Briggs & Stratton Corporation Reports Fiscal 2018 Third Quarter Results

Briggs & Stratton Corporation Reports Fiscal 2018 Third Quarter Results

Company benefits from ongoing strength in commercial sales; Business optimization program on track to yield $30-$35 million in annual profit improvements

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

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

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

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

Outlook:

Updated fiscal 2018 guidance:

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

Conference Call Information:

The company will host a conference call tomorrow at 10:00 AM (ET) to review the third quarter financial results. A live webcast of the conference call will be available on the company's corporate website: http://investors.basco.com.

Also available is a dial-in number to access the call real-time at (877) 233-9136 and enter Conference ID 4737929. A replay will be offered beginning approximately two hours after the call ends and will be available for one week. Dial (855) 859-2056 and enter the Conference ID to access the replay.

Non-GAAP Financial Measures:

This release refers to non-GAAP financial measures including "adjusted gross profit", "adjusted engineering, selling, general, and administrative expenses", "adjusted segment income (loss)", "adjusted net income (loss)", and "adjusted diluted earnings (loss) per share." Refer to the accompanying financial schedules for supplemental financial data and corresponding reconciliations of these non-GAAP financial measures to certain GAAP financial measures.

Safe Harbor Statement:

This release contains certain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. The words "anticipate", "believe", "estimate", "expect", "forecast", "intend", "plan", "project", and similar expressions are intended to identify forward-looking statements. The forward-looking statements are based on the company's current views and assumptions and involve risks and uncertainties that include, among other things, the ability to successfully forecast demand for its products; changes in interest rates and foreign exchange rates; the effects of weather on the purchasing patterns of consumers and original equipment manufacturers (OEMs); actions of engine manufacturers and OEMs with whom the company competes; changes in laws and regulations, including U.S. tax reform, changes in tax rates, laws and regulations as well as related guidance; changes in customer and OEM demand; changes in prices of raw materials and parts that the company purchases; changes in domestic and foreign economic conditions (including effects from the U.K.'s decision to exit the European Union); the ability to bring new productive capacity on line efficiently and with good quality; outcomes of legal proceedings and claims; the ability to realize anticipated savings from restructuring actions; and other factors disclosed from time to time in the company's SEC filings or otherwise, including the factors discussed in Item 1A, Risk Factors, of the company's Annual Report on Form 10-K and in its periodic reports on Form 10-Q. The company undertakes no obligation to update forward-looking statements made in this release to reflect events or circumstances after the date of this release.

About Briggs & Stratton Corporation:

Briggs & Stratton Corporation (NYSE: BGG), headquartered in Milwaukee, Wisconsin, is focused on providing power to get work done and make people's lives better. Briggs & Stratton is the world's largest producer of gasoline engines for outdoor power equipment, and is a leading designer, manufacturer and marketer of power generation, pressure washer, lawn and garden, turf care and job site products through its Briggs & Stratton®, Simplicity®, Snapper®, Ferris®, Vanguard(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 March
                                                                           -----------------------------------------------------------------

                                                                                         (In Thousands, except per share data)


                                         Three Months Ended March                                   Nine Months Ended March
                                         ------------------------                                  -----------------------

                                                  FY2018                                                    FY2017                           FY2018            FY2017
                                                  ------                                                    ------                           ------            ------

    NET SALES                                                     $604,069                                                     $596,965             $1,379,599         $1,311,998

    COST OF GOODS SOLD                                             473,796                                                      462,194              1,090,196          1,029,299

    Gross Profit                                                   130,273                                                      134,771                289,403            282,699


    ENGINEERING, SELLING, GENERAL AND
     ADMINISTRATIVE EXPENSES

                                                                    79,885                                                       78,279                244,490            223,373

    EQUITY IN EARNINGS OF UNCONSOLIDATED
     AFFILIATES                                                        713                                                        1,079                  6,438              7,318
                                                                       ---                                                        -----                  -----              -----

    Income from Operations                                          51,101                                                       57,571                 51,351             66,644


    INTEREST EXPENSE                                               (8,617)                                                     (5,521)              (19,167)          (15,159)

