In the news release, Briggs & Stratton Corporation Reports
Fiscal 2019 Third Quarter Results, issued 25-Apr-2019 by Briggs & Stratton Corporation
over PR Newswire, we are advised by the company that the sixth
bullet point, second sentence, should read "Net sales for fiscal
2020 are expected to be in a range of $1.98
billion to $2.03 billion and
diluted earnings per share are expected to be in a range of
$1.20 to $1.40, excluding business optimization program
costs." rather than "Net sales for fiscal 2020 are expected to in a
range of $1.98 million to
$2.03 million and diluted earnings
per share are expected to be in a range of $1.20 to $1.40,
excluding business optimization program costs." as originally
issued inadvertently. The complete, corrected release follows:
Briggs & Stratton Corporation Reports Fiscal 2019 Third Quarter
Results
MILWAUKEE, April 25, 2019 /PRNewswire/ -- Briggs &
Stratton Corporation (NYSE: BGG) today announced financial results
for its third fiscal quarter ended March 31,
2019.
- Third fiscal quarter net sales decreased 4% to $580 million from $604 million in the prior year. The
decrease is largely driven by continued weather-related market
softness in Australia and
Europe as well as the impact to
U.S. sales from the Sears bankruptcy.
- Ongoing favorable sales momentum led to 18% growth of engines
and products designed for commercial markets, on a trailing
twelve-month basis, and accounted for 30% of trailing twelve-month
sales.
- Quarterly GAAP gross profit margin of 16.7% and adjusted gross
profit margin of 17.4% decreased from last year's GAAP gross profit
margin of 21.6% and adjusted gross profit margin of 21.9%,
primarily due to sales mix, lower production volumes as planned,
and start-up inefficiencies associated with our business
optimization initiatives.
- Third quarter GAAP net income of $8.0 million,
or $0.19 per diluted share, included business
optimization charges and acquisition integration charges compared
to GAAP net income of $31.9 million,
or $0.74 per diluted share in the
prior year. Excluding these items, adjusted net income for the
fiscal 2019 third quarter was $14.6 million,
or $0.34 per diluted share, compared with $36.2
million, or $0.84 per diluted share, for the prior
year.
- The company is revising its fiscal 2019 earnings outlook
to $0.45 to $0.55 per
diluted share, before business optimization costs and other
charges, from previous guidance of $1.10 to $1.30 per diluted share. The revision
reflects continued weather-related market softness and the
impact of temporary inefficiencies associated with the start-up of
business optimization initiatives.
- The company's preliminary estimates for fiscal 2020 include
meaningful sales and earnings improvement from the fiscal 2019
outlook. Net sales for fiscal 2020 are expected to be in
a range of $1.98 billion to
$2.03 billion and diluted earnings
per share are expected to be in a range of $1.20 to $1.40,
excluding business optimization program costs. Further
context will be provided in tomorrow's earnings conference
call.
Todd J. Teske, Chairman,
President and Chief Executive Officer, commented, "We were
disappointed in the quarterly results. Lower shipments due to the
Sears bankruptcy, weather-related softness particularly in
Australia and Europe, and inefficiencies from start-up
activities related to our business optimization initiatives
tempered overall sales performance and reduced quarterly
profitability more than previously expected. While incurring
these elevated start-up costs were difficult from a financial
performance perspective, they helped enable us to meet important
customer delivery commitments on robust sales across commercial
lines and position us well for long-term growth." Teske
continued, "Actions are already underway to improve operating
performance. Fulfillment levels in our service parts business
have meaningfully improved, and we are now positioned to support
demand during the peak season. Similarly, production of
commercial Vanguard engines is increasing, following the on-shoring
from our joint venture. Quality and performance for this line
remain high, as closer proximity to our primary customer base is
helping us win new business. Production is also increasing at our
new facility for Ferris mowers and other commercial products.
Growing conditions are favorable throughout much of North America and Europe, which set the stage for a more normal
grass-cutting season. The much-needed additional capacity is also
giving us the resources to meet the higher demand for our
innovative commercial products. Taken together, we are
well-positioned to regain momentum on delivering the business
optimization program pre-tax savings of up to $40 million by fiscal 2021 and are confident that
our strategic actions position us for improving trends in revenue
growth, profitability and capital returns as we enter fiscal 2020
and beyond."
