Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
 
Date of Report (Date of earliest event reported): January 24, 2018
 
BRIGGS & STRATTON CORPORATION
(Exact name of registrant as specified in its charter)
 

Wisconsin
 
1-1370
 
39-0182330
(State or other jurisdiction
 
(Commission
 
(I.R.S. Employer
 of incorporation)
 
File Number)
 
   Identification No.)

12301 West Wirth Street, Wauwatosa, Wisconsin 53222
(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code (414) 259-5333


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company    o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    o



BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

ITEM 2.02.    RESULTS OF OPERATIONS AND FINANCIAL CONDITION
 
On January 24, 2018, Briggs & Stratton Corporation issued a press release announcing results for the second quarter of fiscal 2018 in the press release furnished as Exhibit 99.1.

Cautionary Statement on Forward-Looking Statements
This Current Report on Form 8-K 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 our 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 we compete; 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 we purchase; 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 our 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. We undertake no obligation to update forward-looking statements made in this release to reflect events or circumstances after the date of this release.


2

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

ITEM 9.01.    FINANCIAL STATEMENTS AND EXHIBITS

(a)
Not applicable
(b)
Not applicable
(c)
Not applicable
(d)
Exhibits. The following exhibit is being furnished herewith:

Exhibit No.
 
Description
99.1
 


3

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
    
 
 
 
BRIGGS & STRATTON CORPORATION
 
 
 
 
(Registrant)
 
 
 
 
 
 
Date:
January 24, 2018
 
/s/ Mark A. Schwertfeger
 
 
 
 
Mark A. Schwertfeger
 
 
 
 
Senior Vice President and Chief Financial Officer
Duly Authorized Officer
 



4
Exhibit


 

Investor Relations Contact:
Mark A. Schwertfeger, Senior VP and Chief Financial Officer
(800) 365-2759

BRIGGS & STRATTON CORPORATION REPORTS
FISCAL 2018 SECOND QUARTER RESULTS

Company reports 4% growth in sales on continued strength of commercial sales
Guidance increased for fiscal 2018

MILWAUKEE, January 24, 2018/PRNewswire/ -- Briggs & Stratton Corporation (NYSE: BGG) today announced financial results for its second fiscal quarter ended December 31, 2017.

Fiscal second quarter net sales were $446 million, an increase of $18 million, or 4.2%, from $428 million for the prior year from continued favorable momentum in sales of engines and products designed for commercial markets.

Quarterly gross profit margin of 20.8% (GAAP) and adjusted gross profit margin of 21.1% decreased from a gross profit margin of 22.3% last year primarily due to sales mix and lower production volumes as anticipated.
    
Second quarter net loss of $16.3 million, or $0.39 per share (GAAP), included a $24.9 million one-time charge as a result of the implementation of the Tax Cuts and Jobs Act of 2017 (“Tax Reform”) as well as business optimization charges. Excluding these items, adjusted net income was $10.7 million, or $0.25 per diluted share.
 
The company’s estimated effective tax rate for fiscal 2018 is expected to be in a range of 29% to 31%, excluding business optimization costs and the one-time charge from implementing Tax Reform.

The company is increasing its fiscal 2018 earnings outlook to $1.45 to $1.62 per diluted share, before business optimization costs and the one-time charge from implementing Tax Reform, from previous guidance of $1.41 to $1.58 per diluted share due to the reduction in the planned effective tax rate.


“At the halfway point in our fiscal year, I am pleased to report that we are solidly on track to meeting our annual and long-range goals,” said Todd J. Teske, Chairman, President and Chief Executive Officer. “Highlights from our second quarter results included growth of our commercial offerings as well as a modest contribution from follow-on generator sales due to the hurricanes this past fall. We also made nice strides in advancing our business optimization program, and we remain on schedule with this important initiative to support growth and long-term profitability improvement.” Teske continued, “Looking forward to the upcoming lawn and garden season, our engine placement is set and it is consistent with last season as we had anticipated. We continue to introduce new, innovative residential products and engines that provide substantially better performance and benefits for home owners. We are also encouraged by continued positive growth trends for new and existing single-family homes. Accelerating our momentum in growing sales of our commercial offerings remains a key focus for us, and we expect that our new products and engines this year will result in further success. The new offerings are designed to improve the productivity of people who use our equipment to earn a living.”

