MILWAUKEE, March 6, 2020 /PRNewswire/ -- Briggs &
Stratton Corporation (NYSE: BGG) today announced details of its
planned strategic repositioning. The actions announced include a
sharp focus on the company's global expertise in power application,
a simpler organization through strategic divestitures, and a
streamlined overall business to drive improved capital returns. An
outcome of these actions includes significantly de-levering the
company to improve financial flexibility.
Building a More Focused Company
As a result of careful
analysis of market dynamics and opportunities, the company will be
repositioning to focus its businesses with expected annual sales of
approximately $1.0 billion in the
design, production and sale of:
- Briggs & Stratton residential engines, where it maintains a
recognized global leadership position;
- Vanguard commercial engines, which has experienced sustained
high growth and market share gains;
- Briggs & Stratton standby power generation, in which it
maintains the number two position in North America; and
- Vanguard commercial battery systems, where it is a pioneer in
commercializing electrification for a broad range of commercial
applications.
"An in-depth analysis to more deeply understand the impact of
market trends on our business portfolio has led us to focus our
resources and energies to drive more sustained growth and higher
risk-adjusted returns," stated Todd
Teske, Chairman, President and Chief Executive Officer. "We
are pursuing a repositioning of the company to simplify our
portfolio around our foundational expertise in power application.
This action gives us an opportunity to streamline and optimize our
corporate infrastructure to support higher profitability, as well
as to strengthen our balance sheet with proceeds from the
divestiture of strong, yet non-core, assets. Throughout this
process, our mission has remained the same: to provide power to
people to make work easier and improve lives. We will do this by
providing innovative and diverse power solutions and a superior
support network."
Pursuing Divestitures and Significantly Reducing
Debt
The repositioning includes planned divestitures of the
majority of the businesses within the Products Segment. Priority is
being placed on divesting the turf products business headquartered
in the U.S. and the pressure washer and portable generator product
lines. The turf products business headquartered in the U.S.
includes premier lawn and garden and turf care equipment sold under
the Ferris®, Billy Goat®, Simplicity®, Snapper®, and Snapper
Pro® brands.
The company is pursuing parallel paths to achieve its priority
of restoring financial flexibility. By the end of fiscal 2020
(June), the company expects to secure up to $200 million in
debt financing as part of a package which will be used in part to
retire the $195 million of
outstanding senior notes, due December
2020. In addition, proceeds from the divestitures are
expected to exceed the outstanding senior notes and result in
significantly lower leverage by the end of fiscal 2021. J.P. Morgan
has been engaged to arrange the debt refinancing and has separately
been retained to advise on the divestiture of the turf products
business.
Long-term Financial Targets
Management has updated its
long-term financial targets to include:
- 2-4% organic sales growth with focused growth areas exceeding
10% organic sales growth
- Greater than 8% adjusted operating margin
- 2-3% free cash flow on sales
- Less than 3 times debt to adjusted EBITDA
These targets reflect expectations beyond fiscal 2021 and assume
the completion of the planned divestitures. Associated with the
strategic repositioning plan are expected charges of $35 million to $45
million, of which, approximately $20
million to $25 million are
cash charges. The charges are expected to be incurred during
fiscal years 2020 and 2021.
Scheduled Conference Call
The company has scheduled an
investor conference call today, Friday,
March 6, 2020, at 10:00 a.m.
EST to discuss details of its strategic repositioning plan.
A slide presentation supporting the discussion will be available 30
minutes prior to the webcast. The webcast will be available on the
company's corporate website, at http://investors.basco.com. Also
available is a dial-in number to access the call real-time. To
join, dial (877) 233-9136 and enter Conference ID 4383007. A replay
will be offered beginning approximately two hours after the call
ends and will be available for one week. Dial (855) 859-2056 to
access the replay and enter the Conference ID.
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.
Forward-looking 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; imposition
of new, or changes in existing, duties, tariffs and trade
agreements; 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 production 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; the ability to
maintain or obtain adequate sources of liquidity and access to debt
markets; 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.
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SOURCE Briggs & Stratton Corporation