Fiscal 2019 Outlook:
- Net sales are now expected to be in a range of $1.86 billion to $1.91
billion (previously $1.90
billion to $1.96 billion), a
$40 million reduction. The decrease
contemplates $30 million in lower
sales in Australia and
Europe due to unfavorable weather
conditions and a cautious retail sentiment. North America service parts sales are
anticipated to be $10 million lower
than previously estimated due to lower sales to date through the
third quarter.
- Operating margin is expected to be 2.6% to 2.8% (previously
4.5% to 4.8%), before the impact of charges from the business
optimization program, bad debt charge, litigation settlement charge
or acquisition integration costs. The reduction is due to the
company's expectation of lower sales as well as unfavorable sales
mix, lower manufacturing volumes and temporarily elevated
inefficiencies.
- Equity in earnings of unconsolidated affiliates is expected to
be $11.5 million, and interest
expense is expected to be $28.5
million, adjusted for business optimization charges and
premiums paid to retire senior notes. Due to lower expected
earnings, the consolidated tax rate is expected to be in a range of
10% to 12%.
- Net income is now expected to be in a range of $19 million to $23
million (previously $47
million to $55 million), or
$0.45 to $0.55 per diluted share (previously $1.10 to $1.30 per
diluted share), before the impact of charges.
- The company continues to anticipate capital expenditures of
approximately $65 million.
- The company's business optimization program is expected to
generate pre-tax savings of $35
million to $40 million by
fiscal 2021 and related total program pre-tax charges are expected
to be up to $70 million, including
fiscal 2019 program costs of $42
million to $46 million.
Conference Call Information:
The company will host a conference call tomorrow at 10:00 AM (ET) to review the third quarter
financial results. A live webcast of the conference call will be
available on the company's corporate website:
http://investors.basco.com.
Also available is a dial-in number to access the call real-time
at (877) 233-9136 and enter Conference ID 9389953. A replay will be
offered beginning approximately two hours after the call ends and
will be available for one week. Dial (855) 859-2056 and enter the
Conference ID to access the replay.
Non-GAAP Financial Measures:
This release refers to non-GAAP financial measures including
"adjusted gross profit", "adjusted engineering, selling, general,
and administrative expenses", "adjusted segment income (loss)",
"adjusted net income (loss)", and "adjusted diluted earnings (loss)
per share." Refer to the accompanying financial schedules for
supplemental financial data and corresponding reconciliations of
these non-GAAP financial measures to certain GAAP financial
measures.
Safe Harbor Statement:
This release contains certain forward-looking statements that
involve risks and uncertainties that could cause actual results to
differ materially from those projected in the forward-looking
statements. The words "anticipate", "believe", "estimate",
"expect", "forecast", "intend", "plan", "project", and similar
expressions are intended to identify forward-looking statements.
The forward-looking statements are based on the company's current
views and assumptions and involve risks and uncertainties that
include, among other things, the ability to successfully forecast
demand for its products; changes in interest rates and foreign
exchange rates; the effects of weather on the purchasing patterns
of consumers and original equipment manufacturers (OEMs); actions
of engine manufacturers and OEMs with whom the company competes;
changes in laws and regulations, including U.S. tax reform, changes
in tax rates, laws and regulations as well as related guidance;
imposition of new, or changes in existing, duties, tariffs and
trade agreements; changes in customer and OEM demand; changes in
prices of raw materials and parts that the company purchases;
changes in domestic and foreign economic conditions (including
effects from the U.K.'s decision to exit the European Union); the
ability to bring new productive capacity on line efficiently and
with good quality; outcomes of legal proceedings and claims; the
ability to realize anticipated savings from the business
optimization program and restructuring actions; and other factors
disclosed from time to time in the company's SEC filings or
otherwise, including the factors discussed in Item 1A, Risk
Factors, of the company's Annual Report on Form 10-K and in its
periodic reports on Form 10-Q. The company undertakes no obligation
to update forward-looking statements made in this release to
reflect events or circumstances after the date of this
release.
About Briggs & Stratton Corporation:
Briggs & Stratton Corporation (NYSE: BGG), headquartered in
Milwaukee, Wisconsin, is focused
on providing power to get work done and make people's lives better.