    OTHER INCOME                                                     1,079                                                          844                  2,483              1,679
                                                                     -----                                                          ---                  -----              -----

    Income before Income Taxes                                      43,563                                                       52,894                 34,667             53,164


    PROVISION FOR INCOME TAXES                                      11,675                                                       17,075                 34,163             16,242
                                                                    ------                                                       ------                 ------             ------

    Net Income                                                     $31,888                                                      $35,819                   $504            $36,922
                                                                   =======                                                      =======                   ====            =======


    EARNINGS PER SHARE

    Basic                                                            $0.74                                                        $0.83                  $0.00              $0.86

    Diluted                                                          $0.74                                                        $0.83                  $0.00              $0.86


    WEIGHTED AVERAGE SHARES OUTSTANDING

    Basic                                                           42,064                                                       42,076                 42,108             42,217

    Diluted                                                         42,307                                                       42,175                 42,362             42,271


                                                                     Supplemental International Sales Information
                                                                     --------------------------------------------

                                                                                    (In Thousands)


                                   Three Months Ended March                    Nine Months Ended March
                                  ------------------------                    -----------------------

                                           FY2018                                      FY2017                     FY2018          FY2017
                                           ------                                      ------                     ------          ------

    International sales based on
     product shipment destination                           $160,653                                     $171,565        $432,538        $440,179


                                     BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

                                   Consolidated Balance Sheets as of the End of March
                                   --------------------------------------------------

                                                     (In Thousands)


    CURRENT ASSETS:                                   FY2018                          FY2017
                                                      ------                          ------

    Cash and Cash Equivalents                                          $56,165                  $52,097

    Accounts Receivable, Net                                           259,472                  298,990

    Inventories                                                        438,492                  413,572

    Prepaid Expenses and Other
     Current Assets                                                     35,953                   22,178

    Total Current Assets                                               790,082                  786,837
                                                                       -------                  -------


    OTHER ASSETS:

    Goodwill                                                           164,213                  161,823

    Investments                                                         50,224                   49,535

    Other Intangible Assets, Net                                        98,021                  101,847

    Deferred Income Tax Asset                                           34,886                   85,007

    Other Long-Term Assets, Net                                         20,932                   19,182

    Total Other Assets                                                 368,276                  417,394
                                                                       -------                  -------



    PLANT AND EQUIPMENT:

    At Cost                                                          1,161,535                1,086,778

    Less -Accumulated
     Depreciation                                                      762,186                  742,240

    Plant and Equipment, Net                                           399,349                  344,538
                                                                       -------                  -------

                                                                    $1,557,707               $1,548,769
                                                                    ==========               ==========



    CURRENT LIABILITIES:

    Accounts Payable                                                  $202,822                 $212,974

    Short-Term Debt                                                    131,556                   62,300

    Accrued Liabilities                                                157,895                  144,023

    Total Current Liabilities                                          492,273                  419,297
                                                                       -------                  -------


    OTHER LIABILITIES:

    Accrued Pension Cost                                               197,749                  297,170

    Accrued Employee Benefits                                           21,787                   22,649

    Accrued Postretirement Health
     Care Obligation                                                    29,547                   31,126

    Other Long-Term Liabilities                                         53,737                   43,320

    Long-Term Debt                                                     202,332                  221,682

    Total Other Liabilities                                            505,152                  615,947
                                                                       -------                  -------


    SHAREHOLDERS' INVESTMENT:

    Common Stock                                                           579                      579

    Additional Paid-In Capital                                          75,001                   73,269

    Retained Earnings                                                1,089,364                1,093,323

    Accumulated Other
     Comprehensive Loss                                              (280,546)               (330,293)

    Treasury Stock, at Cost                                          (324,116)               (323,353)

    Total Shareholders' Investment                                     560,282                  513,525
                                                                       -------                  -------

                                                                    $1,557,707               $1,548,769
                                                                    ==========               ==========


                                                            BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

                                                                 Consolidated Statements of Cash Flows
                                                                 -------------------------------------

                                                                            (In Thousands)


                                                                  Nine Months Ended March
                                                                  -----------------------


    CASH FLOWS FROM OPERATING
     ACTIVITIES:                                                          FY2018                           FY2017
                                                                          ------                           ------

