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News: $SWK Stanley Black & Decker Reports 2Q 2019 Results

NEW BRITAIN, Conn. , July 23, 2019 /PRNewswire/ -- Stanley Black & Decker (NYSE: SWK) today announced second quarter 2019 financial results. 2Q'19 Revenues Totaled $3.8 Billion , Up 3% Versus Prior Year, Driven By Organic Growth And Acquisitions Operating Margin Rate Was...

Read the whole news Stanley Black & Decker Reports 2Q 2019 Results

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Stanley Black & Decker Reports 4Q 2015 Results
PR Newswire Stanley Black & Decker
January 28, 2016 6:00 AM
????
NEW BRITAIN, Conn., Jan. 28, 2016 /PRNewswire/ -- Stanley Black & Decker (SWK) today announced full year and fourth quarter 2015 financial results.

Full Year Revenues Totaled $11.2 Billion Reflecting 6% Organic Growth Offset By 7% Currency Impact
Full Year Operating Margin Rate Expanded 90 Basis Points To 14.2%
Full Year Diluted GAAP EPS Was $5.92, Up 10% From 2014 As Strong Operational Performance More Than Offset $220 Million Of Currency Headwinds
2015 Free Cash Flow Of $871 Million; Working Capital Turns Maintained At 9.2
4Q'15 Revenues Totaled $2.8 Billion With 1% Organic Growth
4Q'15 Operating Margin Rate Expanded 100 Basis Points To 14.2%
4Q'15 Diluted GAAP EPS Was $1.78, Up 30% From 4Q'14 As Solid Operational Performance Combined With Lower Tax, Share Count And Restructuring More Than Offset $50 Million Of Currency Headwinds
Expect 2016 Full Year Diluted EPS Of $6.00 To $6.20 On A GAAP Basis And Free Cash Flow Conversion Of Approximately 100%
4Q'15 Key Points:

Net sales for the quarter were $2.8 billion, down 5% versus prior year, as price (+1%) was more than offset by currency (-6%).

Gross margin rate for the quarter was 35.6%, up from prior year 35.2% as price, productivity, cost actions and commodity deflation more than offset unfavorable currency.

SG&A expenses were 21.5% of sales compared to 22.1% in 4Q'14 reflecting tight cost management.

Operating margin rate was 14.2% compared to 13.2% in 4Q'14, as actions to improve profitability more than offset $50 million of unfavorable currency.

Restructuring charges for the quarter were $3.7 million compared to $24.4 million in 4Q'14.

Tax rate was 12.7% compared to the 4Q'14 rate of 17.6% as a result of adjustments to tax positions relating to undistributed foreign earnings and the impact of certain net operating losses that have become realizable.

Average diluted shares outstanding for the quarter were 150.0 million versus 160.0 million a year ago, reflecting the impact of share actions.

Working capital turns for the quarter were 9.2 consistent with 4Q'14 as lower organic growth in the quarter constrained the potential for year over year working capital turns improvement.
Stanley Black & Decker's Chairman and CEO, John F. Lundgren, commented, "We are pleased with our full year financial results, having achieved 6% organic growth and 10% earnings per share growth amidst a very challenging operating environment. By maintaining our focus on innovation and controlling key operational levers such as price, cost and product mix, we delivered noteworthy operating leverage despite significant foreign currency headwinds. We concluded 2015 with a solid fourth quarter, expanding margins, generating significant free cash flow and posting positive organic growth in the face of ongoing weakness in some key markets.

"As we look forward, we believe we are well positioned to manage through a continued difficult environment by leveraging our world-class franchises and brands to deliver solid organic growth and strong free cash flow while maintaining our disciplined and shareholder friendly approach to capital allocation."

4Q'15 Segment Results



($ in M)
4Q'15 Segment Results


Sales
Profit
Profit
Rate






Tools & Storage
$1,831
$303.9
16.6%






Security
$538
$68.8
12.8%






Industrial
$477
$85.5
17.9%



Tools & Storage net sales decreased 3% versus 4Q'14 as volume (+2%) and price (+1%) were more than offset by unfavorable currency (-6%). All regions posted organic growth with North America +3%, Europe +6%, and the emerging markets +1%. The U.S. construction tool market remained healthy and new products and brand extensions generated share gains in North America despite downward pressure in the industrial channels and Canada. Solid commercial momentum continued in Europe as share gains from new products and an expanded retail footprint produced another quarter of above-market organic growth. Organic growth within the emerging markets remained positive reflecting the favorable impact of pricing and the continued success of our mid-price-point product releases amidst a series of challenging end markets, including Brazil, Russia and China. Overall Tools & Storage segment profit rate was 16.6%, up from the 4Q'14 rate of 16.0%, as volume leverage, price, productivity, cost management and lower commodity prices more than offset currency pressures.

Security net sales decreased 9% versus 4Q'14 as price (+1%) was more than offset by lower volumes (-5%) and currency (-5%). Higher installation revenues in a number of countries and a stable recurring revenue portfolio resulted in Europe posting organic growth of 3%, Europe's fifth consecutive quarter of flat or positive organic growth. Order rates in Europe were again strong, up double-digits, while recurring revenue attrition remained solidly within the target range of 10-12%. North America's organic revenues declined 6% due primarily to lower volumes within the commercial electronic security business as 4Q'14 benefited from a large retail installation. Similar to Europe, orders within the North American commercial electronic security business were strong. Emerging markets organic revenues declined due to the ongoing relatively weak market conditions in China. Overall Security segment profit rate was 12.8%, up 100 basis points versus prior year, primarily due to improved operating performance within Europe. The segment profit rate improved 90 basis points sequentially as a result of continued margin expansion within Europe and improved operating performance in the North America business.

Industrial net sales decreased 7% versus 4Q'14 as price (+1%) was more than offset by lower volumes (-2%) and currency (-6%). Engineered Fastening's organic revenues declined 3% as strong global automotive revenues were more than offset by lower electronics and industrial volumes. Infrastructure organic revenues were up 2% as increased Oil & Gas volumes from higher North American on-shore pipeline project activity more than offset lower Hydraulic Tools volumes due to a difficult scrap steel market. Overall Industrial segment profit rate was 17.9%, up 210 basis points from the 4Q'14 rate, as productivity gains and cost control, particularly within Engineered Fastening, more than offset the impacts of currency and lower Hydraulic Tools volumes.
President and Chief Operating Officer, James M. Loree, commented, "Our Tools & Storage team delivered 3% organic growth for the quarter, buoyed by continued strength within North American and European retail channels, despite tough comparables and significant headwinds from a weak industrial end market and within the emerging markets. With respect to the latter, the success of our mid-price point products combined with strong pricing actions allowed us to outperform underlying market growth. The 8% organic growth in Tools & Storage for the year is a testament to the strength and momentum of this world class franchise. Also noteworthy was Engineered Fastening's ability to drive outsized organic growth within automotive and generate margin expansion in the quarter despite overall lower volumes. Our Security business demonstrated another quarter of forward progress. Europe delivered positive organic growth, year-over-year margin improvement with margins approaching 10%, strong order rates and attrition at targeted levels for the quarter. Our focus within Security North America remains squarely on improving field productivity where we took another step forward in the quarter evidenced by sequential margin improvement."

2016 Outlook

Donald Allan Jr., Senior Vice President and CFO, commented, "2015 was a strong year in terms of operational execution and 2016 will require a similar effort as we expect continued challenging macroeconomic conditions. Maintaining our focus on operational excellence, and making smart investments to support organic growth while proactively mitigating significant currency headwinds position us to deliver approximately 3% organic growth and EPS of $6.00 - $6.20 (up approximately 3% at the mid-point) in 2016."

The following summarizes key 2016 planning assumptions:

Organic growth of approximately 3% (approximately +$0.45 to $0.50 EPS)
Commodity deflation, cost actions and productivity (approximately +$0.45 to $0.50 EPS)
Lower average share count, including approximately $300 million of share repurchases in 2016 (approximately +$0.13 EPS)
Foreign exchange headwinds of approximately $170 - $190 million (approximately - $0.85 to $0.95 EPS)
Restructuring charges and the tax rate will be relatively consistent with 2015 levels
Free cash flow conversion approximating 100%
Mr. Allan added, "Our 2016 outlook maintains the key elements from our three year financial outlook presented in May 2015, namely above market organic growth, operational efficiency, EPS expansion and improved cash flow return on investment, while incorporating today's global growth and foreign exchange outlook. In addition, we remain committed to our long-term capital allocation plan of returning approximately 50% of free cash flow to shareholders through dividends and opportunistic share repurchases and deploying the balance towards acquisitions."

The Company will host a conference call with investors today, January 28, 2016 at 8:00 am ET. A slide presentation which will accompany the call will be available at www.stanleyblackanddecker.com and will remain available after the call.

You can also access the slides via the Stanley Black & Decker Investor Relations iPad & iPhone app from the Apple App Store by searching for "SWK Investor Relations."

The call will be accessible by telephone within the U.S. at (877) 930-8285, from outside the U.S. at +1 (253) 336-8297, and via the Internet at www.stanleyblackanddecker.com. To participate, please register on the web site at least fifteen minutes prior to the call and download and install any necessary audio software. Please use the conference identification number 19339634. A replay will also be available two hours after the call and can be accessed at (855) 859-2056 or +1 (404) 537-3406 using the passcode 19339634. The replay will also be available as a podcast within 24 hours and can be accessed on our website and via iTunes.

Stanley Black & Decker, an S&P 500 company, is a diversified global provider of hand tools, power tools and related accessories, mechanical access solutions and electronic security solutions, healthcare solutions, engineered fastening systems, and more. Learn more at www.stanleyblackanddecker.com.



Contact:
Greg Waybright

Vice President, Investor & Government Relations

greg.waybright@sbdinc.com

(860) 827-3833


View photo
.Stanley Black & Decker. (PRNewsFoto/Stanley Black & Decker)
These results reflect the Company's continuing operations. In 4Q'14, the Company classified the results of the Security segment's Spain and Italy operations as held for sale based on management's intention to sell these operations. In July 2015, the Company completed the sale of these operations. The operating results of Security Spain and Italy have been reported as discontinued operations for 2014 and through the date of sale for 2015. In 3Q'13, the Company classified two small businesses within the Security and Industrial segments as held for sale based on management's intention to sell these businesses; these businesses were sold during 2014. The operating results of these businesses have been reported as discontinued operations through the date of sale for 2014. Total sales reported as discontinued operations were $39.4 million and $118.4 million for 2015 and 2014, respectively, and $25.2 million for 4Q'14.

In the first quarter of 2015, the Company combined the Construction & Do-It-Yourself ("CDIY") business with certain complementary elements of the Industrial and Automotive Repair ("IAR") and Healthcare businesses (formerly part of the Industrial and Security segments, respectively) to form one Tools & Storage business. As a result of this change, the legacy CDIY segment was renamed Tools & Storage. The Company recast segment net sales and profit for 2014 to align with this change in organizational structure. There is no impact to the consolidated financial statements of the Company as a result of this change.

Organic sales growth is defined as total sales growth less the sales of companies acquired in the past twelve months and any foreign currency impacts. Operating margin is defined as sales less cost of sales and selling, general and administrative expenses. Management uses operating margin and its percentage of net sales as key measures to assess the performance of the Company as a whole, as well as the related measures at the segment level. Free cash flow is defined as cash flow from operations less capital and software expenditures. Management considers free cash flow an important indicator of its liquidity, as well as its ability to fund future growth and to provide a return to the shareowners. Free cash flow does not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company's common stock and business acquisitions, among other items. Normalized free cash flow, as reconciled from the associated GAAP measures on page 10 for 4Q'15 and 4Q'14 is considered a meaningful pro forma metric to aid the understanding of the Company's cash flow performance aside from the material impact of M&A-related payments and charges. Free cash flow conversion is defined as free cash flow divided by net income.

