Wisconsin | 1-1370 | 39-0182330 | ||
(State or other jurisdiction | (Commission | (I.R.S. Employer | ||
of incorporation) | File Number) | Identification No.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
(a) | Not applicable |
(b) | Not applicable |
(c) | Not applicable |
(d) | Exhibits. The following exhibit is being furnished herewith: |
Exhibit No. | Description | |
99.1 | Press Release dated October 26, 2016 announcing results for the first quarter of fiscal 2017. |
BRIGGS & STRATTON CORPORATION | ||||
(Registrant) | ||||
Date: | October 26, 2016 | /s/ Mark A. Schwertfeger | ||
Mark A. Schwertfeger | ||||
Senior Vice President and Chief Financial Officer Duly Authorized Officer |
Exhibit No. | Description | |
99.1 | Press Release dated October 26, 2016 announcing results for the first quarter of fiscal 2017. |
• | First quarter net sales were $287 million. Net sales decreased $3 million compared to last year. |
• | First quarter net loss was $14.1 million. Results improved from a net loss of $18.2 million or an adjusted net loss of $15.2 million last year. |
• | First quarter diluted loss per share was $0.34 compared to $0.42 (GAAP) and $0.35 (adjusted) last year. |
• | Repurchased $8.7 million in shares under the share repurchase program during the quarter. |
• | Increasing fiscal 2017 earnings outlook to $1.31 to $1.46 per diluted share from previous guidance of $1.26 to $1.41 per diluted share due to the impact to date of Hurricane Matthew. |
Three Months Ended September | ||||||||
FY2017 | FY2016 | |||||||
NET SALES | $ | 286,797 | $ | 289,458 | ||||
COST OF GOODS SOLD | 234,276 | 237,287 | ||||||
RESTRUCTURING CHARGES | — | 2,459 | ||||||
Gross Profit | 52,521 | 49,712 | ||||||
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 72,063 | 72,134 | ||||||
RESTRUCTURING CHARGES | — | 914 | ||||||
EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES (1) | 3,228 | — | ||||||
Loss from Operations | (16,314 | ) | (23,336 | ) | ||||
INTEREST EXPENSE | (4,505 | ) | (4,536 | ) | ||||
OTHER INCOME | 457 | 1,455 | ||||||
Loss before Income Taxes | (20,362 | ) | (26,417 | ) | ||||
CREDIT FOR INCOME TAXES | (6,214 | ) | (8,246 | ) | ||||
Net Loss | $ | (14,148 | ) | $ | (18,171 | ) | ||
EARNINGS (LOSS) PER SHARE | ||||||||
Basic | $ | (0.34 | ) | $ | (0.42 | ) | ||
Diluted | (0.34 | ) | (0.42 | ) | ||||
WEIGHTED AVERAGE SHARES OUTSTANDING | ||||||||
Basic | 42,494 | 43,478 | ||||||
Diluted | 42,494 | 43,478 |
Three Months Ended September | ||||||||
FY2017 | FY2016 | |||||||
International sales based on product shipment destination | $ | 109,887 | $ | 91,541 |
CURRENT ASSETS: | FY2017 | FY2016 | ||||||
Cash and Cash Equivalents | $ | 42,960 | $ | 53,995 | ||||
Accounts Receivable, Net | 160,710 | 168,964 | ||||||
Inventories | 470,807 | 473,773 | ||||||
Deferred Income Tax Asset | 43,693 | 46,096 | ||||||
Prepaid Expenses and Other Current Assets | 41,470 | 47,006 | ||||||
Total Current Assets | 759,640 | 789,834 | ||||||
OTHER ASSETS: | ||||||||
Goodwill | 161,670 | 167,859 | ||||||
Investments | 52,049 | 31,432 | ||||||
Other Intangible Assets, Net | 103,318 | 107,237 | ||||||
Deferred Income Tax Asset | 49,730 | 17,571 | ||||||
Other Long-Term Assets, Net | 17,488 | 17,023 | ||||||
Total Other Assets | 384,255 | 341,122 | ||||||
PLANT AND EQUIPMENT: | ||||||||
