MILWAUKEE, April 21, 2016 /PRNewswire/ -- Briggs &
Stratton Corporation (NYSE:BGG) today announced financial results
for its third fiscal quarter ended March 27,
2016.
Highlights:
- Third quarter fiscal 2016 consolidated net sales were
$604 million, a decrease of
$15 million or 2.5% compared to the
prior year. Net sales decreased $9
million or 1.4% before currency impacts.
- Third quarter fiscal 2016 consolidated adjusted net income was
$34.9 million compared to the
adjusted net income of $39.2 million
in the third quarter of fiscal 2015. Third quarter fiscal 2016
consolidated net income was $26.8
million compared to the net income of $33.9 million in the third quarter of fiscal
2015.
- Third quarter fiscal 2016 adjusted diluted earnings per share
was $0.80 compared to the adjusted
diluted earnings per share of $0.86
last year. Third quarter fiscal 2016 diluted earnings per share was
$0.61 compared to the diluted
earnings per share of $0.75 last
year.
- The Company recorded a non-cash goodwill impairment charge of
$7.7 million during the third quarter
of fiscal 2016 within the Job Site reporting unit of its Products
Segment.
- The Company reaffirms full year earnings guidance.
- The Board of Directors authorized an additional $50 million in share repurchases.
"Our fiscal 2016 third quarter results were impacted by many
economic factors. In the U.S., we continue to be encouraged
by the housing recovery as well as some positive signs of regional
early season demand for outdoor power equipment. Our Job Site
business continues to be impacted by the downturn in U.S. oil
production which is masking the improvements in other areas of our
Products Segment. The first nine months year-over-year
negative impact on pre-tax earnings of our Job Site business is
$10 million, prior to the impact of
the goodwill impairment charge. We have made solid progress
in pivoting to the construction and rental markets; however, there
continues to be elevated job site equipment in the channel.
Internationally our sales were down by 16% in the quarter
driven by a delayed start to the European lawn and garden market
combined with continued global economic uncertainty and a stronger
U.S. dollar," commented Todd J.
Teske, Chairman, President and Chief Executive Officer of
Briggs & Stratton Corporation. Teske continued, "Despite
the headwinds, we continue to see improvement in our Products
Segment as we focus more on commercial equipment and driving
innovation throughout the segment. We also see solid
performance from our Engines Segment as we continue to introduce
engines with new, innovative features. We remain optimistic
for the lawn and garden season and for the opportunity for more
people to experience our innovative new products that make work
easier."
Consolidated Results:
Consolidated net sales for the third quarter of fiscal 2016 were
$604 million, a decrease of
$15 million or 2.5% from the third
quarter of fiscal 2015. Net sales decreased during the quarter
partially due to an unfavorable foreign currency impact, net of
price increases, of $6.5 million,
predominately related to the weakening of the Euro, Australian
Dollar, and Brazilian Real. Excluding currency impacts, net
sales decreased by $9 million. The
decrease in net sales was primarily a result of lower shipments in
international regions, particularly Europe, Australia and Brazil, as well as lower sales of job site
products. Partially offsetting this decrease were increased
shipments of engines to customers in North America, higher sales of commercial lawn
and garden products in North
America, and sales from Billy Goat, which was acquired in
May 2015. The third quarter fiscal
2016 consolidated net income and diluted earnings per share, which
includes restructuring charges and a goodwill impairment charge,
were $26.8 million and $0.61, respectively, compared to net income of
$33.9 million and diluted earnings
per share of $0.75 in the third
quarter of fiscal 2015. The third quarter fiscal 2016 adjusted
consolidated net income was $34.9
million or $0.80 per diluted
share as compared to adjusted consolidated net income of
$39.2 million or $0.86 per diluted share in the third quarter of
fiscal 2015.
Consolidated net sales for the first nine months of fiscal 2016
were $1.31 billion, a decrease of
$49 million or 3.6% from the first
nine months of fiscal 2015. Net sales decreased during the first
nine months of fiscal year 2016 partially due to an unfavorable
foreign currency impact, net of price increases, of $21.4 million, predominately related to the
weakening of the Euro, Australian Dollar, and Brazilian Real.
Excluding currency impacts, net sales decreased by $27.9 million. The decrease in net sales was
primarily from lower shipments to international regions, and an
approximately $20 million decrease in
sales of job site products due to higher channel inventory.