CAUTIONARY STATEMENTS
Under the Private Securities Litigation Reform Act of 1995

Statements in this press release that are not historical, including but not limited to those regarding the Company's ability to: (i) achieve full year 2016 EPS of $6.00 - $6.20 on a GAAP basis (including restructuring charges relatively consistent with 2015 levels); (ii) generate free cash flow conversion approximating 100%; (iii) improve the Company's cash flow return on investment; and (iv) over the long term, return approximately 50% of free cash flow to shareholders through dividends and opportunistic share repurchases while deploying the balance towards acquisitions (collectively, the "Results"); are "forward looking statements" and subject to risk and uncertainty.

The Company's ability to deliver the Results as described above is based on current expectations and involves inherent risks and uncertainties, including factors listed below and other factors that could delay, divert, or change any of them, and could cause actual outcomes and results to differ materially from current expectations. In addition to the risks, uncertainties and other factors discussed in this press release, the risks, uncertainties and other factors that could cause or contribute to actual results differing materially from those expressed or implied in the forward looking statements include, without limitation, those set forth under Item 1A Risk Factors of the Company's Annual Report on Form 10-K and any material changes thereto set forth in any subsequent Quarterly Reports on Form 10-Q, or those contained in the Company's other filings with the Securities and Exchange Commission, and those set forth below.

The Company's ability to deliver the Results is dependent, or based, upon: (i) the Company's ability to increase working capital turns during 2016; (ii) the Company's ability to deliver organic growth of approximately 3% in 2016; (iii) the Company's ability to generate approximately $0.45 to $0.50 of EPS through cost actions, commodity deflation and productivity; (iv) foreign exchange headwinds of approximately $170 - $190 million in 2016; (v) the Company's ability to achieve a tax rate relatively consistent with the 2015 tax rate; (vi) the Company's ability to keep restructuring charges relatively consistent with 2015 levels; (vii) the Company's ability to identify and close on appropriate acquisition opportunities within desired timeframes at reasonable cost; (viii) successful integration of existing and any newly acquired businesses and formation of new business platforms; (ix) the continued acceptance of technologies used in the Company's products and services; (x) the Company's ability to manage existing Sonitrol franchisee and Mac Tools relationships; (xi) the Company's ability to minimize costs associated with any sale or discontinuance of a business or product line, including any severance, restructuring, legal or other costs; (xii) the proceeds realized with respect to any business or product line disposals; (xiii) the extent of any asset impairments with respect to any businesses or product lines that are sold or discontinued; (xiv) the success of the Company's efforts to manage freight costs, steel and other commodity costs as well as capital expenditures; (xv) the Company's ability to sustain or increase prices in order to, among other things, offset or mitigate the impact of steel, freight, energy, non-ferrous commodity and other commodity costs and any inflation increases and/or currency impacts; (xvi) the Company's ability to generate free cash flow and maintain a strong debt to capital ratio; (xvii) the Company's ability to identify and effectively execute productivity improvements and cost reductions, while minimizing any associated restructuring charges; (xviii) the Company's ability to obtain favorable settlement of tax audits; (xix) the ability of the Company to generate earnings sufficient to realize future income tax benefits during periods when temporary differences become deductible, including realizing tax credit carry forward amounts within the allowable carry forward periods; (xx) the continued ability of the Company to access credit markets under satisfactory terms; (xxi) the Company's ability to negotiate satisfactory price and payment terms under which the Company buys and sells goods, services, materials and products; (xxii) the Company's ability to successfully develop, market and achieve sales from new products and services; and (xxiii) the availability of cash to complete approximately $300 million of share repurchases over the course of the year when conditions are right.

The Company's ability to deliver the Results is also dependent upon: (i) the success of the Company's marketing and sales efforts, including the ability to develop and market new and innovative products at the right price points in both existing and new markets; (ii) the ability of the Company to maintain or improve production rates in the Company's manufacturing facilities, respond to significant changes in product demand and fulfill demand for new and existing products; (iii) the Company's ability to continue improvements in working capital through effective management of accounts receivable and inventory levels; (iv) the ability to continue successfully managing and defending claims and litigation; (v) the success of the Company's efforts to mitigate any adverse earnings impact resulting from increases generated by, for example, increases in the cost of energy or significant Chinese Renminbi, Canadian Dollar, Euro, British Pound, Brazilian Real or other currency fluctuations; (vi) the geographic distribution of the Company's earnings; (vii) the commitment to and success of the Stanley Fulfillment System; and (viii) successful implementation with expected results of cost reduction programs.

The Company's ability to achieve the Results will also be affected by external factors. These external factors include: challenging global geopolitical and macroeconomic environment; the economic environment of emerging markets, particularly Latin America, Russia, China and Turkey; pricing pressure and other changes within competitive markets; the continued consolidation of customers particularly in consumer channels; inventory management pressures on the Company's customers; the impact the tightened credit markets may have on the Company or its customers or suppliers; the extent to which the Company has to write off accounts receivable or assets or experiences supply chain disruptions in connection with bankruptcy filings by customers or suppliers; increasing competition; changes in laws, regulations and policies that affect the Company, including, but not limited to trade, monetary, tax and fiscal policies and laws; the timing and extent of any inflation or deflation; the impact of poor weather conditions on sales; currency exchange fluctuations; the impact of dollar/foreign currency exchange and interest rates on the competitiveness of products and the Company's debt program; the strength of the U.S. and European economies; the extent to which world-wide markets associated with homebuilding and remodeling stabilize and rebound; the impact of events that cause or may cause disruption in the Company's supply, manufacturing, distribution and sales networks such as war, terrorist activities, and political unrest; and recessionary or expansive trends in the economies of the world in which the Company operates. The Company undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date hereof.



STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, Millions of Dollars Except Per Share Amounts)













FOURTH QUARTER

YEAR TO DATE



2015

2014

2015

2014










NET SALES

$ 2,845.4

$ 2,982.5

$ 11,171.8

$ 11,338.6










COSTS AND EXPENSES









Cost of sales

1,831.2

1,931.4

7,099.8

7,235.9

Gross margin

1,014.2

1,051.1

4,072.0

4,102.7

% of Net Sales

35.6%

35.2%

36.4%

36.2%











Selling, general and administrative

610.6

658.3

2,486.4

2,595.9

% of Net Sales

21.5%

22.1%

22.3%

22.9%











Operating margin

403.6

392.8

1,585.6

1,506.8

% of Net Sales

14.2%

13.2%

14.2%

13.3%











Other - net

53.8

60.5

222.0

239.6

Restructuring charges

3.7

24.4

47.6

18.8

Income from operations

346.1

307.9

1,316.0

1,248.4











Interest - net

39.7

42.2

165.2

163.6










EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
306.4

265.7

1,150.8

1,084.8

Income taxes on continuing operations

39.1

46.7

248.6

227.1
NET EARNINGS FROM CONTINUING OPERATIONS
267.3

219.0

902.2

857.7











Less: net earnings (loss) attributable to non-controlling interests
0.1

(0.3)

(1.6)

0.5










NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE








TO COMMON SHAREOWNERS

267.2

219.3

903.8

857.2










NET LOSS FROM DISCONTINUED OPERATIONS
(1.7)

(73.5)

(20.1)

(96.3)










NET EARNINGS ATTRIBUTABLE TO COMMON SHAREOWNERS
$ 265.5

$ 145.8

$ 883.7

$ 760.9




















BASIC EARNINGS (LOSS) PER SHARE OF COMMON STOCK








Continuing operations

$ 1.83

$ 1.41

$ 6.10

$ 5.49

Discontinued operations

(0.01)

(0.47)

(0.14)

(0.62)

Total basic earnings per share of common stock
$ 1.82

$ 0.94

$ 5.96

$ 4.87










DILUTED EARNINGS (LOSS) PER SHARE OF COMMON STOCK








Continuing operations

$ 1.78

$ 1.37

$ 5.92

$ 5.37

Discontinued operations

(0.01)

(0.46)

(0.13)

(0.60)

Total diluted earnings per share of common stock
$ 1.77

$ 0.91

$ 5.79

$ 4.76










DIVIDENDS PER SHARE

$ 0.55

$ 0.52

$ 2.14

$ 2.04










AVERAGE SHARES OUTSTANDING (in thousands)








Basic

145,908

155,799

148,234

156,090

Diluted

150,020

160,013

152,706

159,737




STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)









January 2,

January 3,



2016

2015
ASSETS





Cash and cash equivalents

$ 465.4

$ 496.6

Accounts and notes receivable, net
1,331.8

1,396.7

Inventories, net

1,526.4

1,562.7

Assets held for sale

-

29.5

Other current assets

338.5

463.3

Total current assets

3,662.1

3,948.8

Property, plant and equipment, net
1,450.2

1,454.1

Goodwill and other intangibles, net
9,625.8

10,027.2

Other assets

570.4

419.0

Total assets

$ 15,308.5

$ 15,849.1












LIABILITIES AND SHAREOWNERS' EQUITY




Short-term borrowings

$ 7.6

$ 7.5

Accounts payable

1,533.1

1,579.2

Accrued expenses

1,261.9

1,221.9

Liabilities held for sale

-

23.4

Total current liabilities
2,802.6

2,832.0

Long-term debt

3,836.6

3,839.8

Other long-term liabilities

2,810.1

2,665.4

Stanley Black & Decker, Inc. shareowners' equity
5,811.6

6,429.1

Non-controlling interests' equity
47.6

82.8

Total liabilities and equity
$ 15,308.5

$ 15,849.1




STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
SUMMARY OF CASH FLOW ACTIVITY
(Unaudited, Millions of Dollars)



















FOURTH QUARTER

YEAR TO DATE



















2015

2014

2015

2014

OPERATING ACTIVITIES











Net earnings from continuing operations


$ 267.3

$ 219.0

$ 902.2

$ 857.7


Net loss from discontinued operations


(1.7)

(73.5)

(20.1)

(96.3)


Depreciation and amortization


105.6

112.4

414.0

449.8


Changes in working capital1


503.5

433.2

(98.0)

(9.8)


Other



(46.5)

70.5

(15.8)

94.5


Net cash provided by operating activities


828.2

761.6

1,182.3

1,295.9



























INVESTING AND FINANCING ACTIVITIES











Capital and software expenditures


(131.3)

(111.6)

(311.4)

(291.0)


Proceeds from issuances of common stock


79.5

20.3

163.5

71.3


Net short-term (repayments) borrowings


(449.6)

(424.8)

1.2

(391.0)


Net investment hedge settlements


25.5

3.6

137.7

(61.4)


Cash dividends on common stock


(80.7)

(80.8)

(319.9)

(321.3)


Purchases of common stock for treasury


(9.7)

(7.5)

(649.8)

(28.2)


Acquisitions, net of cash acquired


(33.6)

-

(51.1)

(3.2)


Payments on long-term debt


-

(45.7)

(16.1)

(46.6)


Effect of exchange rate changes on cash


(52.1)

(84.0)

(132.9)

(147.1)


Other



(4.1)

(21.3)

(34.7)

(77.0)


Net cash used in investing and financing activities


(656.1)

(751.8)

(1,213.5)

(1,295.5)














Increase (Decrease) in Cash and Cash Equivalents


172.1

9.8

(31.2)

0.4














Cash and Cash Equivalents, Beginning of Period


293.3

486.8

496.6

496.2














Cash and Cash Equivalents, End of Period


$ 465.4

$ 496.6

$ 465.4

$ 496.6



























Free Cash Flow Computation2










Operating cash flow


$ 828.2

$ 761.6

$ 1,182.3

$ 1,295.9

Less: capital and software expenditures


(131.3)

(111.6)

(311.4)

(291.0)

Free cash flow (before dividends)


$ 696.9

$ 650.0

$ 870.9

$ 1,004.9

Merger & Acquisition-related charges and payments4


14.6

36.1

83.3

152.2

Free cash flow, normalized (before dividends)3


$ 711.5

$ 686.1

$ 954.2

$ 1,157.1


1
Working capital is comprised of accounts receivable, inventory, accounts payable and deferred revenue.


2,3
Free cash flow is defined as cash flow from operations less capital and software expenditures. Management considers free cash flow an important measure of its liquidity, as well as its ability to fund future growth and to provide a return to the shareowners. Free cash flow does not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company's common stock and business acquisitions, among other items. Normalized free cash flow, as reconciled above, is considered a meaningful pro forma metric to aid the understanding of the Company's cash flow performance aside from the material impact of merger and acquisition-related activities.