At Cost | 1,065,847 | 1,039,144 | ||||||
Less - Accumulated Depreciation | 737,044 | 727,601 | ||||||
Plant and Equipment, Net | 328,803 | 311,543 | ||||||
$ | 1,472,698 | $ | 1,442,499 | |||||
CURRENT LIABILITIES: | ||||||||
Accounts Payable | $ | 186,468 | $ | 184,264 | ||||
Short-Term Debt | 50,175 | 38,410 | ||||||
Accrued Liabilities | 129,705 | 143,332 | ||||||
Total Current Liabilities | 366,348 | 366,006 | ||||||
OTHER LIABILITIES: | ||||||||
Accrued Pension Cost | 306,319 | 203,931 | ||||||
Accrued Employee Benefits | 23,341 | 23,233 | ||||||
Accrued Postretirement Health Care Obligation | 36,120 | 45,382 | ||||||
Other Long-Term Liabilities | 49,538 | 47,993 | ||||||
Long-Term Debt | 221,456 | 222,811 | ||||||
Total Other Liabilities | 636,774 | 543,350 | ||||||
SHAREHOLDERS' INVESTMENT: | ||||||||
Common Stock | 579 | 579 | ||||||
Additional Paid-In Capital | 67,383 | 71,040 | ||||||
Retained Earnings | 1,054,251 | 1,047,338 | ||||||
Accumulated Other Comprehensive Loss | (334,336 | ) | (289,741 | ) | ||||
Treasury Stock, at Cost | (318,301 | ) | (296,073 | ) | ||||
Total Shareholders' Investment | 469,576 | 533,143 | ||||||
$ | 1,472,698 | $ | 1,442,499 | |||||
Three Months Ended September | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | FY2017 | FY2016 | |||||||
Net Loss | $ | (14,148 | ) | $ | (18,171 | ) | |||
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: | |||||||||
Depreciation and Amortization | 14,286 | 13,397 | |||||||
Stock Compensation Expense | 1,248 | 1,627 | |||||||
Loss on Disposition of Plant and Equipment | 113 | 46 | |||||||
Provision for Deferred Income Taxes | 3,498 | 3,844 | |||||||
Equity in Earnings of Unconsolidated Affiliates | (3,228 | ) | (1,436 | ) | |||||
Dividends Received from Unconsolidated Affiliates | 3,043 | 728 | |||||||
Non-Cash Restructuring Charges | — | 229 | |||||||
Changes in Operating Assets and Liabilities: | |||||||||
Accounts Receivable | 29,422 | 45,558 | |||||||
Inventories | (84,733 | ) | (95,342 | ) | |||||
Other Current Assets | (2,234 | ) | 2,408 | ||||||
Accounts Payable, Accrued Liabilities and Income Taxes | (18,212 | ) | (30,337 | ) | |||||
Other, Net | (5,552 | ) | (5,240 | ) | |||||
Net Cash Used in Operating Activities | (76,497 | ) | (82,689 | ) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||
Capital Expenditures | (15,764 | ) | (12,428 | ) | |||||
Cash Paid for Acquisitions, Net of Cash Acquired | — | (2,174 | ) | ||||||
Proceeds on Sale of Investment in Marketable Securities | 3,343 | — | |||||||
Proceeds Received on Disposition of Plant and Equipment | 52 | 515 | |||||||
Net Cash Used in Investing Activities | (12,369 | ) | (14,087 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||
Net Borrowings on Revolver | 50,175 | 38,410 | |||||||
Stock Option Exercise Proceeds and Tax Benefits | 1,117 | 6,433 | |||||||
Treasury Stock Purchases | (8,654 | ) | (11,178 | ) | |||||
Payment of Acquisition Contingent Liability | (813 | ) | — | ||||||
Net Cash Provided by Financing Activities | 41,825 | 33,665 | |||||||
EFFECT OF EXCHANGE RATE CHANGES | 162 | (1,284 | ) | ||||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (46,879 | ) | (64,395 | ) | |||||
CASH AND CASH EQUIVALENTS, Beginning | 89,839 | 118,390 | |||||||
CASH AND CASH EQUIVALENTS, Ending | $ | 42,960 | $ | 53,995 | |||||
