MILWAUKEE, Aug. 16, 2017 /PRNewswire/ -- Briggs &
Stratton Corporation (NYSE: BGG) today announced financial results
for its fourth fiscal quarter and year ended July 2, 2017.
For the fiscal 2017 fourth quarter:
- Fiscal fourth quarter net sales were $474 million, a decrease of $28 million or 5.6% from $502 million for the prior year. Continued high
growth in commercial turf and lawn care, commercial job site, and
commercial engines was offset by softness in residential
sales.
- Quarterly gross profit margin of 21.3% increased from GAAP
gross profit margin of 18.7% and was consistent with adjusted gross
profit margin of 21.4% last year, as an improved product mix and
manufacturing efficiencies offset the impact of lower volumes.
- Fourth quarter net income was $19.7
million, an increase from GAAP net income of $5.3 million and slightly lower than adjusted net
income of $20.1 million last year. On
a diluted per-share basis, earnings were $0.46, an increase from $0.12 (GAAP) and consistent with $0.46 (adjusted) last year.
For the fiscal 2017 full year:
- Fiscal 2017 net sales were $1.79
billion, down 1.3% from $1.81
billion for fiscal 2016. Fiscal 2017 was a record year for
net sales of commercial type products, amounting to $434 million, a 7% increase compared to last
year.
- Gross profit margin of 21.5% increased from GAAP gross profit
margin of 20.0% and adjusted gross profit margin of 21.1% last
year, due to manufacturing efficiency improvements and favorable
sales mix, including a higher proportion of commercial sales and
higher margins on new products.
- Net income was $56.7 million, an
increase from GAAP net income of $26.6
million and adjusted net income of $55.0 million last year. Fiscal 2017 diluted
earnings per share were $1.31, an
increase from $0.60 (GAAP) and
$1.25 (adjusted) last year. We
achieved earnings growth of over 20% in fiscal 2017 after factoring
out higher ERP upgrade costs, the negative impact of foreign
exchange, higher pension costs and a higher tax rate.
Stock repurchase and dividend update:
- The company paid $24.1 million in
cash dividends to shareholders during fiscal 2017.
- The company repurchased $19.7
million of common stock under the company's share repurchase
program during fiscal 2017. The company currently has approximately
$30.5 million remaining under the
current authorization, which expires on June
29, 2018.
Fiscal 2018 outlook:
- For fiscal 2018, the company estimates net sales in a range of
$1.87 billion to $1.92 billion, for
projected annual growth of 4.5% to 7.5%. Projections reflect modest
market growth assumptions plus a return to more normalized channel
inventories.
- Fiscal 2018 diluted earnings per share are estimated to be
$1.31 to $1.48. Factoring out the
absence of hurricanes, higher expected ERP upgrade
costs, higher expected interest expense and a change in tax
rate, the midpoint of the earnings range shows growth for fiscal
2018 of approximately 25% compared to fiscal 2017.
"We achieved earnings within our guidance range for fiscal 2017
on the meaningful progress made to diversify our business and drive
operational excellence," stated Todd J.
Teske, Briggs & Stratton's Chairman, President and Chief
Executive Officer. "During the year, we delivered strong
sales growth in commercial products and commercial engines to gain
share and improve gross profit margins. New, innovative
products, with the features our customers want, also contributed to
profitability and our success in maintaining our leadership
position in engines." Teske continued, "Lower-than-expected
shipments of residential outdoor power equipment and engines
resulted from certain North
America channel partners making unexpected changes to their
merchandising and inventory stocking levels during the spring
selling season compounded by regional pockets of suboptimal growing
conditions. We have observed improved growing conditions throughout
the season but continue to see a cautious approach to reordering as
channel partners have focused on controlling inventory to
abnormally low levels. Looking ahead, we remain optimistic
about the future, as reflected in the outlook for fiscal 2018, as
well as today's announcement of our business optimization program,
which will drive further advancements in operational excellence and
provide capacity for the production of high-growth
products."