Partially offsetting this decrease were higher shipments of small
engines used on walk mowers to North American customers, increased
sales of commercial lawn and garden products, and sales from Billy
Goat. Consolidated net income for the first nine months of fiscal
2016, which includes restructuring charges, goodwill impairment
charge, acquisition-related charges, litigation charges, and the
reinstatement of a deferred tax asset, was $21.2 million or $0.48 per diluted share. The first nine months of
fiscal 2015 consolidated net income, which included restructuring
charges and acquisition-related charges, was $25.6 million or $0.56 per diluted share. The first nine months of
fiscal 2016 adjusted consolidated net income was $34.9 million or $0.79 per diluted share as compared to adjusted
consolidated net income of $41.8
million or $0.91 per diluted
share in the first nine months of fiscal 2015.
Non-GAAP Financial Measures and Segment Reporting
This release refers to non-GAAP financial measures including
"adjusted gross profit", "adjusted segment income (loss)", and
"adjusted net income (loss)". Refer to the accompanying
financial schedules for supplemental financial data and
corresponding reconciliations of these non-GAAP financial measures
to certain GAAP financial measures.
The Company concluded that its equity method investments are
integral to its business. Beginning with the third quarter of
fiscal 2016, the Company is prospectively classifying its equity in
earnings of unconsolidated affiliates as a separate line item
within income from operations. For periods prior to the third
quarter of fiscal 2016, equity in earnings from unconsolidated
affiliates is classified in Other Income. For all periods
presented, equity in earnings from unconsolidated affiliates is
included in segment income (loss).
Prior to the third quarter of fiscal 2016, segment income (loss)
is defined as income (loss) from operations plus equity in earnings
of unconsolidated affiliates. Beginning with the third quarter of
fiscal 2016, segment income (loss) is equal to operating income
(loss). The Company has included a reconciliation from consolidated
segment income (loss) to income (loss) from operations in the
accompanying Adjusted Segment Information table.
Engines Segment:
|
|
Three Months
Ended March
|
|
Nine Months
Ended March
|
(In
Thousands)
|
|
FY2016
|
|
FY2015
|
|
FY2016
|
|
FY2015
|
Net Sales
|
|
$
415,680
|
|
$
432,248
|
|
$
827,770
|
|
$
857,067
|
|
|
|
|
|
|
|
|
|
Gross Profit as
Reported
|
|
$
99,371
|
|
$
98,885
|
|
$
188,783
|
|
$
189,580
|
Restructuring
Charges
|
|
-
|
|
-
|
|
464
|
|
-
|
Adjusted Gross
Profit
|
|
$
99,371
|
|
$
98,885
|
|
$
189,247
|
|
$
189,580
|
|
|
|
|
|
|
|
|
|
Gross Profit % as
Reported
|
|
23.9%
|
|
22.9%
|
|
22.8%
|
|
22.1%
|
Adjusted Gross Profit
%
|
|
23.9%
|
|
22.9%
|
|
22.9%
|
|
22.1%
|
|
|
|
|
|
|
|
|
|
Segment Income as
Reported
|
|
$
52,166
|
|
$
54,928
|
|
$
52,195
|
|
$
59,967
|
Restructuring
Charges
|
|
-
|
|
-
|
|
1,354
|
|
-
|
Litigation
Charges
|
|
-
|
|
-
|
|
2,825
|
|
-
|
Adjusted Segment
Income
|
|
$
52,166
|
|
$
54,928
|
|
$
56,374
|
|
$
59,967
|
|
|
|
|
|
|
|
|
|
Segment Income % as
Reported
|
|
12.5%
|
|
12.7%
|
|
6.3%
|
|
7.0%
|
Adjusted Segment
Income %
|
|
12.5%
|
|
12.7%
|
|
6.8%
|
|
7.0%
|
Net sales in the third quarter of fiscal 2016 decreased
$17 million or 3.8% from the prior
year. Unfavorable foreign currency, net of offsetting price
increases, negatively impacted net sales by approximately
$3.4 million, largely due to the
weakening of the Euro. Total engine volumes shipped in the quarter
decreased by 3.8% or approximately 120,000 engines, mainly
attributable to lower shipments into Europe and Asia as OEMs have ordered less due to caution
over the global economy, including the strength of the U.S. dollar.
Shipments of small engines to North American customers increased in
the quarter due to more normal timing of pressure washer production
as well as continued strength in walk mower engine shipments. In
fiscal 2015 pressure washer production was accelerated earlier in
the year to build inventory in advance of the McDonough
closure.