4
Merger & Acquisition-related charges and payments relate primarily to the Black & Decker merger and Niscayah and Infastech acquisitions, including facility closure-related charges, employee-related charges and integration costs.




STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)




FOURTH QUARTER

YEAR TO DATE



2015

2014

2015

2014
NET SALES









Tools & Storage

$ 1,830.9

$ 1,880.0

$ 7,140.7

$ 7,033.0

Security

538.0

589.9

2,092.9

2,261.2

Industrial

476.5

512.6

1,938.2

2,044.4

Total

$ 2,845.4

$ 2,982.5

$ 11,171.8

$ 11,338.6




















SEGMENT PROFIT









Tools & Storage

$ 303.9

$ 300.6

$ 1,170.1

$ 1,074.4

Security

68.8

69.4

239.6

259.2

Industrial

85.5

80.9

339.9

350.6

Segment Profit

458.2

450.9

1,749.6

1,684.2

Corporate Overhead

(54.6)

(58.1)

(164.0)

(177.4)

Total

$ 403.6

$ 392.8

$ 1,585.6

$ 1,506.8




















Segment Profit as a Percentage of Net Sales








Tools & Storage

16.6%

16.0%

16.4%

15.3%

Security

12.8%

11.8%

11.4%

11.5%

Industrial

17.9%

15.8%

17.5%

17.1%

Segment Profit

16.1%

15.1%

15.7%

14.9%

Corporate Overhead

(1.9%)

(1.9%)

(1.5%)

(1.6%)

Total

14.2%

13.2%

14.2%

13.3%

Stanley Black & Decker Reports 3Q 2015 Results

.

PR Newswire
Stanley Black & Decker
October 22, 2015 6:00 AM








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NEW BRITAIN, Conn., Oct. 22, 2015 /PRNewswire/ -- Stanley Black & Decker (SWK) today announced third quarter 2015 financial results.
•3Q'15 Revenues Totaled $2.8 Billion, As Strong Organic Growth Of 6% Was More Than Offset By 8% Currency Impact
•3Q'15 Operating Margin Rate Expanded 70 Basis Points To A Post-Merger Record 14.8% Despite $70 Million Of Currency Headwinds
•3Q'15 Diluted GAAP EPS Was $1.55 Up 1% From 3Q'14 As Strong Operational Performance More Than Offset Tax And Restructuring Headwinds
•Raising 2015 Full Year GAAP EPS Guidance Range To $5.80 To $5.95, From $5.70 To $5.90, Up 8% To 11% Versus 2014

3Q'15 Key Points:
•Net sales for the period were $2.8 billion, down 2% versus prior year, as positive volume (+5%) and price (+1%) were more than offset by currency (-8%).
•Gross margin rate for the quarter was 36.3%, down slightly from the prior year rate of 36.4% as favorable volume leverage, price, productivity, cost actions and commodity deflation substantially offset unfavorable currency.
•SG&A expenses were 21.5% of sales compared to 22.3% in 3Q'14 reflecting volume leverage and cost control.
•Operating margin rate was 14.8% compared to 14.1% in 3Q'14, as actions to improve profitability and generate solid operating leverage more than offset significant unfavorable currency.
•Restructuring charges for the quarter were $14.0 million compared to a restructuring credit of $0.2 million in 3Q'14.
•Tax rate was 24.5% compared to the 3Q'14 rate of 19.1% as a result of higher U.S. vs. foreign earnings in the third quarter of 2015 compared to the prior year and the impact of statutory expirations on certain foreign tax positions in last year's third quarter.
•Average diluted shares outstanding for the quarter were 150.8 million versus 160.6 million a year ago, reflecting the cumulative impact of our recent share repurchase actions including approximately $200 million of opportunistic share repurchases during the quarter capitalizing on recent equity market declines.
•Working capital turns for the quarter were 6.4 compared to 6.5 for 3Q'14. Free cash flow for the quarter was $171 million versus $189 million for 3Q'14.

Stanley Black & Decker's Chairman and CEO, John F. Lundgren, commented, "We achieved continued share gains across much of the portfolio in the third quarter and remain on track to deliver strong organic growth for the year. This organic growth momentum, combined with a sharp focus on cost management and price realization, positions us to deliver meaningful margin expansion and 8-11% EPS growth in 2015 despite severe currency pressure and volatile economic conditions in a number of our markets.

"We continue to leverage our world-class franchises and brands to deliver substantial organic growth and margin expansion, while generating strong free cash flow and maintaining a shareholder friendly capital allocation approach. Although market conditions remain challenging in the near-term, we are confident that our agile leadership team, focus on execution and robust pipeline of innovative new products will enable us to continue our strong performance trend."



3Q'15 Segment Results




($ in M)

3Q'15 Segment Results



Sales

Profit

Profit
Rate







Tools & Storage

$1,838

$307.8

16.7%







Security

$512

$60.8

11.9%







Industrial

$479

$85.4

17.8%



•Tools & Storage net sales increased 2% versus 3Q'14 as volume (+8%) and price (+1%), more than offset unfavorable currency (-7%). Organic growth remained strong across all regions with North America +11%, Europe +7% and the emerging markets +6%. Share gains from innovative new products and brand extensions combined with a healthy underlying U.S. tool market continued to fuel growth in North America despite softness in Canada and industrial channels. Europe continued its above-market organic growth performance due to share gains from new products combined with leveraging an expanded retail footprint and solid commercial momentum in what remains a muted market. The continued roll out of our mid-price-point product offerings along with pricing actions fueled solid organic growth within the emerging markets, most notably in Latin America and portions of Asia, despite continuing pressure in Russia and China. Overall Tools & Storage segment profit rate was 16.7%, up from the 3Q'14 rate of 15.7%, as volume leverage, price, productivity, cost management and lower commodity prices more than offset significant currency pressures.
•Security net sales decreased 8% versus 3Q'14 as price (+1%) was more than offset by lower volumes (-2%) and currency (-7%). Positive momentum accelerated in Europe with organic growth of 4% led by higher installation revenues and broad-based growth throughout the region. Europe's order rates remained strong, up double-digits for the quarter, with recurring revenue attrition contained within the target range of 10-12%. Organic revenues within North America were flat as growth across the mechanical businesses was offset by lower volumes within the electronics business. Emerging markets organic revenues were lower due primarily to slowing market conditions in China. Overall Security segment profit rate was 11.9%, up 150 basis points from the 2Q'15 rate and 30 basis points lower than prior year. The sequential improvement in the rate reflects continued margin expansion within Europe and improved operating performance across the North America businesses.
•Industrial net sales decreased 7% versus 3Q'14 as price (+1%) was more than offset by lower volumes (-1%) and currency (-7%). Engineered Fastening achieved 3% organic growth as strong global automotive and electronics revenues more than offset weaker industrial volumes. As expected, Infrastructure organic revenues decreased 10% due to lower Oil & Gas volumes resulting from delayed or suspended onshore pipeline construction and reduced offshore activity, as well as lower Hydraulic Tools volume due to difficult scrap steel market conditions. Overall Industrial segment profit rate was 17.8%, up from the 3Q'14 rate of 17.7%, as favorable volume leverage from Engineered Fastening, productivity gains and cost control more than offset the impacts of currency and lower Infrastructure volumes.

President and Chief Operating Officer, James M. Loree, commented, "Our results for the quarter, in which we again generated organic growth at the high end of expectations, demonstrate that our commitment to delivering sustained, above-market organic growth is taking root. The Tools & Storage team delivered impressive organic growth of 9% overcoming tough comparables and a weaker industrial end market. Strength within Engineered Fastening's automotive and electronics markets was noteworthy as was our growth within the emerging markets where we are navigating through a volatile and challenging end market backdrop. The Company's operating margin performance for the quarter was also a highlight and another post-merger record.

"Security showed stable organic revenue with impressive strength in Europe, strong order rate trends, and sequential margin improvement – all encouraging signs that this business is on a solid improvement track. The commercial actions we have taken to drive growth in both North America and Europe are beginning to manifest themselves in order rates and backlog while efforts to improve Security's field efficiency and cost structure continue to progress."

Updated 2015 Outlook

Donald Allan Jr., Senior Vice President and CFO, commented, "We are raising the range of our 2015 EPS outlook to $5.80 to $5.95 from $5.70 to $5.90 on a GAAP basis and expect our free cash flow for 2015 to approach $1 billion reflecting the impact of strong organic growth on our working capital levels. Our revised 2015 EPS outlook reflects the impacts of a stronger operational performance combined with incremental commodity deflation which are expected to more than offset a slower growth outlook for the industrial portions of our businesses and slightly higher currency headwinds, now estimated to be closer to the high end of our prior range of $200 to $220 million.

"We continue to be encouraged by our operating results in 2015, most notably our organic growth and expanding margins despite dynamic market conditions in various geographies. We will maintain our operational agility in 2016 as we expect to face continued currency headwinds of approximately $100 million for the year. As always, we will seek to identify cost, commodity deflation and pricing opportunities to partially mitigate this impact and allow us to demonstrate reasonable earnings growth in 2016."



The Company will host a conference call with investors today, October 22, at 8:00 am ET. A slide presentation which will accompany the call will be available at www.stanleyblackanddecker.com and will remain available after the call.

You can also access the slides via the Stanley Black & Decker Investor Relations iPad & iPhone app from the Apple App Store by searching for "SWK Investor Relations".

The call will be accessible by telephone within the U.S. at (877) 930-8285, from outside the U.S. at +1 (253) 336-8297, and via the Internet at www.stanleyblackanddecker.com. To participate, please register on the web site at least fifteen minutes prior to the call and download and install any necessary audio software. Please use the conference identification number 49376260. A replay will also be available two hours after the call and can be accessed at (855) 859-2056 or +1 (404) 537-3406 using the passcode 49376260. The replay will also be available as a podcast within 24 hours and can be accessed on our website and via iTunes.

Stanley Black & Decker, an S&P 500 company, is a diversified global provider of hand tools, power tools and related accessories, mechanical access solutions and electronic security solutions, healthcare solutions, engineered fastening systems, and more. Learn more at www.stanleyblackanddecker.com.