Business Optimization Program
In addition to quarterly and full-year financial results, today
the company announced the launch of a business optimization program
that is designed to drive efficiencies and expand capacity in
commercial engines and cutting equipment. The program entails
expanding production of Vanguard commercial engines into the
company's existing large engine plants, which are located in
Georgia and Alabama, and expanding Ferris commercial mower
production capacity in a new, modern facility which is located
close to the current manufacturing location in New York. "We have successfully grown
commercial sales by $180 million, or
more than 70%, over the last five years," said Teske. "Our launch
of this business optimization program will lay the foundation for
continued profitable growth. These actions are expected to enable
the highly dedicated and skilled teams at our U.S. plants to more
effectively produce our commercial offerings."
Production of Vanguard engines in the company's U.S. plants is
expected to be phased in beginning in late fiscal 2018 through the
middle of fiscal 2019. Currently, the majority of Vanguard engines
are sourced from overseas. Production of Ferris commercial
mowers is expected to begin in the new facility in the latter half
of fiscal 2018, and the exit from the existing plant and remote
warehouse is planned for fiscal 2019. The business optimization
program also includes the project costs for the integration and
go-live efforts associated with the company's ERP upgrade and the
anticipated operational excellence efficiency improvements. The
go-live for the ERP upgrade is expected towards the end of fiscal
2018, subsequent to the peak seasonal shipment period.
We project that the business optimization program will generate
$30 million to $35 million of annual
pre-tax savings, in addition to supporting profitable commercial
growth. We estimate the savings will be achieved over a three-year
period beginning in fiscal 2019. Total pre-tax expenses related to
the business optimization program are expected to be approximately
$50 million to $55 million, of which
$24 million to $28 million is
expected be recognized in fiscal 2018.
Outlook:
For fiscal 2018, we anticipate net sales to be in a range of
$1.87 billion to $1.92 billion for
growth of 4.5% to 7.5%. This sales range contemplates that the
markets for commercial products will grow mid-single digits and
that we will continue to gain market share in the categories of
commercial turf and lawn care, commercial job site, and commercial
engines. We anticipate modest market growth for the U.S.
residential lawn and garden market in addition to some
normalization of channel inventory levels. Our outlook does not
include any positive impact of storms, whereas fiscal 2017 net
sales included a modest benefit from Hurricane Matthew.
For fiscal 2018, we estimate mid-point growth in net income of
approximately 6%, to be in a range of $56
million to $64 million, or $1.31 to
$1.48 per diluted share, prior to the impact of costs
related to our business optimization program or the benefit of any
share repurchases. Operating margins before business optimization
costs are expected to be approximately 5.6% to 5.8%. Compared to
fiscal 2017, operating margins are expected to improve due to
favorable sales mix from growth of commercial products, product
margin expansion and operational efficiency improvements.
The improvement in operating margins is anticipated to be
tempered by incremental pre-tax expenses of $4 million to $6 million ($0.06 to $0.09 per diluted share) for completing
the build-out phase of the ERP system upgrade. We also anticipate
increased interest expense of approximately $2.5 million ($0.04
per diluted share) due to rising interest rates and higher average
borrowings. The effective tax rate is projected to return to a more
normal rate, in a range of 31% to 33%, from 28.9% for fiscal 2017,
for an increased expense of $0.06 per
diluted share. After factoring out the absence of
hurricane benefits, the increased ERP upgrade costs, higher
interest expense and the change in tax rate, the midpoint of our
earnings range for fiscal 2018 contemplates approximately 25%
growth in earnings compared with fiscal 2017. Capital expenditures
are projected to be $80 million to $90
million, which includes the majority of expenditures
associated with the business optimization program.
