Briggs & Stratton Corporation Reports Fiscal 2020 Second Qua

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|Jan 31|magazine58 min read

MILWAUKEE, Jan. 30, 2020 /PRNewswire/ -- Briggs & Stratton Corporation (NYSE: BGG), a recognized global leader in providing power to get work done, today announced financial results for its second quarter of fiscal 2020, ended December 29, 2019.

Fiscal Second Quarter 2020 Highlights

    --  Net sales of $438 million declined from $505 million for the prior year,
        predominantly driven by the expected impact of the timing of shipments
        of small engines to OEMs and lower storm-related sales, as well as lower
        than expected sales of job site products. For the quarter, Engines
        segment sales declined 19% and Products segment sales declined 5%.
    --  Gross profit margin of 15.5% (GAAP) and adjusted gross profit margin of
        17.3% decreased from a gross profit margin of 18.3% (GAAP) and adjusted
        gross profit margin of 18.6% for the second quarter last year primarily
        as a result of the lower sales volumes and production. Efficiency
        improvements in operations continue to be on track.
    --  GAAP net loss was $15.3 million, or $0.37 per share, including pretax
        charges of $9.6 million primarily related to the Company's small engine
        manufacturing consolidation initiative. For the second quarter last
        year, GAAP net loss was $2.6 million, or $0.07 per share, including
        pretax charges of $11.2 million primarily related to the Company's
        business optimization program. Excluding these items, adjusted net loss
        was $8.1 million, or $0.20 per share, versus adjusted net income of $8.4
        million, or $0.20 per diluted share last year.

Market Dynamics Project Highlights:

    --  The Company recently completed its previously announced project to more
        fully analyze market dynamics to position the business for more
        sustained growth and higher returns. The project expanded to encompass a
        review of the Company's current portfolio and how to best focus and
        simplify the business to be nimbler and compete more effectively.
    --  Entering multi-week planning period to finalize steps in the Company's
        repositioning plan, which is expected to include certain asset sales and
        a renewed focus on the Company's core strength of power application.
    --  Plan also includes a shift in the Company's capital allocation
        priorities, including the suspension of the dividend, effective
        immediately, in an effort to strengthen the balance sheet and provide
        additional funds to invest for future initiatives.
    --  Expects to host special strategic investor call following the conclusion
        of its planning process within the next four-to-six weeks.

Management Commentary:

"Areas of market-related softness drove sales below expectations and we are incrementally more cautious about the second half of the year," said Todd J. Teske, Chairman, President and Chief Executive Officer. "Softer than anticipated retail activity this fall has left channel inventories of residential mowers elevated in North America and Europe and channel partners have signaled a conservative approach to ordering for the upcoming season. Despite market conditions, we have made material progress on several fronts that have positioned us to meet customer needs during the peak season and deliver efficiency improvements. We also remain on track to meet our goal for inventory reduction by fiscal year-end, as part of our focus on improving working capital and de-levering the balance sheet."

Teske added, "During the first half of the year, we devoted significant time to our market dynamics project. These efforts have been very constructive and support our belief that a sharp focus on our core strength of power application will better position the Company for long-term sustainable growth and higher returns. We are currently finalizing the next steps forward for this plan, which will simplify our business and improve our financial flexibility. We will announce further details and begin implementing our plans in the third quarter."

Fiscal 2020 Outlook:

The Company is revising its outlook for fiscal 2020 to reflect some increased uncertainty related to the upcoming lawn and garden selling season in North America and Europe.

                                 
       
          Current Fiscal 2020 Outlook*           
       
           Prior Fiscal 2020 Outlook*



        Net Sales                                   
            $1.83 - $1.97 billion                  
            $1.91 - 1.97 billion

    ---

        Adjusted Net Income                              
            $3 - $14 million                      
            $9 - $17 million

    ---

        Adjusted Earnings per
         Diluted Share                            
            $0.05 - $0.33 per share               
            $0.20 - $0.40 per share

    ---

        Operating Margins                                             2.1% to 2.9%                                  2.5% to 3.0%

    ---

        Unconsolidated Affiliate
         Earnings                  
       Approximately $7.5 million                    
       Approximately $10.0 million

    ---

        Interest Expense                                    
            $35.5 million                         
            $34.0 million

    ---


               * This outlook excludes the costs
                of the business optimization
                program, the engine manufacturing
                consolidation project, and any
                potential asset sales.