Contact:

Greg Waybright



Vice President, Investor & Government Relations



greg.waybright@sbdinc.com



(860) 827-3833


These results reflect the Company's continuing operations. In 4Q'14, the Company classified the results of the Security segment's Spain and Italy operations as held for sale based on management's intention to sell these operations. In July 2015, the Company completed the sale of these operations. The operating results of Security Spain and Italy have been reported as discontinued operations for 3Q'15 through the date of the sale and 3Q'14. In 3Q'13, the Company classified two small businesses within the Security and Industrial segments as held for sale based on management's intention to sell these businesses; these businesses were sold during 2014. The operating results of these businesses have been reported as discontinued operations for 3Q'14. Total sales reported as discontinued operations were $3.9 million and $28.4 million for 3Q'15 and 3Q'14, respectively.

In the first quarter of 2015, the Company combined the Construction & Do-It-Yourself ("CDIY") business with certain complementary elements of the Industrial and Automotive Repair ("IAR") and Healthcare businesses (formerly part of the Industrial and Security segments, respectively) to form one Tools & Storage business. As a result of this change, the legacy CDIY segment was renamed Tools & Storage. The Company recast segment net sales and profit for 3Q'14 to align with this change in organizational structure. There is no impact to the consolidated financial statements of the Company as a result of this change.

Organic sales growth is defined as total sales growth less the sales of companies acquired in the past twelve months and any foreign currency impacts. Operating margin is defined as sales less cost of sales and selling, general and administrative expenses. Management uses operating margin and its percentage of net sales as key measures to assess the performance of the Company as a whole, as well as the related measures at the segment level. Free cash flow is defined as cash flow from operations less capital and software expenditures. Management considers free cash flow an important indicator of its liquidity, as well as its ability to fund future growth and to provide a return to the shareowners. Free cash flow does not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company's common stock and business acquisitions, among other items. Normalized free cash flow, as reconciled from the associated GAAP measures on page 10 for 3Q'15 and 3Q'14 is considered a meaningful pro forma metric to aid the understanding of the Company's cash flow performance aside from the material impact of M&A-related payments and charges.




CAUTIONARY STATEMENTS
Under the Private Securities Litigation Reform Act of 1995

Statements in this press release that are not historical, including but not limited to those regarding the Company's ability to: (i) achieve full year 2015 EPS of $5.80 - $5.95 on a GAAP basis (including $50 million or $0.25 EPS in restructuring charges); (ii) generate free cash flow approaching $1.0 billion for 2015; (iii) achieve meaningful margin expansion and 8-11% EPS growth in 2015; and (iv) maintain its operational agility and demonstrate reasonable earnings growth in 2016 (collectively, the "Results"); are "forward looking statements" and subject to risk and uncertainty.

The Company's ability to deliver the Results as described above is based on current expectations and involves inherent risks and uncertainties, including factors listed below and other factors that could delay, divert, or change any of them, and could cause actual outcomes and results to differ materially from current expectations. In addition to the risks, uncertainties and other factors discussed in this press release, the risks, uncertainties and other factors that could cause or contribute to actual results differing materially from those expressed or implied in the forward looking statements include, without limitation, those set forth under Item 1A Risk Factors of the Company's Annual Report on Form 10-K and any material changes thereto set forth in any subsequent Quarterly Reports on Form 10-Q, or those contained in the Company's other filings with the Securities and Exchange Commission, and those set forth below.

The Company's ability to deliver the Results is dependent, or based, upon: (i) the Company's ability to deliver sufficient working capital turns expansion to achieve free cash flow approaching $1 billion for 2015; (ii) the Company's ability to deliver organic growth of approximately 6% in 2015; (iii) the Company's ability to successfully execute upon indirect cost actions and to benefit from pricing opportunities and commodity deflation; (iv) foreign exchange headwinds being at the higher end of the $200-$220 million range at the end of 2015 and approximately $100 million in 2016; (v) the Company's ability to achieve a tax rate relatively consistent with the 2014 tax rate; (vi) the Company's ability to limit restructuring charges to approximately $50 million in 2015: (vii) successful integration of existing businesses and formation of new business platforms; (viii) the continued acceptance of technologies used in the Company's products and services; (ix) the Company's ability to manage existing Sonitrol franchisee and Mac Tools relationships; (x) the Company's ability to minimize costs associated with any sale or discontinuance of a business or product line, including any severance, restructuring, legal or other costs; (xi) the proceeds realized with respect to any business or product line disposals; (xii) the extent of any asset impairments with respect to any businesses or product lines that are sold or discontinued; (xiii) the success of the Company's efforts to manage freight costs, steel and other commodity costs as well as capital expenditures; (xiv) the Company's ability to sustain or increase prices in order to, among other things, offset or mitigate the impact of steel, freight, energy, non-ferrous commodity and other commodity costs and any inflation increases and/or currency impacts; (xv) the Company's ability to generate free cash flow and maintain a strong debt to capital ratio; (xvi) the Company's ability to identify and effectively execute productivity improvements and cost reductions, while minimizing any associated restructuring charges; (xvii) the Company's ability to obtain favorable settlement of tax audits; (xviii) the ability of the Company to generate earnings sufficient to realize future income tax benefits during periods when temporary differences become deductible, including realizing tax credit carry forward amounts within the allowable carry forward periods; (xix) the continued ability of the Company to access credit markets under satisfactory terms; (xx) the Company's ability to negotiate satisfactory price and payment terms under which the Company buys and sells goods, services, materials and products; (xxi) the Company's ability to successfully develop, market and achieve sales from new products and services; and (xxii) the availability of cash to repurchase shares when conditions are right.

The Company's ability to deliver the Results is also dependent upon: (i) the success of the Company's marketing and sales efforts, including the ability to develop and market new and innovative products at the right price points in both existing and new markets; (ii) the ability of the Company to maintain or improve production rates in the Company's manufacturing facilities, respond to significant changes in product demand and fulfill demand for new and existing products; (iii) the Company's ability to continue improvements in working capital through effective management of accounts receivable and inventory levels; (iv) the ability to continue successfully managing and defending claims and litigation; (v) the success of the Company's efforts to mitigate any adverse earnings impact resulting from increases generated by, for example, increases in the cost of energy or significant Chinese Renminbi, Canadian Dollar, Euro, British Pound, Brazilian Real or other currency fluctuations; (vi) the geographic distribution of the Company's earnings; (vii) the commitment to and success of the Stanley Fulfillment System; and (viii) successful implementation with expected results of cost reduction programs.

The Company's ability to achieve the Results will also be affected by external factors. These external factors include: challenging global geopolitical and macroeconomic environment; the economic environment of emerging markets, particularly Latin America, Russia, China and Turkey; pricing pressure and other changes within competitive markets; the continued consolidation of customers particularly in consumer channels; inventory management pressures on the Company's customers; the impact the tightened credit markets may have on the Company or its customers or suppliers; the extent to which the Company has to write off accounts receivable or assets or experiences supply chain disruptions in connection with bankruptcy filings by customers or suppliers; increasing competition; changes in laws, regulations and policies that affect the Company, including, but not limited to trade, monetary, tax and fiscal policies and laws; the timing and extent of any inflation or deflation; the impact of poor weather conditions on sales; currency exchange fluctuations; the impact of dollar/foreign currency exchange and interest rates on the competitiveness of products and the Company's debt program; the strength of the U.S. and European economies; the extent to which world-wide markets associated with homebuilding and remodeling stabilize and rebound; the impact of events that cause or may cause disruption in the Company's supply, manufacturing, distribution and sales networks such as war, terrorist activities, and political unrest; and recessionary or expansive trends in the economies of the world in which the Company operates. The Company undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date hereof.





STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited, Millions of Dollars Except Per Share Amounts)






























THIRD QUARTER


YEAR TO DATE






2015


2014


2015


2014















NET SALES


$ 2,829.5


$ 2,878.9


$ 8,326.4


$ 8,356.1















COSTS AND EXPENSES












Cost of sales


1,802.5


1,832.3


5,268.6


5,304.5




Gross margin


1,027.0


1,046.6


3,057.8


3,051.6




% of Net Sales


36.3%


36.4%


36.7%


36.5%
















Selling, general and administrative


608.3


641.1


1,875.8


1,937.6




% of Net Sales


21.5%


22.3%


22.5%


23.2%
















Operating margin


418.7


405.5


1,182.0


1,114.0




% of Net Sales


14.8%


14.1%


14.2%


13.3%
















Other - net


54.0


60.9


168.2


179.1




Restructuring charges (credits)


14.0


(0.2)


43.9


(5.6)




Income from operations


350.7


344.8


969.9


940.5
















Interest - net


41.6


40.4


125.5


121.4















EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

309.1


304.4


844.4


819.1




Income taxes on continuing operations


75.7


58.3


209.5


180.4



NET EARNINGS FROM CONTINUING OPERATIONS

233.4


246.1


634.9


638.7
















Less: net (loss) earnings attributable to non-controlling interests

(0.7)


(0.3)


(1.7)


0.8















NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE











TO COMMON SHAREOWNERS


234.1


246.4


636.6


637.9















NET LOSS FROM DISCONTINUED OPERATIONS

(5.4)


(9.7)


(18.4)


(22.8)















NET EARNINGS ATTRIBUTABLE TO COMMON SHAREOWNERS

$ 228.7


$ 236.7


$ 618.2


$ 615.1



























BASIC EARNINGS (LOSS) PER SHARE OF COMMON STOCK











Continuing operations


$ 1.60


$ 1.57


$ 4.28


$ 4.08




Discontinued operations


(0.04)


(0.06)


(0.12)


(0.15)




Total basic earnings per share of common stock

$ 1.57


$ 1.51


$ 4.15


$ 3.94















DILUTED EARNINGS (LOSS) PER SHARE OF COMMON STOCK











Continuing operations


$ 1.55


$ 1.53


$ 4.15


$ 3.99




Discontinued operations


(0.04)


(0.06)


(0.12)


(0.14)




Total diluted earnings per share of common stock

$ 1.52


$ 1.47


$ 4.03


$ 3.85















DIVIDENDS PER SHARE


$ 0.55


$ 0.52


$ 1.59


$ 1.52















AVERAGE SHARES OUTSTANDING (in thousands)











Basic


145,911


156,628


148,796


156,278




Diluted


150,781


160,582


153,405


159,755








STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED BALANCE SHEETS


(Unaudited, Millions of Dollars)












October 3,


January 3,





2015


2015


ASSETS







Cash and cash equivalents


$ 293.3


$ 496.6



Accounts and notes receivable, net

1,690.9


1,396.7



Inventories, net


1,867.0


1,562.7



Assets held for sale


-


29.5



Other current assets


422.1


463.3



Total current assets


4,273.3


3,948.8



Property, plant and equipment, net

1,407.6


1,454.1



Goodwill and other intangibles, net

9,739.6


10,027.2



Other assets


450.4


419.0



Total assets


$ 15,870.9


$ 15,849.1
















LIABILITIES AND SHAREOWNERS' EQUITY






Short-term borrowings


$ 457.0


$ 7.5



Accounts payable


1,718.9


1,579.2



Accrued expenses


1,246.4


1,221.9



Liabilities held for sale


-


23.4



Total current liabilities

3,422.3


2,832.0



Long-term debt


3,847.3


3,839.8



Other long-term liabilities


2,880.7


2,665.4



Stanley Black & Decker, Inc. shareowners' equity

5,639.0


6,429.1



Non-controlling interests' equity

81.6


82.8



Total liabilities and equity

$ 15,870.9


$ 15,849.1








STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES


SUMMARY OF CASH FLOW ACTIVITY


(Unaudited, Millions of Dollars)






















THIRD QUARTER


YEAR TO DATE






















2015


2014


2015


2014



OPERATING ACTIVITIES













Net earnings from continuing operations



$ 233.4


$ 246.1


$ 634.9


$ 638.7




Net loss from discontinued operations



(5.4)


(9.7)