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 (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
|
|
|
FY2017
|
|
FY2016
|
|
FY2017
|
|
FY2016
|
NET SALES
|
|
$
474,105
|
|
$
502,191
|
|
$
1,786,103
|
|
$
1,808,778
|
COST OF GOODS
SOLD
|
|
372,975
|
|
405,768
|
|
1,402,274
|
|
1,438,166
|
RESTRUCTURING
CHARGES
|
|
-
|
|
2,471
|
|
-
|
|
8,157
|
Gross
Profit
|
|
101,130
|
|
93,952
|
|
383,829
|
|
362,455
|
|
|
|
|
|
|
|
|
|
ENGINEERING, SELLING,
GENERAL
|
|
|
|
|
|
|
|
|
AND ADMINISTRATIVE
EXPENSES
|
|
74,164
|
|
85,502
|
|
297,538
|
|
305,482
|
RESTRUCTURING
CHARGES
|
|
-
|
|
608
|
|
-
|
|
2,038
|
GOODWILL
IMPAIRMENT
|
|
-
|
|
-
|
|
-
|
|
7,651
|
TRADENAME
IMPAIRMENT
|
|
-
|
|
2,683
|
|
-
|
|
2,683
|
EQUITY IN EARNINGS OF
UNCONSOLIDATED AFFILIATES (1)
|
|
3,737
|
|
655
|
|
11,056
|
|
1,760
|
Income from
Operations
|
|
30,703
|
|
5,814
|
|
97,347
|
|
46,361
|
|
|
|
|
|
|
|
|
|
INTEREST
EXPENSE
|
|
(5,135)
|
|
(4,890)
|
|
(20,293)
|
|
(20,033)
|
OTHER
INCOME
|
|
927
|
|
4,679
|
|
2,607
|
|
9,028
|
Income before Income
Taxes
|
|
26,495
|
|
5,603
|
|
79,661
|
|
35,356
|
|
|
|
|
|
|
|
|
|
PROVISION FOR INCOME
TAXES
|
|
6,768
|
|
254
|
|
23,011
|
|
8,795
|
Net Income
|
|
$
19,727
|
|
$
5,349
|
|
$
56,650
|
|
$
26,561
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.46
|
|
$
0.12
|
|
$
1.31
|
|
$
0.61
|
Diluted
|
|
0.46
|
|
0.12
|
|
1.31
|
|
0.60
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE
SHARES OUTSTANDING
|
|
|
|
|
|
|
|
|
Basic
|
|
42,063
|
|
42,631
|
|
42,178
|
|
43,019
|
Diluted
|
|
42,302
|
|
42,896
|
|
42,263
|
|
43,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 June
|
|
Twelve
Months Ended June
|
|
|
FY2017
|
|
FY2016
|
|
FY2017
|
|
FY2016
|
International sales
based on product shipment destination
|
|
$
99,910
|
|
$
105,282
|
|
$
540,088
|
|
$
509,775
|
BRIGGS &
STRATTON CORPORATION AND SUBSIDIARIES
Consolidated
Balance Sheets as of the End of June
(In
Thousands)
|
|
CURRENT
ASSETS:
|
FY2017
|
|
FY2016
|
Cash and Cash
Equivalents
|
$
61,707
|
|
$
89,839
|
Accounts Receivable,
Net
|
230,011
|
|
191,678
|
Inventories
|
374,879
|
|
386,065
|
Prepaid Expenses and
Other Current Assets
|
22,844
|
|
28,419
|
Total Current
Assets
|
689,441
|
|
696,001
|
|
|
|
|
OTHER
ASSETS:
|
|
|
|
Goodwill
|
161,649
|
|
161,568
|
Investments
|
51,677
|
|
52,757
|
Other Intangible
Assets, Net
|
100,595
|
|
104,164
|
Deferred Income Tax
Asset
|
64,412
|
|
98,203
|
Other Long-Term
Assets, Net
|
18,325
|
|
17,701
|
Total Other
Assets
|
396,658
|
|
434,393
|
|
|
|
|
|
|
|
|
PLANT AND
EQUIPMENT:
|
|
|
|
At Cost
|
1,104,583
|
|
1,056,893
|
Less - Accumulated
Depreciation
|
739,703
|
|
730,620
|
Plant and Equipment,
Net
|
364,880
|
|
326,273
|
|
$1,450,979
|
|
$1,456,667
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts
Payable
|
$
193,677
|
|
$
181,152
|
