Briggs & Stratton Corporation has announced financial results for its third fiscal quarter ended April 2, 2017.
- Fiscal third quarter net sales were $597 million, a decrease of $7 million or 1.1% compared to last year. Strong sales growth in commercial engines and products was offset by a sales decline in small engines due to OEM customers producing closer to the season, as anticipated.
- Fiscal third quarter gross profit margin of 22.6% increased from GAAP gross profit margin of 21.1% and adjusted gross profit margin of 21.2%, principally on a more favorable product mix, including a higher proportion of commercial engines and commercial products, the positive impact of innovative new engines, and improvements in manufacturing efficiencies.
- Third quarter net income was $35.8 million, an increase from GAAP net income of $26.8 million and adjusted net income of $34.9 million last year.
- Third quarter diluted earnings per share were $0.83, an increase from $0.61 (GAAP) and $0.80 (adjusted) last year.
- Repurchased $2.8 million in shares under the share repurchase program during the quarter.
"Our focus on growing higher margin commercial engines and products has been an important factor in driving our improved profitability over the last few years and we continued to make progress during our fiscal third quarter," says Todd J. Teske, Chairman, President and Chief Executive Officer. "The hard work over the past several years to reposition our product portfolio and manufacturing footprint in order to place the proper focus on commercial growth of engines, lawn and turf care and job site products is showing results as we have achieved solid growth driven in part by new product introductions. These markets present an attractive opportunity due to their size and anticipated growth rates. We believe that we have the brands, the products and the distribution network to grow our commercial portfolio in excess of the market."
Teske continues, "At the same time, we continue to introduce new, innovative residential products and engines that will help homeowners get the job done. Our engine placement on residential lawnmowers again leads the market and positions us well for improvements across the housing market. As we have indicated throughout this fiscal year, both OEMs and retailers have been cautious in their ordering activity, choosing to produce and take inventory closer to the season. We saw this particularly in the most recently completed quarter. We remain optimistic that the upcoming season will reflect market growth in the U.S. of 1-4% over the course of the mowing season. Together, the base provided by our market-leading residential products combined with the higher margin, higher growth commercial products positions us well for profitable growth."
Outlook for fiscal 2017 remains unchanged from previous guidance, except for higher capital expenditures. Capital expenditures are now expected to be $80-$90 million compared to previous guidance of $70-$80 million.
Summary of fiscal 2017 guidance:
- Net sales are expected to be in a range of $1.86-$1.90 billion. The company continues to expect that the U.S. residential lawn and garden market will improve by 1-4% over the course of the season. Customers have taken a more cautious approach to building inventory for the season as anticipated. It is possible engine sales may shift beyond the fourth quarter of fiscal 2017 depending on the pace with which the season breaks.
- Net income is expected to be in a range of $57-$64 million or $1.31-$1.46 per diluted share (prior to the impact of any share repurchases).
- Operating margins are expected to be approximately 5.5-5.8%.
- The effective tax rate is expected to be in a range of 31-33%.