    Net Income                                                                                   $504                $36,922

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

    Depreciation and Amortization                                                              43,756                 42,177

    Stock Compensation Expense                                                                  5,312                  4,560

    Loss on Disposition of Plant
     and Equipment                                                                              1,595                    610

    Provision for Deferred Income
     Taxes                                                                                     24,744                  7,574

    Equity in Earnings of
     Unconsolidated Affiliates                                                                (9,068)               (7,318)

    Dividends Received from
     Unconsolidated Affiliates                                                                  9,810                  8,186

    Pension Cash Contributions                                                               (30,000)                     -

    Changes in Operating Assets and Liabilities:

    Accounts Receivable                                                                      (25,948)             (110,978)

    Inventories                                                                              (62,780)              (27,553)

    Other Current Assets                                                                      (3,430)                   584

    Accounts Payable, Accrued
     Liabilities and Income Taxes                                                              11,287                 30,041

    Other, Net                                                                                 15,198               (11,269)

       Net Cash Used in Operating
        Activities                                                                           (19,020)              (26,464)
                                                                                              -------                -------


    CASH FLOWS FROM INVESTING ACTIVITIES:

    Capital Expenditures                                                                     (77,483)              (48,780)

    Proceeds Received on
     Disposition of Plant and
     Equipment                                                                                    339                  1,014

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

    Proceeds on Sale of Investment
     in Marketable Securities                                                                       -                 3,343

    Increase to Restricted Cash                                                               (9,053)                     -

       Net Cash Used in Investing
        Activities                                                                           (87,997)              (44,423)
                                                                                              -------                -------


    CASH FLOWS FROM FINANCING ACTIVITIES:

    Net Borrowings on Revolver                                                                131,556                 62,300

    Long Term Note Payable                                                                      7,685                      -

    Debt Issuance Costs                                                                       (1,154)                     -

    Treasury Stock Purchases                                                                  (8,710)              (17,924)

    Repayment of Long Term Debt                                                              (19,781)                     -

    Payment of Acquisition
     Contingent Liability                                                                           -               (1,625)

    Stock Option Exercise Proceeds
     and Tax Benefits                                                                           3,943                  4,751

    Payments Related to Shares
     Withheld for Taxes for Stock
     Compensation                                                                             (1,147)               (1,739)

    Cash Dividends Paid                                                                      (12,007)              (12,028)

       Net Cash Provided by Financing
        Activities                                                                            100,385                 33,735
                                                                                              -------                 ------


    EFFECT OF EXCHANGE RATE
     CHANGES                                                                                    1,090                  (590)
                                                                                                -----                   ----

    NET DECREASE IN CASH AND CASH
     EQUIVALENTS                                                                              (5,542)              (37,742)

    CASH AND CASH EQUIVALENTS,
     Beginning                                                                                 61,707                 89,839

    CASH AND CASH EQUIVALENTS,
     Ending                                                                                   $56,165                $52,097
                                                                                              =======                =======

Liquidity and Capital Resources:

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

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

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

SUPPLEMENTAL SEGMENT INFORMATION


     Engines Segment:
     ----------------

                                  Three Months Ended March           Nine Months Ended March
                                  ------------------------          -----------------------

                   (In Thousands)          FY2018                            FY2017                   FY2018           FY2017
                                           ------                            ------                   ------           ------

    Net Sales                                              $384,292                          $391,063         $790,543          $806,298


    Gross Profit as Reported                                $96,780                           $98,814         $183,428          $191,373

    Business Optimization                                       903                                 -           2,031                 -

    Adjusted Gross Profit                                   $97,683                           $98,814         $185,459          $191,373
                                                            =======                           =======         ========          ========


    Gross Profit % as Reported                                25.2%                            25.3%           23.2%            23.7%

    Adjusted Gross Profit %                                 25.4%                            25.3%           23.5%            23.7%


    Segment Income as Reported                              $47,989                           $50,946          $36,590           $57,216

    Business Optimization                                     2,896                                 -           7,243                 -

    Adjusted Segment Income                                 $50,885                           $50,946          $43,833           $57,216
                                                            =======                           =======          =======           =======