(18.4)


(22.8)




Depreciation and amortization



103.9


112.6


308.4


337.4




Changes in working capital1



(173.1)


(168.6)


(601.5)


(443.0)




Other




80.2


68.7


30.7


24.0




Net cash provided by operating activities



239.0


249.1


354.1


534.3































INVESTING AND FINANCING ACTIVITIES













Capital and software expenditures



(68.5)


(60.2)


(180.1)


(179.4)




Proceeds from issuances of common stock



9.3


23.4


84.0


51.0




Net short-term borrowings (repayments)



32.1


(48.8)


450.8


33.8




Net investment hedge settlements



48.3


(29.2)


112.2


(65.0)




Cash dividends on common stock



(79.7)


(81.4)


(239.2)


(240.5)




Purchases of common stock for treasury



(192.1)


(1.3)


(640.1)


(20.7)




Effect of exchange rate changes on cash



(38.7)


(66.3)


(80.8)


(63.1)




Other




(48.3)


(14.2)


(64.2)


(59.8)




Net cash used in investing and financing activities



(337.6)


(278.0)


(557.4)


(543.7)

















Decrease in Cash and Cash Equivalents



(98.6)


(28.9)


(203.3)


(9.4)

















Cash and Cash Equivalents, Beginning of Period



391.9


515.7


496.6


496.2

















Cash and Cash Equivalents, End of Period



$ 293.3


$ 486.8


$ 293.3


$ 486.8































Free Cash Flow Computation2












Operating cash inflow



$ 239.0


$ 249.1


$ 354.1


$ 534.3



Less: capital and software expenditures



(68.5)


(60.2)


(180.1)


(179.4)



Free cash inflow (before dividends)



$ 170.5


$ 188.9


$ 174.0


$ 354.9



Merger & Acquisition-related charges and payments4



20.4


29.5


68.7


116.1



Free cash inflow, normalized (before dividends)3



$ 190.9


$ 218.4


$ 242.7


$ 471.0
















1

Working capital is comprised of accounts receivable, inventory, accounts payable and deferred revenue.
















2,3

Free cash flow is defined as cash flow from operations less capital and software expenditures. Management considers free cash flow an important measure of its liquidity, as well as its ability to fund future growth and to provide a return to the shareowners. Free cash flow does not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company's common stock and business acquisitions, among other items. Normalized free cash flow, as reconciled above, is considered a meaningful pro forma metric to aid the understanding of the Company's cash flow performance aside from the material impact of merger and acquisition-related activities.
















4

Merger & Acquisition-related charges and payments relate primarily to the Black & Decker merger and Niscayah and Infastech acquisitions, including facility closure-related charges, employee-related charges and integration costs.








STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES


BUSINESS SEGMENT INFORMATION


(Unaudited, Millions of Dollars)
































THIRD QUARTER


YEAR TO DATE







2015


2014


2015


2014




NET SALES













Tools & Storage


$ 1,838.2


$ 1,806.4


$ 5,309.8


$ 5,153.0





Security


512.0


554.8


1,554.9


1,671.3





Industrial


479.3


517.7


1,461.7


1,531.8





Total


$ 2,829.5


$ 2,878.9


$ 8,326.4


$ 8,356.1






























SEGMENT PROFIT













Tools & Storage


$ 307.8


$ 284.1


$ 866.2


$ 773.8





Security


60.8


67.6


170.8


189.8





Industrial


85.4


91.5


254.4


269.7





Segment Profit


454.0


443.2


1,291.4


1,233.3





Corporate Overhead


(35.3)


(37.7)


(109.4)


(119.3)





Total


$ 418.7


$ 405.5


$ 1,182.0


$ 1,114.0






























Segment Profit as a Percentage of Net Sales












Tools & Storage


16.7%


15.7%


16.3%


15.0%





Security


11.9%


12.2%


11.0%


11.4%





Industrial


17.8%


17.7%


17.4%


17.6%





Segment Profit


16.0%


15.4%


15.5%


14.8%





Corporate Overhead


(1.2%)


(1.3%)


(1.3%)


(1.4%)





Total


14.8%


14.1%


14.2%


13.3%

Stanley Black & Decker Reports 2Q 2015 Results

.

PR Newswire
Stanley Black & Decker
July 30, 2015 6:00 AM








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NEW BRITAIN, Conn., July 30, 2015 /PRNewswire/ -- Stanley Black & Decker (SWK) today announced second quarter 2015 financial results.
•2Q'15 Revenues Totaled $2.9 Billion, Flat To Prior Year, As Robust Organic Growth Of 8% Was Offset By An 8% Currency Impact
•2Q'15 Operating Margin Rate Expanded 70 Basis Points To A Post-Merger Record 14.4% Despite $50 Million Of Currency Headwinds
•2Q'15 Diluted GAAP EPS Was $1.54 Up 11% From 2Q'14 On Strong Operational Performance
•Raising 2015 Full Year GAAP EPS Guidance Range To $5.70 To $5.90 From $5.65 To $5.85, Up 6% To 10% Versus 2014, Despite $1.00 To $1.10 Per Share Of Foreign Currency EPS Pressure

2Q'15 Key Points:
•Net sales for the period were $2.9 billion, flat to prior year, as positive volume (+7%) and price (+1%) were offset by currency (-8%).

•Gross margin rate for the quarter was 36.9%, up 20 basis points from the prior year rate of 36.7% as a result of favorable volume leverage, price, productivity and cost actions which more than offset unfavorable currency.

•SG&A expenses were 22.5% of sales compared to 22.9% in 2Q'14 reflecting volume leverage and cost control.

•Operating margin rate was 14.4% up 70 basis points from 2Q'14, reflecting actions to improve profitability and generate solid operating leverage which more than offset unfavorable currency.

•Restructuring charges for the quarter were $5.0 million compared to a restructuring credit of $1.7 million in 2Q'14.

•Tax rate was 25.0% equal to the 2Q'14 rate.

•Average diluted shares outstanding for the quarter were 152.7 million versus 159.7 million a year ago, reflecting the cumulative impact of our recent share repurchase program, including the repurchase of approximately $100 million of shares during the quarter.

•Working capital turns for the quarter were 7.0, up 0.2 turns from 2Q'14. Free cash flow for the quarter was $247 million versus $376 million for 2Q'14 reflecting an increased level of working capital to support higher organic growth.

Stanley Black & Decker's Chairman and CEO, John F. Lundgren, commented, "Our results from the second quarter and first half of 2015, combined with our recently increased dividend, reflect the continued successful execution of the strategy we communicated at our Investor Day in May: leveraging our world-class franchises and brands to deliver substantial organic growth and margin expansion, while generating strong free cash flow and maintaining a shareholder friendly capital allocation program. Organic growth and operating leverage were strong across most of the business, innovation is robust, and the organization remains agile, giving us confidence in our ability to navigate the uncertain currency and macro conditions we expect to continue to face in the back half of this year, and positioning us to meet our updated full year financial commitments."







2Q'15 Segment Results














($ in M)

2Q'15 Segment Results




Sales

Profit

Profit
Rate









Tools & Storage

$1,840

$301.6

16.4%









Security

$533

$55.2

10.4%









Industrial

$494

$94.3

19.1%




•Tools & Storage net sales increased 4% versus 2Q'14 as volume (+10%) and price (+1%), were partially offset by currency (-7%). Organic growth was strong across the board with North America, Europe and emerging markets up 14%, 7% and 5%, respectively. North America, which posted its fourth consecutive quarter of double-digit organic growth, continued to benefit from healthy underlying tool demand, share gains from new products and brand extensions, along with a favorable outdoor season. Europe maintained its trend of strong organic growth as new products, an expanded retail footprint, and solid commercial momentum continued to generate share gains in many markets amid a challenged growth environment. Emerging markets organic growth resulted from mid-price-point product launches and pricing actions, most notably in Latin America, which offset steep declines in Russia and slow market conditions in China. Overall Tools & Storage segment profit rate was a post-merger record 16.4%, up from the 2Q'14 rate of 15.6%, as volume leverage, price, productivity and cost management more than offset currency pressures.

•Security net sales decreased 7% versus 2Q'14 as organic growth of 1%, driven by slightly positive volume and price, was significantly impacted by currency (-8%). Organic growth within North America & emerging markets ("NA & EM") was flat as organic growth across the NA businesses was offset by declines in EM due to a slow China market. Europe's organic growth accelerated in the quarter (+3%), as higher installation revenues led to the region's third consecutive quarter of flat or positive organic growth, with growth in all major countries. Order rates in Europe were also strong, up double digits for the quarter, with attrition remaining within the target range of 10-12%. Overall Security segment profit rate was 10.4%, 170 basis points below 2Q'14. The year-over-year decrease in the rate relates primarily to the impact of project mix within the NA electronics business and sluggish EM volumes which more than offset improved operating performance within Europe and the NA mechanical business.

In addition, the Company completed the sale of Security Europe's Spain and Italy operations in July. The results of these operations have been reported as discontinued operations beginning in 4Q'14.

•Industrial net sales decreased 4% versus 2Q'14 as volume (+3%) and price (+1%) were more than offset by currency (-8%). Engineered Fastening achieved 4% organic growth driven by strong global automotive and electronics revenues, which more than offset weaker North American industrial volumes. Infrastructure organic revenues increased 3% as higher Oil & Gas volume, which benefited from a large international equipment sale during the quarter, more than offset lower Hydraulic Tools volume due to difficult market dynamics related to scrap steel. Overall Industrial segment profit rate was 19.1%, up 140 basis points from the 2Q'14 rate of 17.7%, as favorable volume leverage from Engineered Fastening and Oil & Gas, productivity gains and cost control more than offset the impact from currency and lower Hydraulic Tools volume.

President and Chief Operating Officer, James M. Loree, commented, "Our second quarter represented the fourth successive quarter of organic growth at or above 6% -- a sign that our efforts to build a culture geared towards organic growth are gaining traction. This impressive growth was once again led by our Tools & Storage platform, which has averaged 10% organic growth over this time period, while emerging markets in total despite weakness in China and Engineered Fastening also showed strength.

"Security's top-line performance was solid and we are encouraged by order rate trends, which reflect the impact of commercial actions aimed at driving growth in both North America and Europe. We were particularly pleased with the organic growth and operating margin results in Europe, which continues to perform to expectations, as well as within the North America mechanical access business. Security's overall margin performance fell short of our expectations for the quarter, however, as we have previously communicated, the multi-year growth and margin rate recovery trajectory of this business will not necessarily be linear. We still believe Security will achieve its growth and profitability objectives and remain committed to completing our assessment of its strategic fit by the second half of 2016. "

Updated 2015 Outlook

Donald Allan Jr., Senior Vice President and CFO, commented, "We are raising the range of our 2015 EPS outlook to $5.70 to $5.90 from $5.65 to $5.85 on a GAAP basis. We are maintaining our free cash flow outlook of at least $1 billion, however, we are closely monitoring the relatively higher working capital levels experienced in the first half of the year to ensure our working capital is adequate to service the higher organic growth expectations, which could modestly pressure free cash flow. Our current 2015 EPS outlook reflects the strong first half performance and improved full-year organic outlook within Tools & Storage and to a lesser extent our Engineered Fastening business, combined with additional indirect cost actions which, in the aggregate, are expected to more than offset Security's slower improvement. It is also important to note that since the beginning of the fourth quarter of 2014 we have reduced our share count by the equivalent of ~$1 billion of shares utilizing a combination of cash as well as equity derivatives, achieving our share repurchase plan announced in late 2013.

