BGG
$23.47
Briggs & Stratton
($.42)
(1.76%)
Earnings Details
3rd Quarter March 2017
Thursday, April 20, 2017 5:04:00 PM
Tweet Share Watch
Summary

Briggs & Stratton Misses

Briggs & Stratton (BGG) reported 3rd Quarter March 2017 earnings of $0.83 per share on revenue of $597.0 million. The consensus earnings estimate was $0.81 per share on revenue of $615.8 million. The Earnings Whisper number was $0.84 per share. Revenue fell 1.1% compared to the same quarter a year ago.

The company said it continues to expect fiscal 2017 earnings of $1.31 to $1.46 per share on revenue of $1.86 billion to $1.90 billion. The current consensus earnings estimate is $1.37 per share on revenue of $1.86 billion for the year ending June 30, 2017.

Briggs & Stratton Corporation is the producer of air cooled gasoline engines for outdoor power equipment. The Company designs, manufactures, markets and services these products for original equipment manufacturers.

Results
Reported Earnings
$0.83
Earnings Whisper
$0.84
Consensus Estimate
$0.81
Reported Revenue
$597.0 Mil
Revenue Estimate
$615.8 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Briggs & Stratton Corporation Reports Fiscal 2017 Third Quarter Results

Briggs & Stratton Corporation (BGG) today announced financial results for its third fiscal quarter ended April 2, 2017.

https://mma.prnewswire.com/media/128192/briggs___stratton_corporation_logo.jpg

Fiscal third quarter net sales were $597 million, a decrease of $7 million or 1.1% compared to last year. Strong sales growth in commercial engines and products was offset by a sales decline in small engines due to OEM customers producing closer to the season, as anticipated.

Fiscal third quarter gross profit margin of 22.6% increased from GAAP gross profit margin of 21.1% and adjusted gross profit margin of 21.2%, principally on a more favorable product mix, including a higher proportion of commercial engines and commercial products, the positive impact of innovative new engines, and improvements in manufacturing efficiencies.

Third quarter net income was $35.8 million, an increase from GAAP net income of $26.8 million and adjusted net income of $34.9 million last year.

Third quarter diluted earnings per share were $0.83, an increase from $0.61 (GAAP) and $0.80 (adjusted) last year.

Repurchased $2.8 million in shares under the share repurchase program during the quarter.

"Our focus on growing higher margin commercial engines and products has been an important factor in driving our improved profitability over the last few years and we continued to make progress during our fiscal third quarter," said Todd J. Teske, Chairman, President and Chief Executive Officer. "The hard work over the past several years to reposition our product portfolio and manufacturing footprint in order to place the proper focus on commercial growth of engines, lawn and turf care and job site products is showing results as we have achieved solid growth driven in part by new product introductions. These markets present an attractive opportunity due to their size and anticipated growth rates. We believe that we have the brands, the products and the distribution network to grow our commercial portfolio in excess of the market." Teske continued, "At the same time, we continue to introduce new, innovative residential products and engines that will help homeowners get the job done. Our engine placement on residential lawnmowers again leads the market and positions us well for improvements across the housing market. As we have indicated throughout this fiscal year, both OEMs and retailers have been cautious in their ordering activity, choosing to produce and take inventory closer to the season. We saw this particularly in the most recently completed quarter. We remain optimistic that the upcoming season will reflect market growth in the U.S. of 1-4% over the course of the mowing season. Together, the base provided by our market-leading residential products combined with the higher margin, higher growth commercial products positions us well for profitable growth."

Outlook:

Our outlook for fiscal 2017 remains unchanged from previous guidance, except for higher capital expenditures. Capital expenditures are now expected to be $80 million to $90 million compared to previous guidance of $70 million to $80 million.

Summary of fiscal 2017 guidance:

Net sales are expected to be in a range of $1.86 billion to $1.90 billion. We continue to expect that the U.S. residential lawn and garden market will improve by 1% to 4% over the course of the season. Customers have taken a more cautious approach to building inventory for the season as we anticipated. It is possible engine sales may shift beyond the fourth quarter of fiscal 2017 depending on the pace with which the season breaks.

Net income is expected to be in a range of $57 million to $64 million or $1.31 to $1.46 per diluted share (prior to the impact of any share repurchases).

