9% lower production volumes,
as anticipated, and freight rate increases. Material cost increases
have been offset by higher pricing.
- GAAP ESG&A increased compared to last year by $0.4 million and adjusted ESG&A was lower by
$0.2 million. Adjusted ESG&A was
lower due to lower variable compensation costs, partially offset by
the investment to upgrade the company's ERP system.
Products
Segment:
|
|
|
Three Months
Ended March
|
|
Nine Months
Ended March
|
(In
Thousands)
|
|
FY2018
|
|
FY2017
|
|
FY2018
|
|
FY2017
|
Net Sales
|
|
$
245,169
|
|
$
233,510
|
|
$
653,845
|
|
$
575,007
|
|
|
|
|
|
|
|
|
|
Gross Profit as
Reported
|
|
$
32,773
|
|
$
34,946
|
|
$
105,570
|
|
$
91,075
|
Business
Optimization
|
|
971
|
|
-
|
|
2,493
|
|
-
|
Adjusted Gross
Profit
|
|
$
33,744
|
|
$
34,946
|
|
$
108,063
|
|
$
91,075
|
|
|
|
|
|
|
|
|
|
Gross Profit % as
Reported
|
|
13.4%
|
|
15.0%
|
|
16.1%
|
|
15.8%
|
Adjusted Gross Profit
%
|
|
13.8%
|
|
15.0%
|
|
16.5%
|
|
15.8%
|
|
|
|
|
|
|
|
|
|
Segment Income as
Reported
|
|
$
2,392
|
|
$
5,614
|
|
$
14,356
|
|
$
9,177
|
Business
Optimization
|
|
1,309
|
|
-
|
|
5,259
|
|
-
|
Adjusted Segment
Income
|
|
$
3,701
|
|
$
5,614
|
|
$
19,615
|
|
$
9,177
|
|
|
|
|
|
|
|
|
|
Segment Income % as
Reported
|
|
1.0%
|
|
2.4%
|
|
2.2%
|
|
1.6%
|
Adjusted Segment
Income %
|
|
1.5%
|
|
2.4%
|
|
3.0%
|
|
1.6%
|
Third Quarter Highlights
- Net sales increased by $11.7
million, or 5.0%, from the same period last year. The
increase was primarily due to higher sales of commercial job site
products and generators. Generator sales benefited from higher than
usual power outages due to the east coast ice and snow storms.
Sales of commercial mowers were lower in the third quarter due to
timing of shipments driven by unseasonably cool spring
weather.
- Gross profit percentage and adjusted gross profit percentage
decreased by 160 basis points and 120 basis points, respectively,
primarily due to unfavorable sales mix, higher freight costs and a
4% reduction in manufacturing throughput. As anticipated,
production of pressure washers was lower in the quarter in order to
right size inventory levels, which were elevated coming out of last
season.
- GAAP ESG&A and adjusted ESG&A increased by $1.2 million and $0.9
million, respectively, compared to last year due to higher
commissions expense on increased sales volume and higher costs
associated with investments to upgrade the company's ERP system and
growing commercial offerings.
Non-GAAP Financial Measures
Briggs & Stratton Corporation prepares its financial
statements using Generally Accepted Accounting Principles (GAAP).
When a company discloses material information containing non-GAAP
financial measures, SEC regulations require that the disclosure
include a presentation of the most directly comparable GAAP measure
and a reconciliation of the GAAP and non-GAAP financial measures.
Management's inclusion of non-GAAP financial measures in this
release is intended to supplement, not replace, the presentation of
the financial results in accordance with GAAP. Briggs &
Stratton Corporation management believes that these non-GAAP
financial measures, when considered together with the GAAP
financial measures, provide information that is useful to investors
in understanding period-over-period operating results separate and
apart from items that may, or could, have a disproportionately
positive or negative impact on results in any particular period.
