MILWAUKEE,
Aug. 15, 2018
/PRNewswire/ -- Briggs & Stratton Corporation (NYSE: BGG)
today announced financial results for its fiscal fourth quarter and
year ended July 1, 2018.
For the fiscal 2018 fourth quarter:
- Fiscal fourth quarter net sales were $502 million, an increase of $28 million or 5.8% from $474 million for the prior year. Continued high
growth in commercial turf and lawn care, commercial job site,
commercial engines and generators was offset by year-over-year
softness in residential lawn and garden sales.
- Quarterly GAAP gross profit margin of 21.6% and adjusted
gross profit margin of 22.0% increased from gross profit margin of
21.3% last year driven by favorable sales mix due to higher sales
of commercial offerings. Manufacturing efficiency improvements and
higher pricing offset material and freight cost
increases.
- Fourth quarter GAAP net loss of $11.8 million included business optimization
charges, pension settlement charges, senior note repurchase
premiums, and the impact of implementing tax reform. Excluding
these items, adjusted net income was $20.1
million, or $0.47 per diluted
share, which was slightly higher than $0.46 per diluted share for the fourth quarter of
fiscal 2017.
For the fiscal 2018 full year:
- Fiscal 2018 net sales were $1.88
billion, up $95.2 million or
5.3% from $1.79 billion for fiscal
2017. The company set a new record for sales of commercial
products, amounting to $505 million,
an increase of 16% compared to last year.
- Full year GAAP gross profit margin of 21.2% was down from
21.5% for fiscal 2017. Adjusted gross profit margin of 21.5% was
comparable with last year. Products adjusted segment operating
margins of 3.3% improved by 170 basis points from last
year.
- Full year GAAP net loss of $11.3
million, or $0.28 per diluted
share, included business optimization charges, pension settlement
charges, senior note repurchase premiums, and the impact of
implementing tax reform. Excluding these items, adjusted net income
was $55.8 million, or $1.29 per diluted share.
Capital allocation update:
- Capital expenditures of $103
million were elevated from prior years to fund the business
optimization program.
- The company paid $24.0
million in cash dividends to shareholders during fiscal
2018.
- The company repurchased $10.3
million of common stock under the company's share repurchase
program during fiscal 2018.
- The capital structure was strengthened by making a
$30 million voluntary pension plan
contribution and repurchasing approximately $22.3 million of the company's high yield senior
notes.
"Ongoing robust shipments of commercial products sustained
growth for the quarter and year, and demonstrated the effectiveness
of our diversification strategy," stated Todd J. Teske, Chairman, President and Chief
Executive Officer. "We are very pleased with the growth in
commercial job site products, supported by new customers and
channels. Placement of our Vanguard commercial engines powering
more applications remains solidly on track. Shipments of Ferris
commercial mowers finished the quarter on an upward trend, as
weather conditions improved. This growth offset weakness in
residential sales, which resulted from a severely delayed mowing
season from a prolonged wet and cold spring across much of
North America, compounded by
inventory reductions among mass retailers in Europe and the U.S. being taken in
anticipation of brand transitions. While these issues
presented a challenge to achieving our planned sales this season,
we are confident in our ability to maintain our market-leading
placement in residential engines next season, based on discussions
with channel partners. There has been good progress to date with
line reviews as consumers continue to recognize the Briggs &
Stratton brand for its innovation and reliability. We are well
positioned to benefit from recovery to a more normalized
environment."
Teske added, "I am pleased with the progress made in
fiscal 2018 to position the company for improving performance. In
addition to the contributions from the acquisition of assets of
Ground Logic and recently Hurricane Power, we are on track with our
business optimization initiatives to deliver $30-$35 million in
annual profit improvement by 2021. We enter fiscal 2019 ramping up
production in our new Ferris mower facility, which provides needed
capacity and greater manufacturing efficiency. In addition, we will
be increasing domestic production of Vanguard commercial engines,
with the on-shoring of engines from overseas and strong customer
demand for our expanded line of horizontal-shaft engines. Our
upgraded ERP system successfully went live at the beginning of
July, and we expect to begin accruing the benefits from a more
streamlined platform. Taken together, we continue to expect to
drive growth, efficiency and innovation as more people depend on
Briggs & Stratton for power to get the job done."