Briggs & Stratton is the world's largest producer of gasoline
engines for outdoor power equipment, and is a leading designer,
manufacturer and marketer of power generation, pressure washer,
lawn and garden, turf care and job site products through its Briggs
& Stratton®, Simplicity®, Snapper®, Ferris®, Vanguard®,
Allmand®, Billy Goat®, Murray®, Branco®, and Victa® brands. Briggs
& Stratton products are designed, manufactured, marketed and
serviced in over 100 countries on six continents. For additional
information, please visit www.basco.com and
www.briggsandstratton.com.
BRIGGS &
STRATTON CORPORATION AND SUBSIDIARIES
|
Consolidated
Statements of Operations for the Periods Ended March
|
(In Thousands,
except per share data)
|
|
|
|
Three Months
Ended March
|
|
Nine Months
Ended March
|
|
|
FY2019
|
|
FY2018
|
|
FY2019
|
|
FY2018
|
NET SALES
|
|
$580,196
|
|
$604,069
|
|
$1,364,655
|
|
$1,379,599
|
COST OF GOODS
SOLD
|
|
483,209
|
|
473,796
|
|
1,131,422
|
|
1,090,196
|
Gross
Profit
|
|
96,987
|
|
130,273
|
|
233,233
|
|
289,403
|
|
|
|
|
|
|
|
|
|
ENGINEERING, SELLING,
GENERAL AND ADMINISTRATIVE
EXPENSES
|
|
79,521
|
|
80,156
|
|
267,553
|
|
245,304
|
EQUITY IN EARNINGS OF
UNCONSOLIDATED AFFILIATES
|
|
(205)
|
|
713
|
|
5,786
|
|
6,438
|
Income (Loss) from
Operations
|
|
17,261
|
|
50,830
|
|
(28,534)
|
|
50,537
|
|
|
|
|
|
|
|
|
|
INTEREST
EXPENSE
|
|
(9,088)
|
|
(8,617)
|
|
(21,731)
|
|
(19,167)
|
OTHER
INCOME
|
|
953
|
|
1,350
|
|
391
|
|
3,297
|
Income (Loss) before
Income Taxes
|
|
9,126
|
|
43,563
|
|
(49,874)
|
|
34,667
|
|
|
|
|
|
|
|
|
|
PROVISION (CREDIT)
FOR INCOME TAXES
|
|
1,121
|
|
11,675
|
|
(14,331)
|
|
34,163
|
Net Income
(Loss)
|
|
$
8,005
|
|
$
31,888
|
|
$
(35,543)
|
|
$
504
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) PER
SHARE
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.19
|
|
$
0.74
|
|
$
(0.86)
|
|
$
0.00
|
Diluted
|
|
$
0.19
|
|
$
0.74
|
|
$
(0.86)
|
|
$
0.00
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE
SHARES OUTSTANDING
|
|
|
|
|
|
|
|
|
Basic
|
|
41,527
|
|
42,064
|
|
41,691
|
|
42,108
|
Diluted
|
|
41,527
|
|
42,307
|
|
41,691
|
|
42,362
|
Supplemental
International Sales Information
|
(In
Thousands)
|
|
|
|
Three Months
Ended March
|
|
Nine Months
Ended March
|
|
|
FY2019
|
|
FY2018
|
|
FY2019
|
|
FY2018
|
International sales
based on product shipment destination
|
|
$142,817
|
|
$160,653
|
|
$379,468
|
|
$432,538
|
BRIGGS &
STRATTON CORPORATION AND SUBSIDIARIES
|
Consolidated
Balance Sheets as of the End of March
|
(In
Thousands)
|
|
CURRENT
ASSETS:
|
FY2019
|
|
FY2018
|
Cash and Cash
Equivalents
|
$
23,863
|
|
$
56,165
|
Accounts Receivable,
Net
|
253,536
|
|
259,472
|
Inventories
|
525,210
|
|
438,492
|
Prepaid Expenses and
Other Current Assets
|
34,682
|
|
35,953
|
Total Current
Assets
|
837,291
|
|
790,082
|
|
|
|
|
OTHER
ASSETS:
|
|
|
|
Goodwill
|
169,693
|
|
164,213
|
Investments
|
46,937
|
|
50,224
|
Other Intangible
Assets, Net
|
97,465
|
|
98,021
|
Deferred Income Tax
Asset
|
31,031
|
|
34,886
|
Other Long-Term
Assets, Net
|
20,365
|
|
20,932
|
Total Other
Assets
|
365,491
|
|
368,276
|
|
|
|
|
|
|
|
|
PLANT AND
EQUIPMENT:
|
|
|
|
At Cost
|
1,208,747
|
|
1,161,535
|
Less - Accumulated
Depreciation
|
795,467
|
|
762,186
|
Plant and Equipment,
Net
|
413,280
|
|
399,349
|
|
$
1,616,062
|
|
$
1,557,707
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts
