Briggs & Stratton Profit Misses Estimates, Cuts FY Outlook; Stock Down - Update

(RTTNews) - Briggs & Stratton Corp. (BGG) on Thursday reported a swing to profit for the second quarter, helped by higher gross margins and lower restructuring charges that offset a five percent drop in sales. Nevertheless, quarterly earnings badly missed Wall Street estimates, as did sales.

Moving forward, the company slashed its outlook for fiscal year 2014, mainly to exclude the potential positive benefit of landed hurricanes from its guidance and also to reflect foreign currency impacts and weak European snow sales.

The company however remains optimistic of an improved lawn and garden market this spring and believes the retail market for lawn and garden products will increase 4 percent to 6 percent in the U.S. next season.

Investors were not impressed with the results and guidance, dragging Briggs & Stratton stock down six percent in morning trade on the New York Stock Exchange.

Briggs & Stratton is a manufacturer of air-cooled gasoline engines for outdoor power equipment.

The second quarter was impacted by lower sales of standby and portable generators, partly offset by demand for engines and lawn and garden products, Briggs & Stratton said in a statement. The company noted that lesser storm activity reduced sales by about $55 million in the recent quarter.

The company earlier suffered from weak consumer spending for outdoor power equipment in the international markets and lower demand for snow thrower products in the U.S. and Europe.

For the second quarter, the Wauwatosa, Wisconsin-based company posted net income of $0.7 million or $0.01 per share, compared with net loss of $0.6 million or $0.02 per share last year.

Results for the recent include restructuring charges of $1.6 million, while the prior year had similar charges of $4.3 million.

Excluding items, adjusted earnings for the quarter was $2.3 million or $0.05 per share, compared with $3.7 million or $0.07 per share.

On average, four analysts polled by Thomson Reuters expected earnings of $0.09 per share for the quarter. Analysts' estimates typically exclude special items.

Sales for the quarter declined to $416.6 million from $439 million a year ago. Analysts expected sales of about $440 million for the quarter.

For fiscal year 2014, Briggs & Stratton now expect net income of $48 million to $57 million or $1.00 to $1.18 per share prior to the impact of any additional share repurchases and restructuring charges. Sales are now expected between $1.88 billion and $2 billion.

The company earlier estimated net income of $50 million to $62 million or $1.04 to $1.28 per share and sales of $1.88 billion to $2.03 billion for 2014.

Analysts currently expect earnings of $1.11 per share on sales of $1.93 billion for the year.

BGG stock is trading at $21.33, down $1.40 or 6.18%, on a volume of 1.7 million shares.