Briggs & Stratton Corporation Reports Improved First Quarter Sales; Reaffirms Full Year Guidance

Briggs & Stratton Corporation Reports Improved First Quarter Sales; Reaffirms
                              Full Year Guidance

PR Newswire

MILWAUKEE, Oct. 17, 2013

MILWAUKEE, Oct. 17, 2013 /PRNewswire/ --Briggs & Stratton Corporation
(NYSE:BGG) today announced financial results for its first fiscal quarter
ended September 29, 2013.

(Logo:http://photos.prnewswire.com/prnh/20120529/CG15020LOGO)

Highlights:

  oFirst quarter fiscal 2014 consolidated net sales were $317.3 million, an
    increase of $8.3 million or 3% from the prior year.
  oHigher North American consumer engine shipments and sales of equipment to
    dealers increased as consumer demand rebounds from last year's drought.
  oLack of storms in quarter caused lower portable generator sales compared
    to last year when Hurricane Isaac hit in August.
  oPlanned engine and products production cuts lowers inventories and reduces
    margins in the quarter.
  oFirst quarter 2014 adjusted net loss was $16.5 million, $3.3 million
    higher than the adjusted net loss of $13.2 million in the first quarter of
    fiscal 2013.

"Our first quarter results were slightly better than we anticipated as we
experienced increased consumer demand for lawn and garden equipment leading to
higher shipments of engines that power these products and higher shipments of
lawn and garden products to our dealers," commented Todd J. Teske, Chairman,
President and Chief Executive Officer of Briggs & Stratton Corporation. "We
have also seen continued strength in standby generator sales; however,
portable generator sales decreased with Hurricane Isaac landing last year and
no significant storm activity this year," continued Teske. "Higher retail
sales of lawn and garden equipment have helped to reduce channel inventories.
We also lowered our inventory by reducing production in the quarter compared
to last year. While this reduced productivity and margins in the near term,
our inventory levels are better aligned for manufacturing to retail demand in
the upcoming lawn and garden season."

Consolidated Results:

Consolidated net sales for the first quarter of fiscal 2014 were $317.3
million, an increase of $8.3 million or approximately 3% from the first
quarter of fiscal 2013 with sales increases in engines and lawn and garden
products, partially offset by lower sales of portable generators. The fiscal
2014 first quarter consolidated net loss, which includes restructuring
charges, was $19.3 million, or $0.41 per diluted share. The first quarter of
fiscal 2013 consolidated net loss including restructuring charges was $16.5
million, or $0.35 per diluted share.

Included in the consolidated net loss for the first quarter of fiscal 2014
were pre-tax charges of $3.6 million related to restructuring actions.
Included in consolidated net loss for the first quarter of fiscal 2013 were
pre-tax charges of $5.1 million also related to restructuring actions. After
removing the impact of these items, the adjusted consolidated net loss for the
first quarter of fiscal 2014 was $16.5 million or $0.35 per diluted share,
which was $3.3 million higher compared to the first quarter fiscal 2013
adjusted consolidated net loss of $13.2 million or $0.28 per diluted share.

Engines Segment:

                                       Three Months Ended Fiscal September
(In Thousands)                         2013                 2012
Engines Net Sales                      $     183,787   $     164,515
Engines Gross Profit as Reported       $      25,236  $      24,712
Restructuring Charges                  1,765                1,091
Adjusted Engines Gross Profit          $      27,001  $      25,803
Engines Gross Profit % as Reported     13.7%                15.0%
Adjusted Engines Gross Profit %        14.7%                15.7%
Engines Loss from Operations as        $     (18,086)  $     (17,504)
Reported
Restructuring Charges                  1,765                1,091
Adjusted Engines Loss from Operations  $     (16,321)  $     (16,413)
Engines Loss from Operations % as      -9.8%                -10.6%
Reported
Adjusted Engines Loss from Operations  -8.9%                -10.0%
%

Engines Segment fiscal 2014 first quarter net sales were $183.8 million, which
was $19.3 million or 11.7% higher than the first quarter of fiscal 2013. This
increase in net sales was driven by higher sales of engines used on lawn and
garden equipment and related service parts to customers in the North American
and European markets due to more favorable late season growing conditions this
year. The increase was partially offset by unfavorable sales mix due to fewer
sales of larger engines used in snow throwers and in portable generators
resulting from a lack of storm activity in the first quarter of fiscal 2014
and unfavorable foreign exchange predominantly related to the Australian
dollar.