Payable
|
$
272,125
|
|
$
202,822
|
Short-Term
Debt
|
211,545
|
|
131,556
|
Accrued
Liabilities
|
143,432
|
|
157,895
|
Total Current
Liabilities
|
627,102
|
|
492,273
|
|
|
|
|
OTHER
LIABILITIES:
|
|
|
|
Accrued Pension
Cost
|
179,487
|
|
197,749
|
Accrued Employee
Benefits
|
20,122
|
|
21,787
|
Accrued
Postretirement Health Care Obligation
|
25,294
|
|
29,547
|
Other Long-Term
Liabilities
|
61,050
|
|
53,737
|
Long-Term
Debt
|
195,464
|
|
202,332
|
Total Other
Liabilities
|
481,417
|
|
505,152
|
|
|
|
|
SHAREHOLDERS'
INVESTMENT:
|
|
|
|
Common
Stock
|
579
|
|
579
|
Additional Paid-In
Capital
|
77,523
|
|
75,001
|
Retained
Earnings
|
1,018,265
|
|
1,089,364
|
Accumulated Other
Comprehensive Loss
|
(255,021)
|
|
(280,546)
|
Treasury Stock, at
Cost
|
(333,803)
|
|
(324,116)
|
Total Shareholders'
Investment
|
507,543
|
|
560,282
|
|
$
1,616,062
|
|
$
1,557,707
|
BRIGGS &
STRATTON CORPORATION AND SUBSIDIARIES
|
Consolidated
Statements of Cash Flows
|
(In
Thousands)
|
|
|
Nine Months Ended
March
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
FY2019
|
|
FY2018
|
Net Income
(Loss)
|
$
(35,543)
|
|
$
504
|
Adjustments to
Reconcile Net Income (Loss) to Net Cash Used in Operating
Activities:
|
|
|
|
Depreciation and
Amortization
|
47,385
|
|
43,756
|
Stock Compensation
Expense
|
5,496
|
|
5,312
|
Loss on Disposition
of Plant and Equipment
|
66
|
|
1,595
|
Provision (Credit)
for Deferred Income Taxes
|
(19,247)
|
|
24,744
|
Equity in Earnings of
Unconsolidated Affiliates
|
(8,403)
|
|
(9,068)
|
Dividends Received
from Unconsolidated Affiliates
|
10,510
|
|
9,810
|
Pension Cash
Contributions
|
-
|
|
(30,000)
|
Changes in Operating
Assets and Liabilities:
|
|
|
|
Accounts
Receivable
|
(70,876)
|
|
(25,948)
|
Inventories
|
(113,407)
|
|
(62,780)
|
Other Current
Assets
|
(856)
|
|
(3,430)
|
Accounts Payable,
Accrued Liabilities and Income Taxes
|
77,905
|
|
11,287
|
Other, Net
|
2,079
|
|
15,198
|
Net Cash
Used in Operating Activities
|
(104,891)
|
|
(19,020)
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
Capital
Expenditures
|
(46,379)
|
|
(77,483)
|
Proceeds Received on
Disposition of Plant and Equipment
|
31
|
|
339
|
Cash Paid for
Acquisitions, Net of Cash Acquired
|
(8,865)
|
|
(1,800)
|
Net Cash
Used in Investing Activities
|
(55,213)
|
|
(78,944)
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
Net Borrowings on
Revolver
|
163,509
|
|
131,556
|
Long Term Note
Payable
|
-
|
|
7,685
|
Debt Issuance
Costs
|
-
|
|
(1,154)
|
Treasury Stock
Purchases
|
(11,937)
|
|
(8,710)
|
Repayments of Long
Term Debt
|
(5,424)
|
|
(19,781)
|
Stock Option Exercise
Proceeds and Tax Benefits
|
1,823
|
|
3,943
|
Payments Related to
Shares Withheld for Taxes for Stock Compensation
|
(257)
|
|
(1,147)
|
Cash Dividends
Paid
|
(11,891)
|
|
(12,007)
|
Net Cash
Provided by Financing Activities
|
135,823
|
|
100,385
|
|
|
|
|
EFFECT OF EXCHANGE
RATE CHANGES
|
(239)
|
|
1,090
|
NET INCREASE
(DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
(24,520)
|
|
3,511
|
CASH, CASH
EQUIVALENTS AND RESTRICTED CASH, Beginning 1
|
49,218
|
|
61,707
|
CASH, CASH
EQUIVALENTS AND RESTRICTED CASH, Ending 2
|
$
24,698
|
|
$
65,218
|
|
1 Included within
Beginning Cash, Cash Equivalents, and Restricted Cash is
approximately $4.3 million and $0 of restricted cash as of July 1,
2018 and July 2, 2017, respectively.