Fiscal 2019 Outlook:
- Net sales are expected to be in a range of $1.93 billion to $1.99
billion for growth of approximately 2.5% to 5.8%
(5.5% to 9.0% growth excluding storm-related sales of
approximately $55 million for fiscal
2018)
-
- Markets for commercial products are expected to grow
mid-single digits and we anticipate continued market share gains in
the categories of commercial job site, commercial
engines and commercial turf and lawn care, in addition to the
benefit of the recent asset acquisitions.
- Residential sales, excluding fiscal 2018 storm volume,
are expected to grow approximately 3% to 5%, which includes market
improvement on more normal spring weather andsome normalization of
channel inventory levels in the U.S. and Europe.
- We expect to hold our market-leading
residential engine placement for the upcoming lawn and garden
season.
- Net income is expected to be in a range of $58 million to $66
million, or $1.35 to
$1.55 per diluted share, prior to the
impact of costs related to our business optimization program,
acquisition costs or the benefit of any share repurchases. This
contemplates year-over-year midpoint growth of approximately
11%.
- Operating margins before business optimization costs and
acquisition costs are expected to be approximately 5.3% to 5.5%.
Compared to fiscal 2018, operating margins are expected to improve
due to favorable sales mix from growth of commercial products and
business optimization program savings of $6
million to $8 million. Higher
material and freight costs are expected to be offset by pricing,
efficiency improvements and product cost improvements.
- Interest expense is expected to be approximately
$24.5 million and other income to be
approximately $1 million, which
includes approximately $2 million of
pension expense that would have previously been reported in
operating income.
- Tax rate before business optimization costs and
acquisition costs are expected to be in a range of 24% to 26%,
which includes the benefit of a full fiscal year under tax
reform.
- The company anticipates capital expenditures to be
approximately $65
million.
- Pre-tax charges associated with the business optimization
program are expected to be approximately $27
million to $32 million in
fiscal 2019. Total program cost estimate remains unchanged at
$50 million to $55 million.
Conference Call Information:
The company will host a conference call tomorrow at
10:00 AM (ET) to review the fourth
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 5254579. 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 the business optimization program and 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 June
|
(In Thousands,
except per share data)
|
|
|
|
|
Three Months
Ended June
|
|
Twelve
Months Ended June
|
|
|
FY2018
|
|
FY2017
|
|
FY2018
|
|
FY2017
|
NET SALES
|
|
$501,694
|
|
$474,105
|
|
$1,881,294
|
|
$1,786,103
|
COST OF GOODS
SOLD
|
|
393,017
|
|
372,975
|
|
1,483,212
|
|
1,402,274
|
Gross
Profit
|
|
108,677
|
|
101,130
|
|
398,082
|
|