Teske concluded, "Given uncertainty around elevated channel inventory and ongoing global weather related challenges, we are now forecasting slightly reduced financial results across our segments. We also expect slightly higher consolidated interest expense associated with our ABL credit facility compared to previous estimates. We remain focused on our key strategic priorities including the realization of value from our business optimization program and our small engine production consolidation, as well as reducing our inventories through the peak season and strengthening our balance sheet. We believe our strategic plan focused on power application will complement the hard work that has been done to improve our business and are excited to share the final details of that plan with our shareholders and other stakeholders in a few weeks."

Conference Call Information:

The Company will host a conference call today, January 30, 2020, at 10:00 AM (ET) to review the second 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. To join, dial (877) 233-9136 and enter Conference ID 4383007. 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; imposition of new, or changes in existing, duties, tariffs and trade agreements; 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 production capacity on line efficiently and with good quality; outcomes of legal proceedings and claims; the ability to realize anticipated savings from the business optimization program and restructuring actions; the ability to maintain or obtain adequate sources of liquidity and access to debt markets; 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 December

                                                                                          ---

                                                             
              
                (In Thousands, except per share data)




                                                 Three Months Ended December                                         Six Months Ended December



                                           
       
                FY2020                                           
              FY2019                    
     
       FY2020    
     FY2019




     NET SALES                                                     $437,941                                                           $505,462          $751,660           $784,459



     COST OF GOODS SOLD                                             369,916                                                            413,005           640,389            648,248



     Gross Profit                                                    68,025                                                             92,457           111,271            136,211




      ENGINEERING, SELLING, GENERAL
       AND ADMINISTRATIVE EXPENSES


                                                                      79,124                                                             87,139           157,861            187,998


      EQUITY IN EARNINGS OF UNCONSOLIDATED
       AFFILIATES                                                        946                                                              3,017             2,209              5,990




     Loss from Operations                                          (10,153)                                                             8,335          (44,381)          (45,797)





     INTEREST EXPENSE                                               (8,965)                                                           (7,482)         (15,869)          (12,643)



     OTHER INCOME (EXPENSE)                                           (388)                                                             (946)          (1,131)             (603)




     Loss before Income Taxes                                      (19,506)                                                              (93)         (61,381)          (59,043)





     CREDIT FOR INCOME TAXES                                        (4,162)                                                             2,511          (12,400)          (15,452)




     Net Loss                                                     $(15,344)                                                          $(2,604)        $(48,981)         $(43,591)






     EARNINGS (LOSS) PER SHARE



     Basic                                                          $(0.37)                                                           $(0.07)          $(1.18)           $(1.05)



     Diluted                                                        $(0.37)                                                           $(0.07)          $(1.18)           $(1.05)




      WEIGHTED AVERAGE SHARES OUTSTANDING



     Basic                                                           41,725                                                             41,689            41,664             41,773



     Diluted                                                         41,725                                                             41,689            41,664             41,773

                                             
              
                
       Supplemental International Sales Information

                                                                          ---

                                                                   
       
            (In Thousands)




                                       Three Months Ended December                              Six Months Ended December



                                   
     
                FY2020                                
              FY2019                  
     
     FY2020    
     FY2019



     International sales based on
      product shipment destination                        $144,019                                                $148,125      $246,635          $236,651

                       
              
           BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES


            
              
                
             Consolidated Balance Sheets as of the End of December

                                                    ---

                                      
          
                (In Thousands)





     CURRENT ASSETS:                   
              
                FY2020                        
         FY2019

                                                                                                              ---

      Cash and Cash Equivalents                                 $42,230                                    $33,954


      Accounts Receivable, Net                                  219,351                                    242,232



     Inventories                                               612,119                                    567,256


      Prepaid Expenses and Other
       Current Assets                                            34,141                                     38,481


      Total Current Assets                                      907,841                                    881,923






     OTHER ASSETS:



     Goodwill                                                  169,451                                    169,401



     Investments                                                46,698                                     47,078


      Other Intangible Assets, Net                               94,915                                     98,619


      Deferred Income Tax Asset                                  56,022                                     30,442


      Other Long-Term Assets, Net                                21,438                                     19,852



     Right of Use Asset                                        107,605                                          -



     Total Other Assets                                        496,129                                    365,392








     PLANT AND EQUIPMENT:



     At Cost                                                 1,231,874                                  1,197,673


