Wauwatosa-based Briggs & Stratton Corp. plans to invest additional money in marketing its products to homeowners in an effort to increase demand, executives said during the company’s fiscal 2018 second quarter earnings call Thursday.
Todd Teske, Briggs, chairman, president and chief executive officer, said the company is encouraged by an improving U.S. home market and believes there’s an opportunity for solid growth in single-family home product sales.
“We see this environment as an opportune time to build greater public awareness around our products and innovation and are accelerating investments in demand creation,” Teske said, highlighting improvements the company has made to reduce noise and improve storage and reliability of its products. “We plan to do more to communicate our story to capture demand as more people return to home ownership.”
The company plans to increase marketing spending by about $2 million in the current quarter, using additional profits generated by increased sales prompted by hurricanes in Florida and Texas last fall. Briggs spent $19 million on advertising in fiscal 2017, up from $18 million in 2016 and $17.5 million in 2015. Briggs spent $23 million in fiscal 2017 on research and development, up from around $20 million in the two previous years.
“We spent a lot of money over the last several years on engineering and innovation and now it’s time for us to add some additional dollars for demand creation,” Teske said. “We felt that we needed to get the word out more this year and perhaps we were a little light in the past.”
Teske said the company would evaluate the need for additional spending in the future while also looking to find a balance between engineering and marketing investments.
He also said the company is not moving away from the commercial industry, which has increasingly become a focus for the manufacturer.
For the second quarter the company reported $446 million in revenue, up $18 million or 4.2 percent from the same time last year. The increase was primarily driven by sales of engines and products designed for commercial markets.
Briggs did report a $16.3 million loss for the quarter after including a $24.9 million charge related to the implementation of tax reform. Adjusted net income for the quarter was $10.7 million, a 30 percent decrease from $15.3 million last year. Gross profit was down about 2.7 percent for the quarter, which the company attributed to sales mix and lower production volumes. Engineering, selling, general and administrative expenses were up 6.7 percent.
Teske said the company is “solidly on track” to meet is annual and long-range goals.