383,829
|
|
|
|
|
|
|
|
|
|
ENGINEERING, SELLING,
GENERAL
|
|
|
|
|
|
|
|
|
AND ADMINISTRATIVE
EXPENSES
|
|
129,655
|
|
74,164
|
|
374,145
|
|
297,538
|
EQUITY IN EARNINGS OF
UNCONSOLIDATED AFFILIATES
|
|
2,819
|
|
3,737
|
|
9,257
|
|
11,056
|
Income (Loss) from
Operations
|
|
(18,159)
|
|
30,703
|
|
33,194
|
|
97,347
|
|
|
|
|
|
|
|
|
|
INTEREST
EXPENSE
|
|
(6,153)
|
|
(5,135)
|
|
(25,320)
|
|
(20,293)
|
OTHER
INCOME
|
|
745
|
|
927
|
|
3,227
|
|
2,607
|
Income (Loss) before
Income Taxes
|
|
(23,567)
|
|
26,495
|
|
11,101
|
|
79,661
|
|
|
|
|
|
|
|
|
|
PROVISION (BENEFIT)
FOR INCOME TAXES
|
|
(11,742)
|
|
6,768
|
|
22,421
|
|
23,011
|
Net Income
(Loss)
|
|
$
(11,825)
|
|
$
19,727
|
|
$
(11,320)
|
|
$
56,650
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) PER
SHARE
|
|
|
|
|
|
|
|
|
Basic
|
|
$
(0.29)
|
|
$
0.46
|
|
$
(0.28)
|
|
$
1.31
|
Diluted
|
|
$
(0.29)
|
|
$
0.46
|
|
$
(0.28)
|
|
$
1.31
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE
SHARES OUTSTANDING
|
|
|
|
|
|
|
|
|
Basic
|
|
41,947
|
|
42,063
|
|
42,068
|
|
42,178
|
Diluted
|
|
41,947
|
|
42,302
|
|
42,068
|
|
42,263
|
Supplemental
International Sales Information
|
(In
Thousands)
|
|
|
|
Three Months
Ended June
|
|
Twelve
Months Ended June
|
|
|
FY2018
|
|
FY2017
|
|
FY2018
|
|
FY2017
|
International sales
based on product shipment destination
|
|
$102,069
|
|
$99,910
|
|
$534,607
|
|
$540,088
|
BRIGGS &
STRATTON CORPORATION AND SUBSIDIARIES
|
Consolidated
Balance Sheets as of the End of June
|
(In
Thousands)
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
FY2018
|
|
FY2017
|
Cash and Cash
Equivalents
|
$
44,923
|
|
$
61,707
|
Accounts Receivable,
Net
|
182,801
|
|
230,011
|
Inventories
|
411,831
|
|
374,879
|
Prepaid Expenses and
Other Current Assets
|
39,651
|
|
22,844
|
Total Current
Assets
|
679,206
|
|
689,441
|
|
|
|
|
OTHER
ASSETS:
|
|
|
|
Goodwill
|
163,200
|
|
161,649
|
Investments
|
50,960
|
|
51,677
|
Other Intangible
Assets, Net
|
95,864
|
|
100,595
|
Deferred Income Tax
Asset
|
12,149
|
|
64,412
|
Other Long-Term
Assets, Net
|
20,507
|
|
18,325
|
Total Other
Assets
|
342,680
|
|
396,658
|
|
|
|
|
|
|
|
|
PLANT AND
EQUIPMENT:
|
|
|
|
At Cost
|
1,175,165
|
|
1,104,583
|
Less - Accumulated
Depreciation
|
753,085
|
|
739,703
|
Plant and Equipment,
Net
|
422,080
|
|
364,880
|
|
$
1,443,966
|
|
$
1,450,979
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts
Payable
|
$
204,173
|
|
$
193,677
|
Short-Term
Debt
|
48,036
|
|
-
|
Accrued
Liabilities
|
131,897
|
|
136,701
|
Total Current
Liabilities
|
384,106
|
|
330,378
|
|
|
|
|
OTHER
LIABILITIES:
|
|
|
|
Accrued Pension
Cost
|
189,872
|
|
242,908
|
Accrued Employee
Benefits
|
20,196
|
|
21,897
|
Accrued
Postretirement Health Care Obligation
|
30,186
|
|
35,132
|
Other Long-Term
Liabilities
|
49,228
|
|
39,537
|
Long-Term
Debt
|
199,954
|
|
221,793
|
Total Other
Liabilities
|
489,436
|
|
561,267
|
|
|
|
|
SHAREHOLDERS'
INVESTMENT:
|
|
|
|
Common
Stock
|
579
|
|
579
|
Additional Paid-In
Capital
|
76,408
|
|
73,562
|
Retained
Earnings