      Less -Accumulated
       Depreciation                                             834,968                                    784,518


      Plant and Equipment, Net                                  396,906                                    413,155



                                                             $1,800,876                                 $1,660,470








     CURRENT LIABILITIES:



     Accounts Payable                                         $215,295                                   $226,536



     Short-Term Debt                                           195,175                                    314,073



     Accrued Liabilities                                       134,463                                    132,179


      Short-Term Lease Obligations                               12,368                                          -


      Total Current Liabilities                                 557,301                                    672,788






     OTHER LIABILITIES:


      Accrued Pension Cost                                      213,268                                    182,925


      Accrued Employee Benefits                                  21,174                                     20,174


      Accrued Postretirement Health
       Care Obligation                                           22,752                                     26,763


      Other Long-Term Liabilities                                65,606                                     56,388


      Long-Term Lease Obligations                                92,945                                          -



     Long-Term Debt                                            428,300                                    196,013


      Total Other Liabilities                                   844,045                                    482,263






     SHAREHOLDERS' INVESTMENT:



     Common Stock                                                  579                                        579


      Additional Paid-In Capital                                 70,901                                     77,310



     Retained Earnings                                         940,616                                  1,016,205


      Accumulated Other
       Comprehensive Loss                                     (288,983)                                 (254,768)


      Treasury Stock, at Cost                                 (323,583)                                 (333,907)


      Total Shareholders' Investment                            399,530                                    505,419



                                                             $1,800,876                                 $1,660,470

                                                  
              
                BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES


                                               
              
                
                  Consolidated Statements of Cash Flows

                                                                                   ---

                                                                  
              
                (In Thousands)




                                                                                   Six Months Ended December





      CASH FLOWS FROM OPERATING
       ACTIVITIES:                                           
              
                FY2020                                 
     FY2019

                                                                                                                                           ---


     Net Loss                                                                                     $(48,981)                         $(43,591)



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


      Depreciation and Amortization                                                                   37,491                             32,263


      Stock Compensation Expense                                                                       2,694                              3,177


      Loss on Disposition of Plant
       and Equipment                                                                                   1,421                                 66


      Provision for Deferred Income
       Taxes                                                                                        (15,551)                          (19,550)


      Equity in Earnings of
       Unconsolidated Affiliates                                                                     (2,730)                           (7,854)


      Dividends Received from
       Unconsolidated Affiliates                                                                       4,300                             10,510



     Changes in Operating Assets and Liabilities:



     Accounts Receivable                                                                           (21,092)                          (59,838)



     Inventories                                                                                  (111,404)                         (157,401)


      Other Current Assets                                                                               852                              1,947


      Accounts Payable, Accrued
       Liabilities and Income Taxes                                                                 (54,464)                            22,382



     Other, Net                                                                                       (397)                             1,862


         Net Cash Used in Operating
          Activities                                                                               (207,861)                         (216,027)






     CASH FLOWS FROM INVESTING ACTIVITIES:


      Capital Expenditures                                                                          (34,431)                          (34,234)


      Proceeds Received on
       Disposition of Plant and
       Equipment                                                                                          15                                 12


      Cash Paid for Acquisitions,
       Net of Cash Acquired                                                                                -                           (8,865)


         Net Cash Used in Investing
          Activities                                                                                (34,416)                          (43,087)






     CASH FLOWS FROM FINANCING ACTIVITIES:


      Net Borrowings on Credit
       Facilities                                                                                    267,757                            266,038



     Debt Issuance Costs                                                                            (4,800)                                 -


      Treasury Stock Purchases                                                                             -                          (11,429)


      Repayments of Long Term Debt                                                                         -                           (4,875)


      Stock Option Exercise Proceeds
       and Tax Benefits                                                                                    -                             1,823


      Payments Related to Shares
       Withheld for Taxes for Stock
       Compensation                                                                                     (55)                             (257)



     Cash Dividends Paid                                                                            (7,936)                           (5,948)


         Net Cash Provided by Financing
          Activities                                                                                 254,966                            245,352





      EFFECT OF EXCHANGE RATE
       CHANGES                                                                                          (74)                             (336)



      NET INCREASE (DECREASE) IN
       CASH, CASH EQUIVALENTS AND
       RESTRICTED CASH                                                                                12,615                           (14,098)


      CASH, CASH EQUIVALENTS AND
       RESTRICTED CASH, Beginning
       (1)                                                                                           30,342                             49,218


      CASH, CASH EQUIVALENTS AND
       RESTRICTED CASH, Ending (2)                                                                   $42,957                            $35,120

                                                                                                                                           ===


            Included within Beginning Cash,
              Cash Equivalents, and Restricted
              Cash is approximately $0.8 million
              and $4.3 of restricted cash as of
              June 30, 2019 and July 1, 2018,

     
     (1)  respectively.