Accrued
Liabilities
|
136,701
|
|
137,149
|
Total Current
Liabilities
|
330,378
|
|
318,301
|
|
|
|
|
OTHER
LIABILITIES:
|
|
|
|
Accrued Pension
Cost
|
242,908
|
|
310,378
|
Accrued Employee
Benefits
|
21,897
|
|
23,483
|
Accrued
Postretirement Health Care Obligation
|
35,132
|
|
38,441
|
Other Long-Term
Liabilities
|
39,537
|
|
51,099
|
Long-Term
Debt
|
221,793
|
|
221,339
|
Total Other
Liabilities
|
561,267
|
|
644,740
|
|
|
|
|
SHAREHOLDERS'
INVESTMENT:
|
|
|
|
Common
Stock
|
579
|
|
579
|
Additional Paid-In
Capital
|
73,562
|
|
72,020
|
Retained
Earnings
|
1,107,033
|
|
1,074,437
|
Accumulated Other
Comprehensive Loss
|
(300,026)
|
|
(338,450)
|
Treasury Stock, at
Cost
|
(321,814)
|
|
(314,960)
|
Total Shareholders'
Investment
|
559,334
|
|
493,626
|
|
$1,450,979
|
|
$1,456,667
|
BRIGGS &
STRATTON CORPORATION AND SUBSIDIARIES
Consolidated
Statements of Cash Flows
(In
Thousands)
|
|
|
Twelve Months
Ended June
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
FY2017
|
|
FY2016
|
Net Income
|
$
56,650
|
|
$
26,561
|
Adjustments to
Reconcile Net Income to Net Cash Provided by Operating
Activities:
|
|
|
|
Depreciation and
Amortization
|
56,183
|
|
54,400
|
Stock Compensation
Expense
|
4,923
|
|
5,109
|
Goodwill and
Tradename Impairment
|
-
|
|
10,334
|
Pension Settlement
Expense
|
-
|
|
20,245
|
Loss on Disposition
of Plant and Equipment
|
857
|
|
751
|
Provision for
Deferred Income Taxes
|
10,316
|
|
2,194
|
Equity in Earnings of
Unconsolidated Affiliates
|
(11,056)
|
|
(4,947)
|
Dividends Received
from Unconsolidated Affiliates
|
9,067
|
|
6,119
|
Non-Cash
Restructuring Charges
|
-
|
|
3,903
|
Changes in Operating
Assets and Liabilities:
|
|
|
|
Accounts
Receivable
|
(41,655)
|
|
23,917
|
Inventories
|
11,204
|
|
(7,933)
|
Other Current
Assets
|
(1,759)
|
|
1,231
|
Accounts Payable,
Accrued Liabilities and Income Taxes
|
8,152
|
|
(14,016)
|
Other, Net
|
(12,538)
|
|
(12,941)
|
Net Cash
Provided by Operating Activities
|
90,344
|
|
114,927
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
Capital
Expenditures
|
(83,141)
|
|
(64,161)
|
Proceeds Received on
Disposition of Plant and Equipment
|
1,027
|
|
1,359
|
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
|
-
|
|
(860)
|
Net Cash
Used in Investing Activities
|
(78,771)
|
|
(85,836)
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
Repayments on
Long-Term Debt
|
-
|
|
(1,851)
|
Debt Issuance
Costs
|
-
|
|
(932)
|
Treasury Stock
Purchases
|
(19,680)
|
|
(37,441)
|
Payment of
Acquisition Contingent Liability
|
(1,625)
|
|
-
|
Stock Option Exercise
Proceeds
|
7,770
|
|
12,389
|
Payments Related to
Shares Withheld for Taxes for Stock Compensation
|
(1,750)
|
|
(3,104)
|
Cash Dividends
Paid
|
(24,054)
|
|
(23,617)
|
Net Cash
Used in Financing Activities
|
(39,339)
|
|
(54,556)
|
|
|
|
|
EFFECT OF EXCHANGE