Segment income in the third quarter of fiscal 2016 decreased by
$2.8 million from the prior year. The
gross profit percentage was 23.9% in the third quarter of fiscal
2016, an increase of 100 basis points from the prior year. Expanded
margins on new products, manufacturing efficiency improvements and
lower material costs contributed to the higher gross profit
percentage compared to the third quarter of fiscal 2015.
Manufacturing volume was consistent year over year during the third
quarter. Partially offsetting the higher gross profit percentage
was a 40 basis point unfavorable impact from foreign currency, net
of offsetting price increases.
Engineering, selling, general and administrative expenses for
the third quarter of fiscal 2016 increased $2.4 million largely due to strategic initiatives
and higher costs related to pension expense, partially offset by
the benefit of the movement in foreign currency rates.
Products Segment:
|
|
Three Months
Ended March
|
|
Nine Months
Ended March
|
(In
Thousands)
|
|
FY2016
|
|
FY2015
|
|
FY2016
|
|
FY2015
|
Net Sales
|
|
$
220,845
|
|
$
211,135
|
|
$
555,883
|
|
$
576,313
|
|
|
|
|
|
|
|
|
|
Gross Profit as
Reported
|
|
$
27,527
|
|
$
19,908
|
|
$
81,414
|
|
$
64,505
|
Restructuring
Charges
|
|
580
|
|
7,088
|
|
5,222
|
|
20,780
|
Acquisition Related
Charges
|
|
-
|
|
-
|
|
250
|
|
1,172
|
Adjusted Gross
Profit
|
|
$
28,107
|
|
$
26,996
|
|
$
86,886
|
|
$
86,457
|
|
|
|
|
|
|
|
|
|
Gross Profit % as
Reported
|
|
12.5%
|
|
9.4%
|
|
14.6%
|
|
11.2%
|
Adjusted Gross Profit
%
|
|
12.7%
|
|
12.8%
|
|
15.6%
|
|
15.0%
|
|
|
|
|
|
|
|
|
|
Segment Income (Loss)
as Reported
|
|
$
(7,246)
|
|
$
(8,128)
|
|
$
(6,767)
|
|
$
(20,125)
|
Restructuring
Charges
|
|
724
|
|
8,031
|
|
5,762
|
|
23,261
|
Goodwill
Impairment
|
|
7,651
|
|
-
|
|
7,651
|
|
-
|
Acquisition Related
Charges
|
|
-
|
|
110
|
|
276
|
|
1,641
|
Adjusted Segment
Income
|
|
$
1,129
|
|
$
13
|
|
$
6,922
|
|
$
4,777
|
|
|
|
|
|
|
|
|
|
Segment Income (Loss)
% as Reported
|
|
-3.3%
|
|
-3.8%
|
|
-1.2%
|
|
-3.5%
|
Adjusted Segment
Income %
|
|
0.5%
|
|
0.0%
|
|
1.2%
|
|
0.8%
|
Net sales in the third quarter of fiscal 2016 increased
$10 million or 4.6% from the prior
year. Unfavorable foreign currency, net of offsetting price
increases, negatively impacted net sales by approximately
$3.2 million, primarily related to
the Australian Dollar and Brazilian Real. Excluding currency
impacts, net sales increased by $12.9
million, primarily from increased sales of high-end
residential and commercial lawn and garden equipment through our
North American dealer channel and the Billy Goat acquisition.
Partially offsetting this increase were lower international sales,
primarily in Australia, lower
sales of job site products due to high channel inventories and
lower sales related to our previously announced strategic decision
to exit the sale of lower margin Snapper products.
Adjusted segment income in the third quarter of fiscal 2016
increased by $1.1 million from the
prior year. The adjusted gross profit percentage of 12.7% in the
third quarter of fiscal 2016 decreased 10 basis points year over
year. Adjusted gross margins decreased due to lower manufacturing
volume related to job site products and standby generators.
Unfavorable foreign currency, net of offsetting price increases,
also negatively impacted gross profit percentage by 30 basis
points. Partially offsetting the lower gross profit percentage was
incremental savings of $2.0 million
realized from the previously announced restructuring actions and a
favorable sales mix, which improved adjusted gross margins by
approximately 90 basis points and was driven by our focus on
selling higher margin lawn and garden equipment and the results
from last year's Billy Goat acquisition.
Adjusted engineering, selling, general and administrative
expenses in the third quarter of fiscal 2016 increased $0.3 million from the prior year, primarily due
to the Billy Goat acquisition, partially offset by the benefit of
the movement in foreign currency rates.
