Wauwatosa-based Briggs & Stratton Corp. plans to sell the majority of its products businesses to shift the company’s focus toward the application of power.
Briggs reported net sales of $1.84 billion last year, with the products segment accounting for $932 million. The company said its new focus would be on four areas with about $1 billion in combined revenue.
The areas of focus will include Briggs & Stratton residential engines, Vanguard commercial engines, standby power generation and the company’s new Vanguard commercial battery systems.
Briggs said it plans to prioritize divesting its U.S. headquartered turf products business along with its pressure washer and portable generator product lines. The company’s turf brands include the Ferris, Billy Goat, Simplicity, Snapper and Snapper Pro brands.
The company said in January it was evaluating a potential sale that would cover at least $195 million in maturing debt. The decision was an outgrowth of a market dynamics project the company launched last year. Briggs has been challenged by stagnant demand for its residential products and a retail environment complicated by the bankruptcy of Sears.
The extent of any local impact from the sale is not immediately clear. Briggs has distribution facilities in Menomonee Falls, Milwaukee and Germantown that serve both the engines and products businesses. Its Wauwatosa headquarters, manufacturing and warehouse operation also serves both segments.
The company plans to record charges of $35 million to $45 million as part of its repositioning plan, including $20 million to $25 million in cash charges.
Todd Teske, chairman, president and chief executive officer, said the company’s analysis of market trends led to the decision “to focus our resources and energies to drive more sustained growth and higher risk-adjusted returns."
"We are pursuing a repositioning of the company to simplify our portfolio around our foundational expertise in power application,” he said. “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.”
As it seeks to sell off its products businesses, Briggs is also aiming to reduce its debt. The company said it expects to secure up to $200 million in debt financing by June as part of a package that will be used to pay off $195 million in outstanding senior notes due in December 2020.
Briggs also will use proceeds from the divestitures to pay off additional debt and lower significantly lower its leverage by the end of 2021.