The Engines Segment adjusted gross profit percentage for the first quarter of
2014 was 14.7%, which was 1.0% lower compared to the first quarter of fiscal
2013. The adjusted gross profit percentage was unfavorably impacted by 2.4%
from a 15% reduction in manufacturing volume to reduce inventory. Unfavorable
foreign exchange related to the Australian dollar and Japanese yen also
impacted the adjusted gross profit percentage by 0.5%. The decrease was
partially offset by an increase to adjusted gross profit of 1.3% related to
favorable sales mix of higher margin service parts as well as the contribution
of margin generated by the Branco acquisition which closed in the second
quarter of fiscal 2013. Margins also benefitted slightly from reduced
manufacturing costs and materials costs.

The Engines Segment engineering, selling, general and administrative expenses
were $43.3 million in the first quarter of fiscal 2014, an increase of $1.1
million from the first quarter of fiscal 2013 primarily due to higher
compensation expense and the addition of expenses from Branco. The increase
was partially offset by $1.5 million of lower pension expense in fiscal 2014.

Products Segment:

                                    Three Months Ended Fiscal September
(In Thousands)                      2013                  2012
Products Net Sales                  $     153,037    $     173,297
Products Gross Profit as Reported   $      17,825   $      18,716
Restructuring Charges               1,820                 4,035
Adjusted Products Gross Profit      $      19,645   $      22,751
Products Gross Profit % as          11.6%                 10.8%
Reported
Adjusted Products Gross Profit %    12.8%                 13.1%
Products Loss from Operations as    $      (7,615)  $      (4,756)
Reported
Restructuring Charges               1,820                 4,035
Adjusted Products Loss from         $      (5,795)  $       
Operations                                                (721)
Products Loss from Operations % as  -5.0%                 -2.7%
Reported
Adjusted Products Loss from         -3.8%                 -0.4%
Operations %

Products Segment fiscal 2014 first quarter net sales were $153.0 million, a
decrease of $20.3 million or 11.7% from the first quarter of fiscal 2013. The
decrease in net sales was primarily related to lower sales of portable
generators due to no landed hurricanes in the first quarter of fiscal 2014.
Hurricane Isaac occurred in the first quarter of fiscal 2013. In addition,
international net sales were lower in the first quarter of fiscal 2014 due to
reduced shipments of snow throwers to customers in Europe and unfavorable
foreign exchange primarily related to the Australian dollar. This decrease
was partially offset by favorable late season growing conditions during the
first quarter of fiscal 2014 that led to higher sales of lawn and garden
equipment through our North American dealer channel, pressure washers and
service parts as well as net sales from the Branco acquisition.

The Products Segment adjusted gross profit percentage for the first quarter of
2014 was 12.8%, which was 0.3% lower than the adjusted gross profit percentage
for the first quarter of fiscal 2013. The adjusted gross profit percentage was
lower by 0.8% due to a 21% reduction of manufacturing throughput that was
planned in order to control inventory in response to lower sales at the outset
of the 2013 lawn and garden season. This decrease was partially offset by the
margin contributed by the Branco acquisition.

The Products Segment fiscal 2014 fourth quarter engineering, selling, general
and administrative expenses were $25.4 million, an increase of $2.0 million
from the first quarter of fiscal 2013. The increase was mainly attributable to
the additional expenses from Branco.

Corporate Items:

Interest expense for the first quarter of fiscal 2014 was comparable to the
same period a year ago.

The effective tax rate for the first quarter of fiscal 2014 was 29.3% compared
to 33.6% for the same period in the prior year. The decrease in the effective
tax rate for the first quarter of fiscal 2014 compared to the first quarter of
fiscal 2013 was primarily driven by non-deductible losses of certain foreign
subsidiaries and foreign tax rates that vary from the U.S. statutory rate.