Tax Reform

As a result of the Tax Cuts and Jobs Act of 2017, the company recognized a one-time charge of $24.9 million in the second quarter from the estimated impact of the inclusion of foreign earnings and revaluation of deferred tax assets and liabilities. Excluding this charge as well as the costs of the company’s business optimization program, the company expects the reduction in the corporate tax rate will result in an effective tax rate of approximately 29% to 31% (previously 31% to 33%) for fiscal 2018. Given the mid-year change in the corporate tax rate, the company’s fiscal 2018 effective tax rate is comprised of a blend of the pre and post-tax reform tax rates. Beginning in fiscal 2019, the company’s effective tax rate is expected to decrease to a range of approximately 26% to 28%.






Outlook:

Updated fiscal 2018 guidance:

Net sales are expected to be in a range of $1.91 billion to $1.96 billion, up from previous guidance of $1.90 billion to $1.95 billion, due to follow-on generator sales to date through the end of the second quarter.
Net income is expected to be in a range of $62 million to $70 million (previously $60 million to $68 million), or $1.45 to $1.62 per diluted share (previously $1.41 to $1.58 per diluted share), due to the reduction in the planned effective tax rate. This outlook is prior to the benefit of share repurchases and excludes the costs of the business optimization program and the one-time implementation charge related to Tax Reform.
Operating margins are expected to remain unchanged from previous guidance of approximately 5.8% to 6.0%, prior to the impact of costs related to the company’s business optimization program. Management expects the modest contribution from follow-on generator sales in the second quarter to be offset by incremental promotional investment in the upcoming quarter to further promote the company’s innovative products to new and existing homeowners.


Conference Call Information:

The company will host a conference call tomorrow 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 at (877) 233-9136 and enter Conference ID 3969087. A replay will be offered beginning approximately two hours after the call ends and will be available for one week. Dial (855) 859-2056 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 December
(In Thousands, except per share data)

 
 
Three Months Ended December
 
Six Months Ended December
 
 
FY2018
 
FY2017
 
FY2018
 
FY2017
NET SALES
 
$
446,436

 
$
428,236

 
$
775,531

 
$
715,034

COST OF GOODS SOLD
 
353,570

 
332,830

 
616,400

 
567,106

Gross Profit
 
92,866

 
95,406

 
159,131

 
147,928

 
 
 
 
 
 
 
 
 
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
 
77,891

 
73,032

 
164,605

 
145,095

EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES
 
2,113

 
3,011

 
5,726

 
6,239

Income from Operations
 
17,088

 
25,385

 
252

 
9,072

 
 
 
 
 
 
 
 
 
INTEREST EXPENSE
 
(5,593
)
 
(5,133
)
 
(10,550
)
 
(9,638
)
OTHER INCOME
 
685

 
381

 
1,403

 
836

Income (Loss) before Income Taxes
 
12,180

 
20,633

 
(8,895
)
 
270

 
 
 
 
 
 
 
 
 
PROVISION (CREDIT) FOR INCOME TAXES
 
28,524

 
5,382

 
22,488

 
(833
)
Net Income (Loss)
 
$
(16,344
)
 
$
15,251

 
$
(31,383
)
 
$
1,103

 
 
 
 
 
 
 
 
 
EARNINGS (LOSS) PER SHARE
 
 
 
 
 
 
 
 
Basic
 
$
(0.39
)
 
$
0.35

 
$
(0.75
)
 
$
0.02

Diluted
 
(0.39
)
 
0.35

 
(0.75
)
 
0.02

 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE SHARES OUTSTANDING
 
 
 
 
 
 
 
 
Basic
 
42,154

 
42,081

 
42,130

 
42,287

Diluted
 
42,154

 
42,142

 
42,130

 
42,337



Supplemental International Sales Information
(In Thousands)


 
 
Three Months Ended December
 
Six Months Ended December
 
 
FY2018
 
FY2017
 
FY2018
 
FY2017
International sales based on product shipment destination
 
$
157,248

 
$
158,727

 
$
271,885

 
$
268,614









BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets as of the End of December
(In Thousands)


 
 
 
 
 
CURRENT ASSETS:
FY2018
 
FY2017
 
Cash and Cash Equivalents
$
66,366

 
$
47,327

 
Accounts Receivable, Net
201,253

 
222,768

 
Inventories
501,531

 
485,851

 
Prepaid Expenses and Other Current Assets
37,901

 
36,010

 
Total Current Assets
807,051

 
791,956

 
 