|
1,071,480
|
|
1,107,033
|
Accumulated Other
Comprehensive Loss
|
(252,272)
|
|
(300,026)
|
Treasury Stock, at
Cost
|
(325,771)
|
|
(321,814)
|
Total Shareholders'
Investment
|
570,424
|
|
559,334
|
|
$
1,443,966
|
|
$
1,450,979
|
BRIGGS &
STRATTON CORPORATION AND SUBSIDIARIES
|
Consolidated
Statements of Cash Flows
|
(In Thousands)
|
|
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
FY2018
|
|
FY2017
|
Net Income
(Loss)
|
$
(11,320)
|
|
$
56,650
|
Adjustments to
Reconcile Net Income (Loss) to Net Cash Provided by Operating
Activities:
|
|
|
|
Depreciation and
Amortization
|
58,258
|
|
56,183
|
Stock Compensation
Expense
|
6,675
|
|
4,923
|
Loss on Disposition
of Plant and Equipment
|
1,915
|
|
857
|
Provision for
Deferred Income Taxes
|
35,351
|
|
10,316
|
Equity in Earnings of
Unconsolidated Affiliates
|
(12,230)
|
|
(11,056)
|
Dividends Received
from Unconsolidated Affiliates
|
10,911
|
|
9,067
|
Pension
Settlement
|
41,157
|
|
-
|
Pension Cash
Contributions
|
(30,000)
|
|
-
|
Changes in Operating
Assets and Liabilities:
|
|
|
|
Accounts
Receivable
|
47,180
|
|
(41,655)
|
Inventories
|
(37,446)
|
|
11,204
|
Other Current
Assets
|
(4,759)
|
|
(1,759)
|
Accounts Payable,
Accrued Liabilities and Income Taxes
|
(10,345)
|
|
8,152
|
Other, Net
|
(2,624)
|
|
(12,538)
|
Net Cash
Provided by Operating Activities
|
92,723
|
|
90,344
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
Capital
Expenditures
|
(103,203)
|
|
(83,141)
|
Proceeds Received on
Disposition of Plant and Equipment
|
339
|
|
1,027
|
Cash Paid for
Acquisitions, Net of Cash Acquired
|
(1,800)
|
|
-
|
Proceeds on Sale of
Investment in Marketable Securities
|
-
|
|
3,343
|
Increase to
Restricted Cash
|
(4,295)
|
|
-
|
Net Cash
Used in Investing Activities
|
(108,959)
|
|
(78,771)
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
Net Borrowings on
Revolver
|
48,036
|
|
-
|
Long Term Note
Payable
|
7,685
|
|
-
|
Debt Issuance
Costs
|
(1,154)
|
|
-
|
Treasury Stock
Purchases
|
(10,312)
|
|
(19,680)
|
Repayments of Long
Term Debt
|
(22,261)
|
|
-
|
Payment of
Acquisition Contingent Liability
|
-
|
|
(1,625)
|
Stock Option Exercise
Proceeds and Tax Benefits
|
3,772
|
|
7,770
|
Payments Related to
Shares Withheld for Taxes for Stock Compensation
|
(1,396)
|
|
(1,750)
|
Cash Dividends
Paid
|
(23,951)
|
|
(24,054)
|
Net Cash
Provided by (Used in) Financing Activities
|
419
|
|
(39,339)
|
|
|
|
|
EFFECT OF EXCHANGE
RATE CHANGES
|
(967)
|
|
(366)
|
NET DECREASE IN CASH
AND CASH EQUIVALENTS
|
(16,784)
|
|
(28,132)
|
CASH AND CASH
EQUIVALENTS, Beginning
|
61,707
|
|
89,839
|
CASH AND CASH
EQUIVALENTS, Ending
|
$
44,923
|
|
$
61,707
|
|
|
|
|
SUPPLEMENTAL
SEGMENT INFORMATION
|
|
Engines
Segment:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended June
|
|
Twelve
Months Ended June
|
(In
Thousands)
|
|
FY2018
|
|
FY2017
|
|
FY2018
|
|
FY2017
|
Net Sales
|
|
$
275,775
|
|
$ 292,511
|
|
$
1,066,318
|
|
$
1,098,809
|
|
|
|
|
|
|
|
|
|
Gross Profit as
Reported
|
|
$
69,217
|
|
$
70,663
|
|
$
252,645
|
|