     
     (2) Included
              within Ending
              Cash, Cash
              Equivalents,
              and
              Restricted
              Cash is
              approximately
              $0.7 million
              and $1.2
              million of
              restricted
              cash as of
              December 29,
              2019 and
              December 30,
              2018,
              respectively.

                                                                         
              
           
         SUPPLEMENTAL SEGMENT INFORMATION

                                                                                              ---




              
                
                  Engines Segment:

    ---



                                                                Three Months Ended December                             Six Months Ended December



                     
              (In Thousands)              
     
               FY2020                                
              FY2019                  
     
       FY2020   
     FY2019




                   Net Sales                                                      $219,190                                               $272,018       $352,544           $391,108





                   Gross Profit as Reported                                        $33,192                                                $55,614        $52,334            $71,551


               Engine Manufacturing Consolidation Project                             7,124                                                               11,951



              Business Optimization                                                     63                                                    665            224              1,088



                   Adjusted Gross Profit                                           $40,379                                                $56,279        $64,509            $72,639






                   Gross Profit % as Reported                                        15.1%                                                 20.4%         14.8%             18.3%


    Adjusted Gross Profit %                                                         18.4%                                                 20.7%         18.3%             18.6%




                    Segment Income (Loss) as Reported                             $(14,248)                                                $4,658      $(42,152)         $(39,593)


               Engine Manufacturing Consolidation Project                             7,124                                                               11,951



              Business Optimization                                                  1,595                                                  7,508          2,486             21,871


                    Adjusted Segment Income (Loss)                                 $(5,529)                                               $12,166      $(27,715)         $(17,722)





                    Segment Income (Loss) % as Reported                               -6.5%                                                  1.7%        -12.0%            -10.1%


    Adjusted Segment Income (Loss) %                                                -2.5%                                                  4.5%         -7.9%             -4.5%

Second Quarter Highlights

    --  Engine sales unit volumes decreased versus the second quarter of fiscal
        2019 by approximately 453,000 engines, or 24%, principally on the timing
        of OEM mower builds, which began earlier in fiscal 2019 to support brand
        transitions at retail. Revenue growth in service parts continued to
        benefit from improved throughput and order fulfillment rates.
    --  GAAP gross profit percentage compared to the second quarter last year
        decreased 530 basis points and adjusted gross profit margins decreased
        230 basis points, on a 19% decrease in production volumes and higher
        material costs, partially offset by business optimization program
        savings of $2 million and favorable sales mix on higher service parts
        sales.
    --  GAAP engineering, selling, general and administrative expenses (ESG&A)
        declined by $4.6 million compared to the second quarter of fiscal 2019.
        Adjusted ESG&A decreased $0.2 million.
    --  Adjusted equity in earnings of unconsolidated affiliates decreased by
        $1.9 million from the same period last year due to the ramp down of the
        Company's Japanese joint venture that formerly produced Vanguard engines
        and a decrease in the Company's service parts distributors'
        profitability. This was primarily due to higher shipping costs to refill
        channel inventory of service parts.


              
                
                  Products Segment:

    ---



                                                                 Three Months Ended December   Six Months Ended December



                   
              (In Thousands)                 
     
               FY2020            
        FY2019                  
     
     FY2020    
     FY2019




                   Net Sales                                                       $241,984                     $254,627      $437,625           $427,670





                   Gross Profit as Reported                                         $35,179                      $37,577       $59,997            $65,213



              Business Optimization                                                     441                          834         1,090              3,713



                   Adjusted Gross Profit                                            $35,620                      $38,411       $61,087            $68,926





                    Gross Profit % as Reported                                         14.5%                       14.8%        13.7%             15.2%


    Adjusted Gross Profit %                                                          14.7%                       15.1%        14.0%             16.1%




                    Segment Income (Loss) as Reported                                 $4,441                       $4,411      $(1,169)          $(5,651)



              Business Optimization                                                     857                        3,235         1,564              8,802