"We are encouraged by our overall first half performance despite difficult currency and market conditions and remain confident that 2015 will be another step forward in achieving our 2018 financial objectives that we communicated in May."

The Company will host a conference call with investors today, July 30, at 8:00 am ET. A slide presentation which will accompany the call will be available at www.stanleyblackanddecker.com and will remain available after the call.

You can also access the slides via the Stanley Black & Decker Investor Relations iPad & iPhone app from the Apple App Store by searching for "SWK Investor Relations".

The call will be accessible by telephone within the U.S. at (877) 930-8285, from outside the U.S. at +1 (253) 336-8297, and via the Internet at www.stanleyblackanddecker.com. To participate, please register on the web site at least fifteen minutes prior to the call and download and install any necessary audio software. Please use the conference identification number 77039075. A replay will also be available two hours after the call and can be accessed at (855) 859-2056 or +1 (404) 537-3406 using the passcode 77039075. The replay will also be available as a podcast within 24 hours and can be accessed on our website and via iTunes.

Stanley Black & Decker, an S&P 500 company, is a diversified global provider of hand tools, power tools and related accessories, mechanical access solutions and electronic security solutions, healthcare solutions, engineered fastening systems, and more. Learn more at www.stanleyblackanddecker.com.






Contact:

Greg Waybright



Vice President, Investor & Government Relations



greg.waybright@sbdinc.com



(860) 827-3833





These results reflect the Company's continuing operations. In 4Q'14, the Company classified the results of the Security segment's Spain and Italy operations as held for sale based on management's intention to sell these operations. In July 2015, the Company completed the sale of these operations. The operating results of Security Spain and Italy have been reported as discontinued operations for 2Q'15 and 2Q'14. In 3Q'13, the Company classified two small businesses within the Security and Industrial segments as held for sale based on management's intention to sell these businesses; these businesses were sold during 2014. The operating results of these businesses have been reported as discontinued operations for 2Q'14. Total sales reported as discontinued operations were $17.6 million and $33.4 million for 2Q'15 and 2Q'14, respectively.

In the first quarter of 2015, the Company combined the Construction & Do-It-Yourself ("CDIY") business with certain complementary elements of the Industrial and Automotive Repair ("IAR") and Healthcare businesses (formerly part of the Industrial and Security segments, respectively) to form one Tools & Storage business. As a result of this change, the legacy CDIY segment was renamed Tools & Storage. The Company recast segment net sales and profit for 2Q'14 to align with this change in organizational structure. There is no impact to the consolidated financial statements of the Company as a result of this change.

Organic sales growth is defined as total sales growth less the sales of companies acquired in the past twelve months and any foreign currency impacts. Operating margin is defined as sales less cost of sales and selling, general and administrative expenses. Management uses operating margin and its percentage of net sales as key measures to assess the performance of the Company as a whole, as well as the related measures at the segment level. Free cash flow is defined as cash flow from operations less capital and software expenditures. Management considers free cash flow an important indicator of its liquidity, as well as its ability to fund future growth and to provide a return to the shareowners. Free cash flow does not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company's common stock and business acquisitions, among other items. Normalized free cash flow, as reconciled from the associated GAAP measures on page 10 for 2Q'15 and 2Q'14 is considered a meaningful pro forma metric to aid the understanding of the Company's cash flow performance aside from the material impact of M&A-related payments and charges.





CAUTIONARY STATEMENTS
Under the Private Securities Litigation Reform Act of 1995




Statements in this press release that are not historical, including but not limited to those regarding the Company's ability to: (i) achieve full year 2015 EPS of $5.70 - $5.90 on a GAAP basis (including $50 million or $0.25 EPS in restructuring charges); (ii) generate free cash flow of at least $1.0 billion for 2015; (iii) maintain Security margin rates relatively flat to the prior year during 2015; and (iv) achieve its 2018 financial objectives as communicated at the Investor Day conference in May (collectively, the "Results"); are "forward looking statements" and subject to risk and uncertainty.




The Company's ability to deliver the Results as described above is based on current expectations and involves inherent risks and uncertainties, including factors listed below and other factors that could delay, divert, or change any of them, and could cause actual outcomes and results to differ materially from current expectations. In addition to the risks, uncertainties and other factors discussed in this press release, the risks, uncertainties and other factors that could cause or contribute to actual results differing materially from those expressed or implied in the forward looking statements include, without limitation, those set forth under Item 1A Risk Factors of the Company's Annual Report on Form 10-K and any material changes thereto set forth in any subsequent Quarterly Reports on Form 10-Q, or those contained in the Company's other filings with the Securities and Exchange Commission, and those set forth below.




The Company's ability to deliver the Results is dependent, or based, upon: (i) the Company's ability to deliver sufficient working capital turns expansion to achieve at least $1 billion of free cash flow for 2015; (ii) the Company's ability to deliver organic growth of approximately 6% (iii) the Company's ability to successfully execute upon indirect cost actions and to benefit from pricing and cost deflation; (iv) the Company's ability to sufficiently lower its average share count in 2015; (v) foreign exchange headwinds being approximately $200-$220 million in 2015; (vi) the Company's ability to achieve a tax rate relatively consistent with the 2014 tax rate; (vii) the Company's ability to limit restructuring charges to approximately $50 million in 2015: (viii) successful integration of acquisitions completed during the year, as well as integration of existing businesses and formation of new business platforms; (ix) the continued acceptance of technologies used in the Company's products and services; (x) the Company's ability to manage existing Sonitrol franchisee and Mac Tools relationships; (xi) the Company's ability to minimize costs associated with any sale or discontinuance of a business or product line, including any severance, restructuring, legal or other costs; (xii) the proceeds realized with respect to any business or product line disposals; (xiii) the extent of any asset impairments with respect to any businesses or product lines that are sold or discontinued; (xiv) the success of the Company's efforts to manage freight costs, steel and other commodity costs as well as capital expenditures; (xv) the Company's ability to sustain or increase prices in order to, among other things, offset or mitigate the impact of steel, freight, energy, non-ferrous commodity and other commodity costs and any inflation increases and/or currency impacts; (xvi) the Company's ability to generate free cash flow and maintain a strong debt to capital ratio; (xvii) the Company's ability to identify and effectively execute productivity improvements and cost reductions, while minimizing any associated restructuring charges; (xviii) the Company's ability to obtain favorable settlement of tax audits; (xix) the ability of the Company to generate earnings sufficient to realize future income tax benefits during periods when temporary differences become deductible, including realizing tax credit carry forward amounts within the allowable carry forward periods; (xx) the continued ability of the Company to access credit markets under satisfactory terms; (xxi) the Company's ability to negotiate satisfactory price and payment terms under which the Company buys and sells goods, services, materials and products; (xxii) the Company's ability to successfully develop, market and achieve sales from new products and services; and (xxiii) the availability of cash to repurchase shares when conditions are right.




The Company's ability to deliver the Results is also dependent upon: (i) the success of the Company's marketing and sales efforts, including the ability to develop and market new and innovative products at the right price points in both existing and new markets; (ii) the ability of the Company to maintain or improve production rates in the Company's manufacturing facilities, respond to significant changes in product demand and fulfill demand for new and existing products; (iii) the Company's ability to continue improvements in working capital through effective management of accounts receivable and inventory levels; (iv) the ability to continue successfully managing and defending claims and litigation; (v) the success of the Company's efforts to mitigate any adverse earnings impact resulting from increases generated by, for example, increases in the cost of energy or significant Euro, Canadian Dollar, Chinese Renminbi or other currency fluctuations; (vi) the geographic distribution of the Company's earnings; (vii) the commitment to and success of the Stanley Fulfillment System; and (viii) successful implementation with expected results of cost reduction programs.




The Company's ability to achieve the Results will also be affected by external factors. These external factors include: challenging global geopolitical and macroeconomic environment; the economic environment of emerging markets, particularly Latin America, Russia and Turkey; pricing pressure and other changes within competitive markets; the continued consolidation of customers particularly in consumer channels; inventory management pressures on the Company's customers; the impact the tightened credit markets may have on the Company or its customers or suppliers; the extent to which the Company has to write off accounts receivable or assets or experiences supply chain disruptions in connection with bankruptcy filings by customers or suppliers; increasing competition; changes in laws, regulations and policies that affect the Company, including, but not limited to trade, monetary, tax and fiscal policies and laws; the timing and extent of any inflation or deflation; the impact of poor weather conditions on sales; currency exchange fluctuations; the impact of dollar/foreign currency exchange and interest rates on the competitiveness of products and the Company's debt program; the strength of the U.S. and European economies; the extent to which world-wide markets associated with homebuilding and remodeling stabilize and rebound; the impact of events that cause or may cause disruption in the Company's supply, manufacturing, distribution and sales networks such as war, terrorist activities, and political unrest; and recessionary or expansive trends in the economies of the world in which the Company operates. The Company undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date hereof.








STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited, Millions of Dollars Except Per Share Amounts)






























SECOND QUARTER


YEAR TO DATE






2015


2014


2015


2014















NET SALES


$ 2,866.9


$ 2,860.1


$ 5,496.9


$ 5,477.2















COSTS AND EXPENSES












Cost of sales


1,809.7


1,811.5


3,466.1


3,472.2




Gross margin


1,057.2


1,048.6


2,030.8


2,005.0




% of Net Sales


36.9%


36.7%


36.9%


36.6%
















Selling, general and administrative


644.5


655.9


1,267.5


1,296.5




% of Net Sales


22.5%


22.9%


23.1%


23.7%
















Operating margin


412.7


392.7


763.3


708.5




% of Net Sales


14.4%


13.7%


13.9%


12.9%
















Other - net


50.5


57.3


114.2


118.2




Restructuring charges (credits)


5.0


(1.7)


29.9


(5.4)




Income from operations


357.2


337.1


619.2


595.7
















Interest - net


43.2


40.3


83.9


81.0















EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

314.0


296.8


535.3


514.7




Income tax expense on continuing operations

78.5


74.1


133.8


122.1



NET EARNINGS FROM CONTINUING OPERATIONS

235.5


222.7


401.5


392.6
















Less: net (loss) earnings attributable to non-controlling interests

(0.2)


0.9


(1.0)


1.1















NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE











TO COMMON SHAREOWNERS


235.7


221.8


402.5


391.5















NET LOSS FROM DISCONTINUED OPERATIONS

(8.5)


(5.3)


(13.0)


(13.1)















NET EARNINGS ATTRIBUTABLE TO COMMON SHAREOWNERS

$ 227.2


$ 216.5


$ 389.5


$ 378.4



























BASIC EARNINGS (LOSS) PER SHARE OF COMMON STOCK











Continuing operations


$ 1.59


$ 1.42


$ 2.68


$ 2.51




Discontinued operations


(0.06)


(0.03)


(0.09)


(0.08)




Total basic earnings per share of common stock

$ 1.53


$ 1.38


$ 2.59


$ 2.42















DILUTED EARNINGS (LOSS) PER SHARE OF COMMON STOCK











Continuing operations


$ 1.54


$ 1.39


$ 2.60


$ 2.46




Discontinued operations


(0.06)


(0.03)


(0.08)


(0.08)




Total diluted earnings per share of common stock

$ 1.49


$ 1.36


$ 2.51


$ 2.37















DIVIDENDS PER SHARE


$ 0.52


$ 0.50


$ 1.04


$ 1.00















AVERAGE SHARES OUTSTANDING (in thousands)











Basic


148,059


156,316


150,339


156,097




Diluted


152,663


159,666


154,881


159,354






























STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED BALANCE SHEETS


(Unaudited, Millions of Dollars)