|
|
2 Included within
Ending Cash, Cash Equivalents, and Restricted Cash is approximately
$0.8 million and $9.1 million of restricted cash as of March 31,
2019 and April 1, 2018, respectively.
|
SUPPLEMENTAL SEGMENT INFORMATION
Engines
Segment:
|
|
|
|
Three Months
Ended March
|
|
Nine Months
Ended March
|
(In
Thousands)
|
|
FY2019
|
|
FY2018
|
|
FY2019
|
|
FY2018
|
Net Sales
|
|
$
336,243
|
|
$ 384,292
|
|
$
727,351
|
|
$ 790,543
|
|
|
|
|
|
|
|
|
|
Gross Profit as
Reported
|
|
$
72,529
|
|
$
96,780
|
|
$
144,272
|
|
$ 183,428
|
Business
Optimization
|
|
623
|
|
903
|
|
1,712
|
|
2,031
|
Adjusted Gross
Profit
|
|
$
73,151
|
|
$
97,683
|
|
$
145,984
|
|
$ 185,459
|
|
|
|
|
|
|
|
|
|
Gross Profit % as
Reported
|
|
21.6%
|
|
25.2%
|
|
19.8%
|
|
23.2%
|
Adjusted Gross Profit
%
|
|
21.8%
|
|
25.4%
|
|
20.1%
|
|
23.5%
|
|
|
|
|
|
|
|
|
|
Segment Income (Loss) as
Reported
|
|
$
22,833
|
|
$
47,718
|
|
$
(16,579)
|
|
$
35,776
|
Business
Optimization
|
|
5,211
|
|
2,896
|
|
27,083
|
|
7,243
|
Adjusted Segment
Income
|
|
$
28,044
|
|
$
50,614
|
|
$
10,504
|
|
$
43,019
|
|
|
|
|
|
|
|
|
|
Segment Income (Loss) % as
Reported
|
|
6.8%
|
|
12.4%
|
|
(2.3%)
|
|
4.5%
|
Adjusted Segment Income
%
|
|
8.3%
|
|
13.2%
|
|
1.4%
|
|
5.4%
|
Third Quarter Highlights
- Engine unit volumes decreased by 18%, or approximately 456,000
engines, in the third quarter of fiscal 2019 compared to the same
period last year. Domestically, as anticipated, consumer engine
sales decreased due to the Sears bankruptcy and the pull forward of
shipments to the second quarter to enable channel partners to
restock inventory and facilitate brand transitions this year. Sales
into Australia and Europe declined by over 25% in the third
quarter due to prolonged historic drought conditions in
Australia and elevated channel
inventories in Europe following
last summer's drought. Domestic service parts sales declined
slightly year over year. The decrease in sales was mitigated by a
nearly 10% increase in commercial Vanguard engine sales and higher
pricing to offset cost inflation and tariffs.
- The gross profit percentage decreased by 360 basis points from
last year due to unfavorable sales mix (160 bps), a 14% reduction
in manufacturing volume as planned (130 bps) and inefficiencies
(100 bps). Unfavorable sales mix was caused by proportionately less
sales outside the U.S. and slightly lower service parts sales.
Inefficiencies from start-up activities related to the company's
ERP upgrade and the on-shoring of Vanguard engines led to
temporarily elevated supply chain and labor costs to ensure timely
delivery on the robust growth of Vanguard engines and improve the
throughput of service parts sales. Higher prices offset higher
commodity costs and tariffs. Foreign exchange was slightly
favorable to margins in the quarter.
- GAAP ESG&A expenses were consistent year over year and
adjusted ESG&A expenses decreased $3.0
million from last year due to lower employee compensation
costs.
