Briggs & Stratton Corporation BGG today announced that it expects to report net sales and earnings below
the guidance provided for fiscal 2013.
o Consolidated net sales for the fourth quarter and fiscal year 2013 are
expected to be approximately $475 million and $1.86 billion, respectively
o Production levels lowered in response to OEM production schedules to
control inventories
o U.S. sales in line with industry estimates for engines and products;
Europe market softness continues
o Engine market share in line with original guidance
o Excluding charges related to restructuring actions, legal settlements, and
other non-cash charges, revised fourth fiscal quarter and fiscal 2013
adjusted diluted earnings per share is estimated to be approximately $0.17
to $0.21 per share and $0.88 to $0.92 per share, respectively
o Outlook for an improved fiscal 2014 on a strengthening U.S. lawn and
garden market, lower channel inventories, and continued expansion and
growth in certain international markets; European outlook remains cautious
"An extremely slow start to the spring lawn and garden season and a cautious
approach to managing inventories after last year's drought has impacted the
U.S. and European markets through the end of June," commented Todd J. Teske,
Chairman, President and CEO of Briggs & Stratton Corporation. "In response to
the lower retail sales, almost all channel participants including mass
retailers, dealers, and equipment OEMs have been cautiously managing
inventories and therefore have been slow to re-order for the current season.
Equipment OEMs have reduced production levels compared to last year and thus
we reduced our engine production in the quarter negatively impacting
absorption of plant operating costs in the near term," continued Teske. "On a
positive note, we have seen the retail market strengthening in May and June
and continuing into July as we compare to last year's drought-impacted summer
season and we believe inventory levels at our dealers are in great shape
heading into our next fiscal year."
Engines Segment:
o Fourth fiscal quarter 2013 Engines segment net sales are expected to be
approximately $300 million
o Total engines shipped in the quarter were approximately 1.9 million units
compared to approximately 2.1 million units in the prior year
o Production totaled approximately 1.6 million units in the quarter compared
to approximately 2.0 million in the prior year
o Ending engine unit inventories were approximately 1.4 million compared to
approximately 1.3 million units last year
Through the end of June 2013, the Company estimates that the retail market for
walk and riding mowing equipment has decreased by approximately 3-5% compared
to the last season. The lower retail sales due to a late spring in the U.S.
and Europe have not yet recovered in the current season. Estimates of U.S.
industry shipments to retailers of walk mowers are consistent with last year
through June while shipments of riding mowers has increased by approximately
3%. The Company expects that by the end of the current season, retail sales
of mowing equipment will be flat to slightly up for the season. Certain
equipment OEMs have reduced inventories compared to the prior year in response
to lower than anticipated retail sales.
Products Segment:
o Fourth fiscal quarter 2013 Products segment net sales are expected to be
approximately $203 million
o Manufacturing throughput reduced 15% in the quarter compared to the prior
year in order to control inventories
o Domestic product inventories decreased by approximately $50 million
compared to the prior year
o Dealer inventories are below average of last several years
The majority of the decrease in net sales compared to the prior year is due to
our previously announced decision to exit the sale of lawn and garden
equipment to U.S. mass market retailers. This was partially offset by higher
sales of lawn and garden equipment to our dealers in the U.S. and increased
sales in Brazil due to our acquisition of Branco in December of 2012.
Production levels in the products plants were also reduced to lower
inventories resulting in lower absorption of fixed manufacturing costs in the
near term.
Financial Position:
Net debt at June 30, 2013 is anticipated to be approximately $37 million.
Expected cash flows from operations for fiscal 2013 is approximately $160
million.
The results discussed above are preliminary and therefore are subject to the
completion of fiscal year end closing and auditing procedures including, but
not limited to, the evaluation of goodwill and intangibles for potential
impairment.
Conference Call Information:
There is no conference call scheduled in association with this announcement.
The Company is scheduled to announce its full results for the fourth fiscal
quarter of 2013 and host its regularly quarterly conference call on August 15,
2013 at 10:00 AM (ET). 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 1596431.
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