Briggs & Stratton trims sales outlook, cuts dividend as 3Q sales fall

By Jennifer Lanning Drey

Portland, Ore., April 16 - Briggs & Stratton Corp. lowered its sales outlook and reduced its dividend after posting a nearly $52 million decrease in consolidated net sales for the third quarter of fiscal 2009, James Brenn, the company's chief financial officer, said Thursday during its quarterly earnings conference call.

The company will reduce the dividend by 50% from the prior-quarter level to increase liquidity in light of the challenging conditions, Brenn said.

"We believe in paying a healthy dividend; however, in these turbulent times and uncertain credit markets, we believe it is prudent to implement several tactics, including the dividend policy, that should provide us greater liquidity in the future and allow us to have adequate cash flows and credit facilities for the foreseeable future," he said.

Briggs & Stratton had $243 million of borrowings, including letters of credit, outstanding on its $500 million revolving credit facility at the end of the third quarter. Cash and cash equivalents were $16.5 million at the end of the period.

Sales decline

Briggs & Stratton posted consolidated net sales of $673.8 million in the third quarter, compared to consolidated net sales of $725.7 million in the prior-year quarter. Lower sales and production volumes combined with unfavorable currency exchange rates were the major factors negatively affecting results, John Shiely, chief executive officer of Briggs & Stratton, said during the call.

Both the engines segment and lawn and garden equipment component of the power products segment are now expected to produce lower sales and production volumes than previously expected for full-year 2009, Brenn said.

The lower forecast will translate to lower usage of the company's production facilities in the fourth quarter, which is critical for maintaining appropriate levels of working capital, he said.

"We believe we have the flexibility to respond to an upturn in demand for both engines and end products if the spring season responds more favorably than our revised outlook contemplates," Brenn said.

Briggs & Stratton is a Wauwatosa, Wis., producer of air-cooled gasoline engines and engine-powered outdoor equipment.

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