    Segment Income % as Reported                              12.5%                            13.0%            4.6%             7.1%

    Adjusted Segment Income %                               13.2%                            13.0%            5.5%             7.1%

Third Quarter Highlights

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


    Products Segment:
    -----------------

                                   Three Months Ended March          Nine Months Ended March
                                  ------------------------           -----------------------

                   (In Thousands)          FY2018                            FY2017                   FY2018           FY2017
                                           ------                            ------                   ------           ------

    Net Sales                                               $245,169                         $233,510         $653,845          $575,007


    Gross Profit as Reported                                 $32,773                          $34,946         $105,570           $91,075

    Business Optimization                                        971                                -           2,493                 -

    Adjusted Gross Profit                                    $33,744                          $34,946         $108,063           $91,075
                                                             =======                          =======         ========           =======


    Gross Profit % as Reported                                 13.4%                           15.0%           16.1%            15.8%

    Adjusted Gross Profit %                                  13.8%                           15.0%           16.5%            15.8%


    Segment Income as Reported                                $2,392                           $5,614          $14,356            $9,177

    Business Optimization                                      1,309                                -           5,259                 -

    Adjusted Segment Income                                   $3,701                           $5,614          $19,615            $9,177
                                                              ======                           ======          =======            ======


    Segment Income % as Reported                                1.0%                            2.4%            2.2%             1.6%

    Adjusted Segment Income %                                 1.5%                            2.4%            3.0%             1.6%

Third Quarter Highlights

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

Non-GAAP Financial Measures

Briggs & Stratton Corporation prepares its financial statements using Generally Accepted Accounting Principles (GAAP). When a company discloses material information containing non-GAAP financial measures, SEC regulations require that the disclosure include a presentation of the most directly comparable GAAP measure and a reconciliation of the GAAP and non-GAAP financial measures. Management's inclusion of non-GAAP financial measures in this release is intended to supplement, not replace, the presentation of the financial results in accordance with GAAP. Briggs & Stratton Corporation management believes that these non-GAAP financial measures, when considered together with the GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period. Management also believes that these non-GAAP financial measures enhance the ability of investors to analyze the company's business trends and to understand the company's performance. In addition, management may utilize non-GAAP financial measures as a guide in the company's forecasting, budgeting and long-term planning process. Non-GAAP financial measures should be considered in addition to, and not as a substitute for, or superior to, financial measures presented in accordance with GAAP. The following tables are reconciliations of the non-GAAP financial measures:


                                                                                                            BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

                                                                                                 Adjusted Segment Information for the Three Month Periods Ended March
                                                                                                 --------------------------------------------------------------------

                                                                                                                (In Thousands, except per share data)


                                                         Three Months Ended March
                                                        ------------------------

                                        FY2018                                    Adjustments(1)                                         FY2018                         FY2017            Adjustments        FY2017
                                      Reported                                                                                          Adjusted                      Reported                             Adjusted
                                      --------                                                                                          --------                      --------                             --------


    Gross Profit

    Engines                                     $96,780                                                 $903                                            $97,683                   $98,814       $        -              $98,814

    Products                                     32,773                                                  971                                             33,744                    34,946                -               34,946

    Inter-Segment Eliminations                      720                                                    -                                               720                     1,011                -                1,011
                                                    ---                                                  ---                                               ---                     -----              ---                -----

    Total                                      $130,273                                               $1,874                                           $132,147                  $134,771       $        -             $134,771


    Engineering, Selling, General and
     Administrative Expenses

    Engines                                     $48,853                                                 $587                                            $48,266                   $48,450       $        -              $48,450

    Products                                     31,032                                                  338                                             30,694                    29,829                -               29,829
                                                 ------                                                  ---                                                                      ------              ---

    Total                                       $79,885                                                 $925                                            $78,960                   $78,279       $        -              $78,279


    Equity in Earnings of
    Unconsolidated Affiliates

    Engines                                         $62                                               $1,406                                             $1,468                      $582       $        -                 $582

    Products                                        651                                                    -                                               651                       497                -                  497
                                                                                                                                                                                   ---

