Increased demand for portable generators after Hurricanes Harvey, Irma and Maria pushed revenues in Wauwatosa-based Briggs & Stratton’s products group up by nearly $36 million during the company’s first quarter of fiscal 2018.
Revenues were up by 14.8 percent overall, reaching $329.1 million as the products segment was up nearly 24 percent and increased sales of engines to international customers improved revenues in the engines segment by 5 percent.
The increased business from the storms helped improve the company’s gross profit from $55.5 million to $66.3 million, but higher engineering, selling, general and administrative expenses hurt the bottom line results. Briggs reported a net loss of $15 million, or 36 cents per diluted share, up from a $14.2 million loss, 34 cents per share, last year.
The loss also included $3.7 million in costs related to the company’s business optimization program, which includes expanded production at three U.S. facilities.
Mark Schwertfeger, Briggs chief financial officer, said some of the increased costs were also the result of higher variable incentive compensation for employees as a result of the storms.
“I’m very proud of our team who worked diligently with our channel partners and suppliers through the development of these severe storms,” said Todd Teske, Briggs chairman, president and chief executive officer.
Teske and Schwertfeger both said the company has also seen increased interest in activity for standby generators, but said it was too soon to know how the interest would translate into sales in the coming months. Teske noted many dealers are still working on service and repair work following the storms. He also said wildfires in California have the potential to drive added sales as well.
“When you look at people’s need for backup power, I would tell you that this feels perhaps not nearly as strong as Superstrom Sandy because that was a lot of people out of power, but it certainly is getting much more attention than Matthew did a year ago,” Teske said. “We’d expect to see something and we are seeing some activity out there right now, but you’ve got to remember every storm is different and part of that has to deal with the population density and a lot of other factors.”
Briggs did increase its guidance for fiscal 2018, projecting revenue to be between $1.9 billion and $1.95 billion, a 1.6 percent increase of the midpoint, as a result of the storms. Net income is excepted to be between $60 million and $68 million, a 6.7 percent increase of the midpoint from previous guidance.
Schwerfeger said the increase was the result of the increased storm business and the company’s outlook has changed for the rest of the year. He also pointed out the company’s second quarter results will be compared against last year’s second quarter, which included a $15 million revenue boost from Hurricane Matthew.
