Briggs & Stratton — Debt Investor Presentation (July 2020)
50 slides from Briggs & Stratton's debt investor presentation, Jul 15, 2020
Slide 1: Project Badger: Senior Noteholder Discussion Materials
Project Badger: Senior Noteholder Discussion Materials June 2020 | Strictly Confidential
Slide 2: Disclaimer
Disclaimer By accepting this presentation (this “Memorandum”), recipients acknowledge that they have read, understood and accepted the terms of this Disclaimer. This Memorandum is the property of, and contains the proprietary and confidential information of, Briggs & Stratton Corporation and its dir
Slide 3: Disclaimer: Forward Looking Statements
Disclaimer FORWARD LOOKING STATEMENTS CERTAIN STATEMENTS IN THIS MEMORANDUM CONSTITUTE OR MAY DEEMED TO CONSTITUTE, “FORWARD-LOOKING STATEMENTS” (AS DEFINED IN THE U.S. PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995). SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES A
Slide 4: Table of Contents
Table of Contents Executive Summary 4 Why BGG Is Positioned to Win Over the Long Term 13 Historical and Projected Financials 24 Weekly Cash Flow Projections 34 Appendix 38 3
Slide 5: Executive Summary
ll BRIGGSsSTRATTON BRIGGS & STRATTON CORPORATION Executive Summary
Slide 6: Transaction Overview
Transaction Overview • Briggs & Stratton Corporation (“Briggs & Stratton,” “BGG” or the “Company”) is the world’s largest producer of gasoline engines for outdoor power equipment—with ~50-70%(1) residential engine market share in the United States —and a leading manufacturer of power generation, law
Slide 7: Transaction Overview (cont.)
Transaction Overview (cont.) • The Company has developed a detailed business plan that reflects the current impacts of the COVID-19 pandemic, the longer term outlook for the business based on a conservative view of the likely recovery as well as the immediate, near-term cost savings actions that the
Slide 8: Briggs & Stratton Overview
Briggs & Stratton Overview Company Overview Market-Leading Brands and Diverse Product Portfolio • Briggs & Stratton is the world’s largest producer of gasoline engines for outdoor power equipment - ~50-70%(1) Market-Leading Brands Differentiated Product Portfolio residential engine market share in t
Slide 9: Engines Segment Overview
Engines Segment Overview Segment Overview Strong Brands and Product Portfolio • Leading manufacturer of small gasoline engines with gross horsepower ranging from 2.5hp up to 40hp and aftermarket parts and services Brand Select Products Value Proposition • Over 125 million engines delivered to date •
Slide 10: Products Segment Overview
Products Segment Overview Segment Overview Strong Brands and Product Portfolio • BGG has leading market positions across a wide range of principal product Brand Select Products Value Proposition lines, including: – Lawn and garden powered equipment • Blowers • Niche-focused outdoor property cleanup
Slide 11: Factors Impacting the Company
Factors Impacting the Company • An aging and urbanizing population, rising incomes as well as general shift in consumer preference are U.S. Residential Turf Market (Units in Millions) leading to an outgrowth in “Do-It-For-Me” in lieu of “Do-It-Yourself” for residential consumers 7 6.0 6.7 Shifting c
Slide 12: Steps Taken to Manage Through the Pandemic
Steps Taken to Manage Through the Pandemic COVID-19 Impact Actions Taken • Actual revenue in FQ3’20 was estimated to be lower by ~$40 Employee Costs million compared to the Company’s forecast • Base salary reductions of 35% to 40% for executives and 25% • Briggs’ customers and sales channels have be
Slide 13: BGG Has Reassessed the Business From the Bottom Up