 
 
 
OTHER ASSETS:
 
 
 
 
Goodwill
164,312

 
161,287

 
Investments
47,626

 
48,298

 
Other Intangible Assets, Net
98,895

 
102,324

 
Deferred Income Tax Asset
43,882

 
88,111

 
Other Long-Term Assets, Net
19,870

 
20,171

 
Total Other Assets
374,585

 
420,191

 
 
 
 
 
PLANT AND EQUIPMENT:
 
 
 
 
At Cost
1,140,232

 
1,077,452

 
Less - Accumulated Depreciation
754,654

 
746,289

 
Plant and Equipment, Net
385,578

 
331,163

 
 
$
1,567,214

 
$
1,543,310

 
 
 
 
 
CURRENT LIABILITIES:
 
 
 
 
Accounts Payable
$
208,307

 
$
186,291

 
Short-Term Debt
128,647

 
132,100

 
Accrued Liabilities
142,785

 
127,411

 
Total Current Liabilities
479,739

 
445,802

 
 
 
 
 
OTHER LIABILITIES:
 
 
 
 
Accrued Pension Cost
232,769

 
301,551

 
Accrued Employee Benefits
21,664

 
22,819

 
Accrued Postretirement Health Care Obligation
31,361

 
33,658

 
Other Long-Term Liabilities
51,464

 
43,797

 
Long-Term Debt
222,008

 
221,570

 
Total Other Liabilities
559,266

 
623,395

 
 
 
 
 
SHAREHOLDERS' INVESTMENT:
 
 
 
 
Common Stock
579

 
579

 
Additional Paid-In Capital
73,635

 
68,144

 
Retained Earnings
1,063,501

 
1,063,500

 
Accumulated Other Comprehensive Loss
(290,254
)
 
(336,952
)
 
Treasury Stock, at Cost
(319,252
)
 
(321,158
)
 
Total Shareholders' Investment
528,209

 
474,113

 
 
$
1,567,214

 
$
1,543,310

 
 
 
 
 







BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In Thousands)

 
 
 
Six Months Ended December
CASH FLOWS FROM OPERATING ACTIVITIES:
FY2018
 
FY2017
 
Net Income (Loss)
$
(31,383
)
 
$
1,103

 
Adjustments to Reconcile Net Income (Loss) to Net Cash Used in Operating Activities:
 
 
 
 
 
Depreciation and Amortization
28,524

 
28,156

 
 
Stock Compensation Expense
3,869

 
2,826

 
 
Loss on Disposition of Plant and Equipment
1,553

 
331

 
 
Provision for Deferred Income Taxes
18,427

 
4,315

 
 
Equity in Earnings of Unconsolidated Affiliates
(6,948
)
 
(6,239
)
 
 
Dividends Received from Unconsolidated Affiliates
9,810

 
8,186

 
Changes in Operating Assets and Liabilities:
 
 
 
 
 
Accounts Receivable
29,900

 
(36,077
)
 
 
Inventories
(126,075
)
 
(99,787
)
 
 
Other Current Assets
(3,402
)
 
1,203

 
 
Accounts Payable, Accrued Liabilities and Income Taxes
16,808

 
(23,350
)
 
 
Other, Net
(5,944
)
 
(7,240
)
 
 
Net Cash Used in Operating Activities
(64,861
)
 
(126,573
)
 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
 
Capital Expenditures
(45,597
)
 
(31,163
)
 
 
Proceeds Received on Disposition of Plant and Equipment
686

 
1,009

 
 
Cash Paid for Acquisitions, Net of Cash Acquired
(1,800
)
 

 
 
Proceeds on Sale of Investment in Marketable Securities

 
3,343

 
 
Increase to Restricted Cash
(12,704
)
 

 
 
Net Cash Used in Investing Activities
(59,415
)
 
(26,811
)
 
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
 
Net Borrowings on Revolver
128,648

 
132,100

 
 
Long Term Note Payable
7,685

 

 
 
Debt Issuance Costs
(1,154
)
 

 
 
Treasury Stock Purchases
(3,128
)
 
(15,153
)
 
 
Payment of Acquisition Contingent Liability

 
(813
)
 
 
Stock Option Exercise Proceeds and Tax Benefits
2,939

 
4,243

 
 