    Total                                          $713                                               $1,406                                             $2,119                    $1,079       $        -               $1,079


    Segment Income

    Engines                                     $47,989                                               $2,896                                            $50,885                   $50,946       $        -              $50,946

    Products                                      2,392                                                1,309                                              3,701                     5,614                -                5,614

    Inter-Segment Eliminations                      720                                                    -                                               720                     1,011                -                1,011

    Total                                       $51,101                                               $4,205                                            $55,306                   $57,571       $        -              $57,571


    Interest Expense                           $(8,617)                                              $2,017                                            (6,600)                 $(5,521)      $        -             $(5,521)


    Income before Income Taxes                   43,563                                                6,222                                             49,785                    52,894                -               52,894

    Provision for Income Taxes                   11,675                                                1,876                                             13,551                    17,075                -               17,075
                                                 ------                                                -----                                             ------                    ------              ---               ------

    Net Income                                  $31,888                                               $4,346                                            $36,234                   $35,819       $        -              $35,819


    Earnings Per Share

    Basic                                         $0.74                                                $0.10                                              $0.84                     $0.83         $      -                $0.83

    Diluted                                        0.74                                                 0.10                                               0.84                      0.83                -                 0.83

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


                                                                                                           BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

                                                                                                 Adjusted Segment Information for the Nine Month Periods Ended March
                                                                                                 -------------------------------------------------------------------

                                                                                                                (In Thousands, except per share data)


                                                         Nine Months Ended March
                                                         -----------------------

                                        FY2018                                   Adjustments(1)                                      FY2018                            FY2017             Adjustments        FY2017
                                      Reported                                                                                      Adjusted                         Reported                              Adjusted
                                      --------                                                                                      --------                         --------                              --------


    Gross Profit

    Engines                                     $183,428                                          $2,031                                           $185,459                      $191,373       $        -              $191,373

    Products                                     105,570                                           2,493                                            108,063                        91,075                -                91,075

    Inter-Segment Eliminations                       405                                               -                                               405                           251                -                   251
                                                     ---                                             ---                                               ---                           ---              ---                   ---

    Total                                       $289,403                                          $4,524                                           $293,927                      $282,699       $        -              $282,699


    Engineering, Selling, General and
     Administrative Expenses

    Engines                                     $150,340                                          $2,582                                           $147,758                      $138,610       $        -              $138,610

    Products                                      94,150                                           2,766                                             91,384                        84,763                -                84,763
                                                  ------                                           -----                                                                          ------              ---

    Total                                       $244,490                                          $5,348                                           $239,142                      $223,373       $        -              $223,373


    Equity in Earnings of
    Unconsolidated Affiliates

    Engines                                       $3,502                                          $2,630                                             $6,132                        $4,453       $        -                $4,453

    Products                                       2,936                                               -                                             2,936                         2,865                -                 2,865
                                                                                                                                                                                 -----

    Total                                         $6,438                                          $2,630                                             $9,068                        $7,318       $        -                $7,318


    Segment Income

    Engines                                      $36,590                                          $7,243                                            $43,833                       $57,216       $        -               $57,216

    Products                                      14,356                                           5,259                                             19,615                         9,177                -                 9,177

    Inter-Segment Eliminations                       405                                               -                                               405                           251                -                   251

    Total                                        $51,351                                         $12,502                                            $63,853                       $66,644       $        -               $66,644


    Interest Expense                           $(19,167)                                         $2,017                                          $(17,150)                    $(15,159)      $        -             $(15,159)


    Income before Income Taxes                    34,667                                          14,519                                             49,186                        53,164                -                53,164

    Provision for Income Taxes                    34,163                                        (21,104)                                            13,059                        16,242                -                16,242
                                                  ------                                         -------                                             ------                        ------              ---                ------

    Net Income                                      $504                                         $35,623                                            $36,127                       $36,922       $        -               $36,922


    Earnings Per Share

    Basic                                          $0.00                                           $0.84                                              $0.84                         $0.86         $      -                 $0.86

    Diluted                                         0.00                                            0.83                                               0.83                          0.86                -                  0.86

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

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

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SOURCE Briggs & Stratton Corporation