Briggs & Stratton Corporation Reports Fiscal 2018 Second Quarter Results

MILWAUKEE, Jan. 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(TM), 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                                      Adjustments(1)                                      FY2018                               FY2017           Adjustments       FY2017
                                                           Reported                                                                                        Adjusted                             Reported                           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                                     Adjustments(1)                                      FY2018                               FY2017           Adjustments        FY2017
                                                           Reported                                                                                       Adjusted                             Reported                            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.

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SOURCE Briggs & Stratton Corporation