Payments Related to Shares Withheld for Taxes for Stock Compensation
(1,147
)
 
(1,739
)
 
 
Cash Dividends Paid
(5,998
)
 
(6,039
)
 
 
Net Cash Provided by Financing Activities
127,845

 
112,599

 
 
 
 
 
 
EFFECT OF EXCHANGE RATE CHANGES
1,090

 
(1,727
)
NET DECREASE IN CASH AND CASH EQUIVALENTS
4,659

 
(42,512
)
CASH AND CASH EQUIVALENTS, Beginning
61,707

 
89,839

CASH AND CASH EQUIVALENTS, Ending
$
66,366

 
$
47,327

 
 
 
 
 
 






Liquidity and Capital Resources:

Net debt at December 31, 2017 was $285.4 million (total Long-Term Debt and Short-Term Debt, excluding related debt issuance costs, of $351.8 million less $66.4 million of cash), compared with $307.9 million (total Long-Term Debt and Short-Term Debt, excluding debt issuance costs, of $355.2 million less $47.3 million of cash) at January 2, 2017.

Cash flows used in operating activities for the first six months of fiscal 2018 were $64.9 million, compared to $126.6 million for the first six months of fiscal 2017. The decrease in cash used in operating activities was primarily related to changes in working capital, including greater collections of accounts receivable due to timing of sales and customer payments, as well as higher accounts payable due to timing.

During the first six months of fiscal 2018, the company repurchased approximately 141,000 shares of its common stock (including approximately 42,000 in the second quarter) on the open market at an average price of $22.16 per share. As of December 31, 2017, there was remaining authorization to repurchase up to approximately $27 million of common stock with an expiration date of June 29, 2018.





































SUPPLEMENTAL SEGMENT INFORMATION

Engines Segment:
 
 
Three Months Ended December
 
Six Months Ended December
(In Thousands)
 
FY2018
 
FY2017
 
FY2018
 
FY2017
Net Sales
 
$
243,505

 
$
260,797

 
$
406,252

 
$
415,235

 
 
 
 
 
 
 
 
 
Gross Profit as Reported
 
$
55,429

 
$
61,573

 
$
86,648

 
$
92,559

Business Optimization
 
703

 

 
1,128

 

 Adjusted Gross Profit
 
$
56,132

 
$
61,573

 
$
87,776

 
$
92,559

 
 
 
 
 
 
 
 
 
Gross Profit % as Reported
 
22.8
%
 
23.6
%
 
21.3
 %
 
22.3
%
Adjusted Gross Profit %
 
23.1
%
 
23.6
%
 
21.6
 %
 
22.3
%
 
 
 
 
 
 
 
 
 
Segment Income (Loss) as Reported
 
$
8,421

 
$
17,922

 
$
(11,437
)
 
$
6,269

Business Optimization
 
2,016

 

 
4,347

 

Adjusted Segment Income (Loss)
 
$
10,437

 
$
17,922

 
$
(7,090
)
 
$
6,269

 
 
 
 
 
 
 
 
 
Segment Income (Loss) % as Reported
 
3.5
%
 
6.9
%
 
(2.8
)%
 
1.5
%
Adjusted Segment Income (Loss) %
 
4.3
%
 
6.9
%
 
(1.7
)%
 
1.5
%

Second Quarter Highlights

Engine sales unit volumes decreased by 10%, or approximately 180,000 engines, in the second quarter of fiscal 2018 compared to the same period last year. The decrease was primarily due to an acceleration of international sales into the first quarter of fiscal 2018, as well as management’s anticipation that domestic customers will produce closer to the lawn and garden season this year. Sales of service parts to the company’s service distribution venture were also lower this year due to a planned seasonal inventory reduction initiative. Partially offsetting the sales decline were increased sales of commercial engines.
Gross profit percentage decreased due to approximately 5% lower manufacturing volume and unfavorable sales mix, which includes lower service parts sales. Higher material costs were offset by modest pricing increases.
ESG&A increased by $2.5 million (GAAP) and $2.4 million (adjusted) from last year due to higher employee compensation costs and the investment in the upgrade to the company’s ERP system.









