MILWAUKEE, April 25, 2018 /PRNewswire/ — Briggs & Stratton Corporation (NYSE: BGG) today announced financial results for its fiscal third quarter ended April 1, 2018.

  • Fiscal third quarter net sales were $604 million, an increase of $7 million, or 1.2%, from $597 million for the prior year from continued favorable momentum in commercial sales and higher sales of generators. The company estimates that unseasonable spring weather lowered quarterly lawn and garden sales by approximately $10 million from a year ago, but caused spring storms which helped elevate generator sales.
  • Quarterly gross profit margin of 21.6% (GAAP) and adjusted gross profit margin of 21.9% decreased from a gross profit margin of 22.6% last year primarily due to sales mix, higher freight costs, and lower production volumes.
  • Third quarter net income of $31.9 million, or $0.74 per diluted share (GAAP), included senior note repurchase premiums, business optimization charges and the impact of implementing tax reform. Excluding these items, adjusted net income was $36.2 million, or $0.84 per diluted share. Management estimates that unseasonable weather reduced fiscal 2018 third quarter earnings by approximately $0.05 per diluted share from a year ago.
  • The company strengthened its capital structure in the third quarter by making a $30 million voluntary pension plan contribution and repurchasing approximately $19.8 million of its high yield senior notes.
  • The Board of Directors authorized an additional $50 million in share repurchases reflecting its confidence in the company’s strategy.
  • The company is adjusting its fiscal 2018 earnings outlook to $1.33 to $1.50 per diluted share, before business optimization costs, senior note repurchase premiums and the implementation of tax reform, from previous guidance of $1.45 to $1.62 per diluted share due to the anticipation of certain channel partners reducing inventories this season to effect a more efficient transition of brands. In addition, unseasonable spring weather could reduce the company’s fiscal 2018 outlook by up to an incremental $0.20 per diluted share.  The magnitude of the impact of the unseasonal spring weather is expected to be determined by the timing of the season breaking in the impacted regions, the pacing of the related retail sales and whether retailers will commit to an extended selling season.

Briggs & Stratton Corporation logo. (PRNewsFoto/Briggs & Stratton Corporation)

“We achieved sales growth in the third quarter from higher generator sales and from our business diversification initiatives focused on more commercial customers and applications,” said Todd J. Teske, Chairman, President and Chief Executive Officer. “This sales growth came about despite the headwind of unusually high snowfall on the east coast of the U.S.  and an unseasonably cold start to spring in the U.S. and Europe.  The unseasonable spring weather has not yet abated; in fact, there has been record snowfall across much of the midwestern portion of the U.S. into the middle of April and continued cool temperatures which have effectively delayed the start of the spring growing season by over a month. Although the season has been delayed, we do expect a solid grass growing season as there is adequate ground moisture in the areas where lawns are prevalent.  Compounding the spring weather challenges, engine sales for residential mowers were negatively impacted in the third quarter by actions certain of our channel partners are taking to prepare for the anticipated transition of brands next season at a major retailer.  This transition has led to our channel partners taking a cautious approach to ordering for this season to reduce inventories and effect a more efficient transition following the end of the season.  While we now expect this brand transition to present a near-term challenge for us achieving our planned sales this season, we are confident of our future success in this category.  Homeowners will continue to rely upon our trusted brand and benefit from our innovative products that make work easier.”    

Teske continued, “Looking ahead, we remain confident in our abilities to achieve our long-term growth and profitability objectives. More commercial customers are turning to Briggs & Stratton for the innovation we are bringing to higher-growth products and solutions which improve the productivity and safety of workers in commercial cutting, infrastructure, construction and other demanding jobs. Revenue growth in this area is 13% for the trailing 12 months. At the same time our position as the leading and preferred global supplier of power for residential lawn and garden is secure behind continued innovation. The business optimization program is on track to deliver $30-35 million in annual profit improvement.” 

Outlook:

Updated fiscal 2018 guidance:

