Research Desk Line-up: Middleby Post Earnings Coverage
LONDON, UK / ACCESSWIRE / November 22, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Briggs & Stratton Corp. (NYSE: BGG), which can be viewed by registering at http://protraderdaily.com/optin/'symbol=BGG, following the Company's posting of its first quarter fiscal 2018 operating results on October 25, 2017. The engine maker outperformed top- and bottom-line expectations and also raised its FY18 guidance. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:
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Get more of our free earnings reports coverage from other constituents of the Diversified Machinery industry. Pro-TD has currently selected The Middleby Corporation (NASDAQ: MIDD) for due-diligence and potential coverage as the Company reported on November 07, 2017, its financial results for Q3 2017 which ended on September 30, 2017. Register for a free membership today, and be among the early birds that get access to our report on Middleby when we publish it.
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Earnings Reviewed
For its first fiscal quarter ended October 1, 2017, Briggs & Stratton's net sales were $329.09 million, up 14.7%, from $286.80 million during Q1 FY17, due to both higher shipments of generators related to hurricane activity and continued favorable momentum in sales of engines and products designed for commercial markets. The Company's revenue exceeded analysts' expectations of $294.5 million.
For Q1 FY18, Briggs & Stratton's quarterly GAAP gross profit margin was 20.1%, while adjusted gross profit margin of 20.5% compared to gross profit margin of 18.3% in Q1 FY17, primarily from the favorable storm contribution.
Briggs & Stratton's net loss was $15.04 million, or $0.36 per share, in Q1 FY18 GAAP compared to GAAP net loss of $14.15 million, or $0.34 per diluted share, in Q1 FY17. The Company's adjusted net loss for the reported quarter was $11.3 million, or $0.27 per share, in the reported quarter. Briggs & Stratton typically reports a net loss in first fiscal quarter due to the seasonal nature of its Engines business and the related lawn and garden portion of the Company's Products business. The Company's earnings number topped Wall Street's expectations for a loss of $0.35 per share.
Briggs & Stratton's Segment Results
During Q1 FY18, the Engine segment's sales were $162.75 million compared to $154.50 million in Q1 FY17, largely due to overseas customers ordering earlier than anticipated. Engine sales unit volumes increased by 8%, or approximately 78,000 engines on a y-o-y basis, primarily due to higher sales to international customers whom accelerated a portion of their orders into the first fiscal quarter as well as higher commercial engine sales.
The Engine segment's adjusted gross profit rate was 19.4%, a decrease of approximately 70 basis points from the gross profit margin last year of 20.1%, largely driven by unfavorable sales mix due to lower service parts revenue and slightly higher material costs. Engine segment's adjusted loss of $17.5 million in Q1 FY18 was better than anticipated, primarily due to the pull-forward of overseas shipments and slightly higher than planned production.
During Q1 FY18, the Product segment's net sales surged 24% to $186.60 million on a y-o-y basis, primarily driven by heightened demand for portable generators due to the recent hurricane activity. The Company also achieved higher sales of job site equipment in the reported quarter related to improved market conditions and its new towable air compressors and generators.
For Q1 FY18, Production volume were slightly lower on a y-o-y basis at 1.5 million units. Total engine inventories at the end of the reported quarter were approximately 2 million units, reflecting an increase of approximately 30,000 units on a y-o-y basis. The Product segment adjusted gross profit margin improved by 430 basis points to 19.5%, largely due to the contribution margin from the strong generator sales and favorable sales mix. Product segment's adjusted segment income was $6.56 million as compared adjusted loss of $3.25 million in the year-ago same period.
Cash Matters
Briggs & Stratton's net debt at the end of Q1 FY18 was approximately $230 million, which was consistent on a y-o-y basis. At the end of the reported quarter, the Company had approximately $65 million drawn on its $500 million revolving credit facility.
Briggs & Stratton's cash used in operating activity for Q1 FY18 was approximately $30 million, primarily related to seasonal build of inventory levels and reduction of accounts receivable in the quarter. The last-12-month cash provided by operating activities was $136 million and last-12-month free cash flow was approximately $41 million. The Company's last-12-month average funded debt was $290 million, and last-12-month EBITDA was $169 million, resulting in a leverage ratio of a modest 1.71x, well within the Company's debt covenants.
Outlook
For FY18, Briggs & Stratton is forecasting sales to be in the range of $1.90 billion to $1.95 billion, up from previous guidance of $1.87 billion to $1.92 billion. The Company's net income is expected to be in the band of $60 million to $68 million, or $1.41 to $1.58 per diluted share, versus the earlier forecasts of $56 million to $64 million, or $1.31 to $1.48 per diluted share. Briggs & Stratton's operating margins for FY17 are expected to be approximately 5.8% to 6.0% versus the prior guidance of 5.6% to 5.8%.
Stock Performance
Briggs & Stratton's share price finished yesterday's trading session at $24.65, rising 1.52%. A total volume of 181.64 thousand shares have exchanged hands. The Company's stock price surged 22.51% in the last three months, 4.05% in the past six months, and 17.94% in the previous twelve months. Additionally, the stock rallied 10.74% since the start of the year. Shares of the Company have a PE ratio of 19.20 and have a dividend yield of 2.27%. The stock currently has a market cap of $1.05 billion.
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