Products Segment:
 
 
Three Months Ended December
 
Six Months Ended December
(In Thousands)
 
FY2018
 
FY2017
 
FY2018
 
FY2017
Net Sales
 
$
222,080

 
$
190,701

 
$
408,676

 
$
341,497

 
 
 
 
 
 
 
 
 
Gross Profit as Reported
 
$
37,090

 
$
33,178

 
$
72,797

 
$
56,129

Business Optimization
 
754

 

 
1,522

 

 Adjusted Gross Profit
 
$
37,844

 
$
33,178

 
$
74,319

 
$
56,129

 
 
 
 
 
 
 
 
 
Gross Profit % as Reported
 
16.7
%
 
17.4
%
 
17.8
%
 
16.4
%
Adjusted Gross Profit %
 
17.0
%
 
17.4
%
 
18.2
%
 
16.4
%
 
 
 
 
 
 
 
 
 
Segment Income as Reported
 
$
8,320

 
$
6,808

 
$
12,003

 
$
3,563

Business Optimization
 
1,044

 

 
3,950

 

Adjusted Segment Income
 
$
9,364

 
$
6,808

 
$
15,953

 
$
3,563

 
 
 
 
 
 
 
 
 
Segment Income % as Reported
 
3.7
%
 
3.6
%
 
2.9
%
 
1.0
%
Adjusted Segment Income %
 
4.2
%
 
3.6
%
 
3.9
%
 
1.0
%

Second Quarter Highlights

Net sales increased by $31.4 million, or 16.5%, from the same period last year. The increase was primarily due to higher sales of commercial job site products, commercial lawn and garden equipment and snow throwers. Generator sales were slightly lower in the second quarter of fiscal 2018 given the prior year’s second quarter net sales included the impact of Hurricane Matthew.
Gross profit percentage and adjusted gross profit percentage decreased by 70 basis points and 40 basis points, respectively, primarily due to a 4% reduction in manufacturing throughput. Production of pressure washers and residential riding mowers was lower in the quarter in order to right size inventory levels, which were elevated coming out of last season.
ESG&A increased by $2.4 million (GAAP) and $2.1 million (adjusted) compared to last year due to higher compensation costs, 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 December
(In Thousands, except per share data)


 
 
Three Months Ended December
 
 
FY2018 Reported
 
Adjustments(1)
 
FY2018 Adjusted
 
FY2017 Reported
 
Adjustments
 
FY2017 Adjusted
Gross Profit
 
 
 
 
 
 
 
 
 
 
 
 
Engines
 
$
55,429

 
$
703

 
$
56,132

 
$
61,573

 
$

 
$
61,573

Products
 
37,090

 
754

 
37,844

 
33,178

 

 
33,178

Inter-Segment Eliminations
 
347

 

 
347

 
655

 

 
655

Total
 
$
92,866

 
$
1,457

 
$
94,323

 
$
95,406

 
$

 
$
95,406

Engineering, Selling, General and Administrative Expenses
 
 
 
 
 
 
 
 
 
 
 
 
Engines
 
$
48,167

 
$
90

 
$
48,077

 
$
45,706

 
$

 
$
45,706

Products
 
29,724

 
290

 
29,434

 
27,326

 

 
27,326

Total
 
$
77,891

 
$
380

 
$
77,511

 
$
73,032

 
$

 
$
73,032

 
 
 
 
 
 
 
 
 
 
 
 
 
Equity in Earnings of Unconsolidated Affiliates
 
 
 
 
 
 
 
 
 
 
 
 
Engines
 
$
1,159

 
$
1,223

 
$
2,382

 
$
2,055

 
$

 
$
2,055

Products
 
954

 

 
954

 
956

 

 
956

Total
 
$
2,113

 
$
1,223

 
$
3,336

 
$
3,011

 
$

 
$
3,011

 
 
 
 
 
 
 
 
 
 
 
 
 
Segment Income (Loss)
 
 
 
 
 
 
 
 
 
 
 
 
Engines
 
$
8,421

 
$
2,016

 
$
10,437

 
$
17,922

 
$

 
$
17,922

Products
 
8,320

 
1,044

 
9,364

 
6,808

 

 
6,808

Inter-Segment Eliminations
 
347

 

 
347

 
655

 

 
655

Total
 
$
17,088

 
$
3,060

 
$
20,148

 
$
25,385

 
$

 
$
25,385

 
 
 
 
 
 
 
 
 
 
 
 
 
Income before Income Taxes
 
12,180

 
3,060

 
15,240

 
20,633

 