  • Net sales, excluding any impact from the unseasonable weather during the second half of fiscal 2018, are expected to be in a range of $1.89 billion to $1.94 billion, down from previous guidance of $1.91 billion to $1.96 billion, due to expected lower residential engine sales from certain U.S. and European channel partners reducing inventories this season, partially offset by higher generator sales related to the recent east coast power outages from spring snow storms. The reduction in U.S. channel inventory is in anticipation of brand changes at a major retailer and the reduction in Europe channel inventory is largely due to new emissions requirements on engines produced beginning in calendar 2019. Unseasonable spring weather could negatively impact fiscal 2018 full-year net sales by up to $40 million.
  • Net income, excluding any impact from the unseasonable weather, is expected to be in a range of $57 million to $65 million (previously $62 million to $70 million), or $1.33 to $1.50 per diluted share (previously $1.45 to $1.62 per diluted share). The reduction in net income is driven by expected lower engine sales and production due to reductions in channel inventory as well as $4.0 million (pre-tax) of higher freight costs. This outlook is prior to the benefit of share repurchases and excludes the costs of the business optimization program, senior note repurchase premiums and the implementation charge related to tax reform. In addition, unseasonable spring weather could negatively impact fiscal 2018 full-year net income by up to $0.20 per share.
  • Operating margins are expected to be approximately 5.5% to 5.8%, down from previous guidance of approximately 5.8% to 6.0%, prior to the impact of costs related to the company’s business optimization program. The reduction in operating margins is driven by expected lower engine sales and production due to expected channel inventory reductions as well as higher freight costs. In addition, unseasonable spring weather could negatively impact fiscal 2018 operating margins by up to 50 basis points.
  • Capital expenditures are expected to be approximately $100 million, up from previous guidance of $80 million$90 million. The increased spending is related to the company’s business optimization initiative, which is proceeding well. The company continues to anticipate that fiscal 2019 spend will decrease to approximately $65 million.
  • Fiscal 2018 interest expense, excluding premiums paid on the repurchase of senior notes, is expected to remain unchanged at $22.5 million. In addition, the fiscal 2018 effective tax rate is expected to remain unchanged at 29% to 31%, before business optimization expenses, premiums paid on the repurchase of senior notes and the implementation charge related to tax reform.     

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 4737929. 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; 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 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 

FY2018

FY2017

FY2018

FY2017

NET SALES

$               604,069

$               596,965

$            1,379,599

$            1,311,998

COST OF GOODS SOLD

473,796

462,194

1,090,196

1,029,299

Gross Profit 

130,273

134,771

289,403

282,699

ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

 

79,885

 

78,279

 

244,490

 

223,373

EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES

713

1,079

6,438

7,318

Income from Operations

51,101

57,571

51,351

66,644

INTEREST EXPENSE

(8,617)

(5,521)

(19,167)

(15,159)

OTHER INCOME

1,079

844

2,483

1,679

Income before Income Taxes

43,563

52,894

34,667

53,164

PROVISION FOR INCOME TAXES

11,675

17,075

34,163

16,242

Net Income

$                  31,888

$                  35,819

$                       504

$                  36,922

EARNINGS PER SHARE

Basic  

$                      0.74

$                      0.83

$                      0.00

$                      0.86

Diluted

$                      0.74

$                      0.83

$                      0.00

$                      0.86

WEIGHTED AVERAGE SHARES OUTSTANDING

Basic  

42,064

42,076

42,108

42,217

Diluted

42,307

42,175

42,362

42,271

 

Supplemental International Sales Information

(In Thousands)

 Three Months Ended March 

 Nine Months Ended March 

FY2018

FY2017

FY2018

FY2017

International sales based on product shipment destination

$               160,653

$               171,565

$               432,538

$               440,179

 

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets as of the End of March

(In Thousands)

CURRENT ASSETS:

FY2018

FY2017

Cash and Cash Equivalents

$              56,165

$              52,097

Accounts Receivable, Net

259,472

298,990

Inventories

438,492

413,572

Prepaid Expenses and Other Current Assets

35,953

22,178

Total Current Assets

790,082

786,837

OTHER ASSETS:

Goodwill

164,213

161,823

Investments

50,224

49,535

Other Intangible Assets, Net

98,021

101,847

Deferred Income Tax Asset

34,886

85,007

Other Long-Term Assets, Net

20,932

19,182

Total Other Assets

368,276

417,394

PLANT AND EQUIPMENT:

At Cost

1,161,535

1,086,778

Less – Accumulated Depreciation

762,186

742,240

Plant and Equipment, Net

399,349

344,538

$         1,557,707

$         1,548,769

CURRENT LIABILITIES:

Accounts Payable

$            202,822

$            212,974

Short-Term Debt

131,556

62,300

Accrued Liabilities

157,895

144,023

Total Current Liabilities

492,273

419,297

OTHER LIABILITIES:

Accrued Pension Cost

197,749

297,170

Accrued Employee Benefits

21,787

22,649

Accrued Postretirement Health Care Obligation

29,547

31,126

Other Long-Term Liabilities

53,737

43,320

Long-Term Debt

202,332

221,682

Total Other Liabilities

505,152

615,947

SHAREHOLDERS’ INVESTMENT:

