Small engine maker Briggs & Stratton (BGGS.Q) reported third-quarter earnings that came in well below Capital IQ consensus estimates and fell short of expectations on the top line as well.
Briggs & Stratton recorded revenues of $637.3 million in the quarter that ended March 30, a 12% decline over last year's $720.1 million and below Wall Street's estimates of $687.2 million. On the bottom line, it generated $38.5 million, or $0.78 per share, down 2.5% from the year-ago figure but sharply below the $1.04-per-share estimate.
Engine sales fell in the quarter in North America and Europe due to the late start of warm weather. A major snowstorm blanketed much of the northeastern U.S. in early March. As a result, Briggs & Stratton saw OEM customers manage their inventories, which led to a drop in shipments of engines used primarily on walk and ride equipment.
Revenue for products segments such as portable and standby generators, pressure washers, snow throwers, and lawn and garden power equipment fell 18% in the quarter because of the company's decision in April 2012 to exit the sale of lawn and garden equipment through national mass retailers.
Historically, these segments' major customers have been Lowe's, Sears, and Deere, which accounted for a combined 27% of segment sales in 2012.
Briggs & Stratton Chairman, President, and CEO Todd Teske said, "We continue to see soft demand across international markets for engines and products due to macroeconomic concerns weighing on the minds of consumers and unfavorable weather conditions particularly in Australasia. Brazil continues to be a bright spot for growing our international products business as our Branco acquisition is performing as anticipated. Here in the U.S., the spring lawn and garden season has been delayed by at least a few weeks due to a prolonged cold and wet spring in many parts of the country."
He noted it was very different from the year-ago period, when there was an unusually early start to spring with very warm weather across the country.
The company remains optimistic that the U.S. market will stay in line with anticipated growth projections of 4% to 6%, but it is revising its fiscal 2013 net income projections to be in a range of $56 million to $65 million, or $1.16 to $1.33 per share. It previously projected net income to be in a range of $60 million to $75 million, or $1.25 to $1.55 per diluted share.