RATE CHANGES
|
(366)
|
|
(3,086)
|
NET DECREASE IN CASH
AND CASH EQUIVALENTS
|
(28,132)
|
|
(28,551)
|
CASH AND CASH
EQUIVALENTS, Beginning
|
89,839
|
|
118,390
|
CASH AND CASH
EQUIVALENTS, Ending
|
$
61,707
|
|
$
89,839
|
Liquidity and Capital Resources:
Net debt at July 2, 2017 was
$161.4 million (total debt, excluding
debt issuance costs, of $223.1
million less $61.7 million of
cash), or $28.1 million higher than
net debt of $133.3 million (total
debt, excluding debt issuance costs, of $223.1 million less $89.8
million of cash) at July 3,
2016. Cash flows provided by operating activities for fiscal
2017 were $90.3 million compared to
$114.9 million in fiscal 2016. The
decrease in cash provided by operating activities was primarily
related to changes in working capital, including higher accounts
receivable due to timing of sales and collections year over
year. During fiscal 2017, the Company repurchased
approximately 996,000 shares on the open market at an average price
of $19.77 per share. As of
July 2, 2017, the Company had
remaining authorization to repurchase up to approximately
$30.5 million of common stock with an
expiration date of June 29, 2018.
SUPPLEMENTAL SEGMENT INFORMATION
Engines
Segment:
|
|
|
|
Three Months
Ended June
|
|
Twelve
Months Ended June
|
(In
Thousands)
|
|
FY2017
|
|
FY2016
|
|
FY2017
|
|
FY2016
|
Net Sales
|
|
$
292,511
|
|
$
315,046
|
|
$
1,098,809
|
|
$
1,142,815
|
|
|
|
|
|
|
|
|
|
Gross Profit as
Reported
|
|
$
70,663
|
|
$
64,049
|
|
$
262,036
|
|
$
252,833
|
Restructuring
Charges
|
|
-
|
|
-
|
|
-
|
|
464
|
Pension Settlement
Expense
|
|
-
|
|
11,135
|
|
-
|
|
11,135
|
Adjusted Gross
Profit
|
|
$
70,663
|
|
$
75,184
|
|
$
262,036
|
|
$
264,432
|
|
|
|
|
|
|
|
|
|
Gross Profit % as
Reported
|
|
24.2%
|
|
20.3%
|
|
23.8%
|
|
22.1%
|
Adjusted Gross Profit
%
|
|
24.2%
|
|
23.9%
|
|
23.8%
|
|
23.1%
|
|
|
|
|
|
|
|
|
|
Segment Income as
Reported
|
|
$
26,949
|
|
$
8,449
|
|
$
84,165
|
|
$
60,645
|
Restructuring
Charges
|
|
-
|
|
-
|
|
-
|
|
1,354
|
Litigation
Charges
|
|
-
|
|
-
|
|
-
|
|
2,825
|
Pension Settlement
Expense
|
|
-
|
|
20,245
|
|
-
|
|
20,245
|
Adjusted Segment
Income
|
|
$
26,949
|
|
$
28,694
|
|
$
84,165
|
|
$
85,069
|
|
|
|
|
|
|
|
|
|
Segment Income % as
Reported
|
|
9.2%
|
|
2.7%
|
|
7.7%
|
|
5.3%
|
Adjusted Segment Income
%
|
|
9.2%
|
|
9.1%
|
|
7.7%
|
|
7.4%
|
Fourth 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 fourth quarter of fiscal 2017 by approximately 39,000
units and $7 million,
respectively.
- Using comparable sales terms, engine sales volumes decreased by
4% or approximately 80,000 engines in the fourth quarter of fiscal
2017. The decrease was due to channel partners taking a different
approach to merchandising and inventory stocking this season
compounded by regional pockets of suboptimal spring weather.
