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Briggs & Stratton to divest turf products business, focus on engine applications

March 6, 2020 -  By

Briggs & Stratton Corp. will divest certain assets to simplify the organization and focus on its engine applications.

As a result of careful analysis of market dynamics and opportunities, the company will be repositioning to focus its businesses with expected annual sales of approximately $1.0 billion in the design, production and sale of:

  • Briggs & Stratton residential engines, where it maintains a recognized global leadership position;
  • Vanguard commercial engines, which has experienced sustained high growth and market share gains;
  • Briggs & Stratton standby power generation, in which it maintains the number two position in North America; and
  • Vanguard commercial battery systems, where it is a pioneer in commercializing electrification for a broad range of commercial applications.

The repositioning includes planned divestitures of the majority of the businesses within the Products Segment. The company is prioritizing divesting the turf products business headquartered in the U.S. and the pressure washer and portable generator product lines.

The turf products business headquartered in the U.S. includes premier lawn and garden and turf care equipment sold under the Ferris, Billy Goat, Simplicity, Snapper and Snapper Pro brands.

“An in-depth analysis to more deeply understand the impact of market trends on our business portfolio has led us to focus our resources and energies to drive more sustained growth and higher risk-adjusted returns,” said Todd Teske, chairman, president and CEO.

“We are pursuing a repositioning of the company to simplify our portfolio around our foundational expertise in power application,” he continued. “This action gives us an opportunity to streamline and optimize our corporate infrastructure to support higher profitability, as well as to strengthen our balance sheet with proceeds from the divestiture of strong, yet non-core, assets. Throughout this process, our mission has remained the same: to provide power to people to make work easier and improve lives. We will do this by providing innovative and diverse power solutions and a superior support network.”

The company is pursuing parallel paths to achieve its priority of restoring financial flexibility. By the end of fiscal 2020 (June), the company expects to secure up to $200 million in debt financing as part of a package which will be used in part to retire the $195 million of outstanding senior notes, due December 2020. In addition, proceeds from the divestitures are expected to exceed the outstanding senior notes and result in significantly lower leverage by the end of fiscal 2021. J.P. Morgan has been engaged to arrange the debt refinancing and has separately been retained to advise on the divestiture of the turf products business.

Management has also updated its long-term financial targets to include:

  • 2-4 percent organic sales growth with focused growth areas exceeding 10 percent organic sales growth;
  • Greater than 8 percent adjusted operating margin;
  • 2-3 percent free cash flow on sales; and
  • Less than 3 times debt to adjusted EBITDA.

These targets reflect expectations beyond fiscal 2021 and assume the completion of the planned divestitures. Associated with the strategic repositioning plan are expected charges of $35 million to $45 million, of which, approximately $20 million to $25 million are cash charges. The charges are expected to be incurred during fiscal years 2020 and 2021.

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LM Staff

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