-- Operating margins are expected to be approximately 5.5% to 5.8%.

-- The effective tax rate is expected to be in a range of 31% to 33%.

Conference Call Information:

The Company will host a conference call tomorrow at 10:00 AM (ET) to review this information. A live webcast of the conference call will be available on our corporate website: http://investors.basco.com.

Also available is a dial-in number to access the call real-time at (877) 233-9136. 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.

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 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 our 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 we compete; changes in laws and regulations; changes in customer and OEM demand; changes in prices of raw materials and parts that we purchase; 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 our 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. We undertake 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 (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 washers, lawn and garden, turf care and job site products through its Briggs & Stratton?, Simplicity?, Snapper?, Ferris?, Vanguard(TM), Allmand(TM), 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
FY2017
FY2016
FY2017
FY2016
NET SALES
$596,965
$603,750
$1,311,998
$1,306,587
COST OF GOODS SOLD
462,194
476,075
1,029,299
1,032,398
RESTRUCTURING CHARGES
-
580
-
5,686
Gross Profit
134,771
127,095
282,699
268,503
ENGINEERING, SELLING, GENERAL
AND ADMINISTRATIVE EXPENSES
78,279
75,288
223,373
219,980
RESTRUCTURING CHARGES
-
144
-
1,430
GOODWILL IMPAIRMENT
-
7,651
-
7,651
EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES (1)
1,079
1,105
7,318
1,105
Income from Operations
57,571
45,117
66,644
40,547
INTEREST EXPENSE
(5,521)
(5,593)
(15,159)
(15,142)
OTHER INCOME
844
511
1,679
4,348
Income before Income Taxes
52,894
40,035
53,164
29,753
PROVISION FOR INCOME TAXES
17,075
13,212
16,242
8,541
Net Income
$
35,819
$
26,823
$
36,922
$
21,212
EARNINGS PER SHARE
Basic
$
0.83
$
0.62
$
0.86
$
0.48
Diluted
0.83
0.61
0.86
0.48
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic
42,076
42,621
42,217
43,158
Diluted
42,175
42,889
42,271
43,377
1 Beginning in the third quarter of fiscal 2016, the Company classifies its equity in earnings of unconsolidated affiliates within Income from Operations. Prior to the third quarter of fiscal 2016, equity in earnings from unconsolidated affiliates is classified in Other Income. See Adjusted Segment Information tables for prior year equity in earnings of unconsolidated affiliates amounts.
Supplemental International Sales Information
(In Thousands)
Three Months Ended March
Nine Months Ended March
FY2017
FY2016
FY2017
FY2016
International sales based on product shipment destination
$171,565
$160,277
$440,179
$404,493
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets as of the End of March
(In Thousands)
CURRENT ASSETS:
FY2017
FY2016
Cash and Cash Equivalents
$
52,097
$
43,716
Accounts Receivable, Net
298,990
279,127
Inventories
413,572
419,537
Deferred Income Tax Asset
45,914
47,902
Prepaid Expenses and Other Current Assets
22,178
29,993
Total Current Assets
832,751
820,275
OTHER ASSETS:
Goodwill
161,823
160,998
Investments
49,535
56,715
Other Intangible Assets, Net
101,847
106,544
Deferred Income Tax Asset
39,093
14,393
Other Long-Term Assets, Net
19,182
15,122
Total Other Assets
371,480
353,772
PLANT AND EQUIPMENT:
At Cost
1,086,778
1,038,994
Less - Accumulated Depreciation
742,240
724,611
Plant and Equipment, Net
344,538
314,383
$ 1,548,769
$ 1,488,430
CURRENT LIABILITIES:
Accounts Payable
$
212,974
$
212,372
Short-Term Debt
62,300
32,443
Accrued Liabilities
144,023
155,965
Total Current Liabilities
419,297
400,780
OTHER LIABILITIES:
Accrued Pension Cost
297,170
194,542
Accrued Employee Benefits
22,649
22,778
Accrued Postretirement Health Care Obligation 31,126
41,165
Other Long-Term Liabilities
43,320
52,305
Long-Term Debt
221,682
221,221
Total Other Liabilities
615,947
532,011
SHAREHOLDERS’ INVESTMENT:
Common Stock
579
579
Additional Paid-In Capital
73,269
73,072
Retained Earnings
1,093,323
1,074,959
Accumulated Other Comprehensive Loss
(330,293)
(280,940)
Treasury Stock, at Cost
(323,353)
(312,031)
Total Shareholders’ Investment
513,525
555,639
$ 1,548,769
$ 1,488,430
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In Thousands)
Nine Months Ended March
CASH FLOWS FROM OPERATING ACTIVITIES:
FY2017
FY2016
Net Income
$
36,922
$
21,212
Adjustments to Reconcile Net Income to Net Cash Used in Operating Activities:
Depreciation and Amortization
42,177
40,579
Stock Compensation Expense
4,560
4,792
Goodwill Impairment
-
7,651
Loss on Disposition of Plant and Equipment
610
454
Provision for Deferred Income Taxes
7,574
3,656
Equity in Earnings of Unconsolidated Affiliates
(7,318)
(4,292)
Dividends Received from Unconsolidated Affiliates
8,186
5,039
Non-Cash Restructuring Charges
-
1,725
Changes in Operating Assets and Liabilities:
Accounts Receivable
(110,978)
(64,488)
Inventories
(27,553)
(41,903)
Other Current Assets
584
1,429
Accounts Payable, Accrued Liabilities and Income Taxes
30,041
25,598
Other, Net
(13,008)
(6,808)
Net Cash Used in Operating Activities
(28,203)
(5,356)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures
(48,780)
(41,092)
Proceeds Received on Disposition of Plant and Equipment
1,014
997
Cash Paid for Acquisitions, Net of Cash Acquired
-
(3,074)
Cash Paid for Investment in Unconsolidated Affiliates
-
(19,100)
Proceeds on Sale of Investment in Marketable Securities
3,343
-
Other, Net
-
(750)
Net Cash Used in Investing Activities
(44,423)
(63,019)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Borrowings on Revolver
62,300
32,443
Repayments on Long-Term Debt
-
(1,851)
Debt Issuance Costs
-
(932)
Treasury Stock Purchases
(17,924)
(33,394)
Payment of Acquisition Contingent Liability
(1,625)
-
Stock Option Exercise Proceeds and Tax Benefits
4,751
11,165
Cash Dividends Paid
(12,028)
(11,885)
Net Cash Provided by (Used in) Financing Activities
35,474
(4,454)
EFFECT OF EXCHANGE RATE CHANGES
(590)
(1,845)
NET DECREASE IN CASH AND CASH EQUIVALENTS
(37,742)
(74,674)
CASH AND CASH EQUIVALENTS, Beginning
89,839
118,390
CASH AND CASH EQUIVALENTS, Ending
$
52,097
$
43,716