Three Months Ended September | ||||||||
(In Thousands) | FY2017 | FY2016 | ||||||
Net Sales | $ | 154,498 | $ | 150,083 | ||||
Gross Profit as Reported | $ | 30,985 | $ | 23,777 | ||||
Restructuring Charges | — | 464 | ||||||
Adjusted Gross Profit | $ | 30,985 | $ | 24,241 | ||||
Gross Profit % as Reported | 20.1 | % | 15.8 | % | ||||
Adjusted Gross Profit % | 20.1 | % | 16.2 | % | ||||
Segment Loss as Reported | $ | (11,654 | ) | $ | (20,754 | ) | ||
Restructuring Charges | — | 1,354 | ||||||
Litigation Charges | — | 850 | ||||||
Adjusted Segment Loss | $ | (11,654 | ) | $ | (18,550 | ) | ||
Segment Loss % as Reported | (7.5 | )% | (13.8 | )% | ||||
Adjusted Segment Loss % | (7.5 | )% | (12.4 | )% |
• | Starting in fiscal 2017, we implemented new sales terms for engines shipped to overseas customers, which result in earlier revenue recognition compared to the terms we used during previous fiscal years. The change in terms caused units shipped and net sales to be higher by approximately 150,000 units and $18 million, respectively, in the first quarter of fiscal 2017. |
• | Using comparable sales terms, engine volumes shipped decreased by 13% or approximately 130,000 engines in the first quarter of fiscal 2017. The decrease is due to lower sales of engines used on snowthrowers due to elevated channel inventories and our continued anticipation that our customers will produce later in fiscal 2017 compared to fiscal 2016. |
• | Gross profit percentage improved due to favorable sales mix, slightly lower material costs, favorable foreign exchange and manufacturing efficiency improvements. Production volume decreased by 7% as planned. |
• | Equity in earnings of unconsolidated affiliates increased by $1.2 million largely due to the increased ownership in our service parts distributor. |
Three Months Ended September | ||||||||
(In Thousands) | FY2017 | FY2016 | ||||||
Net Sales | $ | 150,795 | $ | 162,541 | ||||
Gross Profit as Reported | $ | 22,951 | $ | 27,143 | ||||
Restructuring Charges | — | 1,995 | ||||||
Acquisition Related Charges | — | 250 | ||||||
Adjusted Gross Profit | $ | 22,951 | $ | 29,388 | ||||
Gross Profit % as Reported | 15.2 | % | 16.7 | % | ||||
Adjusted Gross Profit % | 15.2 | % | 18.1 | % | ||||
Segment Income (Loss) as Reported | $ | (3,245 | ) | $ | 62 | |||
Restructuring Charges | — | 2,019 | ||||||
Acquisition Related Charges | — | 276 | ||||||
Adjusted Segment Income (Loss) | $ | (3,245 | ) | $ | 2,357 | |||
Segment Income (Loss) % as Reported | (2.2 | )% | 0.0 | % | ||||
Adjusted Segment Income (Loss) % | (2.2 | )% | 1.5 | % |
• | Net sales decreased by $11.7 million, primarily due to lower shipments of snowthrowers, pressure washers, and service parts, partially offset by higher shipments of high-end residential and commercial lawn and garden equipment through our North American dealer channel. |
• | Gross profit percentage decreased by 150 basis points. Adjusted gross profit percentage decreased 290 basis points, primarily due to unfavorable foreign exchange and reduced production of snowthrowers due to elevated channel inventories. |
• | Equity in earnings of unconsolidated affiliates increased by $0.6 million due to the increased ownership in our service parts distributor. |
