Briggs & Stratton's shares were brought on Thursday at the level seen last in the 1970s, after the gasoline and outdoor power equipment manufacturer posted a surprise loss in the fourth quarter, cutting its full-year outlook and its quarterly dividend lowered.
The company also announced that it will close its Murray, Kentucky facility, which will employ approximately 630 people by the fall of 2020, as it combines production of its handheld lawnmower motors at its plant in Poplar Bluff, Missouri. The company announced that it would allow employees affected to move to the company's other plants located in Alabama, Georgia, Missouri and New York.
fell 44.5% to register by far the largest single-day decline of all time, and to reach the lowest split-adjusted price since April 1975.
The largest one-day decline so far was on January 24, 2019, after the second quarter result of 15.7%, followed by 14.3% on April 26 after the results of the third quarter.
"During the year, we experienced weather-related headwinds in all three of the world's largest turf and garden centers," CEO Todd Teske said in an analyst call. This resulted in a FactSet protocol. "This challenging and highly unusual environment was associated with the bankruptcy of Sears and several brand and [original equipment manufacturer] transitions."
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The company reported a net loss for the quarter ended June, before opening on Thursday, which increased to $ 18.5 million, or 45 cents per share, from $ 11.8 million or 29 cents per share a year earlier , Excluding one-off items such as expenses related to business optimization, acquisitions and pension payments, adjusted loss per share decreased from 47 cents to 36 cents, but compared to the fact-set consensus, earnings were up 45 cents per share.
Revenues decreased 5.9% to $ 472.0 million, below the FactSet consensus of $ 519.9 million. The company said that an "unusually wet spring" in North America and market disruptions due to channel partner transitions caused "difficult market conditions" that resulted in shipments that fell short of expectations.
The gross profit margin decreased from 21.7% to 14.4%. This resulted from the sales mix, lower production volumes and "operational inefficiencies" hampered by "challenges" in labor availability.
For fiscal year 2020, the Company lowered adjusted earnings per share from 40 to 20 cents, equaling an earlier estimate of approximately $ 1.30, and reducing the revenue outlook from approximately $ 2.01 billion to $ 1.91 billion USD.
"The fourth quarter has been a difficult year with unprecedented market challenges and higher than expected operational inefficiencies during the ramp-up of our business optimization initiatives," said Todd Teske, chief executive. "The North American turf and garden market slowed significantly as the quarter was impacted by unusually wet, cool spring weather and short-term market disruption with distributors."
Raymond James analyst Sam Darkatsh called The Quarter "catastrophic" as the results were far from meeting both internal and external expectations and "countless headwinds" weighed on prospects. He repeated the market rating he had for the stock since January 2018.
Regardless, the company cut its quarterly dividend from 14 cents per share by 64% to 5 cents per share. The new dividend will be paid on 2 October to shareholders registered on 18 September.
Based on current stock prices, the new annual dividend rate implies a dividend yield of 4.36%, compared to the current dividend yield of 12.20% and the implied return on the S & P 500
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With approximately 41.5 million outstanding shares through June, the dividend cut could save the company about $ 15 million a year.
"This measure will help us provide more resources for debt reduction and investment in attractive commercial products and assistive technologies," said Teske.
In terms of facility consolidation, the company expects annual savings of $ 12 to $ 14 million and total costs of $ 30 million to $ 35 million. The company said the need to consolidate the plant comes from the fact that the market for small vertical shaft engines has not grown for several years for several years, including a "difficult real estate market driven by the lack of affordable single-family homes in the US becomes.
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Briggs & Stratton said the plant in Poplar Bluff, Missouri, will have to hire 130 people this fiscal year. Another group of employees will be hired in fiscal year 2021. Additional manufacturing facilities will open in Auburn, Alabama, Statesboro, Georgia, Sherrill, New York, and Lees Summit, Missouri, USA.
The stock has now lost 75% in the last 12 months, while the S & P 500 Index
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increased about 1%.