During the third quarter of 2016, the Company recognized a
non-cash goodwill impairment charge of $7.7
million within its Job Site reporting unit. The Job Site
reporting unit, which is included in the Products Segment, designs,
manufactures, and sells portable light towers and heaters under the
Allmand brand. The impairment charge is a non-cash expense that did
not adversely affect the Company's debt position, cash flow,
liquidity, or compliance with financial covenants under its credit
facilities.
Corporate Items:
The effective tax rates for the third quarter and first nine
months of fiscal 2016 were 33.0% and 28.7% respectively,
compared to 20.2% and 5.7% for the same respective periods last
year. The tax rates for the third quarter and first nine
months of fiscal 2016 were impacted by non-deductible goodwill
impairment. The tax rates for the third quarter and first nine
months of fiscal 2016 and 2015 were impacted by the U.S. research
and development tax credit and foreign earnings in jurisdictions
with tax rates that vary from the U.S. statutory rate. The tax
rate for the first nine months of 2015 was additionally impacted by
the reversal of previously recorded reserves as a result of the
effective settlement of the Company's IRS audit.
Financial Position:
Net debt at March 27, 2016 was
$211.9 million (total debt of
$255.6 million less $43.7 million of cash), or $23.5 million lower than the $235.4 million (total debt of $285.1 million less $49.7
million of cash) at March 29,
2015. Cash flows used in operating activities for fiscal
2016 were $5.4 million compared to
$52.1 million in fiscal 2015. The
improvement in operating cash flows used was primarily related to
changes in working capital due to lower inventory levels and
accounts receivable. Inventory levels were elevated last year in
the third quarter to support the McDonough plant closure and the
introduction of a new engine line. Cash flows used in investing
activities for fiscal 2016 were $63.0
million compared to $103.9
million in fiscal 2015. The decrease in cash used in
investing activities was primarily related to $19.1 million of cash paid for our investment in
Power Distributors, an unconsolidated affiliate, in fiscal 2016, as
compared to $59.9 million of cash
paid for the Allmand acquisition in fiscal 2015.
Restructuring:
During the third quarter of fiscal 2016, the Company continued
implementing the previously announced restructuring actions to
narrow its assortment of lower-priced Snapper consumer lawn and
garden equipment and consolidate its Products segment manufacturing
facilities in order to reduce costs. Products Segment pre-tax
restructuring costs for the third quarter and first nine months of
fiscal 2016 were $0.7 million and
$5.8 million, respectively. Pre-tax
restructuring cost estimates for the Products Segment for fiscal
2016 are $6 million to $8 million.
Incremental pre-tax savings related to the Products Segment
restructuring actions during the third quarter of fiscal 2016 were
$2.0 million. Incremental cost
savings as a result of Products Segment restructuring actions are
anticipated to be $6 million to $7
million in fiscal 2016. Engines Segment restructuring
actions implemented and completed in the first quarter of fiscal
2016 resulted in pre-tax restructuring costs of $1.4 million.
Share Repurchase Program:
On August 13, 2014, the Board of
Directors authorized up to $50
million in funds for use in the common share repurchase
program with an expiration date of June 30,
2016. As of March 27, 2016,
the Company had remaining authorization to repurchase up to
approximately $7 million of common
stock under this authorization. On April 21,
2016, the Board of Directors authorized up to an additional
$50 million in funds for use in the
common share repurchase program with an expiration date of
June 29, 2018. The common share
repurchase program authorizes the purchase of shares of the
Company's common stock on the open market or in private
transactions from time to time, depending on market conditions and
certain governing loan covenants. During the first nine months of
fiscal 2016, the Company repurchased approximately 1,841,000 shares
on the open market at an average price of $18.14 per share.
Outlook:
For fiscal 2016, we continue to expect that adjusted
consolidated net income will be in a range of $56 million to $63 million or $1.25 to $1.41 per diluted share; prior to the
impact of any previously recognized adjustments, additional
restructuring actions or share repurchases. Operating
margins, which now include equity in earnings of unconsolidated
affiliates for the second half of fiscal 2016, are expected to be
approximately 5.1% to 5.3%. Operating margins for fiscal 2015 were
5.2% including the equity in earnings of unconsolidated affiliates
for the second half of the fiscal year. Compared to last
year, operating margins are expected to be consistent as product
margin expansion and manufacturing cost reductions are tempered by
reduced international sales, including the impacts of a stronger
U.S. dollar, and reduced plant utilization in response to lower
sales, particularly within the job site products business.