Liquidity and Capital Resources:

Net debt at April 2, 2017 was $233.4 million (total debt, excluding debt issuance costs, of $285.4 million less $52.1 million of cash), or $21.5 million higher than net debt of $211.9 million (total debt, excluding debt issuance costs, of $255.6 million less $43.7 million of cash) at March 27, 2016.

Cash flows used in operating activities for the first nine months of fiscal 2017 were $28.2 million compared to $5.4 million for the same period in fiscal 2016. The increase in cash used in operating activities was primarily related to changes in working capital, including higher accounts receivable due to timing of sales year over year.

During the first nine months of fiscal 2017, the Company repurchased approximately 916,000 shares on the open market at an average price of $19.57 per share. As of April 2, 2017, the Company had remaining authorization to repurchase up to approximately $32 million of common stock with an expiration date of June 29, 2018.

SUPPLEMENTAL SEGMENT INFORMATION
Engines Segment:
Three Months Ended March
Nine Months Ended March
(In Thousands)
FY2017
FY2016
FY2017
FY2016
Net Sales
$ 391,063
$ 415,680
$ 806,298
$ 827,770
Gross Profit as Reported
$
98,814
$
99,371
$ 191,373
$ 188,783
Restructuring Charges
-
-
-
464
Adjusted Gross Profit
$
98,814
$
99,371
$ 191,373
$ 189,247
Gross Profit % as Reported
25.3%
23.9%
23.7%
22.8%
Adjusted Gross Profit %
25.3%
23.9%
23.7%
22.9%
Segment Income as Reported
$
50,946
$
52,166
$
57,216
$
52,195
Restructuring Charges
-
-
-
1,354
Litigation Charges
-
-
-
2,825
Adjusted Segment Income
$
50,946
$
52,166
$
57,216
$
56,374
Segment Income % as Reported
13.0%
12.5%
7.1%
6.3%
Adjusted Segment Income %
13.0%
12.5%
7.1%
6.8%