$
262,036
|
Business
Optimization
|
|
822
|
|
-
|
|
2,854
|
|
-
|
Adjusted Gross
Profit
|
|
$
70,039
|
|
$
70,663
|
|
$
255,499
|
|
$
262,036
|
|
|
|
|
|
|
|
|
|
Gross Profit % as
Reported
|
|
25.1%
|
|
24.2%
|
|
23.7%
|
|
23.8%
|
Adjusted Gross Profit
%
|
|
25.4%
|
|
24.2%
|
|
24.0%
|
|
23.8%
|
|
|
|
|
|
|
|
|
|
Segment Income (Loss)
as Reported
|
|
$
(25,912)
|
|
$
26,949
|
|
$
10,678
|
|
$
84,165
|
Business
Optimization
|
|
46,671
|
|
-
|
|
53,913
|
|
-
|
Adjusted Segment
Income
|
|
$
20,759
|
|
$
26,949
|
|
$
64,591
|
|
$
84,165
|
|
|
|
|
|
|
|
|
|
Segment Income (Loss)
% as Reported
|
|
-9.4%
|
|
9.2%
|
|
1.0%
|
|
7.7%
|
Adjusted Segment
Income %
|
|
7.5%
|
|
9.2%
|
|
6.1%
|
|
7.7%
|
Fourth Quarter Highlights
- Engine sales unit volumes decreased by 17%, or
approximately 325,000 engines, in the fourth quarter of fiscal 2018
compared to the same period last year. Sales were lower due to
certain channel partners decreasing their orders due to a delayed
start of spring weather and to further reduce channel inventory in
advance of anticipated brand transitions next season. Sales into
Europe were also lower 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 applicable to engines beginning in calendar
2019. Partially offsetting the decrease were higher sales of
Vanguard commercial engines and service parts as well as higher
pricing year-over-year.
- GAAP gross profit percentage compared to last year
increased 90 basis points and adjusted gross profit margins were
higher by 120 basis points due to favorable sales mix, including a
higher proportion of commercial engine sales and service parts.
Manufacturing efficiencies and higher pricing offset a 16% decrease
in manufacturing volume and higher material and freight
costs.
- GAAP engineering, selling, general and administrative
(ESG&A) compared to last year increased by $51.0 million primarily due to the $41.2 million non-cash fourth quarter pension
settlement charge. Adjusted ESG&A increased $5.5 million compared to last year primarily due
to the timing of incentive compensation expense, higher marketing
costs and the investment in our ERP system upgrade.
Fiscal Year Summary
- Net sales decreased by $32.5
million or 3.0% primarily due to declines in residential
engine sales in North America and
Europe due to the unusual spring
weather and reductions in channel inventory. Partially
offsetting the decrease were higher sales of Vanguard commercial
engines and higher pricing. GAAP gross profit percentage decreased
by 10 basis points. Adjusted gross profit percentage increased by
20 basis points compared to last year due to manufacturing
efficiency improvements. The improvement in gross margins was
offset by 8% lower production volumes. Efficiency gains and higher
pricing offset material and freight cost increases. ESG&A costs
increased $62.7 million. Adjusted
ESG&A increased by $14.6 million,
primarily due to $3 million of higher
spending related to our ERP upgrade, higher marketing costs, and
funding growth initiatives.