Partially offsetting the decrease were higher sales of Vanguard
commercial engines.
- Gross profit percentage increased due to manufacturing
efficiency improvements and favorable sales mix including a higher
proportion of commercial engine sales and margin lift on new
products. The gross profit percentage improved despite a 2%
decrease in production units compared to last year.
- ESG&A decreased by $9.6
million (GAAP) and $0.4
million (adjusted) compared to last year due to lower
compensation cost, partially offset by the investment in our ERP
system upgrade.
Fiscal Year Summary
- Net sales decreased by $44.0
million or 3.9% primarily due to lower shipments of engines
in North America due to channel
partners taking a different approach to merchandising and inventory
stocking this season compounded by regional pockets of suboptimal
spring weather. Partially offsetting the decrease were higher sales
of Vanguard commercial engines. Gross profit percentage increased
by 170 basis points. Adjusted gross profit percentage increased by
70 basis points despite lower production of 5% year over year due
to manufacturing efficiency improvements and favorable sales mix
including a higher proportion of commercial engine sales and margin
lift on new products. Engineering, selling, general and
administrative costs (ESG&A) decreased $9.2 million. Adjusted ESG&A (which only
included adjustments in the prior year) increased by $2.7 million, primarily due to $4.0 million of higher spend related to our ERP
upgrade. Equity in earnings of unconsolidated affiliates increased
by $4.2 million.
Products
Segment:
|
|
|
|
Three Months
Ended June
|
|
Twelve
Months Ended June
|
(In
Thousands)
|
|
FY2017
|
|
FY2016
|
|
FY2017
|
|
FY2016
|
Net Sales
|
|
$
203,371
|
|
$
216,271
|
|
$
778,378
|
|
$
772,154
|
|
|
|
|
|
|
|
|
|
Gross Profit as
Reported
|
|
$
30,066
|
|
$
29,530
|
|
$
121,141
|
|
$
110,944
|
Restructuring
Charges
|
|
-
|
|
2,471
|
|
-
|
|
7,693
|
Acquisition Related
Charges
|
|
-
|
|
-
|
|
-
|
|
250
|
Adjusted Gross
Profit
|
|
$
30,066
|
|
$
32,001
|
|
$
121,141
|
|
$
118,887
|
|
|
|
|
|
|
|
|
|
Gross Profit % as
Reported
|
|
14.8%
|
|
13.7%
|
|
15.6%
|
|
14.4%
|
Adjusted Gross Profit
%
|
|
14.8%
|
|
14.8%
|
|
15.6%
|
|
15.4%
|
|
|
|
|
|
|
|
|
|
Segment Income (Loss) as
Reported
|
|
$
3,353
|
|
$
(3,008)
|
|
$
12,530
|
|
$
(9,775)
|
Restructuring
Charges
|
|
-
|
|
3,079
|
|
-
|
|
8,841
|
Goodwill
Impairment
|
|
-
|
|
-
|
|
-
|
|
7,651
|
Tradename
Impairment
|
|
-
|
|
2,683
|
|
-
|
|
2,683
|
Acquisition Related
Charges
|
|
-
|
|
-
|
|
-
|
|
276
|
Adjusted Segment
Income
|
|
$
3,353
|
|
$
2,754
|
|
$
12,530
|
|
$
9,676
|
|
|
|
|
|
|
|
|
|
Segment Income (Loss) % as
Reported
|
|
1.6%
|
|
-1.4%
|
|
1.6%
|
|
-1.3%
|
Adjusted Segment Income
%
|
|
1.6%
|
|
1.3%
|
|
1.6%
|
|
1.3%
|
Fourth Quarter Highlights
- Net sales decreased by $12.9
million, primarily due to lower sales of pressure washers
resulting from lesser category merchandising support at retail and
cool spring temperatures. Partially offsetting the sales decrease
were higher sales of commercial lawn & garden and jobsite
equipment, generators, and service parts.
