Earlier this year it was outboard boat engine maker Evinrude that was out of business. Now the iconic little engine manufacturer Briggs & Stratton has filed for bankruptcy. Both companies were based in Milwaukee. While Evinrude is done, yesterday Briggs & Stratton filed Chapter 11 bankruptcy protection and will be selling its assets to KPS Capital Partners. Year over year Briggs & Stratton’s public shares lost 88% of its value. Mostly, this is due to the coronavirus crisis.
But the Fortune 1000 company has seen declines for years. In business since 1908, its ubiquitous one-cylinder engines have been found on many products. Lawnmowers, go-karts, snow blowers-it’s most every auto enthusiast’s first gas-powered engine. Affectionately called the “five-horse Briggs” the little air-cooled engines haven’t changed much in decades. Briggs & Stratton has been cranking out over 10 million engines a year forever. Its engines are sold in more than 100 countries. They’re everywhere.
Briggs & Stratton stock has steadily been in decline for almost 20 years
In the bankruptcy filing, it states there is over $1 billion in debt from creditors. But there’s more. Its stock has steadily been in decline for almost 20 years. In 2004 it peaked at $40-a-share, but now it hovers for under one dollar. According to the Milwaukee Journal Sentinel, the company was “losing money and burdened by large debts when the economic downturn caused by the coronavirus pandemic hit.”
To get it to the finish line KPS and some other lenders have financed $265 million to continue normal operations. It has also floated a $550 million initial offer to purchase all of Briggs & Stratton’s assets. Sales for the first quarter of 2020 fell almost 20% to $474 million. It is expecting a $157 million sales loss for the second quarter.
“Over the past several months, we have explored multiple options with our advisors to strengthen our financial position and flexibility,” Chief Executive Todd Teske said in a statement. “The challenges we have faced during the COVID-19 pandemic have made reorganization the difficult but necessary and appropriate path forward to secure our business.” Some blame Teske for not being able to staunch the bleeding over the last decade of his tenure, while the board of directors stood by silently. Others blame the incursion of electric-powered appliances much like what is predicted for cars someday.
Restructuring will allow the company to get back to profitable manufacturing
Whatever the case a restructuring will allow it to hopefully get back to profitable manufacturing. “It also gives us support to execute on our strategic plans to bring greater value to our customers and channel partners,” continues Teske. “Throughout this process, Briggs & Stratton products will continue to be produced, distributed, sold, and fully backed by our dedicated team.”
“We are very excited to acquire Briggs & Stratton, a legendary brand in American manufacturing and the leading company in its industry,” KPS co-founder and co-managing partner Michael Psaros said in a press release. “Briggs & Stratton enjoys a leading market position, scale, a global manufacturing footprint, world-class design, and engineering capabilities, and a portfolio of industry-leading products sold under iconic brand names. We intend to capitalize on the company’s many attractive growth opportunities and to support its already substantial investment in research and development, technology, and new product development. KPS intends to grow the new Briggs & Stratton aggressively through strategic acquisitions.”