Management also believes that these non-GAAP financial measures
enhance the ability of investors to analyze the company's business
trends and to understand the company's performance. In addition,
management may utilize non-GAAP financial measures as a guide in
the company's forecasting, budgeting and long-term planning
process. Non-GAAP financial measures should be considered in
addition to, and not as a substitute for, or superior to, financial
measures presented in accordance with GAAP. The following tables
are reconciliations of the non-GAAP financial measures:
BRIGGS &
STRATTON CORPORATION AND SUBSIDIARIES
|
Adjusted Segment
Information for the Three Month Periods Ended March
|
(In Thousands,
except per share data)
|
|
|
|
Three Months
Ended March
|
|
|
FY2018
Reported
|
|
Adjustments1
|
|
FY2018
Adjusted
|
|
FY2017
Reported
|
|
Adjustments
|
|
FY2017
Adjusted
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
96,780
|
|
$
903
|
|
$
97,683
|
|
$
98,814
|
|
$
-
|
|
$
98,814
|
Products
|
|
32,773
|
|
971
|
|
33,744
|
|
34,946
|
|
-
|
|
34,946
|
Inter-Segment
Eliminations
|
|
720
|
|
-
|
|
720
|
|
1,011
|
|
-
|
|
1,011
|
Total
|
|
$
130,273
|
|
$
1,874
|
|
$
132,147
|
|
$
134,771
|
|
$
-
|
|
$
134,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engineering, Selling,
General and Administrative Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
48,853
|
|
$
587
|
|
$
48,266
|
|
$
48,450
|
|
$
-
|
|
$
48,450
|
Products
|
|
31,032
|
|
338
|
|
30,694
|
|
29,829
|
|
-
|
|
29,829
|
Total
|
|
$
79,885
|
|
$
925
|
|
$
78,960
|
|
$
78,279
|
|
$
-
|
|
$
78,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Earnings
of
Unconsolidated Affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
62
|
|
$
1,406
|
|
$
1,468
|
|
$
582
|
|
$
-
|
|
$
582
|
Products
|
|
651
|
|
-
|
|
651
|
|
497
|
|
-
|
|
497
|
Total
|
|
$
713
|
|
$
1,406
|
|
$
2,119
|
|
$
1,079
|
|
$
-
|
|
$
1,079
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
47,989
|
|
$
2,896
|
|
$
50,885
|
|
$
50,946
|
|
$
-
|
|
$
50,946
|
Products
|
|
2,392
|
|
1,309
|
|
3,701
|
|
5,614
|
|
-
|
|
5,614
|
Inter-Segment
Eliminations
|
|
720
|
|
-
|
|
720
|
|
1,011
|
|
-
|
|
1,011
|
Total
|
|
$
51,101
|
|
$
4,205
|
|
$
55,306
|
|
$
57,571
|
|
$
-
|
|
$
57,571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
$
(8,617)
|
|
$
2,017
|
|
(6,600)
|
|
$
(5,521)
|
|
$
-
|
|
$
(5,521)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before Income
Taxes
|
|
43,563
|
|
6,222
|
|
49,785
|
|
52,894
|
|
-
|
|
52,894
|
Provision for Income
Taxes
|
|
11,675
|
|
1,876
|
|
13,551
|
|
17,075
|
|
-
|
|
17,075
|
Net
Income
|
|
$
31,888
|
|
$
4,346
|
|
$
36,234
|
|
$
35,819
|
|
$
-
|
|
$
35,819
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.74
|
|
$
0.10
|
|
$
0.84
|
|
$
0.83
|
|
$
-
|
|
$
0.83
|
Diluted
|
|
0.74
|
|
0.10
|
|
0.84
|
|
0.83
|
|
-
|
|
0.83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
For the third quarter
of fiscal 2018, business optimization expenses include $0.9 million
($0.6 million after tax) of non-cash charges related primarily to
plant & equipment impairment and accelerated depreciation, and
$3.3 million ($2.9 million after tax) of cash charges related
primarily to employee termination benefits, lease terminations,
professional services and plant rearrangement activities. Tax
expense also includes a $0.7 million benefit to revalue deferred
tax assets and liabilities under the Tax Cuts and Jobs Act of 2017.
