Briggs & Stratton Corp. on Friday reported second-quarter profit fell 66 percent as it accounted for its business with bankrupt customer Murray, and lowered its fiscal 2005 guidance range based on its plans to acquire that company's North American operations.
The gas engine manufacturer said quarterly net income fell to $7.1 million, or 14 cents per share, from $20.6 million, or 43 cents last year, due to a $19.7 million reserve increase related to Murray.
The company said second-quarter earnings would have improved from a year ago excluding the write down. Analysts surveyed by Thomson First Call expected Briggs & Stratton to earn 49 cents per share.
Sales rose to $503.7 million from $416.0 million, helped by the inclusion of $72.4 million in sales from its Simplicity Mfg. acquisition, as well as growth in its engine business from improved prices and shipments of higher-priced products.
Second-quarter sales in its engine business rose 5 percent to $374.9 million, while its power products segment posted a 75 percent increase to $170.6 million.
Briggs & Stratton said it plans to record a gain of $20 million to $30 million in the second half of fiscal 2005 related to its $125 million offer to buy Murray's North American business. The company said it also expects net income to be lowered by $3 million to $5 million from absorbing some of Murray's operating losses.
The company adjusted its fiscal 2005 earnings forecast to incorporate the charges and anticipated gains related to Murray, and said it expects earnings of $143 million to $160 million, down from its prior outlook of $150 million to $160 million.
Briggs & Stratton also projected third-quarter net income growth of 13 percent to 15 percent, and sales growth of 30 percent. Based on the company's third-quarter earnings of $71.3 million on sales of $654.7 million last year, Briggs' guidance implies net income of about $80.5 million to $82 million on sales of $851.1 million in the third quarter this year.
The company did not disclose earnings per share guidance in a press release. Analysts expect Briggs to earn $3.20 per share for fiscal 2005.
Briggs & Stratton said it does not expect any significant relief from cost increases on raw materials and components, aside from price increases the company has already implemented.
The company's shares rose 51 cents to $39.01 in afternoon trading on the New York Stock Exchange.