Products
Segment:
|
|
|
|
Three Months
Ended March
|
|
Nine Months
Ended March
|
(In
Thousands)
|
|
FY2019
|
|
FY2018
|
|
FY2019
|
|
FY2018
|
Net Sales
|
|
$
271,209
|
|
$ 245,169
|
|
$
698,879
|
|
$ 653,845
|
|
|
|
|
|
|
|
|
|
Gross Profit as
Reported
|
|
$
24,348
|
|
$
32,773
|
|
$
89,402
|
|
$ 105,570
|
Business
Optimization
|
|
3,267
|
|
971
|
|
6,978
|
|
2,493
|
Adjusted Gross
Profit
|
|
$
27,615
|
|
$
33,744
|
|
$
96,380
|
|
$ 108,063
|
|
|
|
|
|
|
|
|
|
Gross Profit % as
Reported
|
|
9.0%
|
|
13.4%
|
|
12.8%
|
|
16.1%
|
Adjusted Gross Profit
%
|
|
10.2%
|
|
13.8%
|
|
13.8%
|
|
16.5%
|
|
|
|
|
|
|
|
|
|
Segment Income (Loss) as
Reported
|
|
$
(5,682)
|
|
$
2,392
|
|
$
(11,514)
|
|
$
14,356
|
Business
Optimization
|
|
4,407
|
|
1,309
|
|
13,207
|
|
5,259
|
Litigation
Settlement
|
|
-
|
|
-
|
|
2,000
|
|
-
|
Retailer Bankruptcy
Bad Debt Expense
|
|
-
|
|
-
|
|
4,132
|
|
-
|
Acquisition Related
Charges
|
|
287
|
|
-
|
|
523
|
|
-
|
Adjusted Segment Income
(Loss)
|
|
$
(988)
|
|
$
3,701
|
|
$
8,348
|
|
$
19,615
|
|
|
|
|
|
|
|
|
|
Segment Income (Loss) % as
Reported
|
|
(2.1%)
|
|
1.0%
|
|
(1.6%)
|
|
2.2%
|
Adjusted Segment Income
(Loss) %
|
|
(0.4%)
|
|
1.5%
|
|
1.2%
|
|
3.0%
|
Third Quarter Highlights
- Net sales increased by $26.0
million, or 10.6%, from the same period last year. The
increase was primarily due to 16% growth in commercial products on
higher sales of Ferris mowers and growth of commercial stand-on
blowers from the Hurricane acquisition in early fiscal 2019.
Residential sales grew slightly on higher volumes of standby
generators and pressure washers, partially offset by lower sales of
portable generators and riding mowers following cool spring
temperatures in the U.S. Sales also benefited from higher prices to
offset cost inflation.
- The gross profit percentage decreased 440 basis points and
adjusted gross profit percentage decreased by 360 basis points
compared to the third quarter last year. The decrease in the
adjusted gross profit percentage is largely attributed to
inefficiencies (180 bps) and unfavorable sales mix (170 bps).
Inefficiencies from start-up activities related to the ERP upgrade,
elevated international container shipping rates and higher supply
chain and labor costs to ensure our ability to meet delivery
commitments on the robust growth of Ferris mowers. We also incurred
higher labor costs to improve the throughput of service parts to
support increased shipments during the peak season. Unfavorable
sales mix was driven by lower sales of portable generators due to
less spring storms, as well as lower sales of riding mowers through
the dealer channel. Strong sales of pressure washers were driven by
elevated pollen levels this spring and brand transitions at retail.
Partially offsetting the unfavorable sales mix was the favorable
impact of higher commercial sales. Increases in pricing largely
offset higher material and tariff costs.
- GAAP ESG&A expenses decreased by $0.8 million and adjusted ESG&A expenses
decreased by $1.9 million compared
with the previous year from lower employee compensation costs.
Non-GAAP Financial Measures
Briggs & Stratton Corporation prepares its financial
statements using Generally Accepted Accounting Principles (GAAP).
When a company discloses material information containing non-GAAP
financial measures, SEC regulations require that the disclosure
include a presentation of the most directly comparable GAAP measure
and a reconciliation of the GAAP and non-GAAP financial measures.
Management's inclusion of non-GAAP financial measures in this
release is intended to supplement, not replace, the presentation of
the financial results in accordance with GAAP. Briggs &
Stratton Corporation management believes that these non-GAAP
financial measures, when considered together with the GAAP
financial measures, provide information that is useful to investors
in understanding period-over-period operating results separate and
apart from items that may, or could, have a disproportionately
positive or negative impact on results in any particular period.