BGG Has Reassessed the Business From the Bottom Up Due to These Headwinds BGG Has Faced Challenges… …And Continues to Evolve to the Everchanging Environment Plant Closures and Integration into Existing Operations Underutilized Production Footprint Coupled With Operational Improvement Initiatives Inv
Slide 14: Why BGG Is Positioned to Win Over the Long Term
Why BGG Is Positioned to Win Over the Long Term 13
Slide 15: Why BGG Is Positioned to Win Over the Long Term
Why BGG Is Positioned to Win Over the Long Term 2 Commitment to 1 innovation underpins 3 competitive barriers #1 Brand in gasoline and supports growth Established and engines and leading mutually critical portfolio of innovative relationships with product offerings blue-chip customers 6 4 Proven Sig
Slide 16: #1 Brand in Gasoline Engines and Leading Portfolio
#1 Brand in Gasoline Engines and Leading 1 Portfolio of Innovative Product Offerings Briggs & Stratton is the most preferred engine brand and offers a wide range of power equipment with a growing suite of differentiated commercial applications Established Leader Today Competitive Advantages Leading
Slide 17: Commitment to Innovation Underpins Competitive Barriers
Commitment to Innovation Underpins Competitive 2 Barriers and Supports Growth Briggs & Stratton is deeply committed to R&D and recognized as an innovation leader in the market Significant R&D Capabilities Significant Investments in R&D • Stage-gate process that includes problem discovery, concept an
Slide 18: Introducing New Offerings – Commercial Engines
Demonstrated Ability to Introduce New Offerings 2 to Support Growth – Commercial Engines Over the past years, Briggs & Stratton has successfully driven its growth in commercial offerings through its Vanguard brand Case Study: Vanguard Commercial Engine Growth Commercial Engines Sales Growth Achieved
Slide 19: Introducing New Offerings – Commercial Turf Products
Demonstrated Ability to Introduce New Offerings 2 to Support Growth – Commercial Turf Products Over the past years, Briggs & Stratton has successfully driven its growth in commercial offerings through its Ferris brand Case Study: Commercial Turf Products Growth Commercial Sales Growth Achieved(1) ($
Slide 20: Established Pipeline of Innovative New Offerings
2 Established Pipeline of Innovative New Offerings Leveraging its significant power know-how and strong market position in commercial, Briggs & Stratton has developed a unique battery pack product offering Case Study: Battery Pack Introduction Commercially Focused Solution Product Offering Cell Modu
Slide 21: Relationships with Blue-Chip Customers
Established and Mutually-Critical Relationships 3 with Blue-Chip Customers Briggs & Stratton is the brand of choice for global OEMs, professionals and household consumers Briggs & Stratton Customer Offering Blue-Chip Customers • Significant and unmatched suite of after sales services, Customer Produ
Slide 22: Significant, Successful Cost-Saving Actions Taken
Significant, Successful Cost-Saving Actions Taken 4 With Substantial Runway Remaining Over the past years, BGG has taken various actions to improve the operational setup and adjust the strategy to reflect a changing market environment Run-Rate Savings Description Status / Improvement • Single, compa
Slide 23: Clear, Identifiable Plan to Stabilize the Business
Clear, Identifiable Plan to Stabilize the Business 5 and Drive Continued Growth Briggs & Stratton has a defined plan to increase margin and grow EBITDA from $19 million in FY2020 to $190 million in FY2023 Clearly Defined Growth Plan $85 $190 $86 $19 2020FC EBITDA Operational Efficiencies Volume / Pr
Slide 24: Proven Management Team
Proven Management Team With Demonstrated 6 Ability to Right-Size Business Operations Briggs & Stratton is led by an highly experienced and long-tenured management team that has implemented several growth and cost saving initiatives Superior Senior Leadership Years at Executive Background BGG Todd Te