Products
Segment:
|
|
|
|
Three Months
Ended June
|
|
Twelve
Months Ended June
|
(In
Thousands)
|
|
FY2018
|
|
FY2017
|
|
FY2018
|
|
FY2017
|
Net Sales
|
|
$
250,162
|
|
$ 203,371
|
|
$
904,007
|
|
$
778,378
|
|
|
|
|
|
|
|
|
|
Gross Profit as
Reported
|
|
$
39,363
|
|
$
30,066
|
|
$
144,933
|
|
$
121,141
|
Business
Optimization
|
|
1,281
|
|
-
|
|
3,775
|
|
-
|
Adjusted Gross
Profit
|
|
$
40,644
|
|
$
30,066
|
|
$
148,708
|
|
$
121,141
|
|
|
|
|
|
|
|
|
|
Gross Profit % as
Reported
|
|
15.7%
|
|
14.8%
|
|
16.0%
|
|
15.6%
|
Adjusted Gross
Profit %
|
|
16.2%
|
|
14.8%
|
|
16.4%
|
|
15.6%
|
|
|
|
|
|
|
|
|
|
Segment Income as
Reported
|
|
$
7,656
|
|
$
3,353
|
|
$
22,012
|
|
$
12,530
|
Business
Optimization
|
|
2,855
|
|
-
|
|
8,113
|
|
-
|
Adjusted Segment
Income
|
|
$
10,511
|
|
$
3,353
|
|
$
30,125
|
|
$
12,530
|
|
|
|
|
|
|
|
|
|
Segment Income % as
Reported
|
|
3.1%
|
|
1.6%
|
|
2.4%
|
|
1.6%
|
Adjusted Segment
Income %
|
|
4.2%
|
|
1.6%
|
|
3.3%
|
|
1.6%
|
Fourth Quarter Highlights
- Net sales increased by $46.8
million, primarily due to higher sales of commercial mowers
and job site products as well as higher sales of generators and
pressure washers.
- The gross profit percentage increased by 90 basis points
compared to last year. The adjusted gross profit percentage
increased 140 basis points compared to last year primarily due to
favorable sales mix on proportionately higher sales of commercial
products and the benefit of a 5.5% increase in production
throughput. Higher pricing offset higher material costs. Higher
freight costs offset a portion of the margin
improvement.
- GAAP ESG&A increased by $4.5
million compared to last year and adjusted ESG&A
increased by $2.9 million due to
higher commissions expense on increased sales volume and higher
costs associated with investments to upgrade our ERP system and
growing commercial offerings.
Fiscal Year Summary
- Net sales increased by $125.6
million or 16%, primarily due to higher sales
of commercial lawn and garden and job site equipment and
generators. The active storm season this past year resulted in
approximately $55 million of storm
generator sales, or an increase of $40
million from storm sales in fiscal 2017. Gross profit
percentage increased by 40 basis points compared to last year.
Adjusted gross profit percentage improved by 80 basis points year
over year due to the contribution margin from hurricane-related
sales, favorable sales mix from proportionately higher sales of
commercial products and higher pricing. The margin improvement was
partially offset by a reduction in manufacturing throughput of
approximately 3.5% and higher freight costs.