Common Stock

579

579

Additional Paid-In Capital

75,001

73,269

Retained Earnings

1,089,364

1,093,323

Accumulated Other Comprehensive Loss

(280,546)

(330,293)

Treasury Stock, at Cost

(324,116)

(323,353)

Total Shareholders’ Investment

560,282

513,525

$         1,557,707

$         1,548,769

 

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In Thousands)

Nine Months Ended March

CASH FLOWS FROM OPERATING ACTIVITIES:

FY2018

FY2017

Net Income

$                        504

$                   36,922

Adjustments to Reconcile Net Income to Net Cash Used in Operating Activities:

Depreciation and Amortization

43,756

42,177

Stock Compensation Expense

5,312

4,560

Loss on Disposition of Plant and Equipment

1,595

610

Provision for Deferred Income Taxes

24,744

7,574

Equity in Earnings of Unconsolidated Affiliates 

(9,068)

(7,318)

Dividends Received from Unconsolidated Affiliates 

9,810

8,186

Pension Cash Contributions

(30,000)

Changes in Operating Assets and Liabilities:

Accounts Receivable

(25,948)

(110,978)

Inventories

(62,780)

(27,553)

Other Current Assets

(3,430)

584

Accounts Payable, Accrued Liabilities and Income Taxes

11,287

30,041

Other, Net

15,198

(11,269)

   Net Cash Used in Operating Activities

(19,020)

(26,464)

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital Expenditures

(77,483)

(48,780)

Proceeds Received on Disposition of Plant and Equipment

339

1,014

Cash Paid for Acquisitions, Net of Cash Acquired

(1,800)

Proceeds on Sale of Investment in Marketable Securities

3,343

Increase to Restricted Cash

(9,053)

   Net Cash Used in Investing Activities

(87,997)

(44,423)

CASH FLOWS FROM FINANCING ACTIVITIES:

Net Borrowings on Revolver

131,556

62,300

Long Term Note Payable

7,685

Debt Issuance Costs

(1,154)

Treasury Stock Purchases

(8,710)

(17,924)

Repayment of Long Term Debt

(19,781)

Payment of Acquisition Contingent Liability

(1,625)

Stock Option Exercise Proceeds and Tax Benefits

3,943

4,751

Payments Related to Shares Withheld for Taxes for Stock Compensation

(1,147)

(1,739)

Cash Dividends Paid

(12,007)

(12,028)

   Net Cash Provided by Financing Activities

100,385

33,735

EFFECT OF EXCHANGE RATE CHANGES

1,090

(590)

NET DECREASE IN CASH AND CASH EQUIVALENTS

(5,542)

(37,742)

CASH AND CASH EQUIVALENTS, Beginning

61,707

89,839

CASH AND CASH EQUIVALENTS, Ending

$                   56,165

$                   52,097

Liquidity and Capital Resources:

Net debt at April 1, 2018 was $278.8 million (total Long-Term Debt and Short-Term Debt, excluding related debt issuance costs, of $334.8 million less $56.2 million of cash), compared with $233.4 million (total Long-Term Debt and Short-Term Debt, excluding debt issuance costs, of $285.4 million less $52.1 million of cash) at April 2, 2017.

Cash flows used in operating activities for the first nine months of fiscal 2018 were $19.0 million, compared to $26.5 million for the first nine months of fiscal 2017. The decrease in cash used in operating activities was primarily related to changes in working capital, including more rapid collections of accounts receivable partially offset by higher inventory levels due to timing of shipments. The improvement in operating cash flows was partially offset by a $30 million voluntary contribution made to the pension plan in the third quarter of fiscal 2018.

During the first nine months of fiscal 2018, the company repurchased approximately 383,000 shares of its common stock (including approximately 242,000 in the third quarter) on the open market at an average price of $22.76 per share. As of April 1, 2018, there was remaining authorization to repurchase up to approximately $22 million of common stock with an expiration date of June 29, 2018. Subsequent to the end of the quarter, the Board of Directors authorized an additional $50 million under the share repurchase program with an expiration date of June 30, 2020. Further, during the third quarter of fiscal 2018, the company repurchased approximately $19.8 million of Senior Notes after receiving unsolicited offers from bondholders.