Third Quarter Highlights

Starting in fiscal 2017, we implemented new sales terms for engines shipped to overseas customers, resulting in earlier revenue recognition compared to the terms we used during previous fiscal years. The change in terms caused units sold and net sales to be higher in the first half of the fiscal year compared to the second half. As a result of the change, units sold and net sales were lower in the third quarter of fiscal 2017 by approximately 100,000 units and $10 million, respectively.

Using comparable sales terms, engine volumes sold decreased by 5% or approximately 160,000 engines in the third quarter of fiscal 2017. The decrease is due to a more cautious approach by our U.S. customers in building inventory for the season following the delayed start to the season last year. Offsetting the decrease were higher sales of Vanguard commercial engines and higher European engine sales.

Gross profit percentage increased due to favorable sales mix including a higher proportion of commercial engine sales and margin lift on new products as well as manufacturing efficiency improvements.

Investment in our ERP system upgrade and higher pension expense were the primary drivers for the $0.7 million increase in ESG&A expenses compared to last year.

Products Segment:
Three Months Ended March
Nine Months Ended March
(In Thousands)
FY2017
FY2016
FY2017
FY2016
Net Sales
$ 233,510
$ 220,845
$ 575,007
$ 555,883
Gross Profit as Reported
$
34,946
$
27,527
$
91,075
$
81,414
Restructuring Charges
-
580
-
5,222
Acquisition Related Charges
-
-
-
250
Adjusted Gross Profit
$
34,946
$
28,107
$
91,075
$
86,886
Gross Profit % as Reported
15.0%
12.5%
15.8%
14.6%
Adjusted Gross Profit %
15.0%
12.7%
15.8%
15.6%
Segment Income (Loss) as Reported
$
5,614
$
(7,246)
$
9,177
$
(6,767)
Restructuring Charges
-
724
-
5,762
Goodwill Impairment
-
7,651
-
7,651
Acquisition Related Charges
-
-
-
276
Adjusted Segment Income
$
5,614
$
1,129
$
9,177
$
6,922
Segment Income (Loss) % as Reported
2.4%
-3.3%
1.6%
-1.2%
Adjusted Segment Income %
2.4%
0.5%
1.6%
1.2%

Third Quarter Highlights

Net sales increased by $12.7 million, primarily due to higher sales of commercial mowers, turf care equipment and job site equipment.

Gross profit percentage increased by 250 basis points. Adjusted gross profit percentage increased 230 basis points, primarily due to manufacturing efficiency improvements and favorable sales mix, which includes higher sales of commercial products.

Higher new product promotional expenses and the investment in our ERP system upgrade were the primary drivers for the $2.3 million increase in ESG&A expenses compared to last year.

