Briggs & Stratton Q1 Loss Widens, Shares Fall - Analyst Blog
21 Ottobre 2013 - 6:00PM
Zacks
Shares of Briggs &
Stratton Corporation (BGG) fell 5.7% on Oct 17, after it
reported adjusted loss per share of 35 cents for first-quarter
fiscal 2014, ended Sep 29, 2013. This compares unfavorably with the
Zacks Consensus Estimate of loss per share of 31 cents and 28 cents
loss in the year-ago quarter. Lower production at the Engines and
Products segments were responsible for a wider loss.
On a reported basis, Briggs & Stratton posted loss of 41 cents
per share compared with a loss per share of 35 cents in the
prior-year quarter. Reported loss in the quarter included
restructuring charges of 6 cents per share compared with 7 cents
per share in the year-ago quarter.
Operational Update
Net sales grew 3% year over year to $317 million in the first
quarter, surpassing the Zacks Consensus Estimate of $304 million.
The year-over-year increase was driven by a rise in sales of
engines and lawn and garden products, partially offset by lowered
sales of portable generators.
Cost of sales crept up 3.8% year over year to $269.9 million.
Adjusted gross profit was $47.4 million compared with $49 million
in the prior-year quarter. Adjusted gross margin contracted 90
basis points (bps) year over year to 15%.
Engineering, selling, general and administrative expenses increased
4.8% year over year to $68.8 million. Adjusted loss from operation
was $21.3 million compared with $16.7 million in the year-ago
quarter.
Segment Performance
Engines Segment: Net sales in this segment went up
11.7% year over year to $183.8 million, led by higher sales of
engines used in lawn and garden equipment, and related service
parts in the North American and European markets. This was
partially offset by negative sales mix due to fewer sales of larger
engines and the negative impact of foreign exchange. Adjusted loss
from operation for the segment was $16 million, flat with the
year-ago quarter.
Product Segment: The Product segment reported
sales of $153 million, down 11.7% from the year-ago quarter.
Results were affected by lower sales of portable generators,
reduced shipments of snow throwers in Europe and negative currency
translations. But this was partially offset by higher sales of lawn
and garden equipment as well as pressure washers and service parts,
and increased sales from the Branco acquisition. The segment
reported an adjusted loss of $5.8 million compared with a loss of
$0.72 million in the year-ago quarter.
Financials
Cash and cash equivalents were $115 million as of Sep 29, 2013
compared with $101.6 million as of Sep 30, 2012. As of Sep 29,
2013, cash used in operating activities was $52.9 million compared
with $41.4 million as of Sep 30, 2012. The higher use of operating
cash flows was primarily related to lower reduction in accounts
receivable, partially offset by the benefit of lower inventory
production levels.
Net debt as of Sep 29, 2013 was $109.8 million, lower than $126.4
million as of Sep 30, 2012. Debt-to-capitalization ratio contracted
to 26% as of Sep 29, 2013 from 27% in the prior-year quarter.
During first-quarter fiscal 2014, the company repurchased 482,926
shares for $9.7 million.
Restructuring Actions
Briggs & Stratton achieved pre-tax savings of $0.7 million
during the first quarter. The company is making good progress
toward moving horizontal engine manufacturing from its Auburn,
Alabama plant to China.
Pre-tax restructuring costs for fiscal 2014 are expected to be
within $6 million to $8 million. The company also anticipates
savings of $3 million to $5 million from these restructuring
actions in fiscal 2014.
Outlook
Briggs & Stratton reaffirmed its net income guidance of $50
million to $62 million for fiscal 2014. The company also restated
its earnings per share range of $1.04 to $1.28. Net sales were
reiterated at $1.88 billion to $2.03 billion for 2014. It is also
estimates that the retail market for lawn and garden products will
increase 4–6% in the U.S.
Operating income margins were revised from 4–5% to 4.5–5%,
reflecting positive impacts of the restructuring actions. Capital
expenditures were also maintained at $50 million to $55
million.
Milwaukee, Wis. based Briggs & Stratton, is the world's largest
producer of gasoline engines for outdoor power equipment. Its
wholly owned subsidiary, Briggs & Stratton Power Products Group
LLC, is North America's top manufacturer of portable generators and
pressure washers. This subsidiary also leads in the designing,
manufacturing and marketing of standby generators, and lawn, garden
and turf care products through its popular brands.
Briggs & Stratton currently has a Zacks Rank #3 (Hold).
Alamo Group, Inc. (ALG) belongs to the industrial
products sector and is yet to announce its third quarter
results.
Other stocks in the same industry with a favorable Zacks rank are
Kubota Corporation (KUBTY) with Zacks Rank #1
(Strong Buy) and AGCO Corporation (AGCO) with
Zacks Rank #2 (Buy).
AGCO CORP (AGCO): Free Stock Analysis Report
ALAMO GROUP INC (ALG): Free Stock Analysis Report
BRIGGS & STRATT (BGG): Free Stock Analysis Report
KUBOTA CORP ADR (KUBTY): Get Free Report
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