Due to weakness in consumer spending for outdoor power equipment
in our international markets and reduced demand for job site
products due to elevated channel inventories, we are revising our
fiscal 2016 consolidated net sales to be in a range of $1.85 billion to $1.92 billion, down from
previous guidance of $1.90 billion to $1.96
billion. We continue to estimate that the retail
market for U.S. lawn and garden products will increase an estimated
1% to 3% this season, reflecting a gradual improvement in the
housing market. The lower end of our range includes the possibility
that sales of lawn and garden products shift to later in the season
due to retail sales patterns, retailer reorders, and OEM production
schedules. Acquisitions completed in fiscal 2015 are expected
to add approximately 1.5% to net sales reflecting reduced job site
products sales. Offsetting the U.S. lawn and garden organic
growth and acquisition growth are lower estimated sales of
approximately 2% related to our reduction of the lower margin
Snapper SKUs that were discontinued as part of the restructuring
program and unfavorable net foreign currency impacts caused by a
strong U.S. dollar.
Interest expense is estimated to be approximately $21 million. Other income, which excludes
equity in earnings of unconsolidated affiliates for the second half
of fiscal 2016, is expected to be $5.5
million. We estimate that approximately $3.0 million of equity in earnings of
unconsolidated affiliates will shift to income from operations due
to the reporting change implemented in the third quarter of fiscal
2016. The effective tax rate excluding restructuring charges
is projected to be in a range of 29% to 31% and capital
expenditures are projected to be approximately $65 million to $70 million.
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://www.basco.com/investor relations.
Also available is a dial-in number to access the call real-time
at (866) 259-1024. A replay will be offered beginning approximately
two hours after the call ends and will be available for one week.
Dial (888) 266-2081 to access the replay. The pass code will be
1666200.
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; 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, headquartered in Milwaukee, Wisconsin, is the world's largest
producer of gasoline engines for outdoor power equipment. Its
wholly owned subsidiaries include North
America's number one marketer of pressure washers, and it is
a leading designer, manufacturer and marketer of power generation,
lawn and garden, turf care and job site products through its
Simplicity®, Snapper®, Snapper Pro®, Ferris®, PowerBoss®, Allmand™,
Billy Goat®, Murray®, Branco® and Victa® brands. Briggs &
Stratton products are designed, manufactured, marketed and serviced
in over 100 countries on six continents.
BRIGGS &
STRATTON CORPORATION AND SUBSIDIARIES
Consolidated
Statements of Operations for the Periods Ended March
|
(In Thousands,
except per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended March
|
|
Nine Months
Ended March
|
|
|
FY2016
|
|
FY2015
|
|
FY2016
|
|
FY2015
|
NET SALES
|
|
$
603,750
|
|
$
619,015
|
|
$
1,306,587
|
|
$
1,355,931
|
COST OF GOODS
SOLD
|
|
476,075
|
|
492,847
|
|
1,032,398
|
|
1,080,883
|
RESTRUCTURING
CHARGES
|
|
580
|
|
7,088
|
|
5,686
|
|
20,780
|
Gross
Profit
|
|
127,095
|
|
119,080
|
|
268,503
|
|
254,268
|
|
|
|
|
|
|
|
|
|
ENGINEERING, SELLING,
GENERAL
|
|
|
|
|
|
|
|
|
AND ADMINISTRATIVE
EXPENSES
|
|
75,288
|
|
72,714
|
|
219,980
|
|
216,767
|
RESTRUCTURING