Management also believes that these non-GAAP financial measures
enhance the ability of investors to analyze the company's business
trends and to understand the company's performance. In addition,
management may utilize non-GAAP financial measures as a guide in
the company's forecasting, budgeting and long-term planning
process. Non-GAAP financial measures should be considered in
addition to, and not as a substitute for, or superior to, financial
measures presented in accordance with GAAP. The following tables
are reconciliations of the non-GAAP financial measures:
BRIGGS &
STRATTON CORPORATION AND SUBSIDIARIES
|
Adjusted Segment
Information for the Three Month Periods Ended March
|
(In Thousands,
except per share data)
|
|
|
|
Three Months
Ended March
|
|
|
FY2019
Reported
|
|
Adjustments1
|
|
FY2019
Adjusted
|
|
FY2018
Reported
|
|
Adjustments
|
|
FY2018
Adjusted
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
72,529
|
|
$
623
|
|
$
73,151
|
|
$
96,780
|
|
$
903
|
|
$
97,683
|
Products
|
|
24,348
|
|
3,267
|
|
27,615
|
|
32,773
|
|
971
|
|
33,744
|
Inter-Segment
Eliminations
|
|
110
|
|
-
|
|
110
|
|
720
|
|
-
|
|
720
|
Total
|
|
$
96,987
|
|
$
3,889
|
|
$
100,876
|
|
$
130,273
|
|
$
1,874
|
|
$
132,147
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engineering, Selling,
General and Administrative Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
49,287
|
|
$
3,835
|
|
$
45,452
|
|
$
49,124
|
|
$
587
|
|
$
48,537
|
Products
|
|
30,234
|
|
1,428
|
|
28,806
|
|
31,032
|
|
338
|
|
30,694
|
Total
|
|
$
79,521
|
|
$
5,263
|
|
$
74,258
|
|
$
80,156
|
|
$
925
|
|
$
79,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Earnings
of
Unconsolidated Affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
(408)
|
|
$
753
|
|
$
345
|
|
$
62
|
|
$
1,406
|
|
$
1,468
|
Products
|
|
203
|
|
-
|
|
203
|
|
651
|
|
-
|
|
651
|
Total
|
|
$
(205)
|
|
$
753
|
|
$
548
|
|
$
713
|
|
$
1,406
|
|
$
2,119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Income
(Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
22,833
|
|
$
5,211
|
|
$
28,044
|
|
$
47,718
|
|
$
2,896
|
|
$
50,614
|
Products
|
|
(5,682)
|
|
4,694
|
|
(988)
|
|
2,392
|
|
1,309
|
|
3,701
|
Inter-Segment
Eliminations
|
|
110
|
|
-
|
|
110
|
|
720
|
|
-
|
|
720
|
Total
|
|
$
17,261
|
|
$
9,905
|
|
$
27,166
|
|
$
50,830
|
|
$
4,205
|
|
$
55,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
$
(9,088)
|
|
$
15
|
|
$
(9,073)
|
|
$
(8,617)
|
|
$
2,017
|
|
$
(6,600)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before Income
Taxes
|
|
9,126
|
|
9,920
|
|
19,046
|
|
43,563
|
|
6,222
|
|
49,785
|
Provision for Income
Taxes
|
|
1,121
|
|
3,288
|
|
4,409
|
|
11,675
|
|
1,876
|
|
13,551
|
Net
Income
|
|
$
8,005
|
|
$
6,632
|
|
$
14,637
|
|
$
31,888
|
|
$
4,346
|
|
$
36,234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.19
|
|
$
0.15
|
|
$
0.34
|
|
$
0.74
|
|
$
0.10
|
|
$
0.84
|
Diluted
|
|
0.19
|
|
0.15
|
|
0.34
|
|
0.74
|
|
0.10
|
|
0.84
|
|
|
1
|
For the third quarter
of fiscal 2019, business optimization expenses include $1.4 million
($0.9 million after tax) of non-cash charges related to accelerated
depreciation, and $8.4 million ($5.6 million after tax) of cash
charges related primarily to activities associated with the upgrade
to the Company's ERP system, professional services, employee
termination benefits, and plant rearrangement activities. The
Company recognized $0.2 million ($0.1 million after tax) related to
acquisition integration activities.