- Gross profit percentage increased by 110 basis points. Adjusted
gross profit percentage was consistent with last year as
manufacturing efficiency improvements and favorable sales mix,
including higher sales of commercial products and service parts,
were offset by 25% lower manufacturing throughput.
- ESG&A decreased by $1.8
million compared to last year due to lower compensation
cost.
Fiscal Year Summary
- Net sales increased by $6.2
million or 0.8%, primarily due to higher sales of commercial
lawn & garden and jobsite equipment and generators, which
includes the higher shipments related to Hurricane Matthew.
Pressure washer sales decreased due to lesser category
merchandising support at retail and cool spring temperatures. Gross
profit percentage increased 120 basis points. Adjusted gross profit
percentage improved by 20 basis points year over year due to
favorable sales mix, which included higher sales of commercial
products. The profitability improvement was achieved despite 8%
lower production throughput. ESG&A increased $1.3 million, primarily due to higher spend of
$1.3 million related to our ERP
upgrade.
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 June
(In Thousands,
except per share data)
|
|
|
|
Three Months
Ended June
|
|
|
FY2017
Reported
|
|
Adjustments
|
|
FY2017
Adjusted
|
|
FY2016
Reported
|
|
Adjustments1
|
|
FY2016
Adjusted
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
70,663
|
|
$
-
|
|
$
70,663
|
|
$
64,049
|
|
$
11,135
|
|
$
75,184
|
Products
|
|
30,066
|
|
-
|
|
30,066
|
|
29,530
|
|
2,471
|
|
32,001
|
Inter-Segment
Eliminations
|
|
401
|
|
-
|
|
401
|
|
373
|
|
-
|
|
373
|
Total
|
|
$
101,130
|
|
$
-
|
|
$
101,130
|
|
$
93,952
|
|
$
13,606
|
|
$
107,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engineering, Selling,
General and Administrative Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
45,885
|
|
$
-
|
|
$
45,885
|
|
$
55,443
|
|
$
9,110
|
|
$
46,333
|
Products
|
|
28,279
|
|
-
|
|
28,279
|
|
30,059
|
|
-
|
|
30,059
|
Total
|
|
$
74,164
|
|
$
-
|
|
$
74,164
|
|
$
85,502
|
|
$
9,110
|
|
$
76,392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Income (Loss)
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
26,949
|
|
$
-
|
|
$
26,949
|
|
$
8,449
|
|
$
20,245
|
|
$
28,694
|
Products
|
|
3,353
|
|
-
|
|
3,353
|
|
(3,008)
|
|
5,762
|
|
2,754
|
Inter-Segment
Eliminations
|
|
401
|
|
-
|
|
401
|
|
373
|
|
-
|
|
373
|
Total
|
|
$
30,703
|
|
$
-
|
|
$
30,703
|
|
$
5,814
|
|
$
26,007
|
|
$
31,821
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation from
Segment Income (Loss) to Income before Income Taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Earnings of
Unconsolidated Affiliates (2)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Income from
Operations
|
|
$
30,703
|
|
$
-
|
|
$
30,703
|
|
$
5,814
|
|
$
26,007
|
|
$
31,821
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before Income
Taxes
|
|
26,495
|
|
-
|
|
26,495
|
|
5,603
|
|
22,664
|
|
28,267
|
Provision for Income
Taxes
|
|
6,768
|
|
-
|
|
6,768
|
|
254
|
|
7,905
|
|
8,159
|
Net Income
|
|
$
19,727
|
|
$
-
|
|
$
19,727
|
|
$
5,349
|
|
$
14,759
|
|
$
20,108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.46
|
|
$
-
|
|
$
0.46
|
|
$
0.12
|
|
$
0.34
|
|
$
0.46
|
Diluted
|
|
0.46
|
|
-
|
|
0.46
|
|
0.12
|
|
0.34
|
|
0.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
For the fourth
quarter of fiscal 2016, includes pre-tax restructuring charges of
$3,079 ($2,001 after tax), pre-tax pension settlement charges of
$20,245 ($13,160 after tax), pre-tax tradename impairment charge of
$2,683 ($1,771 after tax), and a pre-tax gain on the sale of an
investment in marketable securities of $3,343 ($2,173 after
tax).
