Briggs & Stratton Corp. announced plans Friday to sell the off the majority of its turf product segment to shift back to a sharp focus on the company’s role in the application of power.
Several significant changes in the industry this past year impacted Briggs performance including a retail environment complicated by the bankruptcy of Sears, stagnant sales of residential walk-behind mowers and the exit of a significant customers from the consumer business in 2020, including walk-behind and riding lawn mowers.
Net sales in 2019 were reported as $1.84 billion, down 2.4 percent from 2019.
“In the end, it was a difficult year but one that has set a foundation for growth and improvement,” he said.
As a result of careful analysis of market dynamics and opportunities, the company will be repositioning to focus its businesses with expected annual sales of approximately $1.0 billion in the design, production and sale of Briggs & Stratton residential engines, Vanguard commercial engines, standby power generation and the Vanguard commercial battery systems.
Priority is being placed on divesting the turf products business headquartered in the U.S. and the pressure washer and portable generator product lines. The turf products business includes premier lawn and garden and turf care equipment sold under the Ferris, Billy Goat, Simplicity, Snapper, and Snapper Pro brands.
Teske said a careful analysist of the market trends on the company’s business portfolio led to the decision to focus resources to drive more sustained growth and higher risk-adjusted returns.
"We are pursuing a repositioning of the company to simplify our portfolio around our foundational expertise in power application,” Teske said. “This action gives us an opportunity to streamline and optimize our corporate infrastructure to support higher profitability, as well as to strengthen our balance sheet with proceeds from the divestiture of strong, yet non-core, assets.”
Continuing, Teske noted that throughout this process, the company’s mission has remained the same: to provide power to people to make work easier and improve lives.
“We will do this by providing innovative and diverse power solutions and a superior support network,” he said.
“Our pipeline of user-driven innovation is robust, coupled with the investments we have made, allowing us to serve both our existing and new markets in a manner to gain a competitive advantage,” Teske said, noting that they are particularly excited about the launch of the proprietary lithium-ion Vanguard battery system.
“Combined with our expertise in power application, we are now offering an exciting path for OEMs to electrify their current and future products at a lower cost of development.,” he said.More is expected to be heard on this initiative as the year progresses.
“We are working with great urgency to improve the company’s profitability and cash generation,” Teske said. “At the same time, we remain committed as ever to our strategy, which is to grow the engines business, grow sales of higher-margin products and to further diversify the business.”
To accomplish these goals, he said the company would be focusing on five top priorities:
- Aggressively working to improve operating efficiencies and realize the value of business optimization program.
- Begin consolidation of small engine production.
- Devoting increased time and focus early in fiscal 2020 to more fully analyzing the dynamics of our market with outside help so that we properly position our business for more sustained growth and higher returns.
- Strengthen the balance sheet, with the near-term objective of improving working capital and lowering debt.
- Complete refinancing of revolving credit agreement to ensure the company maintains good financial flexibility.
The company is pursuing parallel paths to achieve its priority of restoring financial flexibility.
Associated with the strategic repositioning plan are expected charges of $35 million to $45 million, of which, approximately $20 million to $25 million are cash charges. The charges are expected to be incurred during fiscal years 2020 and 2021.
By the end of fiscal 2020 (June), the company expects to secure up to $200 million in debt financing as part of a package which will be used in part to retire the $195 million of outstanding senior notes, due December 2020.
In addition, proceeds from the divestitures are expected to exceed the outstanding senior notes and result in significantly lower leverage by the end of fiscal 2021.
These targets reflect expectations beyond fiscal 2021 and assume the completion of the planned divestitures. Associated with the strategic repositioning plan are expected charges of $35 million to $45 million, of which, approximately $20 million to $25 million are cash charges. The charges are expected to be incurred during fiscal years 2020 and 2021.