• | Net sales are expected to be in a range of $1.86 billion to $1.90 billion, up from previous guidance of $1.84 billion to $1.89 billion. We continue to expect that the U.S. residential lawn and garden market will improve by 1% to 4% including expected improvements in the housing market and more seasonal spring weather in key markets. |
• | Net income is expected to be in a range of $57 million to $64 million or $1.31 to $1.46 per diluted share (prior to the impact of any share repurchases), up from previous guidance of $55 million to $62 million or $1.26 to $1.41 per diluted share. |
• | Operating margins are expected to be approximately 5.5% to 5.8%, reflecting the benefit of the storm. Adjusted operating margins for fiscal 2016 were 5.0% (2.6% GAAP), which included the equity in earnings of unconsolidated affiliates for the second half of the fiscal year (5.2% if equity in earnings of unconsolidated affiliates had been included for the full year (2.7% GAAP)). |
• | The effective tax rate is expected to be in a range of 31% to 33%. |
• | Capital expenditures are now expected to be $70 million to $80 million. |
Three Months Ended September | ||||||||||||||||||||||||
FY2017 Reported | Adjustments | FY2017 Adjusted | FY2016 Reported | Adjustments(1) | FY2016 Adjusted | |||||||||||||||||||
Gross Profit | ||||||||||||||||||||||||
Engines | $ | 30,985 | $ | — | $ | 30,985 | $ | 23,777 | $ | 464 | $ | 24,241 | ||||||||||||
Products | 22,951 | — | 22,951 | 27,143 | 2,245 | 29,388 | ||||||||||||||||||
Inter-Segment Eliminations | (1,415 | ) | — | (1,415 | ) | (1,208 | ) | — | (1,208 | ) | ||||||||||||||
Total | $ | 52,521 | $ | — | $ | 52,521 | $ | 49,712 | $ | 2,709 | $ | 52,421 | ||||||||||||
Engineering, Selling, General and Administrative Expenses | ||||||||||||||||||||||||
Engines | $ | 44,455 | $ | — | $ | 44,455 | $ | 44,301 | $ | 850 | $ | 43,451 | ||||||||||||
Products | 27,608 | — | 27,608 | 27,833 | 26 | 27,807 | ||||||||||||||||||
Total | $ | 72,063 | $ | — | $ | 72,063 | $ | 72,134 | $ | 876 | $ | 71,258 | ||||||||||||
Segment Income (Loss) (2) | ||||||||||||||||||||||||
Engines | $ | (11,654 | ) | $ | — | $ | (11,654 | ) | $ | (20,754 | ) | $ | 2,204 | $ | (18,550 | ) | ||||||||
Products | (3,245 | ) | — | (3,245 | ) | 62 | 2,295 | 2,357 | ||||||||||||||||
Inter-Segment Eliminations | (1,415 | ) | — | (1,415 | ) | (1,208 | ) | — | (1,208 | ) | ||||||||||||||
Total | $ | (16,314 | ) | $ | — | $ | (16,314 | ) | $ | (21,900 | ) | $ | 4,499 | $ | (17,401 | ) | ||||||||
Reconciliation from Segment Income (Loss) to Income before Income Taxes: | ||||||||||||||||||||||||
Equity in Earnings of Unconsolidated Affiliates (2) | — | — | — | 1,436 | — | 1,436 | ||||||||||||||||||
Income (Loss) from Operations | $ | (16,314 | ) | $ | — | $ | (16,314 | ) | $ | (23,336 | ) | $ | 4,499 | $ | (18,837 | ) | ||||||||
Income (Loss) before Income Taxes | (20,362 | ) | — | (20,362 | ) | (26,417 | ) | 4,499 | (21,918 | ) | ||||||||||||||
Provision (Credit) for Income Taxes | (6,214 | ) | — | (6,214 | ) | (8,246 | ) | 1,528 | (6,718 | ) | ||||||||||||||
Net Income (Loss) | $ | (14,148 | ) | $ | — | $ | (14,148 | ) | $ | (18,171 | ) | $ | 2,971 | $ | (15,200 | ) | ||||||||
Earnings (Loss) Per Share | ||||||||||||||||||||||||
Basic | $ | (0.34 | ) | $ | — | $ | (0.34 | ) | $ | (0.42 | ) | $ | 0.07 | $ | (0.35 | ) | ||||||||
Diluted | (0.34 | ) | — | (0.34 | ) | (0.42 | ) | 0.07 | (0.35 | ) |