              Litigation Settlement                                                                                                              2,000


               Retailer Bankruptcy Bad Debt Expense                                                                                               4,132



              Acquisition Related Charges                                                                           170                             235



                   Adjusted Segment Income                                           $5,298                       $7,816          $395             $9,518





                    Segment Income % as Reported                                        1.8%                        1.7%        -0.3%             -1.3%


    Adjusted Segment Income %                                                         2.2%                        3.1%         0.1%              2.2%

Second Quarter Highlights

    --  Net sales decreased by $13 million, or 5%, compared to the second
        quarter of fiscal 2019, primarily from lower sales of pressure washers
        relative to last year when brand transitions at retail accelerated
        product shipments. Storm-related sales of generators declined, as
        expected, from less storm activity compared with the same period a year
        ago. Sales activities were also affected by a softer market for job site
        products. The decrease was partially offset by higher sales of standby
        generators and higher pricing.
    --  Gross profit percentage for the second quarter decreased by 30 basis
        points from a year ago. The adjusted gross profit percentage decreased
        40 basis points. Reduced manufacturing volume was offset by higher
        pricing.
    --  GAAP ESG&A declined $3.4 million from the second fiscal quarter a year
        ago. Adjusted ESG&A decreased by $1.3 million due to timing of spending.
    --  Adjusted equity in earnings of unconsolidated affiliates decreased by
        $1.0 million versus the second quarter of fiscal 2019 due to a decrease
        in the Company's service parts distributors' profitability. This was
        primarily due to higher shipping costs to refill channel inventory of
        service parts.

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 December

                                                                                                                                               ---

                                                                                                                           
       
              (In Thousands, except per share data)




                                                  
            
               Three Months Ended December



                                              
     
       FY2020                                                                             
              
                 FY2020                                   
       FY2019                                    
       FY2019


                                              
     
     Reported                                           Adjustments(1)                    
              
                Adjusted                                  
     Reported             
     Adjustments          
     Adjusted




              Gross Profit



              Engines                                         $33,192                                            $7,187                                                       $40,379                                  $55,614                   $665                 $56,279



              Products                                         35,179                                               441                                                        35,620                                   37,577                    834                  38,411


               Inter-Segment Eliminations                        (346)                                                                                                         (346)                                   (734)                                        (734)




                   Total                                      $68,025                                            $7,628                                                       $75,653                                  $92,457                 $1,499                 $93,956




               Engineering, Selling, General
                and Administrative Expenses



              Engines                                         $48,189                                            $1,493                                                       $46,696                                  $52,769                 $5,915                 $46,854



              Products                                         30,935                                               416                                                        30,519                                   34,370                  2,571                  31,799




                   Total                                      $79,124                                            $1,909                                                       $77,215                                  $87,139                 $8,486                 $78,653





              Equity in Earnings of
    Unconsolidated Affiliates



              Engines                                            $749                                               $39                                                          $788                                   $1,814                   $927                  $2,741



              Products                                            197                                                                                                            197                                    1,203                                         1,203




                   Total                                         $946                                               $39                                                          $985                                   $3,017                   $927                  $3,944





              Segment Income (Loss)



              Engines                                       $(14,248)                                           $8,719                                                      $(5,529)                                  $4,658                 $7,508                 $12,166



              Products                                          4,441                                               857                                                         5,298                                    4,411                  3,405                   7,816


               Inter-Segment Eliminations                        (346)                                                                                                         (346)                                   (734)                                        (734)



                   Total                                    $(10,153)                                           $9,576                                                        $(577)                                  $8,335                $10,913                 $19,248





              Interest Expense                               $(8,965)              
              
       $                  -                                                     $(8,965)                                $(7,482)                  $248                $(7,234)




               Income (Loss) before Income
                Taxes                                         (19,506)                                            9,576                                                       (9,930)                                    (93)                11,161                  11,068


               Provision (Benefit) for Income
                Taxes                                          (4,162)                                            2,358                                                       (1,804)                                   2,511                    143                   2,654




              Net Income  (Loss)                            $(15,344)                                           $7,218                                                      $(8,126)                                $(2,604)               $11,018                  $8,414




               Earnings (Loss) Per Share



              Basic                                           $(0.37)                                            $0.17                                                       $(0.20)                                 $(0.07)                 $0.27                   $0.20



              Diluted                                          (0.37)                                             0.17                                                        (0.20)                                  (0.07)                  0.27                    0.20