Slide 25: Historical and Projected Financials
Historical and Projected Financials 24
Slide 26: Summary Historical Financials
Summary Historical Financials FYE June 30, Management Commentary ($ in millions) 2015A 2016A 2017A 2018A 2019A FY2019 Engines Revenue 1,209 1,143 1,099 1,066 989 Products Revenue 789 772 778 904 932 • Engines Sales: Sales decline due to unusually dry weather conditions in Australia and Europe; near-
Slide 27: Assumptions Overview – Improvement Measures
Assumptions Overview – Improvement Measures • Briggs & Stratton will continue to focus its go-to-market strategy on managing each brand into their respective channels, including: • Operate and manage the core Briggs & Stratton engine brand for sustained market leadership Go-to-Market • Increased inv
Slide 28: Assumptions Overview – Methodology
Assumptions Overview – Methodology • The Company is impacted by the shift in consumer behavior resulting from COVID-19; the related downturn will continue in FY2021 with recovery COVID-19 beginning in Q4’FY2021 and ramp slowly to steady state in FY23 • Sales are forecasted by product hierarchy using
Slide 29: Segment Level Sales
Segment Level Sales Pro Forma Pro Forma Actuals Fcst + Act Forecast Forecast Forecast ($ in millions) FY 19 FY 20 FY21 FY 22 FY 23 Net Sales Engines 989 760 720 849 967 Products 932 917 866 925 991 Corp Elims. (84) (84) (78) (79) (82) Total Net Sales $1,837 $1,593 $1,508 $1,695 $1,876 Net sales % in
Slide 30: Annual Consolidated Statement of Profit and Loss
Annual Consolidated Statement of Profit and Loss Pro Forma Pro Forma Actuals Fcst + Act Forecast Forecast Forecast ($ in millions) FY 19 FY 20 FY21 FY 22 FY 23 Net Sales $1,837 $1,593 $1,508 $1,695 $1,876 Net sales % incr (decr) (2.4%) (13.2%) (5.3%) 12.3% 10.7% Cost of Goods Sold 1,524 1,344 1,257
Slide 31: Annual Consolidated Balance Sheet
Annual Consolidated Balance Sheet Forecast Forecast Forecast Forecast ($ in millions) FY 20 FY 21 FY 22 FY 23 Current Assets Cash and equivalents $31 $31 $31 $31 Accounts Receivable 192 185 199 215 Inventory 453 384 399 386 Other current assets 21 19 19 19 Total current assets 697 619 647 650 Fixed
Slide 32: Annual Consolidated Statement of Cash Flows
Annual Consolidated Statement of Cash Flows Forecast Forecast Forecast Forecast Q4Yearly Yearly Yearly ($ in millions) FY 20 FY 21 FY 22 FY 23 Cash flow from operations Net income (32) (37) 26 68 Depreciation & amortization 16 59 60 61 (Increase) decrease in working capital 89 102 (21) 7 Cash provid
Slide 33: Profit and Loss Bridge
Profit and Loss Bridge % of ($ in millions) Net Sales EBITDA Net Sales FY20 Net Sales / EBITDA $1,593 $19 1.2% Volume / COVID / Battery Growth (78) (26) Pricing / Mix (7) (6) Small Engine Manufacturing Consolidation Project 0 13 Facility Consolidation 0 15 Spending Reduction (ESG&A and Other) 0 27 F
Slide 34: Above Plan Growth Potential
Above Plan Growth Potential • Additional analysis of plant utilization to right-size manufacturing footprint • Right-size organization across functions, business units and corporate Further Operational • Increase implementation of company-wide operational improvement initiatives to further eliminate
Slide 35: Weekly Cash Flow Projections
Weekly Cash Flow Projections 34
Slide 36: Cash Flow Projections Assumptions
Cash Flow Projections Assumptions The Company, with the assistance of its advisors, has recently updated its 13-week cash flow forecast. Significant assumptions(1) are set forth below. Receipts • Forecasted receipts are based on: ‒ Existing accounts receivable unwind based on historical customer pay