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 June
|
(In Thousands,
except per share data)
|
|
|
|
|
|
Three Months
Ended June
|
|
|
FY2018
Reported
|
|
Adjustments1
|
|
FY2018
Adjusted
|
|
FY2017
Reported
|
|
Adjustments
|
|
FY2017
Adjusted
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
|
69,217
|
|
$
822
|
|
$
|
70,039
|
|
$
|
70,663
|
|
$
|
-
|
|
$
|
70,663
|
Products
|
|
39,363
|
|
1,281
|
|
40,644
|
|
30,066
|
|
-
|
|
30,066
|
Inter-Segment
Eliminations
|
|
97
|
|
-
|
|
97
|
|
401
|
|
-
|
|
401
|
Total
|
|
$
|
108,677
|
|
$
2,103
|
|
$
|
110,780
|
|
$
|
101,130
|
|
$
|
-
|
|
$
|
101,130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engineering, Selling,
General and Administrative Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
|
96,861
|
|
$
45,515
|
|
$
|
51,346
|
|
$
|
45,885
|
|
$
|
-
|
|
$
|
45,885
|
Products
|
|
|
32,794
|
|
1,573
|
|
31,221
|
|
28,279
|
|
-
|
|
28,279
|
Total
|
|
$
|
129,655
|
|
$
47,088
|
|
$
|
82,567
|
|
$
|
74,164
|
|
$
|
-
|
|
$
|
74,164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Earnings
of
Unconsolidated Affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
|
1,732
|
|
$
334
|
|
$
|
2,066
|
|
$
|
2,171
|
|
$
|
-
|
|
$
|
2,171
|
Products
|
|
|
1,087
|
|
-
|
|
1,087
|
|
1,566
|
|
-
|
|
1,566
|
Total
|
|
$
|
2,819
|
|
$
334
|
|
$
|
3,153
|
|
$
|
3,737
|
|
$
|
-
|
|
$
|
3,737
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Income
(Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
|
(25,912)
|
|
$
46,671
|
|
$
|
20,759
|
|
$
|
26,949
|
|
$
|
-
|
|
$
|
26,949
|
Products
|
|
7,656
|
|
2,855
|
|
10,511
|
|
3,353
|
|
-
|
|
3,353
|
Inter-Segment
Eliminations
|
|
97
|
|
-
|
|
97
|
|
401
|
|
-
|
|
401
|
Total
|
|
$
|
(18,159)
|
|
$
49,526
|
|
$
|
31,367
|
|
$
|
30,703
|
|
$
|
-
|
|
$
|
30,703
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
$
|
(6,153)
|
|
$
211
|
|
(5,942)
|
|
$
|
(5,135)
|
|
$
|
-
|
|
$
|
(5,135)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) before
Income Taxes
|
|
(23,567)
|
|
49,737
|
|
26,170
|
|
26,495
|
|
-
|
|
26,495
|
Provision (Benefit)
for Income Taxes
|
|
(11,742)
|
|
17,779
|
|
6,037
|
|
6,768
|
|
-
|
|
6,768
|
Net Income
(Loss)
|
|
$
|
(11,825)
|
|
$
31,957
|
|
$
|
20,132
|
|
$
|
19,727
|
|
$
|
-
|
|
$
|
19,727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) Per
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.29)
|
|
$
0.76
|
|
$
|
0.47
|
|
$
|
0.46
|
|
$
|
-
|
|
$
|
0.46
|
Diluted
|
|
(0.29)
|
|
0.76
|
|
0.47
|
|
0.46
|
|
-
|
|
0.46
|
|
|
1
|
For the fourth
quarter of fiscal 2018, business optimization expenses include $1.0
million ($0.6 million after tax) of non-cash charges related
primarily to plant & equipment impairment and accelerated
depreciation, and $7.3 million ($4.6 million after tax) of cash
charges related primarily to employee termination benefits, lease
terminations, professional services and plant rearrangement
activities. ESG&A includes $41.2 million ($29.6 million after
tax) of non-cash charges related to the pension settlement. Tax
expense also includes a $3.1 million benefit associated with the
Tax Cuts and Jobs Act of 2017 comprised of $3.9 million to revalue
deferred tax assets and liabilities offset by a $0.8 million charge
to record the impact of the inclusion of foreign earnings. The
company recognized in interest expense $0.2 million ($0.2 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 Twelve Month Periods Ended June
|
(In Thousands,