July 4,


January 3,





2015


2015


ASSETS







Cash and cash equivalents


$ 391.9


$ 496.6



Accounts and notes receivable, net

1,645.9


1,396.7



Inventories, net


1,839.6


1,562.7



Assets held for sale


19.1


29.5



Other current assets


448.3


463.3



Total current assets


4,344.8


3,948.8



Property, plant and equipment, net

1,419.2


1,454.1



Goodwill and other intangibles, net

9,798.7


10,027.2



Other assets


436.1


419.0



Total assets


$ 15,998.8


$ 15,849.1
















LIABILITIES AND SHAREOWNERS' EQUITY






Short-term borrowings


$ 440.5


$ 7.5



Accounts payable


1,764.6


1,579.2



Accrued expenses


1,158.9


1,221.9



Liabilities held for sale


21.0


23.4



Total current liabilities

3,385.0


2,832.0



Long-term debt


3,823.2


3,839.8



Other long-term liabilities


2,924.1


2,665.4



Stanley Black & Decker, Inc. shareowners' equity

5,784.2


6,429.1



Non-controlling interests' equity

82.3


82.8



Total liabilities and equity

$ 15,998.8


$ 15,849.1













STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES


SUMMARY OF CASH FLOW ACTIVITY


(Unaudited, Millions of Dollars)






















SECOND QUARTER


YEAR TO DATE






















2015


2014


2015


2014



OPERATING ACTIVITIES













Net earnings from continuing operations



$ 235.5


$ 222.7


$ 401.5


$ 392.6




Net loss from discontinued operations



(8.5)


(5.3)


(13.0)


(13.1)




Depreciation and amortization



102.0


114.4


204.5


224.8




Changes in working capital1



(50.5)


55.9


(428.4)


(274.4)




Other




34.1


49.5


(49.5)


(44.7)




Net cash provided by operating activities



312.6


437.2


115.1


285.2































INVESTING AND FINANCING ACTIVITIES













Capital and software expenditures



(65.7)


(61.4)


(111.6)


(119.2)




Proceeds from issuances of common stock



31.7


14.4


74.7


27.6




Net short-term (repayments) borrowings



(180.2)


(199.7)


418.7


82.6




Net investment hedge settlements



33.5


(29.5)


63.9


(35.8)




Cash dividends on common stock



(76.8)


(78.4)


(159.5)


(159.1)




Purchases of common stock for treasury



(100.0)


-


(448.0)


(19.4)




Effect of exchange rate changes on cash



3.5


10.3


(42.1)


3.2




Other




(2.2)


(9.8)


(15.9)


(45.6)




Net cash used in investing and financing activities



(356.2)


(354.1)


(219.8)


(265.7)

















(Decrease) Increase in Cash and Cash Equivalents



(43.6)


83.1


(104.7)


19.5

















Cash and Cash Equivalents, Beginning of Period



435.5


432.6


496.6


496.2

















Cash and Cash Equivalents, End of Period



$ 391.9


$ 515.7


$ 391.9


$ 515.7































Free Cash Flow Computation2












Operating cash inflow



$ 312.6


$ 437.2


$ 115.1


$ 285.2



Less: capital and software expenditures



(65.7)


(61.4)


(111.6)


(119.2)



Free cash inflow (before dividends)



$ 246.9


$ 375.8


$ 3.5


$ 166.0



Merger & Acquisition-related charges and payments4



28.5


34.8


48.3


86.6



Free cash inflow, normalized (before dividends)3



$ 275.4


$ 410.6


$ 51.8


$ 252.6
















1

Working capital is comprised of accounts receivable, inventory, accounts payable and deferred revenue.
















2,3

Free cash flow is defined as cash flow from operations less capital and software expenditures. Management considers free cash flow an important measure of its liquidity, as well as its ability to fund future growth and to provide a return to the shareowners. Free cash flow does not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company's common stock and business acquisitions, among other items. Normalized free cash flow, as reconciled above, is considered a meaningful pro forma metric to aid the understanding of the Company's cash flow performance aside from the material impact of merger and acquisition-related activities.
















4

Merger & Acquisition-related charges and payments relate primarily to the Black & Decker merger and Niscayah and Infastech acquisitions, including facility closure-related charges, employee-related charges and integration costs.








STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES


BUSINESS SEGMENT INFORMATION


(Unaudited, Millions of Dollars)
































SECOND QUARTER


YEAR TO DATE







2015


2014


2015


2014




NET SALES













Tools & Storage


$ 1,839.5


$ 1,771.8


$ 3,471.6


$ 3,346.6





Security


533.3


571.6


1,042.9


1,116.5





Industrial


494.1


516.7


982.4


1,014.1





Total


$ 2,866.9


$ 2,860.1


$ 5,496.9


$ 5,477.2






























SEGMENT PROFIT













Tools & Storage


$ 301.6


$ 276.9


$ 558.4


$ 489.7





Security


55.2


69.4


110.0


122.2





Industrial


94.3


91.5


169.0


178.2





Segment Profit


451.1


437.8


837.4


790.1





Corporate Overhead


(38.4)


(45.1)


(74.1)


(81.6)





Total


$ 412.7


$ 392.7


$ 763.3


$ 708.5






























Segment Profit as a Percentage of Net Sales












Tools & Storage


16.4%


15.6%


16.1%


14.6%





Security


10.4%


12.1%


10.5%


10.9%





Industrial


19.1%


17.7%


17.2%


17.6%





Segment Profit


15.7%


15.3%


15.2%


14.4%





Corporate Overhead


(1.3%)


(1.6%)


(1.3%)


(1.5%)





Total


14.4%


13.7%


13.9%


12.9%

If all goes well this should show some growth at the end of the year! Christmas time then 2016 spring time fixer uppers for homes should drive some sales up as well. we'll see.

Stanley Black & Decker Reports 1Q 2015 Results
PR Newswire
Stanley Black & Decker
April 23, 2015 6:00 AM


NEW BRITAIN, Conn., April 23, 2015 /PRNewswire/ -- Stanley Black & Decker (SWK) today announced first quarter 2015 financial results.
•1Q'15 Revenues Increased 1% To $2.6 Billion; Robust Organic Growth Of 8% Mostly Offset By 7% Currency Impact
•1Q'15 Operating Margin Expanded 120 Basis Points To 13.3% Despite $50 Million Of Currency Headwinds
•1Q'15 Diluted GAAP EPS Was $1.07 Consistent With 1Q'14 As Strong Operational Performance Was Offset By Higher Planned Restructuring Charges And A Higher Tax Rate
•Executed Actions That Reduced Share Count By Approximately 8 Million Shares During The Quarter
•Reiterating 2015 Full Year GAAP EPS Guidance Range Of $5.65 To $5.85, Up 5% To 9%, Despite $60 To $70 Million ($0.30 To $0.35 Per Share) In New, Incremental Foreign Currency OM Pressure
•Year Over Year Currency-Related EPS Headwinds Included In Full Year Guidance Now Total $1.00 To $1.10 (19% To 20% Of Prior Year EPS)
•2015 Free Cash Flow Still Expected To Be At Least $1.0 Billion

1Q'15 Key Points:
•Net sales for the period were $2.6 billion, up 1% versus prior year, as positive volume (+7%) and price (+1%) were substantially offset by currency (-7%).


•Gross margin rate for the quarter was 37.0%, up 50 basis points from the prior year rate of 36.5% as a result of favorable volume, price, productivity and cost actions which more than offset unfavorable currency.


•SG&A expenses were 23.7% of sales compared to 24.5% in 1Q'14 reflecting volume leverage and cost control.


•Operating margin rate was 13.3% up 120 basis points from 1Q'14, reflecting actions to improve profitability and generate operating leverage which more than offset unfavorable currency.


•Restructuring charges for the quarter were $24.9 million compared to a restructuring credit of $3.7 million in 1Q'14.


•Tax rate was 25.0%, slightly higher than anticipated and 300 basis points higher than last year's rate due to the timing of certain tax benefits and earnings mix.


•Average diluted shares outstanding for the quarter were 156.5 million versus 160.0 million in 4Q'14 and 159.0 million a year ago, reflecting the impact of our share repurchase program.


•Working capital turns for the quarter were 6.6, up 0.6 turns from 1Q'14. Free cash flow for the quarter, in line with normal seasonality, was an outflow of $243 million versus an outflow of $210 million for 1Q'14.

Stanley Black & Decker's Chairman and CEO, John F. Lundgren, commented, "As we entered 2015, our annual objectives remained focused on delivering solid organic growth, meaningful operating leverage and strong free cash flow coupled with capital allocation actions designed to drive sustainable value for shareholders. We posted strong organic growth and operating leverage in our Tools & Storage and Engineered Fastening businesses in the face of a challenging currency environment, and continued to execute on our plan to improve operating performance in Security. Our long-term strategy and financial objectives remain intact, and we are well-positioned to meet our commitments for the balance of the year despite intensified currency headwinds and a continued volatile macro environment."



1Q'15 Segment Results






($ in M)

1Q'15 Segment Results




Sales

Profit

Profit
Rate









Tools & Storage

$1,632

$256.8

15.7%









Security

$510

$54.8

10.8%









Industrial

$488

$74.7

15.3%




•Tools & Storage net sales increased 3% versus 1Q'14 as volume (+9%) and price (+1%), were partially offset by currency (-7%). Organic growth was particularly strong in North America (+15%) and Europe (+9%). North America continued to benefit from healthy underlying tool demand across the construction and industrial channels as well as share gains from new products and brand extensions aided by strong execution at the customer level. Europe's trend of strong organic growth continued as new products, an expanded retail footprint and solid commercial momentum continued to generate share gains in many markets, in spite of a challenged overall economic recovery. Emerging markets organic growth was relatively flat, as strong growth from mid-price point product launches and pricing actions, most notably in Latin America, offset steep declines in Russia and softness in China. Overall segment profit rate was 15.7%, up from the 1Q'14 rate of 13.5%, as volume leverage, price, productivity and cost management more than offset currency pressures.


•Security net sales decreased 6% versus 1Q'14 as organic growth of 2% driven by volume (+1%) and price (+1%), was significantly impacted by currency (-8%). Organic growth within North America and emerging markets ("NA & EM") of 2% resulted from strong automatic doors revenues and improved performance in the NA commercial locks business which returned to growth after five quarters of organic declines. Europe's organic growth rate was 1%, the second consecutive quarter of flat or positive organic growth, led by higher installation revenues. Europe order rates were up 3% for the quarter with attrition remaining within the target range of 10-12%.

Overall Security segment profit rate was 10.8%, a 110 basis point increase from the 1Q'14 rate of 9.7%. The year-over-year improvement in the rate was due primarily to improved performance within Europe.


•Industrial net sales decreased 2% versus 1Q'14 as volume (+6%) was more than offset by currency (-8%). Engineered Fastening achieved double digit organic growth (+12%) driven by strong global automotive and electronics revenues. Infrastructure organic revenues declined 15% due to decreasing Oil & Gas revenues from delayed or suspended pipeline construction activity offset by modest growth within Hydraulic Tools. Overall Industrial segment profit rate was 15.3%, consistent with the prior quarter but down from the 1Q'14 rate of 17.4%, as lower Oil & Gas volumes and currency more than offset favorable volume leverage from Engineered Fastening, productivity gains and cost control.

President and Chief Operating Officer, James M. Loree, commented, "The first quarter of 2015 represented another strong quarter of organic growth and margin expansion for Stanley Black & Decker. The formation of our new Tools & Storage platform is proceeding as planned, with the larger and stronger business poised for long-term profitable growth. Our Engineered Fastening business maintained its impressive performance during the quarter and while emerging markets remain challenging, we continue to be optimistic about our ability to generate above market growth in these regions due to our prior investments in support of our mid-price point product launches.