CHARGES
|
|
144
|
|
943
|
|
1,430
|
|
2,481
|
GOODWILL
IMPAIRMENT
|
|
7,651
|
|
-
|
|
7,651
|
|
-
|
EQUITY IN EARNINGS OF
UNCONSOLIDATED AFFILIATES (1)
|
|
1,105
|
|
-
|
|
1,105
|
|
-
|
Income from
Operations
|
|
45,117
|
|
45,423
|
|
40,547
|
|
35,020
|
|
|
|
|
|
|
|
|
|
INTEREST
EXPENSE
|
|
(5,593)
|
|
(5,233)
|
|
(15,142)
|
|
(14,641)
|
OTHER
INCOME
|
|
511
|
|
2,323
|
|
4,348
|
|
6,749
|
Income before Income
Taxes
|
|
40,035
|
|
42,513
|
|
29,753
|
|
27,128
|
|
|
|
|
|
|
|
|
|
PROVISION FOR INCOME
TAXES
|
|
13,212
|
|
8,592
|
|
8,541
|
|
1,542
|
Net
Income
|
|
$
26,823
|
|
$
33,921
|
|
$
21,212
|
|
$
25,586
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.62
|
|
$
0.75
|
|
$
0.48
|
|
$
0.56
|
Diluted
|
|
0.61
|
|
0.75
|
|
0.48
|
|
0.56
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE
SHARES OUTSTANDING
|
|
|
|
|
|
|
|
|
Basic
|
|
42,621
|
|
44,160
|
|
43,158
|
|
44,605
|
Diluted
|
|
42,889
|
|
44,241
|
|
43,377
|
|
44,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended March
|
|
Nine Months
Ended March
|
|
|
FY2016
|
|
FY2015
|
|
FY2016
|
|
FY2015
|
International sales
based on product shipment destination
|
|
$
160,277
|
|
$
190,083
|
|
$
404,493
|
|
$
465,130
|
BRIGGS &
STRATTON CORPORATION AND SUBSIDIARIES
Consolidated
Balance Sheets as of the End of March
(In Thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
FY2016
|
|
FY2015
|
Cash and Cash
Equivalents
|
$
43,716
|
|
$
49,694
|
Accounts Receivable,
Net
|
279,127
|
|
315,725
|
Inventories
|
419,537
|
|
446,896
|
Deferred Income Tax
Asset
|
47,902
|
|
48,958
|
Prepaid Expenses and
Other Current Assets
|
29,993
|
|
35,463
|
Total Current
Assets
|
820,275
|
|
896,736
|
|
|
|
|
OTHER
ASSETS:
|
|
|
|
Goodwill
|
160,998
|
|
156,278
|
Investments
|
56,715
|
|
29,354
|
Debt Issuance Costs,
Net
|
3,937
|
|
3,950
|
Other Intangible
Assets, Net
|
106,544
|
|
95,405
|
Deferred Income Tax
Asset
|
14,393
|
|
129
|
Other Long-Term
Assets, Net
|
13,113
|
|
12,445
|
Total Other
Assets
|
355,700
|
|
297,561
|
|
|
|
|
|
|
|
|
PLANT AND
EQUIPMENT:
|
|
|
|
At Cost
|
1,038,994
|
|
1,028,368
|
Less - Accumulated
Depreciation
|
724,611
|
|
728,136
|
Plant and Equipment,
Net
|
314,383
|
|
300,232
|
|
$
1,490,358
|
|
$
1,494,529
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts
Payable
|
$
212,372
|
|
$
197,476
|
Short-Term
Debt
|
32,443
|
|
60,100
|
Accrued
Liabilities
|
155,965
|
|
158,644
|
Total Current
Liabilities
|
400,780
|
|
416,220
|
|
|
|
|
OTHER
LIABILITIES:
|
|
|
|
Accrued Pension
Cost
|
194,542
|
|
107,992
|
Accrued Employee
Benefits
|
22,778
|
|
24,487
|
Accrued
Postretirement Health Care Obligation
|
41,165
|
|
51,750
|
Deferred Income Tax
Liability
|
6
|
|
3,414
|
Other Long-Term
Liabilities
|
52,299
|
|
40,822
|
Long-Term
Debt
|
223,149
|
|
225,000
|
Total Other
Liabilities
|
533,939
|
|
453,465
|
|
|
|
|
SHAREHOLDERS'
INVESTMENT:
|
|
|
|
Common
Stock
|
579
|
|
579
|
Additional Paid-In
Capital
|
73,072
|
|
76,332
|
Retained
Earnings
|
1,074,959
|
|
1,056,981
|
Accumulated Other
Comprehensive Loss
|
(280,940)
|
|
(218,840)
|
Treasury Stock, at
Cost
|
(312,031)
|
|
(290,208)
|
Total Shareholders'
Investment
|
555,639
|
|
624,844
|
|
$
1,490,358
|
|
$
1,494,529
|
BRIGGS &
STRATTON CORPORATION AND SUBSIDIARIES
Consolidated
Statements of Cash Flows
(In
Thousands)
(Unaudited)
|
|
|
|
|
|
Nine Months Ended
March
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
FY2016
|
|
FY2015
|
Net Income
|
$
21,212
|
|
$
25,586
|
Adjustments to
Reconcile Net Income to Net Cash Used in Operating
Activities:
|
|
|
|