except per share data)
|
|
|
|
Twelve
Months Ended June
|
|
|
FY2018
Reported
|
|
Adjustments1
|
|
FY2018
Adjusted
|
|
FY2017
Reported
|
|
Adjustments
|
|
FY2017
Adjusted
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
|
252,645
|
|
$
|
2,854
|
|
$
|
255,499
|
|
$
|
262,036
|
|
$
|
-
|
|
$
|
262,036
|
Products
|
|
144,933
|
|
3,775
|
|
148,708
|
|
121,141
|
|
-
|
|
121,141
|
Inter-Segment
Eliminations
|
|
504
|
|
-
|
|
504
|
|
652
|
|
-
|
|
652
|
Total
|
|
$
|
398,082
|
|
$
|
6,628
|
|
$
|
404,710
|
|
$
|
383,829
|
|
$
|
-
|
|
$
|
383,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engineering, Selling,
General and Administrative Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
|
247,201
|
|
$
|
48,096
|
|
$
|
199,105
|
|
$
|
184,496
|
|
$
|
-
|
|
$
|
184,496
|
Products
|
|
126,944
|
|
|
4,339
|
|
122,605
|
|
113,042
|
|
-
|
|
113,042
|
Total
|
|
$
|
374,145
|
|
$
|
52,435
|
|
$
|
321,711
|
|
$
|
297,538
|
|
$
|
-
|
|
$
|
297,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Earnings
of
Unconsolidated Affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
|
5,234
|
|
$
|
2,964
|
|
$
|
8,198
|
|
$
|
6,625
|
|
$
|
-
|
|
$
|
6,625
|
Products
|
|
4,023
|
|
-
|
|
4,023
|
|
4,431
|
|
-
|
|
4,431
|
Total
|
|
$
|
9,257
|
|
$
|
2,964
|
|
$
|
12,221
|
|
$
|
11,056
|
|
$
|
-
|
|
$
|
11,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
|
10,678
|
|
$
|
53,913
|
|
$
|
64,591
|
|
$
|
84,165
|
|
$
|
-
|
|
$
|
84,165
|
Products
|
|
22,012
|
|
8,113
|
|
30,125
|
|
12,530
|
|
-
|
|
12,530
|
Inter-Segment
Eliminations
|
|
504
|
|
-
|
|
504
|
|
652
|
|
-
|
|
652
|
Total
|
|
$
|
33,194
|
|
$
|
62,026
|
|
$
|
95,220
|
|
$
|
97,347
|
|
$
|
-
|
|
$
|
97,347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
$
|
(25,320)
|
|
$
|
2,228
|
|
$
|
(23,092)
|
|
$
|
(20,293)
|
|
$
|
-
|
|
$
|
(20,293)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before Income
Taxes
|
|
11,101
|
|
64,254
|
|
75,355
|
|
79,661
|
|
-
|
|
79,661
|
Provision for Income
Taxes
|
|
22,421
|
|
(2,836)
|
|
19,585
|
|
23,011
|
|
-
|
|
23,011
|
Net Income
(Loss)
|
|
$
|
(11,320)
|
|
$
|
67,090
|
|
$
|
55,770
|
|
$
|
56,650
|
|
$
|
-
|
|
$
|
56,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) Per
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.28)
|
|
$
|
1.57
|
|
$
|
1.29
|
|
$
|
1.31
|
|
$
|
-
|
|
$
|
1.31
|
Diluted
|
|
(0.28)
|
|
1.57
|
|
1.29
|
|
1.31
|
|
-
|
|
1.31
|
|
|
1
|
For the twelve months
of fiscal 2018, business optimization expenses include $4.8 million
($3.4 million after tax) of non-cash charges related primarily to
plant & equipment impairment and accelerated depreciation, and
$16.1 million ($11.4 million after tax) of cash charges related
primarily to employee termination benefits, lease terminations,
professional services and plant rearrangement activities. ESG&A
includes $41.2 million ($29.6 million after tax) of non-cash
charges related to the pension settlement. Tax expense also
includes a $21.1 million charge associated with the Tax Cuts and
Jobs Act of 2017 comprised of $13.8 million to revalue deferred tax
assets and liabilities and $7.3 million to record the impact of the
inclusion of foreign earnings. The company recognized in
interest expense $2.2 million ($1.6 million after tax) for premiums
paid to repurchase senior notes after receiving unsolicited offers
from bondholders.
|
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SOURCE Briggs & Stratton Corporation