              
                (1)              For the second
                                               quarter of
                                               fiscal 2020,
                                               engine
                                               manufacturing
                                               consolidation
                                               charges
                                               include $3.5
                                               million ($2.6
                                               million after
                                               tax) of cash
                                               charges and
                                               $3.6 million
                                               ($2.7 million
                                               after tax) of
                                               non-cash
                                               charges
                                               related to
                                               the closure
                                               of the engine
                                               plant in
                                               Murray,
                                               Kentucky.
                                               Business
                                               optimization
                                               expenses
                                               include $1.1
                                               million ($0.7
                                               million after
                                               tax) of cash
                                               charges and
                                               $1.4 million
                                               ($1.1 million
                                               after tax) of
                                               non-cash
                                               charges
                                               related to
                                               the warehouse
                                               optimization
                                               program and
                                               the plan to
                                               onshore
                                               Commercial
                                               engine
                                               production.

                                                                               
              
                BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES


                                                             
             
                
                  Adjusted Segment Information for the Six Month Periods Ended December

                                                                                                                 ---

                                                                                    
              
                (In Thousands, except per share data)




                                                   
           
         Six Months Ended December



                                                   FY2020                                                                                           FY2020                
      FY2019                                 
      FY2019


                                                  Reported                                Adjustments(1)                                           Adjusted              
      Reported        
     Adjustments          
      Adjusted




              Gross Profit



              Engines                             $52,334                                            $12,175                                         $64,509                       $71,551                 $1,088              $72,639



              Products                             59,997                                              1,090                                          61,087                        65,213                  3,713               68,926


               Inter-Segment Eliminations          (1,060)                                                                                          (1,060)                        (553)                                     (553)




                   Total                         $111,271                                            $13,265                                        $124,536                      $136,211                 $4,801             $141,012




               Engineering, Selling, General and
                Administrative Expenses



              Engines                             $95,515                                             $1,741                                         $93,774                      $114,697                $18,919              $95,778



              Products                             62,346                                                474                                          61,872                        73,302                 11,456               61,846




                   Total                         $157,861                                             $2,215                                        $155,646                      $187,998                $30,375             $157,623





              Equity in Earnings of
    Unconsolidated Affiliates



              Engines                              $1,029                                               $521                                          $1,550                        $3,553                 $1,864               $5,417



              Products                              1,180                                                                                             1,180                         2,437                                      2,437




                   Total                           $2,209                                               $521                                          $2,730                        $5,990                 $1,864               $7,854





              Segment Income (Loss)



              Engines                           $(42,152)                                           $14,437                                       $(27,715)                    $(39,593)               $21,871            $(17,722)



              Products                            (1,169)                                             1,564                                             395                       (5,651)                15,169                9,518


               Inter-Segment Eliminations          (1,060)                                                                                          (1,060)                        (553)                                     (553)



                   Total                        $(44,381)                                           $16,001                                       $(28,380)                    $(45,797)               $37,040             $(8,757)





              Interest Expense                  $(15,869)     
             
                $                    -                                      $(15,869)                    $(12,643)                  $248            $(12,395)




               Income (Loss) before Income Taxes  (61,381)                                            16,001                                        (45,380)                     (59,043)                37,288             (21,755)


               Provision (Benefit) for Income
                Taxes                             (12,400)                                             2,779                                         (9,621)                     (15,452)                 6,308              (9,144)




              Net Income (Loss)                 $(48,981)                                           $13,222                                       $(35,759)                    $(43,591)               $30,980            $(12,611)




               Earnings (Loss) Per Share



              Basic                               $(1.18)                                             $0.32                                         $(0.86)                      $(1.05)                 $0.74              $(0.31)



              Diluted                              (1.18)                                              0.32                                          (0.86)                       (1.05)                  0.74               (0.31)




     
     (1) For the six months ended December
              30, 2019, engine manufacturing
              consolidation charges include $5.6
              million ($4.7 million after tax)
              of cash charges and $6.4 million
              ($5.3 million after tax) of non-
              cash charges related to the
              closure of the engine plant in
              Murray, Kentucky. Business
              optimization expenses include $2.2
              million ($1.7 million after tax)
              of cash charges and $1.9 million
              ($1.4 million after tax) of non-
              cash charges related to the
              warehouse optimization program and
              the plan to onshore Commercial
              engine production.

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