SUPPLEMENTAL SEGMENT INFORMATION

 Engines Segment:

 Three Months Ended March 

 Nine Months Ended March 

(In Thousands)

FY2018

FY2017

FY2018

FY2017

Net Sales

$              384,292

$              391,063

$              790,543

$              806,298

Gross Profit as Reported

$                96,780

$                98,814

$              183,428

$              191,373

Business Optimization

903

2,031

Adjusted Gross Profit

$                97,683

$                98,814

$              185,459

$              191,373

Gross Profit % as Reported

25.2%

25.3%

23.2%

23.7%

Adjusted Gross Profit %

25.4%

25.3%

23.5%

23.7%

Segment Income as Reported

$                47,989

$                50,946

$                36,590

$                57,216

Business Optimization

2,896

7,243

Adjusted Segment Income

$                50,885

$                50,946

$                43,833

$                57,216

Segment Income % as Reported

12.5%

13.0%

4.6%

7.1%

Adjusted Segment Income %

13.2%

13.0%

5.5%

7.1%

Third Quarter Highlights

  • Engine sales unit volumes decreased by 7%, or approximately 199,000 engines, in the third quarter of fiscal 2018 compared to the same period last year. Sales into Europe were lower due to our customers taking a cautious approach to ordering due to a delayed start of spring weather and certain channel partners reducing orders to lower channel inventory levels in advance of new emissions requirements on the production of engines beginning in calendar 2019. Sales were also lower in North America due to certain channel partners taking a cautious approach to ordering inventory due to a delayed start of spring weather and a desire to further reduce channel inventory in advance of anticipated brand transitions next season. These sales decreases were partially offset by favorable sales mix which included proportionately higher sales of large engines driven by growth of Vanguard commercial engines and higher pricing.
  • GAAP gross profit percentage compared to last year decreased 10 basis points and adjusted gross profit margins were higher by 10 basis points. Adjusted margins were higher due to favorable sales mix and plant efficiencies offsetting 9% lower production volumes, as anticipated, and freight rate increases. Material cost increases have been offset by higher pricing.
  • GAAP ESG&A increased compared to last year by $0.4 million and adjusted ESG&A was lower by $0.2 million. Adjusted ESG&A was lower due to lower variable compensation costs, partially offset by the investment to upgrade the company’s ERP system.

 

Products Segment:

 Three Months Ended March 

 Nine Months Ended March 

(In Thousands)

FY2018

FY2017

FY2018

FY2017

Net Sales

$              245,169

$              233,510

$              653,845

$              575,007

Gross Profit as Reported

$                32,773

$                34,946

$              105,570

$                91,075

Business Optimization

971

2,493

Adjusted Gross Profit

$                33,744

$                34,946

$              108,063

$                91,075

Gross Profit % as Reported

13.4%

15.0%

16.1%

15.8%

Adjusted Gross Profit %

13.8%

15.0%

16.5%

15.8%

Segment Income as Reported

$                   2,392

$                   5,614

$                14,356

$                   9,177

Business Optimization

1,309

5,259

Adjusted Segment Income 

$                   3,701

$                   5,614

$                19,615

$                   9,177

Segment Income % as Reported

1.0%

2.4%

2.2%

1.6%

Adjusted Segment Income %

1.5%

2.4%

3.0%

1.6%

Third Quarter Highlights

  • Net sales increased by $11.7 million, or 5.0%, from the same period last year. The increase was primarily due to higher sales of commercial job site products and generators. Generator sales benefited from higher than usual power outages due to the east coast ice and snow storms. Sales of commercial mowers were lower in the third quarter due to timing of shipments driven by unseasonably cool spring weather.
  • Gross profit percentage and adjusted gross profit percentage decreased by 160 basis points and 120 basis points, respectively, primarily due to unfavorable sales mix, higher freight costs and a 4% reduction in manufacturing throughput. As anticipated, production of pressure washers was lower in the quarter in order to right size inventory levels, which were elevated coming out of last season.
  • GAAP ESG&A and adjusted ESG&A increased by $1.2 million and $0.9 million, respectively, compared to last year due to higher commissions expense on increased sales volume and higher costs associated with investments to upgrade the company’s ERP system and growing commercial offerings.