Depreciation and
Amortization
|
40,579
|
|
39,302
|
Stock Compensation
Expense
|
4,792
|
|
4,840
|
Goodwill
Impairment
|
7,651
|
|
-
|
Loss on Disposition
of Plant and Equipment
|
454
|
|
300
|
Provision for
Deferred Income Taxes
|
3,656
|
|
914
|
Equity in Earnings of
Unconsolidated Affiliates
|
(4,292)
|
|
(5,005)
|
Dividends Received
from Unconsolidated Affiliates
|
5,039
|
|
4,381
|
Non-Cash
Restructuring Charges
|
1,725
|
|
12,445
|
Changes in Operating
Assets and Liabilities:
|
|
|
|
Accounts
Receivable
|
(64,488)
|
|
(88,898)
|
Inventories
|
(41,903)
|
|
(58,715)
|
Other Current
Assets
|
1,429
|
|
5,917
|
Accounts Payable,
Accrued Liabilities and Income Taxes
|
25,598
|
|
18,844
|
Other, Net
|
(6,808)
|
|
(12,046)
|
Net Cash
Used in Operating Activities
|
(5,356)
|
|
(52,135)
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
Additions to Plant
and Equipment
|
(41,092)
|
|
(44,157)
|
Cash Paid for
Acquisitions, Net of Cash Acquired
|
(3,074)
|
|
(59,855)
|
Cash Paid for
Investment in Unconsolidated Affiliates
|
(19,100)
|
|
-
|
Proceeds Received on
Disposition of Plant and Equipment
|
997
|
|
318
|
Other, Net
|
(750)
|
|
(250)
|
Net Cash
Used in Investing Activities
|
(63,019)
|
|
(103,944)
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
Net Borrowings on
Revolver
|
32,443
|
|
60,100
|
Payments on Long-Term
Debt
|
(1,851)
|
|
-
|
Debt Issuance
Costs
|
(932)
|
|
-
|
Cash Dividends
Paid
|
(11,885)
|
|
(11,374)
|
Stock Option Exercise
Proceeds and Tax Benefits
|
11,165
|
|
3,921
|
Treasury Stock
Purchases
|
(33,394)
|
|
(39,560)
|
Net Cash
Provided by (Used in) Financing Activities
|
(4,454)
|
|
13,087
|
|
|
|
|
EFFECT OF EXCHANGE
RATE CHANGES
|
(1,845)
|
|
(1,982)
|
NET DECREASE IN CASH
AND CASH EQUIVALENTS
|
(74,674)
|
|
(144,974)
|
CASH AND CASH
EQUIVALENTS, Beginning
|
118,390
|
|
194,668
|
CASH AND CASH
EQUIVALENTS, Ending
|
$
43,716
|
|
$
49,694
|
Non-GAAP Financial Measures
Briggs & Stratton 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)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended March
|
|
|
FY2016
Reported
|
|
Adjustments1
|
|
FY2016
Adjusted
|
|
FY2015
Reported
|
|
Adjustments1
|
|
FY2015
Adjusted
|
|
|
|
|
|
|
|
Gross
Profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
99,371
|
|
$
-
|
|
$
99,371
|
|
$
98,885
|
|
$
-
|
|
$
98,885
|
Products
|
|
27,527
|
|
580
|
|
28,107
|
|
19,908
|
|
7,088
|
|
26,996
|
Inter-Segment
Eliminations
|
|
197
|
|
-
|
|
197
|
|
287
|
|
-
|
|
287
|
Total
|
|
$
127,095
|
|
$
580
|
|
$
127,675
|
|
$ 119,080
|
|
$
7,088
|
|
$ 126,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engineering, Selling,
General and Administrative Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
47,759
|
|
$
-
|
|
$
47,759
|
|
$
45,345
|
|
$
-
|
|
$
45,345
|
Products
|
|
27,529
|
|
-
|
|
27,529
|
|
27,369
|
|
110
|
|
27,259
|
Total
|
|
$
75,288
|
|
$
-
|
|
$
75,288
|
|
$
72,714
|
|
$
110
|
|
$
72,604
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Income (Loss)
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
52,166
|
|
$
-
|
|
$
52,166
|
|
$
54,928
|
|
$
-
|
|
$
54,928
|
Products
|
|
(7,246)
|
|
8,375
|
|
1,129
|
|
(8,128)
|
|
8,141
|
|
13
|
Inter-Segment
Eliminations
|
|
197
|
|
-
|
|
197
|
|
287
|
|
-
|
|
287
|
Total
|
|
$
45,117
|
|
$
8,375
|
|
$
53,492
|
|
$
47,087
|
|
$
8,141
|
|
$
55,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation from
Segment Income (Loss) to Income before Income Taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Earnings of
Unconsolidated Affiliates (2)
|
|
-
|
|
-
|
|
-
|
|
1,664