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 our business trends and to understand our performance. In addition, we may utilize non-GAAP financial measures as a guide in our 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
FY2017
Adjustments
FY2017
FY2016
Adjustments1
FY2016
Reported
Adjusted
Reported
Adjusted
Gross Profit:
Engines
$
98,814
$
-
$
98,814
$
99,371
$
-
$
99,371
Products
34,946
-
34,946
27,527
580
28,107
Inter-Segment Eliminations
1,011
-
1,011
197
-
197
Total
$
134,771
$
-
$
134,771
$
127,095
$
580
$
127,675
Engineering, Selling, General and Administrative Expenses
Engines
$
48,450
$
-
$
48,450
$
47,759
$
-
$
47,759
Products
29,829
-
29,829
27,529
-
27,529
Total
$
78,279
$
-
$
78,279
$
75,288
$
-
$
75,288
Segment Income (Loss) (2)
Engines
$
50,946
$
-
$
50,946
$
52,166
$
-
$
52,166
Products
5,614
-
5,614
(7,246)
8,375
1,129
Inter-Segment Eliminations
1,011
-
1,011
197
-
197
Total
$
57,571
$
-
$
57,571
$
45,117
$
8,375
$
53,492
Reconciliation from Segment Income (Loss) to Income before Income Taxes:
Equity in Earnings of Unconsolidated Affiliates (2)
-
-
-
-
-
-
Income from Operations
$
57,571
$
-
$
57,571
$
45,117
$
8,375
$
53,492
Income before Income Taxes
52,894
-
52,894
40,035
8,375
48,410
Provision for Income Taxes
17,075
-
17,075
13,212
254
13,466
Net Income
$
35,819
$
-
$
35,819
$
26,823
$
8,121
$
34,944
Earnings Per Share
Basic
$
0.83
$
-
$
0.83
$
0.62
$
0.18
$
0.80
Diluted
0.83
-
0.83
0.61
0.19
0.80
1 For the third quarter of fiscal 2016, includes pre-tax restructuring charges of $724 ($470 after tax) and goodwill impairment charge of $7,651 which is not deductible for income tax purposes.
2 For all periods presented, equity in earnings of unconsolidated affiliates is included in segment income (loss). Beginning with the third quarter of fiscal 2016, the Company classifies its equity in earnings of unconsolidated affiliates within income from operations. Prior to the third quarter of fiscal 2016, equity in earnings of unconsolidated affiliates is classified in other income.
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
FY2017
Adjustments
FY2017
FY2016
Adjustments1
FY2016
Reported
Adjusted
Reported
Adjusted
Gross Profit:
Engines
$
191,373
$
-
$
191,373
$
188,783
$
464
$
189,247
Products
91,075
-
91,075
81,414
5,472
86,886
Inter-Segment Eliminations
251
-
251
(1,694)
-
(1,694)
Total
$
282,699
$
-
$
282,699
$
268,503
$
5,936
$
274,439
Engineering, Selling, General and Administrative Expenses
Engines
$
138,610
$
-
$
138,610
$
138,273
$
2,825
$
135,448
Products
84,763
-
84,763
81,707
26
81,681
Total
$
223,373
$
-
$
223,373
$
219,980
$
2,851
$
217,129
Segment Income (Loss) (2)
Engines
$
57,216
$
-
$
57,216
$
52,195
$
4,179
$
56,374
Products
9,177
-
9,177
(6,767)
13,689
6,922
Inter-Segment Eliminations
251
-
251
(1,694)
-
(1,694)
Total
$
66,644
$
-
$
66,644
$
43,734
$
17,868
$
61,602
Reconciliation from Segment Income (Loss) to Income before Income Taxes:
Equity in Earnings of Unconsolidated Affiliates (2)
-
-
-
3,187
-
3,187
Income from Operations
$
66,644
$
-
$
66,644
$
40,547
$
17,868
$
58,415
Income before Income Taxes
53,164
-
53,164
29,753
17,868
47,621
Provision for Income Taxes
16,242
-
16,242
8,541
4,199
12,740
Net Income
$
36,922
$
-
$
36,922
$
21,212
$
13,669
$
34,881
Earnings Per Share
Basic
$
0.86
$
-
$
0.86
$
0.48
$
0.31
$
0.79
Diluted
0.86
-
0.86
0.48
0.31
0.79
1 For the first nine months of fiscal 2016, includes pre-tax restructuring charges of $7,116 ($4,671 after tax), goodwill impairment charge of $7,651 which is not deductible for income tax purposes, pre-tax acquisition-related charges of $276 ($180 after tax), pre-tax litigation charges of $2,825 ($1,836 after tax), and a tax benefit of $669 for reinstatement of a deferred tax asset related to an investment in marketable securities.
2 For all periods presented, equity in earnings of unconsolidated affiliates is included in segment income (loss). Beginning with the third quarter of fiscal 2016, the Company classifies its equity in earnings of unconsolidated affiliates within income from operations. Prior to the third quarter of fiscal 2016, equity in earnings of unconsolidated affiliates is classified in other income.

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/briggs--stratton-corporation-reports-fiscal-2017-third-quarter-results-300443146.html

SOURCE Briggs & Stratton Corporation

https://rt.prnewswire.com/rt.gif?NewsItemId=CG67838&Transmission_Id=201704201704PR_NEWS_USPR_____CG67838&DateId=20170420