The company recognized in interest expense $2.0 million ($1.5
million after tax) for premiums paid to repurchase senior notes
after receiving unsolicited offers from bondholders.
|
BRIGGS &
STRATTON CORPORATION AND SUBSIDIARIES
|
Adjusted Segment
Information for the Nine Month Periods Ended March
|
(In Thousands,
except per share data)
|
|
|
|
Nine Months Ended
March
|
|
|
FY2018
Reported
|
|
Adjustments1
|
|
FY2018
Adjusted
|
|
FY2017
Reported
|
|
Adjustments
|
|
FY2017
Adjusted
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
183,428
|
|
$
2,031
|
|
$
185,459
|
|
$
191,373
|
|
$
-
|
|
$
191,373
|
Products
|
|
105,570
|
|
2,493
|
|
108,063
|
|
91,075
|
|
-
|
|
91,075
|
Inter-Segment
Eliminations
|
|
405
|
|
-
|
|
405
|
|
251
|
|
-
|
|
251
|
Total
|
|
$
289,403
|
|
$
4,524
|
|
$
293,927
|
|
$
282,699
|
|
$
-
|
|
$
282,699
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engineering, Selling,
General and Administrative Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
150,340
|
|
$
2,582
|
|
$
147,758
|
|
$
138,610
|
|
$
-
|
|
$
138,610
|
Products
|
|
94,150
|
|
2,766
|
|
91,384
|
|
84,763
|
|
-
|
|
84,763
|
Total
|
|
$
244,490
|
|
$
5,348
|
|
$
239,142
|
|
$
223,373
|
|
$
-
|
|
$
223,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Earnings
of
Unconsolidated Affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
3,502
|
|
$
2,630
|
|
$
6,132
|
|
$
4,453
|
|
$
-
|
|
$
4,453
|
Products
|
|
2,936
|
|
-
|
|
2,936
|
|
2,865
|
|
-
|
|
2,865
|
Total
|
|
$
6,438
|
|
$
2,630
|
|
$
9,068
|
|
$
7,318
|
|
$
-
|
|
$
7,318
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
36,590
|
|
$
7,243
|
|
$
43,833
|
|
$
57,216
|
|
$
-
|
|
$
57,216
|
Products
|
|
14,356
|
|
5,259
|
|
19,615
|
|
9,177
|
|
-
|
|
9,177
|
Inter-Segment
Eliminations
|
|
405
|
|
-
|
|
405
|
|
251
|
|
-
|
|
251
|
Total
|
|
$
51,351
|
|
$
12,502
|
|
$
63,853
|
|
$
66,644
|
|
$
-
|
|
$
66,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
$
(19,167)
|
|
$
2,017
|
|
$
(17,150)
|
|
$
(15,159)
|
|
$
-
|
|
$
(15,159)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before Income
Taxes
|
|
34,667
|
|
14,519
|
|
49,186
|
|
53,164
|
|
-
|
|
53,164
|
Provision for Income
Taxes
|
|
34,163
|
|
(21,104)
|
|
13,059
|
|
16,242
|
|
-
|
|
16,242
|
Net
Income
|
|
$
504
|
|
$
35,623
|
|
$
36,127
|
|
$
36,922
|
|
$
-
|
|
$
36,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.00
|
|
$
0.84
|
|
$
0.84
|
|
$
0.86
|
|
$
-
|
|
$
0.86
|
Diluted
|
|
0.00
|
|
0.83
|
|
0.83
|
|
0.86
|
|
-
|
|
0.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
For the first nine
months of fiscal 2018, business optimization expenses include $3.8
million ($2.8 million after tax) of non-cash charges related
primarily to plant & equipment impairment and accelerated
depreciation, and $8.6 million ($7.1 million after tax) of cash
charges related primarily to employee termination benefits, lease
terminations, professional services and plant rearrangement
activities. Tax expense also includes a $24.2 million charge
associated with the Tax Cuts and Jobs Act of 2017 comprised of
$17.7 million to revalue deferred tax assets and liabilities and
$6.5 million to record the impact of the inclusion of foreign
earnings. The company recognized in interest expense $2.0
million ($1.5 million after tax) for premiums paid to repurchase
senior notes after receiving unsolicited offers from
bondholders.
|
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SOURCE Briggs & Stratton Corporation