|
|
-
|
|
1,664
|
Income from
Operations
|
|
$
45,117
|
|
$
8,375
|
|
$
53,492
|
|
$
45,423
|
|
$
8,141
|
|
$
53,564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before Income
Taxes
|
|
40,035
|
|
8,375
|
|
48,410
|
|
42,513
|
|
8,141
|
|
50,654
|
Provision for Income
Taxes
|
|
13,212
|
|
254
|
|
13,466
|
|
8,592
|
|
2,849
|
|
11,441
|
Net
Income
|
|
$
26,823
|
|
$
8,121
|
|
$
34,944
|
|
$
33,921
|
|
$
5,292
|
|
$
39,213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.62
|
|
$
0.18
|
|
$
0.80
|
|
$
0.75
|
|
$
0.11
|
|
$
0.86
|
Diluted
|
|
0.61
|
|
0.19
|
|
0.80
|
|
0.75
|
|
0.11
|
|
0.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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. For the third quarter of
fiscal 2015, includes pre-tax restructuring charges of $8,031
($5,220 after tax) and pre-tax acquisition-related charges of $110
($72 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 Nine Month Periods Ended March
(In Thousands,
except per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended March
|
|
|
FY2016
Reported
|
|
Adjustments1
|
|
FY2016
Adjusted
|
|
FY2015
Reported
|
|
Adjustments1
|
|
FY2015
Adjusted
|
|
|
|
|
|
|
|
Gross
Profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
188,783
|
|
$
464
|
|
$
189,247
|
|
$ 189,580
|
|
$
-
|
|
$ 189,580
|
Products
|
|
81,414
|
|
5,472
|
|
86,886
|
|
64,505
|
|
21,952
|
|
86,457
|
Inter-Segment
Eliminations
|
|
(1,694)
|
|
-
|
|
(1,694)
|
|
183
|
|
-
|
|
183
|
Total
|
|
$
268,503
|
|
$
5,936
|
|
$
274,439
|
|
$ 254,268
|
|
$
21,952
|
|
$ 276,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engineering, Selling,
General and Administrative Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
138,273
|
|
$
2,825
|
|
$
135,448
|
|
$ 133,612
|
|
$
-
|
|
$ 133,612
|
Products
|
|
81,707
|
|
26
|
|
81,681
|
|
83,155
|
|
469
|
|
82,686
|
Total
|
|
$
219,980
|
|
$
2,851
|
|
$
217,129
|
|
$ 216,767
|
|
$
469
|
|
$ 216,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Income (Loss)
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
52,195
|
|
$
4,179
|
|
$
56,374
|
|
$
59,967
|
|
$
-
|
|
$
59,967
|
Products
|
|
(6,767)
|
|
13,689
|
|
6,922
|
|
(20,125)
|
|
24,902
|
|
4,777
|
Inter-Segment
Eliminations
|
|
(1,694)
|
|
-
|
|
(1,694)
|
|
183
|
|
-
|
|
183
|
Total
|
|
$
43,734
|
|
$
17,868
|
|
$
61,602
|
|
$
40,025
|
|
$
24,902
|
|
$
64,927
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation from
Segment Income (Loss) to Income before Income Taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Earnings of
Unconsolidated Affiliates (2)
|
|
3,187
|
|
-
|
|
3,187
|
|
5,005
|
|
-
|
|
5,005
|
Income from
Operations
|
|
$
40,547
|
|
$
17,868
|
|
$
58,415
|
|
$
35,020
|
|
$
24,902
|
|
$
59,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before Income
Taxes
|
|
29,753
|
|
17,868
|
|
47,621
|
|
27,128
|
|
24,902
|
|
52,030
|
Provision for Income
Taxes
|
|
8,541
|
|
4,199
|
|
12,740
|
|
1,542
|
|
8,716
|
|
10,258
|
Net
Income
|
|
$
21,212
|
|
$
13,669
|
|
$
34,881
|
|
$
25,586
|
|
$
16,186
|
|
$
41,772
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.48
|
|
$
0.31
|
|
$
0.79
|
|
$
0.56
|
|
$
0.35
|
|
$
0.91
|
Diluted
|
|
0.48
|
|
0.31
|
|
0.79
|
|
0.56
|
|
0.35
|
|
0.91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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. For the first nine months of
fiscal 2015, includes pre-tax restructuring charges of $23,261
($15,120 after tax) and pre-tax acquisition-related charges of
$1,641 ($1,066 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