Highlights From BGG's Q3 Conference Call: Quarterly Results Fell Below Expectations, Guides Lower & Halves Dividend

Briggs & Stratton Corporation (NYSE: BGG) reported Q3 EPS of $0.51, 13 cents lower than analysts estimates of $0.64. Revenues were $673.8 million, below the consensus of $720.27 million. Shares of BGG are going to close down about 5% on today's financial news. However, shares are up over a dollar from the session low.

Highlights From BGG's Q3 Conference Call:

• Lowers its FY09 EPS from $0.81-$1.10 to $0.46-$0.65, versus the consensus of $0.84.
  
• Cuts its quarterly dividend from $0.22 to $0.11 per common share.
  
• (CFO) Engine segments sales for Q3 were $480 million, $66 million less than the last year and $32 million less than we projected.
  
• Our fiscal year-to-date engine shipments are about on par with where we were a year ago.
  
• Currently, the market for lawn & garden products has developed slower than anticipated for this season.
  
• Projections for the market for lawn & garden equipment could be down anywhere from high single to low double digits. We are reducing our Q4 demand forecast to a shipment level that will result in fiscal 2009 units being slightly lower than those experienced in fiscal 2008 and where the buy is to smaller displacement units.
  
• Power Product segment sales for Q3 were $250 million approximately $8 million more than last year, but about $8 million less than anticipated.
  
• We have lowered our Q4 outlook for the Power Product segment to reflect the expected decline of
  consumer & commercial riding equipment, especially premium equipment we sell in the dealer channel.
  
• (CEO) Lower sales and production volumes and unfavorable currency exchange rates were the major issues affecting our two operating segments.
  
• We lowered our projections for 2009 based primarily because of the slow start to the season, lower inventory levels being targeted at the OEM and retail levels the economic environment and the general market assessment of demand for lawn and garden equipment. We are anticipating lower sales of both our engines and our lawn and garden end products.
  
• We believe in paying a healthy dividend even in these turbulent times and uncertain credit markets. We believe it is prudent to implement several tactics including dividend policy that should provide us greater liquidity in the future and allow us to have adequate cash flows and credit facilities for this foreseeable future. Even as the instability in the credit market continues.
  
• (Q&A) Just quick question on revolver availability at quarter end, could you may be just update us there on how much available on the revolver?
• Were there any letter of credit outstanding that might reduce the availability?
• I'm wondering if perhaps you're seeing any maybe smaller distressed competitors out there and you have any opportunities maybe scoop up some good assets for good value? now, I'd say it's a tough, it's a tough M&A climate in terms of making acquisitions, but if somethings available, it's within our grasp, we would certainly be interested.
  
• And for the hurricane season, obviously little bit too early to predict when NOAA is looking for. But how is the channel, both on your guy's balance sheet as well as the retail?
• What's your visibility on the commercial demand at the dealer level? You were mentioning the 19-20%, is that wholesale, that's out the door, that's April. What are you referring to when you're talking about those types of numbers?
  Briggs & Stratton Corporation is a producer of air cooled gasoline engines for outdoor power equipment. Briggs & Stratton designs, manufactures, markets and services these products for original equipment manufacturers (OEMs) worldwide.
  
  

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