Shares of Briggs & Stratton were shaken Thursday to levels last seen in the 1970s, after gasoline engine and outdoor power equipment manufacturers reported a surprising tax loss in the fourth quarter, lowering the outlook for the full year and reducing quarterly dividends.
The company also said it will close the facility in Murray, Ky., Which employs about 630 people, in the fall of 2020, as it consolidates production of its walk-behind lawnmower engines in Poplar Bluff, Mo. . The company said it will offer affected employees opportunities to relocate to the company's other facilities, located in Alabama, Georgia, Missouri and New York.
BGG, -43.17% ,
which is on track to suffer the largest ever, a one-day percentage decline, by far, fell 48%, against the lowest split-adjusted closing price seen since April 1975.
The previous largest falls in a day were 15.7% at 24. January 2019 after financial income in the second quarter, followed by 14.3% on April 26, after profit in the third quarter.
"During the year, we encountered weather-related headwinds in all three major lawn and garden markets around the globe," says CEO Todd Teske during a conference call with analysts after earnings, according to a transcript from FactSet . "This challenging and very unusual environment was combined with Sears bankruptcy and several brand and [original equipment manufacturer] transfers."
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The company reported before Thursday's opening that the net loss for the quarter ended in June, expanding to $ 18.5 million, or 45 cents per share, from $ 11.8 million, or 29 cents a share a year ago. Excluding non-recurring items, such as fees related to business optimization, acquisitions and pension settlement, the adjusted loss per share was reduced to NOK 36 from NOK 47, but compared with the FactSet consensus for a profit of NOK 0.45 per share.
Revenue fell 5.9% to $ 472.0 million, below the $ 519.9 million FactSet consensus. The company said an "unusually wet spring" in North America and market disruptions caused by channel partner crossings caused "difficult market conditions" that led to shipments that fell below expectations.
Gross profit margin fell to 14.4% from 21.7%, which the company said as a result of sales mix, lower production volume and "operational inefficiency", which was hampered by "challenges" in labor availability.
For fiscal 2020, the company cut its adjusted earnings per share to 20 cents from 40 cents from a previous estimate of about $ 1.30, and lowered its sales outlook to $ 1.91 billion to $ 1.97 billion from about 2.01 billion.
"The fourth quarter capped a difficult year with outstanding market challenges and higher than expected operating efficiencies during the ramp-up of our business optimization initiatives," said CEO Todd Teske. "The North America lawn and garden market slowed significantly as the quarter went from unusual wet, cool spring weather compounded by ongoing market disruption with channel partners. "
Raymond James analyst Sam Darkatsh followed by calling the quarter" catastrophic "as results fell well below both internal and external expectations with" myriad headwinds " "which weighed the outlook. He repeated the market trend that he had on the stock since January 2018.
The company separately cut quarterly dividends by 64% to 5 cents per share, from 14 cents per share. The new dividend will be paid on October 2 to shareholder record September 18.
Based on today's stock prices, implied the new annual dividend rate yields a dividend yield of 3.98%, down from the current dividend yield of 11.18% and implicit return for the S&P 500
SPX, + 0.26%
With approximately 41.5 million outstanding shares through June, dividends cut could save the company $ 15 million a year.
"This action will help us direct more debt reduction and investment in attractive commercial products and enable technology," Teske said.
In terms of facility consolidation, the company expects an annual savings of $ 12 million to $ 14 million, and a total cost of $ 30 million to $ 35 million. The company said the need to consolidate the facility comes because the market for small vertical shaft motors has not grown for several years for a variety of reasons, including a "difficult housing market driven by the lack of affordable single-family homes in the United States."
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Briggs & Stratton said the Poplar Bluff, Mo. facility will need to employ 130 employees this financial year, and another group of employees will be employed in fiscal 2021 There will also be openings in the other manufacturing facilities located in Auburn, Ala., Statesboro, Ga., Sherrill, NY and Lees Summit, Mo.
The stock has now fallen 75% over the past 12 months, while the S&P 500 indices
SPX, + 0.26%
has achieved about 1%.