|
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
|
|
|
FY2019
Reported
|
|
Adjustments1
|
|
FY2019
Adjusted
|
|
FY2018
Reported
|
|
Adjustments
|
|
FY2018
Adjusted
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
144,272
|
|
$
1,712
|
|
$
145,984
|
|
$
183,428
|
|
$
2,031
|
|
$
185,459
|
Products
|
|
89,402
|
|
6,978
|
|
96,380
|
|
105,570
|
|
2,493
|
|
108,063
|
Inter-Segment
Eliminations
|
|
(441)
|
|
-
|
|
(441)
|
|
405
|
|
-
|
|
405
|
Total
|
|
$
233,233
|
|
$
8,690
|
|
$
241,923
|
|
$
289,403
|
|
$
4,524
|
|
$
293,927
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engineering, Selling,
General and Administrative Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
163,997
|
|
$
22,754
|
|
$
141,243
|
|
$
151,154
|
|
$
2,582
|
|
$
148,572
|
Products
|
|
103,556
|
|
12,884
|
|
90,672
|
|
94,150
|
|
2,766
|
|
91,384
|
Total
|
|
$
267,553
|
|
$
35,638
|
|
$
231,915
|
|
$
245,304
|
|
$
5,348
|
|
$
239,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Earnings
of
Unconsolidated Affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
3,146
|
|
$
2,617
|
|
$
5,763
|
|
$
3,502
|
|
$
2,630
|
|
$
6,132
|
Products
|
|
2,640
|
|
-
|
|
2,640
|
|
2,936
|
|
-
|
|
2,936
|
Total
|
|
$
5,786
|
|
$
2,617
|
|
$
8,403
|
|
$
6,438
|
|
$
2,630
|
|
$
9,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Income
(Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
Engines
|
|
$
(16,579)
|
|
$
27,083
|
|
$
10,504
|
|
$
35,776
|
|
$
7,243
|
|
$
43,019
|
Products
|
|
(11,514)
|
|
19,862
|
|
8,348
|
|
14,356
|
|
5,259
|
|
19,615
|
Inter-Segment
Eliminations
|
|
(441)
|
|
-
|
|
(441)
|
|
405
|
|
-
|
|
405
|
Total
|
|
$
(28,534)
|
|
$
46,945
|
|
$
18,411
|
|
$
50,537
|
|
$
12,502
|
|
$
63,039
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
$
(21,731)
|
|
$
263
|
|
$
(21,468)
|
|
$
(19,167)
|
|
$
2,017
|
|
$
(17,150)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) before
Income Taxes
|
|
(49,874)
|
|
47,208
|
|
(2,666)
|
|
34,667
|
|
14,519
|
|
49,186
|
Provision for Income
Taxes
|
|
(14,331)
|
|
9,602
|
|
(4,729)
|
|
34,163
|
|
(21,104)
|
|
13,059
|
Net Income
(Loss)
|
|
$
(35,543)
|
|
$
37,606
|
|
$
2,063
|
|
$
504
|
|
$
35,623
|
|
$
36,127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) Per
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
(0.86)
|
|
$
0.90
|
|
$
0.04
|
|
$
0.00
|
|
$
0.84
|
|
$
0.84
|
Diluted
|
|
(0.86)
|
|
0.90
|
|
0.04
|
|
0.00
|
|
0.83
|
|
0.83
|
|
|
1
|
For the first nine
months of fiscal 2019, business optimization expenses include $2.9
million ($2.3 million after tax) of non-cash charges related to
accelerated depreciation, and $44.2 million ($34.5 million after
tax) of cash charges related primarily to activities associated
with the upgrade to the Company's ERP system, professional
services, employee termination benefits, and plant rearrangement
activities. The Company recognized bad debt expense of $4.1 million
($3.1 million after tax) after a major retailer announced that it
had filed for bankruptcy protection. The Company recognized $2.0
million ($1.5 million after tax) for amounts accrued related to a
litigation settlement and $0.5 million ($0.3 million after tax)
related to acquisition integration activities. Interest expense
includes $0.2 million ($0.2 million after tax) for premiums paid to
repurchase senior notes. Tax expense includes a $1.1 million charge
associated with the Tax Cuts and Jobs Act of 2017 to record the
impact of the inclusion of foreign earnings.
|
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SOURCE Briggs & Stratton Corporation