Financial Position:

Net debt at September 29, 2013 was $109.8 million (total debt of $225.0
million less $115.2 million of cash), or $16.6 million lower from the $126.4
million (total debt of $228.0 million less $101.6 million of cash) at
September 30, 2012. Cash flows used in operating activities for fiscal 2014
were $52.9 million compared to $41.4 million in fiscal 2013. The change in
operating cash flows was primarily related to changes in working capital needs
in fiscal 2014 associated with a lower reduction in accounts receivable
partially offset by the benefit of reduced inventory production levels.

Restructuring:

The previously announced restructuring actions remain on schedule. The Company
achieved incremental pre-tax savings for the first quarter of $0.7 million.
The Company continues to make progress towards moving horizontal engine
manufacturing from its Auburn, Alabama plant to China. As noted previously,
pre-tax restructuring costs for the first quarter of fiscal 2014 were $3.6
million. Pre-tax restructuring cost estimates for fiscal 2014 remain unchanged
at $6 million to $8 million. Incremental restructuring savings for fiscal 2014
are expected to be $3 million to $5 million. 

Share Repurchase Program:

On August 8, 2012, the Board of Directors of the Company authorized up to $50
million in funds associated with the common share repurchase program with an
expiration date of June 30, 2014. 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 quarter of
fiscal 2014, the Company repurchased 482,926 shares on the open market at an
average price of $20.08 per share.

Outlook:

For fiscal 2014, the Company reaffirms its guidance of net income to be in a
range of $50 million to $62 million or $1.04 to $1.28 per diluted share prior
to the impact of any additional share repurchases and costs related to our
announced restructuring actions. Our fiscal 2014 consolidated net sales are
projected to be in a range of $1.88 billion to $2.03 billion. We continue to
estimate that the retail market for lawn and garden products will increase
4-6% in the U.S. next season. The estimated incremental impact of exiting the
sale of lawn and garden equipment through national mass retailers is
approximately $10 million to $15 million of reduced sales in fiscal 2014. In
addition, sales in fiscal 2013 were favorably impacted by sales of portable
and standby generators in response to power outages during Hurricanes Isaac
and Sandy. The upper end of our earnings projections contemplates a higher
market recovery in excess of 10% for the U.S. lawn and garden market, normal
snowfall and a landed hurricane. Operating income margins are expected to
improve over fiscal 2013 and be in a range of 4.5% to 5.0% and reflect the
positive impacts of the restructuring actions. Interest expense and other
income are estimated to be approximately $18 million and $5 million,
respectively. The effective tax rate is projected to be in a range of 30% to
33% and capital expenditures are projected to be approximately $50 million to
$55 million.

Conference Call Information:

The Company will host a conference call today 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.briggsandstratton.com/shareholders. Also
available is a dial-in number to access the call real-time at (866) 804-3545.
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 1596432.

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; and other
factors disclosed from time to time in our SEC filings or otherwise, including
the factors discussed in Item1A, Risk Factors, of the Company's Annual Report
on Form 10-K and in its periodic reports on Form 10-Q.

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
portable generators and pressure washers, and it is a leading designer,
manufacturer and marketer of lawn and garden and turf care through its
Simplicity®, Snapper®, SnapperPro® Ferris®, 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 Fiscal Periods Ended September
(In Thousands, except per share data)
(Unaudited)
                                    Three Months Ended Fiscal September
                                    2013                  2012
NET SALES                           $      317,304  $      309,020
COST OF GOODS SOLD                  269,888               260,024
RESTRUCTURING CHARGES               3,585                 5,126
Gross Profit                       43,831                43,870
ENGINEERING, SELLING, GENERAL
AND ADMINISTRATIVE EXPENSES         68,762                65,688
Loss from Operations                (24,931)              (21,818)
INTEREST EXPENSE                    (4,510)               (4,486)
OTHER INCOME                        2,093                 1,405
Loss before Income Taxes            (27,348)              (24,899)
CREDIT FOR INCOME TAXES             (7,999)               (8,372)
Net Loss                            $               $      
                                    (19,349)              (16,527)
Weighted Average Shares             46,997                47,133
Outstanding
BASIC EARNINGS (LOSS) PER SHARE     $             $        
                                    (0.41)                (0.35)
Diluted Average Shares Outstanding  46,997                47,133
DILUTED EARNINGS (LOSS) PER SHARE   $             $        
                                    (0.41)                (0.35)



