Briggs & Stratton CEO Discusses F1Q2011 Results - Earnings Call Transcript
Briggs & Stratton Corporation (
)
F1Q2011 Earnings Call
October 21, 2010 10:00 am ET
Executives
Dave Rogers - Chief Financial Officer
Todd Teske - Chairman, President, Chief Executive Officer
Analysts
Mark Rookie - Longbow Research
Steven Gregory - Mandalay Research
Craig Kennison - Robert Baird
Ned Borland - Hudson Securities
Mike Hamilton - RBC
Brad Safalow - PAA Research
John Barlow - Weiss
Sam Darkatsh - Raymond James
Jad Fakhry - Farallon Capital
Presentation
Operator
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Briggs & Stratton Corporation F1Q09 Earnings Call Transcript.
Good day, ladies and gentlemen, and welcome to the Briggs & STrattong first quarter earnings release conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions). As a reminder, this conference call is being recorded. I would now like to introduce your host for today's call, Mr. Dave Rogers. Sir, you may begin.
Dave Rogers
Good morning and welcome to the Briggs & Stratton fiscal 2011 first quarter earnings conference call. I’m Dave Rogers, Chief Financial Officer, and joining me today is Todd Teske, our Chairman, President and Chief Executive Officer.
Today’s presentation and our answers to your questions will include forward-looking statements. These statements are based on our current assessment of the markets we operate in. Actual results could differ materially from any stated or implied projections due to changes in one or more of the factors as described in the Safe Harbor section of today’s earnings release as well as our filings with the SEC.
This conference call will be made available on our website approximately two hours after the end of this call. A phone replay will also be available within a few hours of the completion of this call.
Now here's Todd.
Todd Teske
Good morning, everyone, and thank you for joining us today. As you saw from this morning's earnings announcement, our consolidated sales and profitability improved modestly over last year's first quarter. While we typically have a net loss in our first quarter due to the seasonal nature of our business, we are pleased to report these improved results in the face of higher commodity cost and increases in other manufacturing expenses such as employee benefits and transportation expenses.
As we anticipated, continued slow growth in economic data continues to weigh on the minds of the American consumer. Lagging housing starts and resales, continued unemployment of 9.6% nationally and uncertain personal tax rates for all Americans starting in January appears to be having an impact on the levels of consumer spending and it continues to have an impact on the rate of growth for products in the outdoor power equipment industry.
In addition, we continue to have our annual discussions with our key customers regarding product placement for next spring and summer selling season. For now, we are continuing to execute on our current year plan and are slightly ahead of our internal plan through the first fiscal quarter.
Now I'll turn it back over to Dave to walk through our financial results for the first quarter of fiscal 2011.
Dave Rogers
Thanks, Todd. Our first quarter consolidated net sales were $334 million, an increase of $10 million or 3% from consolidated net sales in the first quarter of last year. First quarter consolidated net loss of $8.1 million, a $0.16 loss per diluted share, was an improvement of $600,000 from the net loss of $8.7 million and $0.18 loss per diluted share one year ago.
Our net income and diluted earnings per share were improved from last year despite, as we noted in our last quarterly earnings call, a few specific items that made our comparison to last year's first quarter rather challenging for our operations.
First, in last year's first quarter, we had temporarily reduced salaries by 10% and eliminated the company match on our 401K plan resulting in savings in last year's first quarter of $4.5 million. The salaries and the 401K match were subsequently reinstated.
Secondly, our fiscal 2011 pension expense is estimated to be approximately $18 million higher than fiscal 2010. This higher pension expense impacts each of our quarters ratably, thus pension expense was approximately $4.5 million higher in the first quarter of fiscal 2011 and in fiscal 2010.
Lastly, the more significant price increases typically do not impact our year-over-year comparisons until the second and third fiscal quarters. Even after taking these headwinds into consideration our consolidated income from operations was basically unchanged from last year.
Engine segment sales for the first quarter were $205 million, essentially unchanged from the prior year. As we noted in our release, international shipments to OEMs in Europe and Asia increased over the prior year while intercompany shipments to our own power products group for use in portable generators and pressure washers were down.
Total engine unit shipments were higher than last year by approximately 6%. The impact of the higher volumes was offset by a product mix that skewed towards small engines rather than larger engines used for riding lawnmowers and portable generators.
We continue to believe that overall inventories in the channel are reasonable for this time of year. It appears that OEMs, match retailers and dealers are continuing to be very conscientious with regard to the amount of working capital invested in inventories.
The operating loss for the engine segment was $5.5 million, an increased loss of $700,000 over last year's first quarter. Due to the seasonal nature of our business, quarterly sales and production volumes are typically the lowest in the first fiscal quarter resulting in an operating loss for the quarter.
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