Briggs & Stratton’s first quarter consolidated net sales were 1.1% below last year’s, although net sales actually increased 2.6% before currency impacts. Additionally, the Q1 consolidated adjusted net loss was $15.2 million compared to $9.3 million in the first quarter last year. Briggs & Stratton’s fiscal first quarter ended September 27.
"Our first quarter results were better than we expected, driven by solid late-season activity in the major lawn and garden markets, especially in the U.S.," said Todd Teske, chairman, president and CEO. "We believe the late-season activity has resulted in more normal channel inventories compared to the end of last season. Also, we are encouraged by the continued profitability improvement of our Products business through a focus on selling high-end residential and commercial products while improving the efficiency of our operation. While these factors are encouraging, we are cautious about the global economy and continued foreign currency headwinds as well as continued low oil prices which negatively impact a portion of our Job Site product sales."
Product is moving. Excluding currency impacts predominately related to the weakening of the Euro, Australian Dollar and Brazilian Real, net sales actually increased by $8 million, or 2.6%. The increase was driven by the results of acquisitions completed during fiscal 2015 (i.e. Billy Goat and Allmand Bros.), higher shipments of small engines used on walk mowers, and increased sales of commercial lawn and garden equipment.
Engines segment. Net sales were down roughly 2%. Unfavorable foreign currency, net of offsetting price increases, negatively impacted net sales by approximately $4.9 million, largely due to the weakening of the Euro. Total engine volumes shipped in the quarter increased by 6.3% or approximately 50,000 engines, mainly attributable to higher shipments of small engines used on walk mowers due to improved lawn and garden markets in North America and Europe this past season. This resulted in more normal channel inventories at the end of the season compared to higher inventory levels last year.
Products segment. Net sales were down roughly 2%. Unfavorable foreign currency, net of offsetting price increases, negatively impacted net sales by approximately $5.9 million, primarily related to the Australian Dollar and Brazilian Real. Excluding currency impacts, net sales increased by $2.3 million due to the results from the prior year acquisitions of Allmand and Billy Goat as well as increased sales of high-end residential and commercial lawn and garden equipment through our North America dealer channel.
Partially offsetting this increase were lower sales of snowthrowers into Europe following two seasons of below normal snowfall and decreased sales in Latin America due to unfavorable economic conditions in the region. Lower generator sales due to a prolonged absence of major storms and Briggs’ planned actions to narrow the assortment of lower-priced Snapper consumer lawn and garden equipment also offset the increase.
Briggs & Stratton says it is reaffirming its guidance for fiscal 2016. The company anticipates net sales for fiscal 2016 to be in a range of $1.90-$1.96 billion. This sales range contemplates modest organic growth with expectations of the U.S. and European markets to improve by 1% to 3% for the next season.
Acquisitions completed in fiscal 2015 are expected to add up to 2% to net sales and reflects lower capital spending levels by oil and gas companies based on lower oil pricing compared with last year. Achievement of this growth will depend on the speed with which Briggs further diversifies its Allmand brand into construction and infrastructure sectors as well as internationally.
Offsetting organic and acquisition growth are lower estimated sales of approximately 2% related to Briggs’ reduction of the lower-margin Snapper SKUs that were discontinued as part of the restructuring program and unfavorable net foreign currency impacts caused by a strong U.S. dollar.