|
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 Twelve Month Periods Ended June
(In Thousands,
except per share data)
|
|
|
|
Twelve
Months Ended June
|
|
|
FY2017
Reported
|
|
Adjustments
|
|
FY2017
Adjusted
|
|
FY2016
Reported
|
|
Adjustments1
|
|
FY2016
Adjusted
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
262,036
|
|
$
-
|
|
$
262,036
|
|
$
252,833
|
|
$
11,599
|
|
$
264,432
|
Products
|
|
121,141
|
|
-
|
|
121,141
|
|
110,944
|
|
7,943
|
|
118,887
|
Inter-Segment
Eliminations
|
|
652
|
|
-
|
|
652
|
|
(1,322)
|
|
-
|
|
(1,322)
|
Total
|
|
$
383,829
|
|
$
-
|
|
$
383,829
|
|
$
362,455
|
|
$
19,542
|
|
$
381,997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engineering, Selling,
General and Administrative Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
184,496
|
|
$
-
|
|
$
184,496
|
|
$
193,716
|
|
$
11,935
|
|
$
181,781
|
Products
|
|
113,042
|
|
-
|
|
113,042
|
|
111,766
|
|
26
|
|
111,740
|
Total
|
|
$
297,538
|
|
$
-
|
|
$
297,538
|
|
$
305,482
|
|
$
11,961
|
|
$
293,521
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Income (Loss)
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
84,165
|
|
$
-
|
|
$
84,165
|
|
$
60,645
|
|
$
24,424
|
|
$
85,069
|
Products
|
|
12,530
|
|
-
|
|
12,530
|
|
(9,775)
|
|
19,451
|
|
9,676
|
Inter-Segment
Eliminations
|
|
652
|
|
-
|
|
652
|
|
(1,322)
|
|
-
|
|
(1,322)
|
Total
|
|
$
97,347
|
|
$
-
|
|
$
97,347
|
|
$
49,548
|
|
$
43,875
|
|
$
93,423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation from
Segment Income (Loss) to Income before Income Taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Earnings of
Unconsolidated Affiliates (2)
|
|
-
|
|
-
|
|
-
|
|
3,187
|
|
-
|
|
3,187
|
Income from
Operations
|
|
$
97,347
|
|
$
-
|
|
$
97,347
|
|
$
46,361
|
|
$
43,875
|
|
$
90,236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before Income
Taxes
|
|
79,661
|
|
-
|
|
79,661
|
|
35,356
|
|
40,532
|
|
75,888
|
Provision for Income
Taxes
|
|
23,011
|
|
-
|
|
23,011
|
|
8,795
|
|
12,104
|
|
20,899
|
Net Income
|
|
$
56,650
|
|
$
-
|
|
$
56,650
|
|
$
26,561
|
|
$
28,428
|
|
$
54,989
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
1.31
|
|
$
-
|
|
$
1.31
|
|
$
0.61
|
|
$
0.64
|
|
$
1.25
|
Diluted
|
|
1.31
|
|
-
|
|
1.31
|
|
0.60
|
|
0.65
|
|
1.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
For the twelve months
of fiscal 2016, includes pre-tax restructuring charges of $10,195
($6,672 after tax), goodwill impairment charge of $7,651 which is
not deductible for income tax purposes, pre-tax tradename
impairment charge of $2,683 ($1,771 after tax), pre-tax
acquisition-related charges of $276 ($180 after tax), pre-tax
litigation charges of $2,825 ($1,836 after tax), pre-tax pension
settlement charges of $20,245 ($13,160 after tax), and a pre-tax
gain on the sale of an investment in marketable securities of
$3,343 ($2,842 after tax).
|
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.
|
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SOURCE Briggs & Stratton Corporation