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 

  FY2018
Reported

Adjustments1

 FY2018
Adjusted

  FY2017
Reported

Adjustments

  FY2017 
Adjusted

Gross Profit

Engines

$         96,780

$                  903

$         97,683

$         98,814

$                    –

$         98,814

Products

32,773

971

33,744

34,946

34,946

Inter-Segment Eliminations

720

720

1,011

1,011

Total

$      130,273

$               1,874

$      132,147

$      134,771

$                    –

$      134,771

Engineering, Selling, General and Administrative Expenses

Engines

$         48,853

$                  587

$         48,266

$         48,450

$                    –

$         48,450

Products

31,032

338

30,694

29,829

29,829

Total

$         79,885

$                  925

$         78,960

$         78,279

$                    –

$         78,279

Equity in Earnings of
Unconsolidated Affiliates

Engines

$                 62

$               1,406

$           1,468

$              582

$                    –

$              582

Products

651

651

497

497

Total

$              713

$               1,406

$           2,119

$           1,079

$                    –

$           1,079

Segment Income

Engines

$         47,989

$               2,896

$         50,885

$         50,946

$                    –

$         50,946

Products

2,392

1,309

3,701

5,614

5,614

Inter-Segment Eliminations

720

720

1,011

1,011

Total

$         51,101

$               4,205

$         55,306

$         57,571

$                    –

$         57,571

Interest Expense

$         (8,617)

$               2,017

(6,600)

$         (5,521)

$                    –

$         (5,521)

Income before Income Taxes

43,563

6,222

49,785

52,894

52,894

Provision for Income Taxes

11,675

1,876

13,551

17,075

17,075

Net Income 

$         31,888

$               4,346

$         36,234

$         35,819

$                    –

$         35,819

Earnings Per Share

Basic  

$             0.74

$                 0.10

$             0.84

$             0.83

$                  –

$             0.83

Diluted

0.74

0.10

0.84

0.83

0.83

1

For the third quarter of fiscal 2018, business optimization expenses include $0.9 million ($0.6 million after tax) of non-cash charges related primarily to plant & equipment impairment and accelerated depreciation, and $3.3 million ($2.9 million after tax) of cash charges related primarily to employee termination benefits, lease terminations, professional services and plant rearrangement activities. Tax expense also includes a $0.7 million benefit to revalue deferred tax assets and liabilities under the Tax Cuts and Jobs Act of 2017. The company recognized in interest expense $2.0 million ($1.5 million after tax) for premiums paid to repurchase senior notes after receiving unsolicited offers from bondholders.

 

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

  FY2018
Reported

Adjustments1

 FY2018
 Adjusted

  FY2017
Reported

Adjustments

  FY2017
Adjusted

Gross Profit

Engines

$      183,428

$           2,031

$      185,459

$      191,373

$                    –

$      191,373

Products

105,570

2,493

108,063

91,075

91,075

Inter-Segment Eliminations

405

405

251

251

Total

$      289,403

$           4,524

$      293,927

$      282,699

$                    –

$      282,699

Engineering, Selling, General and Administrative Expenses

Engines

$      150,340

$           2,582

$      147,758

$      138,610

$                    –

$      138,610

Products

94,150

2,766

91,384

84,763

84,763

Total

$      244,490

$           5,348

$      239,142

$      223,373

$                    –

$      223,373

Equity in Earnings of
Unconsolidated Affiliates

Engines

$           3,502

$           2,630

$           6,132

$           4,453

$                    –

$           4,453

Products

2,936

2,936

2,865

2,865

Total

$           6,438

$           2,630

$           9,068

$           7,318

$                    –

$           7,318

Segment Income

Engines

$         36,590

$           7,243

$         43,833

$         57,216

$                    –

$         57,216

Products

14,356

5,259

19,615

9,177

9,177

Inter-Segment Eliminations

405

405

251

251

Total

$         51,351

$         12,502

$         63,853

$         66,644

$                    –

$         66,644

Interest Expense

$       (19,167)

$           2,017

$       (17,150)

$       (15,159)

$                    –

$       (15,159)

Income before Income Taxes

34,667

14,519

49,186

53,164

53,164

Provision for Income Taxes

34,163

(21,104)

13,059

16,242

16,242

Net Income 

$              504

$         35,623

$         36,127

$         36,922

$                    –

$         36,922

Earnings Per Share

Basic  

$             0.00

$             0.84

$             0.84

$             0.86

$                  –

$             0.86

Diluted

0.00

0.83

0.83

0.86

0.86

1

For the first nine months of fiscal 2018, business optimization expenses include $3.8 million ($2.8 million after tax) of non-cash charges related primarily to plant & equipment impairment and accelerated depreciation, and $8.6 million ($7.1 million after tax) of cash charges related primarily to employee termination benefits, lease terminations, professional services and plant rearrangement activities. Tax expense also includes a $24.2 million charge associated with the Tax Cuts and Jobs Act of 2017 comprised of $17.7 million to revalue deferred tax assets and liabilities and $6.5 million to record the impact of the inclusion of foreign earnings.  The company recognized in interest expense $2.0 million ($1.5 million after tax) for premiums paid to repurchase senior notes after receiving unsolicited offers from bondholders.

 

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SOURCE Briggs & Stratton Corporation