Milwaukee-based Briggs & Stratton Corporation provided details of its planned strategic repositioning. The plan includes a focus on the company’s power application, strategic divestitures and a drive for improved capital returns. An outcome of these actions includes significantly de-levering the company to improve financial flexibility.
The company will be repositioning businesses with expected annual sales of about $1 billion in the design, production and sale of Briggs & Stratton residential engines and standby power generation, and Vanguard commercial engines and battery systems.
“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,” says 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. 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.”
The company plans to divest the majority of the businesses within the products segment. Priority is being placed on 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.
By the end of fiscal 2020, 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.
Associated with the strategic repositioning plan are expected charges of $35 million to $45 million, of which, about $20 million to $25 million are cash charges. The charges are expected to be incurred during fiscal years 2020 and 2021.