Briggs & Stratton Expands Capacity to Boost Commercial Sales – August 18, 2017

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Briggs & Stratton Corporation (BGG Free Report) is expanding current manufacturing capacity in a bid to match the growing demand and sales for commercial products. The company announced that it is moving production of its commercial turf operations from current facility in Munnsville, to neighboring Sherrill, both located in New York.

The Munnsville facility manufactures zero turn radius and commercial mowers under the Ferris and Snapper Pro brands, while homeowner zero turn radius mowers are produced under its Simplicity and Snapper brands. The company has witnessed more than 70% sales growth of commercial products in the last five years. The increase in manufacturing will result in approximately 50 additional production employees and will position the company well for continued future growth.

The company also leases warehouse space at another facility in Sherrill which will be combined in to the newly leased facility in Sherrill. Production is likely to begin in Spring 2018 while the facility is anticipated to be fully operational in the spring of 2019.

Briggs & Stratton Corporation Price
 

Briggs & Stratton Corporation Price | Briggs & Stratton Corporation Quote

This news follows the company’s fiscal 2017 (ended Jul 2, 2017) results Aug 16, 2017. Briggs & Stratton posted earnings of $1.31 per share for fiscal 2017, up 4.8% from adjusted earnings of $1.25 a share in fiscal 2016. For fiscal 2018, Briggs & Stratton anticipates net sales to be in the range of $1.87-$1.92 billion, with an annual growth of 4.5-7.5%. Projections reflect modest market growth assumptions plus a return to more normalized channel inventories. The company provided earnings per share outlook of $1.31-$1.48 for the fiscal 2018.

Briggs & Stratton will also gain from the launch of its business optimization program to drive efficiencies, and expansion of capacity in commercial engines and cutting equipment. The business optimization program also comprises the project costs for the integration along with go-live efforts associated with Briggs & Stratton’s ERP upgrade and the anticipated operational excellence efficiency improvements. The go-live for the ERP upgrade is anticipated toward the end of fiscal 2018, subsequent to the peak seasonal shipment period.

The business optimization program will generate annual pre-tax savings of $30-$35 million. The company estimates that the savings will be achieved over a three-year period, beginning fiscal 2019. Total pre-tax expenses related to the business optimization program are expected to be approximately $50-$55 million, of which $24-$28 million is anticipated be recognized in fiscal 2018.

In the last one year, Briggs & Stratton has significantly underperformed the industry with respect to price performance. The stock gained around 8.7%, while the industry rose 25.6%.

Zacks Rank & Key Picks

Briggs & Stratton currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the same sector are AGCO Corporation (AGCO Free Report) , Altra Industrial Motion Corp. (AIMC Free Report) and Apogee Enterprises, Inc. (APOG Free Report) . All three stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AGCO has expected long-term growth rate of 13.51%.

Altra Industrial Motion has expected long-term growth rate of 8.00%.

Apogee has expected long-term growth rate of 12.50%.

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