Shares of Briggs & Stratton (OTC:BGGS.Q) traded down 13% on Friday after the outdoor equipment company reported quarterly results that came in well short of expectations and forecasted continued weakness well into the future. The results continue a difficult pattern for Briggs & Stratton, which is battling internal operation issues, weather-related slowdowns, and the impact of a major U.S. retail bankruptcy.
Briggs & Stratton reported fiscal third-quarter adjusted earnings of $0.34 per share, well below analyst expectations for $0.65 per share in earnings, on revenue of $580.2 million that came in ahead of estimates by nearly $5 million. The company also cut its full-year fiscal 2019 guidance to $0.45 to $0.55 per share, from $1.10 to $1.30, due to "continued weather-related market softness and the impact of temporary inefficiencies."
Wall Street had been expecting full-year earnings of $1.04 per share.
The company also is dealing with the impact of Sears filing for bankruptcy protection. Briggs & Stratton said last year that Sears accounted for about 10% of the residential home and garden market.
Company chairman and CEO Todd J. Teske explained in a statement:
Lower shipments due to the Sears bankruptcy, weather-related softness particularly in Australia and Europe, and inefficiencies from start-up activities related to our business optimization initiatives tempered overall sales performance and reduced quarterly profitability more than previously expected.
This is the second straight earnings miss for the company. Shares of Briggs & Stratton were down sharply in January after the company reported fiscal second-quarter results that came in below expectations.
Briggs & Stratton also cut fiscal 2020 guidance, saying it expects to earn between $1.20 and $1.40 per share compared to the analyst estimate for $1.54 per share, indicating that there is no quick fix to the problems that have plagued it.
Teske said that efforts to improve operations are under way, including better managing service parts and adding production capacity where needed. He said Briggs & Stratton is "well-positioned" to deliver $40 million in annual pre-tax savings by fiscal 2021.
Shares of Briggs & Stratton are nearing lows not seen since the 2008 recession, down nearly 40% over the past year. This is still a profitable company with a strong product lineup.
The issue for investors is, as this latest quarter shows, there are some problems, like weather and the retail environment, that are beyond Briggs & Stratton's control. Even if this is a bottom, it's unclear how long a recovery will take.