Segment Information
(In Thousands)
(Unaudited)
                                         Three Months Ended Fiscal September
                                         2013                   2012
NET SALES:
Engines                                  $      183,787    $     
                                                                164,515
Products                                 153,037                173,297
Inter-Segment Eliminations               (19,520)               (28,792)
 Total *                              $      317,304    $     
                                                                309,020
 * International sales based on                              $     
product shipment destination included    $      118,815    126,497
in net sales
GROSS PROFIT:
Engines                                  $       25,236   $      
                                                                24,712
Products                                 17,825                 18,716
Inter-Segment Eliminations               770                    442
 Total                                $       43,831   $      
                                                                43,870
LOSS FROM OPERATIONS:
Engines                                  $      (18,086)   $     
                                                                (17,504)
Products                                 (7,615)                (4,756)
Inter-Segment Eliminations               770                    442
 Total                                $      (24,931)   $     
                                                                (21,818)

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 measure. 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 table is a
reconciliation of the non-GAAP financial measures:

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Adjusted Net Loss & Diluted Earnings (Loss) Per Share for the Fiscal Periods
Ended September
(In Thousands, except per share data)
(Unaudited)
                                        Three Months Ended Fiscal September
                                        2013               2012
Net Loss                                $             $      
                                        (19,349)          (16,527)
Tax effected charges to reported net
loss:
Restructuring Charges^1                 2,851              3,332
Adjusted Net Loss                       $             $      
                                        (16,498)          (13,195)
Diluted Earnings (Loss) Per Share       $           $        
                                        (0.41)            (0.35)
Tax effected charges to reported
diluted earnings (loss) per share:
Restructuring Charges^1                 0.06               0.07
Adjusted Diluted Earnings (Loss) Per    $           $        
Share                                   (0.35)            (0.28)

 ^1 For the first quarter of fiscal 2014, represents charges of $3,585 net of
    $734 of taxes. For the first quarter of fiscal 2013, represents charges of
    $5,126 net of $1,794 of taxes.



BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Adjusted Segment Gross Profit for the Fiscal Periods Ended September
(In Thousands)
(Unaudited)
                                     Three Months Ended Fiscal September
                                     2013                 2012
GROSS PROFIT:
 Engines
  Gross Profit                    $             $      
                                     25,236               24,712
   Restructuring Charges       1,765                1,091
  Adjusted Engines Gross Profit   $             $      
                                     27,001               25,803
 Products
  Gross Profit                    $             $       18,716
                                     17,825
   Restructuring Charges       1,820                4,035
  Adjusted Products Gross Profit  $             $       22,751
                                     19,645
 Inter-Segment Eliminations        770                  442
 Adjusted Gross Profit               $             $       48,996
                                     47,416



BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Adjusted Segment Loss from Operations for the Fiscal Periods Ended September
(In Thousands)
(Unaudited)
                                        Three Months Ended Fiscal September
                                        2013                2012
LOSS FROM OPERATIONS:
  Engines
    Loss from Operations         $             $     
                                        (18,086)            (17,504)
    Restructuring Charges       1,765               1,091
    Adjusted Engines Loss from   $             $     
  Operations                            (16,321)            (16,413)
  Products
    Loss from Operations         $            $      
                                        (7,615)             (4,756)
    Restructuring Charges       1,820               4,035
    Adjusted Products Loss       $            $        
  from Operations                       (5,795)             (721)
   Inter-Segment Eliminations          770                 442
  Adjusted Loss from Operations         $             $     
                                        (21,346)            (16,692)



BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets as of the End of Fiscal September
(In Thousands)
(Unaudited)
CURRENT ASSETS:                               2013           2012
Cash and Cash Equivalents                     $  115,176   $  101,625
Accounts Receivable, Net                      171,103        192,797
Inventories                                   468,624        503,445
Deferred Income Tax Asset                     47,520         41,125
Assets Held For Sale                          -              5,403
Prepaid Expenses and Other Current Assets     37,189         34,588
 Total Current Assets                      839,612        878,983
OTHER ASSETS:
Goodwill                                      147,218        205,320
Investments                                   19,220         19,240
Debt Issuance Costs, Net                      4,464          5,461
Other Intangible Assets, Net                  87,000         86,732
Deferred Income Tax Asset                     26,788         71,861
Other Long-Term Assets, Net                   13,883         9,050
 Total Other Assets                        298,573        397,664
PLANT AND EQUIPMENT:
At Cost                                       1,026,960      1,016,897
Less - Accumulated Depreciation               741,352        723,832
 Plant and Equipment, Net                  285,608        293,065
                                              $ 1,423,793   $ 1,569,712
CURRENT LIABILITIES:
Accounts Payable                              $   146,296  $  151,484
Short-Term Debt                               -              3,000
Accrued Liabilities                           139,921        139,548
 Total Current Liabilities                 286,217        294,032
OTHER LIABILITIES:
Accrued Pension Cost                          146,138        287,853
Accrued Employee Benefits                     23,520         23,709
Accrued Postretirement Health Care Obligation 69,687         91,355
Other Long-Term Liabilities                   32,809         35,094
Long-Term Debt                                225,000        225,000
 Total Other Liabilities                   497,154        663,011
SHAREHOLDERS' INVESTMENT:
Common Stock                                  579            579
Additional Paid-In Capital                    75,079         80,877
Retained Earnings                             1,017,824      1,077,583
Accumulated Other Comprehensive Loss          (220,606)      (310,749)
Treasury Stock, at Cost                       (232,454)      (235,621)
 Total Shareholders' Investment            640,422        612,669
                                              $ 1,423,793   $ 1,569,712



BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
                                       Three Months Ended Fiscal September
CASH FLOWS FROM OPERATING ACTIVITIES:  2013                 2012
Net Loss                               $               $     (16,527)
                                       (19,349)
Adjustments to Reconcile Net Loss to
Net Cash Used in Operating Activities:
 Depreciation and Amortization    13,874               13,778
 Stock Compensation Expense       3,040                2,511
 Loss (Gain) on Disposition of    157                  (43)
Plant and Equipment
 Credit for Deferred Income Taxes (1,418)              (6,152)
 Earnings of Unconsolidated       (1,529)              (867)
Affiliates
 Dividends Received from          1,500                4,411
Unconsolidated Affiliates
 Pension Cash Contributions       -                    (5,466)
 Non-Cash Restructuring Charges   1,726                3,185
Changes in Operating Assets and
Liabilities:
 Accounts Receivable              20,110               30,762
 Inventories                      (61,310)             (69,546)
 Other Current Assets             (9,983)              2,809
 Accounts Payable, Accrued        4,515                3,749
Liabilities and Income Taxes
Other, Net                             (4,194)              (3,964)
  Net Cash Used in Operating    (52,861)             (41,360)
Activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Plant and Equipment       (11,650)             (7,871)
Proceeds Received on Disposition of    28                   5,620
Plant and Equipment
  Net Cash Used in Investing    (11,622)             (2,251)
Activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments on Short-Term Debt          (300)                -
Stock Option Exercise Proceeds and Tax 994                  1,534
Benefits
Treasury Stock Purchases               (9,696)              (12,886)
  Net Cash Used in Financing    (9,002)              (11,352)
Activities
EFFECT OF EXCHANGE RATE CHANGES        216                  513
NET DECREASE IN CASH AND CASH          (73,269)             (54,450)
EQUIVALENTS
CASH AND CASH EQUIVALENTS, Beginning   188,445              156,075
CASH AND CASH EQUIVALENTS, Ending      $      115,176  $     101,625



SOURCE Briggs & Stratton Corporation

Website: http://www.briggsandstratton.com
Contact: David J. Rodgers, Senior VP and Chief Financial Officer, (414)
259-5333