Slide 37: 13-Week Cash Flow Forecast
13-Week Cash Flow Forecast $ thousands 13 Week Cash Flow - Weekly BBC (weekly A/R, monthly Inventory) Forecast Forecast Forecast Forecast Forecast Forecast Forecast Total 5-Jun-20 12-Jun-20 19-Jun-20 26-Jun-20 3-Jul-20 10-Jul-20 17-Jul-20 7-Week Total Receipts$ 22,617.8 $ 18,870.2 $ 25,738.1 $ 35,87
Slide 38: Borrowing Base Availability
Borrowing Base Availability Forecast Forecast Forecast Forecast Forecast ($ in millions) Q4 Q1 Q2 Q3 Q4 FY20 FY21 FY21 FY21 FY21 Accounts Receivable $126 $95 $133 $180 $124 Inventory 228 207 213 210 190 Real Property 32 32 31 30 30 Equipment 4241393836 Trademarks 59 56 53 50 47 Reserves (36) (34) (3
Slide 39: Appendix
BRIGGS & STRATTON CORPORATION Appendix
Slide 40: Annual Consolidated Statement of Profit and Loss
Annual Consolidated Statement of Profit and Loss Actual Act + Fcst Growth and margins ($ in millions) Pro Forma Pro Forma Forecast Forecast Forecast FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 Gross Sales 2,076 1,828 1,735 1,929 2,120 0.2% (12.0%) (5.1%) 11.2% 9.9% Elims Gross Sales (240) (235
Slide 41: Cash Flow – Monthly FY 2021
Cash Flow – Monthly FY 2021 Forecast Forecast Forecast Forecast Forecast Forecast Forecast ForecastForecastForecastForecastForecastForecastForecast ($ in millions) FY20 FY21 FY21 FY21 FY21 FY21 FY21 FY21 FY21 FY21 FY21 FY21 FY21 FY21 Q4Jul-20Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Ap
Slide 42: Profit and Loss - Monthly FY 2021
Profit and Loss - Monthly FY 2021 Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast ($ in millions) FY21 FY21 FY21 FY21 FY21 FY21 FY21 FY21 FY21 FY21 FY21 FY21 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-2
Slide 43: 2015A – LTM March 2020A EBITDA Bridge
2015A – LTM March 2020A EBITDA Bridge FYE June 30, LTM Adjustments Overview ($ in millions) 2015A 2016A 2017A 2018A 2019A Mar-20 1• Strategic actions to reduce Products production capacity GAAP Net Income (Loss) $46 $27 $57 ($11) ($54) ($212) Plus: GAAP Interest Expense 20 20 20 25 29 33 2• Strategi
Slide 44: Brand Specific Information
Brand Specific Information Reporting Products Products Products Engines Products Products Products Products Engines Products Segment Engines •Lawn and • Lawn and • Lawn and Garden Garden Garden • Lawn and • Lawn and End •Construction •Landscaping • Landscaping • Lawn and • Lawn and • Landscaping • L
Slide 45: Briggs & Stratton Corporation
BRIGGS & STRATTON CORPORATION is |BRIGGSsSTRATTON | NZ BRIGGS & STRATTON CORPORATION @ Houtman Loxey
Slide 46: DIP Budget
a BRIGGS & STRATTON CORPORATION DIP Budget
Slide 47: Cash Flow Projections Assumptions (DIP Budget)
Cash Flow Projections Assumptions The Company, with the assistance of its advisors, has recently updated its debtor-in-possession “DIP” financing budget. Significant assumptions(1) are set forth below. Receipts • Forecasted receipts are based on the Company's FY21 business plan. Assumes a slow down
Slide 48: DIP Budget
DIP Budget $ thousands DIP Budget Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 17-Jul-20 24-Jul-20 31-Jul-20 7-Aug-20 14-Aug-20 21-Aug-20 28-Aug-20 4-Sep-20 11-Sep-20 18-Sep-20 25-Sep-20 2-Oct-20 9-Oct-20 3 mon
Slide 49: Proposed DIP Terms: July 7, 2020
Proposed DIP Terms: July 7, 2020 DIP ABL Facility Size: $450M Revolving Commitment Interest: LIBOR/EURIBOR + 3.50% per annum, payable quarterly in arrears, with a 1.00% floor Unused Line Fee: 0.25% per annum on the daily average undrawn portion of the DIP ABL Revolving Commitments, payable quarterly
Slide 50: Proposed DIP Terms: July 7, 2020
Proposed DIP Terms: July 7, 2020 Entry of Sale Order: no later than October 1, 2020. Consummation of Sale: no later than October 15, 2020.
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