Briggs & Stratton last week announced second-quarter fiscal 2008 consolidated net sales of $478.8 million and consolidated net income of $5.4 million or $0.11 per diluted share, compared with second-quarter fiscal 2007 net sales of $423.1 million and a consolidated net loss of $4.4 million or $.09 per diluted share. The $55.7 million, or 13 percent, increase in consolidated net sales in the second quarter was primarily due to volume improvement in most product categories. The $9.8-million improvement in second-quarter consolidated net income reflects the impact of a $37.0 million gain ($25.0 million after tax) resulting from the sale of an investment in preferred stock including the final dividends paid on the preferred stock, offset by $17.7 million of warranty expense ($12.7 million after tax) for a previously announced snow engine recall.
Operationally, the second-quarter results were lower than last year's second quarter. Improved margins from increased sales were offset by costs incurred in the startup of new production in facilities for power products as well as the impact of costs incurred to close an engine facility. In addition, fixed costs were higher in the second quarter due to lower production levels that resulted from our plan to produce closer to the retail season.
For the first six months of fiscal 2008, the company had consolidated net sales of $845.5 million and a consolidated net loss of $15.0 million or $0.30 per diluted share. For the same period a year ago, consolidated net sales were $761.3 million and there was a consolidated net loss of $20.8 million or $0.42 per diluted share. The increase in the first six month’s consolidated net sales of the $84.2 million, or 11 percent, was primarily attributable to increased engine unit shipments. The $5.8 million increase in consolidated net income reflects the stock transaction that occurred in the second quarter, offset by $19.8 million of warranty expense ($13.5 million after tax) for the snow engine recall.
Operationally, the six-month results improved from the same period a year ago as the benefit of increased sales and lower manufacturing costs were greater than the higher expenses associated with operations startup, a plant closing and lower production levels.
Fiscal 2008 second-quarter net sales were $315.5 million versus $279.0 million for the same period a year ago, an increase of 13 percent. The increase resulted primarily from a 10-percent increase in engine unit shipments between quarters. Sales for the first half of fiscal 2008 were $524.0 million versus $468.6 million in the prior year, a 12-percent increase. This increase in the first half of the year also reflects a 10-percent increase in engine unit shipments between years.
Engine unit shipment increases in the quarter reflect improved placement for the upcoming season as well as some earlier demand for engines by some original equipment manufacturers. The first six months sales also benefited somewhat from stronger summer retail demand in certain regions for lawn and garden equipment.
The second quarter of fiscal 2008 had a loss from operations of $4.9 million, down $13.4 million from the income for operations for the same period a year ago. The major reason for the decrease in income from operations was the $17.7 million warranty expense associated with the snow engine recall.
The loss from operations for the first half of fiscal 2008 was $15.1 million, a $2.1-million decline from the loss from operations of $13.0 million for the same period a year ago. For the six months, the negative impact on income from operations from the snow engine recall was $19.8 million.
Fiscal 2008 second-quarter net sales for power products were $197.0 million, a $26.6-million increase from the same period a year ago. The improvement was primarily the result of increased shipments of portable generators and pressure washers.
Net sales for the first six months of fiscal 2008 were $384.0 million, a $26.7-million increase over the same period a year ago. The sales improvement was the result of unit shipment increases in pressure washers and certain lawn and garden products.
The loss from operations for the second quarter of fiscal 2008 was $15.6 million, a decline of $11.6 million from the loss for the same period a year ago. The increase in the loss from operations was the result of start-up costs for a new plant and new product models for the lawn and garden markets that did not exist in the second quarter a year ago. In addition, manufacturing costs related to materials and components have increased and fixed costs are up because of lower utilization at certain facilities.
The loss from operations for the first six months of fiscal 2008 was $26.2 million, a $25.0-million decline from the loss from operations for the same period a year ago.
Briggs & Stratton announced its net income forecast for the year of $60 to $68 million or $1.21 to $1.37 per diluted share for the full year. The estimate is based on the assumption that consolidated net sales will grow approximately 7 to 8 percent between years, primarily due to higher volume in the engines segment.
At its regular quarterly meeting held last week, the board of directors of Briggs & Stratton Corp. declared a quarterly dividend of $0.22 per share on the common stock. The dividend is payable April 1, to shareholders of record at the close of business March 3.