 
20,633

Provision for Income Taxes
 
28,524

 
(24,010
)
 
4,514

 
5,382

 

 
5,382

Net Income (Loss)
 
$
(16,344
)
 
$
27,070

 
$
10,726

 
$
15,251

 
$

 
$
15,251

 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (Loss) Per Share
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
(0.39
)
 
$
0.64

 
$
0.25

 
$
0.35

 
$

 
$
0.35

Diluted
 
(0.39
)
 
0.64

 
0.25

 
0.35

 

 
0.35

(1) For the second quarter of fiscal 2018, business optimization expenses include $0.8 million ($0.5 million after tax) of non-cash charges related primarily to plant & equipment impairment and accelerated depreciation, and $2.3 million ($1.6 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 $24.9 million charge associated with the Tax Cuts and Jobs Act of 2017 comprised of $18.7 million to revalue deferred tax assets and $6.2 million to record the impact of the inclusion of foreign earnings.






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
 
 
FY2018 Reported
 
Adjustments(1)
 
FY2018 Adjusted
 
FY2017 Reported
 
Adjustments
 
FY2017 Adjusted
Gross Profit
 
 
 
 
 
 
 
 
 
 
 
 
Engines
 
$
86,648

 
$
1,128

 
$
87,776

 
$
92,559

 
$

 
$
92,559

Products
 
72,797

 
1,522

 
74,319

 
56,129

 

 
56,129

Inter-Segment Eliminations
 
(314
)
 

 
(314
)
 
(760
)
 

 
(760
)
Total
 
$
159,131

 
$
2,650

 
$
161,781

 
$
147,928

 
$

 
$
147,928

Engineering, Selling, General and Administrative Expenses
 
 
 
 
 
 
 
 
 
 
 
 
Engines
 
$
101,526

 
$
1,996

 
$
99,530

 
$
90,161

 
$

 
$
90,161

Products
 
63,079

 
2,428

 
60,651

 
54,934

 

 
54,934

Total
 
$
164,605

 
$
4,424

 
$
160,181

 
$
145,095

 
$

 
$
145,095

 
 
 
 
 
 
 
 
 
 
 
 
 
Equity in Earnings of Unconsolidated Affiliates
 
 
 
 
 
 
 
 
 
 
 
 
Engines
 
$
3,441

 
$
1,223

 
$
4,664

 
$
3,871

 
$

 
$
3,871

Products
 
2,285

 

 
2,285

 
2,368

 

 
2,368

Total
 
$
5,726

 
$
1,223

 
$
6,949

 
$
6,239

 
$

 
$
6,239

 
 
 
 
 
 
 
 
 
 
 
 
 
Segment Income (Loss)
 
 
 
 
 
 
 
 
 
 
 
 
Engines
 
$
(11,437
)
 
$
4,347

 
$
(7,090
)
 
$
6,269

 
$

 
$
6,269

Products
 
12,003

 
3,950

 
15,953

 
3,563

 

 
3,563

Inter-Segment Eliminations
 
(314
)
 

 
(314
)
 
(760
)
 

 
(760
)
Total
 
$
252

 
$
8,297

 
$
8,549

 
$
9,072

 
$

 
$
9,072

 
 
 
 
 
 
 
 
 
 
 
 
 
Income (Loss) before Income Taxes
 
(8,895
)
 
8,297

 
(598
)
 
270

 

 
270

Provision (Credit) for Income Taxes
 
22,488

 
(22,501
)
 
(13
)
 
(833
)
 

 
(833
)
Net Income (Loss)
 
$
(31,383
)
 
$
30,798

 
$
(585
)
 
$
1,103

 
$

 
$
1,103

 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (Loss) Per Share
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
(0.75
)
 
$
0.73

 
$
(0.02
)
 
$
0.02

 
$

 
$
0.02

Diluted
 
(0.75
)
 
0.73

 
(0.02
)
 
0.02

 

 
0.02

(1) For the first six months of fiscal 2018, business optimization expenses include $3.0 million ($2.1 million after tax) of non-cash charges related primarily to plant & equipment impairment and accelerated depreciation, and $5.3 million ($3.7 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 $24.9 million charge associated with the Tax Cuts and Jobs Act of 2017 comprised of $18.7 million to revalue deferred tax assets and $6.2 million to record the impact of the inclusion of foreign earnings.