"Security continues to perform to expectations, delivering positive organic revenue growth and an expanded operating margin rate versus the prior year. Our plans to exit Europe's Spain and Italy operations are proceeding on track, and this action, as well as the other global organizational and operational enhancements we have made, give us confidence in our ability to show both top and bottom line improvement as planned within Security during 2015."

Updated 2015 Outlook

Donald Allan Jr., Senior Vice President and CFO, commented, "We are maintaining our 2015 EPS outlook of $5.65 - $5.85 on a GAAP basis (including $50 million or $0.25 EPS, in restructuring charges) and our free cash flow outlook of at least $1 billion. Our current 2015 EPS outlook reflects the strong first quarter performance and improved organic growth outlook, which combined with an acceleration of planned share repurchases, are expected to offset the impact of the significant weakening of various foreign currencies versus the U.S. dollar. Specific to shares, since the beginning of the fourth quarter of 2014 we have reduced our share count by the equivalent of ~$900 million of shares utilizing $326 million of cash as well as equity derivatives, putting us well on our way to completing our share repurchase plan announced in late 2013. We are clearly encouraged by our first quarter performance despite difficult currency conditions and remain confident that 2015 will be another step forward in achieving our long-term financial objectives."

The Company will host a conference call with investors today, April 23, at 8:00am ET. A slide presentation which will accompany the call will be available at www.stanleyblackanddecker.com and will remain available after the call.

You can also access the slides via the Stanley Black & Decker Investor Relations iPad & iPhone app from the Apple App Store by searching for "SWK Investor Relations".

The call will be accessible by telephone at 1 (800) 708-4540, from outside the U.S. at +1 (847) 619-6397, and via the Internet at www.stanleyblackanddecker.com. To participate, please register on the web site at least fifteen minutes prior to the call and download and install any necessary audio software. Please use the conference identification number 3935-9357. A replay will also be available two hours after the call and can be accessed at 1 (888) 843-7419 or +1 (630) 652-3042 using the passcode 3935-9357#. The replay will also be available as a podcast within 24 hours and can be accessed on our website and via iTunes.

Stanley Black & Decker, an S&P 500 company, is a diversified global provider of hand tools, power tools and related accessories, mechanical access solutions and electronic security solutions, healthcare solutions, engineered fastening systems, and more. Learn more at www.stanleyblackanddecker.com.

Contact: Greg Waybright
Vice President, Investor & Government Relations
greg.waybright@sbdinc.com
(860) 827-3833




..
View photo
.Stanley Black & Decker
These results reflect the Company's continuing operations. In 4Q'14, the Company classified the results of the Security segment's Spain and Italy operations as held for sale based on management's intention to sell these operations. The operating results of Security Spain and Italy have been reported as discontinued operations for 1Q'15 and 1Q'14. In 3Q'13, the Company classified two small businesses within the Security and Industrial segments as held for sale based on management's intention to sell these businesses; these businesses were sold during 2014. The operating results of these businesses have been reported as discontinued operations for 1Q'14. Total sales reported as discontinued operations were $17.9 million and $31.4 million for 1Q'15 and 1Q'14, respectively.

In the first quarter of 2015, the Company combined the Construction & Do-It-Yourself ("CDIY") business with certain complementary elements of the Industrial and Automotive Repair ("IAR") and Healthcare businesses (formerly part of the Industrial and Security segments, respectively) to form one Tools & Storage business. As a result of this change, the legacy CDIY segment was renamed Tools & Storage. The Company recast segment net sales and profit for 1Q'14 to align with this change in organizational structure. There is no impact to the consolidated financial statements of the Company as a result of this change.

Organic sales growth is defined as total sales growth less the sales of companies acquired in the past twelve months and any foreign currency impacts. Operating margin is defined as sales less cost of sales and selling, general and administrative expenses. Management uses operating margin and its percentage of net sales as key measures to assess the performance of the Company as a whole, as well as the related measures at the segment level. Free cash flow is defined as cash flow from operations less capital and software expenditures. Management considers free cash flow an important indicator of its liquidity, as well as its ability to fund future growth and to provide a return to the shareowners. Free cash flow does not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company's common stock and business acquisitions, among other items. Normalized free cash flow, as reconciled from the associated GAAP measures on page 10 for 1Q'15 and 1Q'14 is considered a meaningful pro forma metric to aid the understanding of the Company's cash flow performance aside from the material impact of M&A-related payments and charges.

CAUTIONARY STATEMENTS
Under the Private Securities Litigation Reform Act of 1995

Statements in this press release that are not historical, including but not limited to those regarding the Company's ability to: (i) achieve full year 2015 EPS of $5.65 - $5.85 on a GAAP basis (including $50 million or $0.25 EPS in restructuring charges); (ii) generate free cash flow of at least $1.0 billion for 2015 ; and (iii) continue to show both top and bottom line improvement within Security during 2015; (collectively, the "Results"); are "forward looking statements" and subject to risk and uncertainty.

The Company's ability to deliver the Results as described above is based on current expectations and involves inherent risks and uncertainties, including factors listed below and other factors that could delay, divert, or change any of them, and could cause actual outcomes and results to differ materially from current expectations. In addition to the risks, uncertainties and other factors discussed in this press release, the risks, uncertainties and other factors that could cause or contribute to actual results differing materially from those expressed or implied in the forward looking statements include, without limitation, those set forth under Item 1A Risk Factors of the Company's Annual Report on Form 10-K and any material changes thereto set forth in any subsequent Quarterly Reports on Form 10-Q, or those contained in the Company's other filings with the Securities and Exchange Commission, and those set forth below.

The Company's ability to deliver the Results is dependent, or based, upon: (i) the Company's ability to capitalize on operational improvements in both Security Europe and North America as well as execute on its divestiture of Security's operations in Spain and Italy; (ii) the Company's ability to invest in its business strategically and focus on operational excellence to deliver organic growth of approximately 5% during 2015; (iii) the Company's ability to successfully execute upon cost actions within Security and other businesses and to benefit from pricing and commodity deflation; (iv) the Company's ability to sufficiently lower its average share count in 2015; (v) foreign exchange headwinds being approximately $200-220 million in 2015; (vi) the Company's ability to achieve a tax rate relatively consistent with the 2014 tax rate; (vii); the Company's ability to limit one-time restructuring charges to approximately $50 million in 2015; (viii) successful integration of acquisitions completed during the year, as well as integration of existing businesses and formation of new business platforms; (ix) the continued acceptance of technologies used in the Company's products and services; (x) the Company's ability to manage existing Sonitrol franchisee and Mac Tools relationships; (xi) the Company's ability to minimize costs associated with any sale or discontinuance of a business or product line, including any severance, restructuring, legal or other costs; (xii) the proceeds realized with respect to any business or product line disposals; (xiii) the extent of any asset impairments with respect to any businesses or product lines that are sold or discontinued; (xiv) the success of the Company's efforts to manage freight costs, steel and other commodity costs as well as capital expenditures; (xv) the Company's ability to sustain or increase prices in order to, among other things, offset or mitigate the impact of steel, freight, energy, non-ferrous commodity and other commodity costs and any inflation increases and/or currency impacts; (xvi) the Company's ability to generate free cash flow and maintain a strong debt to capital ratio; (xvii) the Company's ability to identify and effectively execute productivity improvements and cost reductions, while minimizing any associated restructuring charges; (xviii) the Company's ability to obtain favorable settlement of tax audits; (xix) the ability of the Company to generate earnings sufficient to realize future income tax benefits during periods when temporary differences become deductible; (xx) the continued ability of the Company to access credit markets under satisfactory terms; (xxi) the Company's ability to negotiate satisfactory price and payment terms under which the Company buys and sells goods, services, materials and products; (xxii) the Company's ability to successfully develop, market and achieve sales from new products and services; and (xxiii) the availability of cash to repurchase shares when conditions are right.

The Company's ability to deliver the Results is also dependent upon: (i) the success of the Company's marketing and sales efforts, including the ability to develop and market new and innovative products at the right price points in both existing and new markets; (ii) the ability of the Company to maintain or improve production rates in the Company's manufacturing facilities, respond to significant changes in product demand and fulfill demand for new and existing products; (iii) the Company's ability to continue improvements in working capital through effective management of accounts receivable and inventory levels; (iv) the ability to continue successfully managing and defending claims and litigation; (v) the success of the Company's efforts to mitigate any adverse earnings impact resulting from increases generated by, for example, increases in the cost of energy or significant Euro, Canadian Dollar, Chinese Renminbi or other currency fluctuations; (vi) the geographic distribution of the Company's earnings; (vii) the commitment to and success of the Stanley Fulfillment System; and (viii) successful implementation with expected results of cost reduction programs.

The Company's ability to achieve the Results will also be affected by external factors. These external factors include: challenging global geopolitical and macroeconomic environment; the economic environment of emerging markets, particularly Latin America, Russia and Turkey; pricing pressure and other changes within competitive markets; the continued consolidation of customers particularly in consumer channels; inventory management pressures on the Company's customers; the impact the tightened credit markets may have on the Company or its customers or suppliers; the extent to which the Company has to write off accounts receivable or assets or experiences supply chain disruptions in connection with bankruptcy filings by customers or suppliers; increasing competition; changes in laws, regulations and policies that affect the Company, including, but not limited to trade, monetary, tax and fiscal policies and laws; the timing and extent of any inflation or deflation; the impact of poor weather conditions on sales; currency exchange fluctuations; the impact of dollar/foreign currency exchange and interest rates on the competitiveness of products and the Company's debt program; the strength of the U.S. and European economies; the extent to which world-wide markets associated with homebuilding and remodeling stabilize and rebound; the impact of events that cause or may cause disruption in the Company's supply, manufacturing, distribution and sales networks such as war, terrorist activities, and political unrest; and recessionary or expansive trends in the economies of the world in which the Company operates. The Company undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date hereof.





STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited, Millions of Dollars Except Per Share Amounts)
















FIRST QUARTER




2015


2014








NET SALES

$ 2,630.0


$ 2,617.1








COSTS AND EXPENSES






Cost of sales

1,656.4


1,660.7



Gross margin

973.6


956.4



% of Net Sales

37.0%


36.5%









Selling, general and administrative

623.0


640.6



% of Net Sales

23.7%


24.5%









Operating margin

350.6


315.8



% of Net Sales

13.3%


12.1%









Other - net

63.7


60.9



Restructuring charges (credits)

24.9


(3.7)



Income from operations

262.0


258.6









Interest - net

40.7


40.7








EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

221.3


217.9



Income tax expense on continuing operations

55.3


48.0


NET EARNINGS FROM CONTINUING OPERATIONS

166.0


169.9









Less: net (loss) earnings attributable to non-controlling interests

(0.8)


0.2








NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE






TO COMMON SHAREOWNERS

166.8


169.7








NET LOSS FROM DISCONTINUED OPERATIONS

(4.5)


(7.8)








NET EARNINGS ATTRIBUTABLE TO COMMON SHAREOWNERS

$ 162.3


$ 161.9














BASIC EARNINGS (LOSS) PER SHARE OF COMMON STOCK






Continuing operations

$ 1.10


$ 1.09



Discontinued operations

(0.03)


(0.05)



Total basic earnings per share of common stock

$ 1.07


$ 1.04








DILUTED EARNINGS (LOSS) PER SHARE OF COMMON STOCK






Continuing operations

$ 1.07


$ 1.07



Discontinued operations

(0.03)


(0.05)



Total diluted earnings per share of common stock

$ 1.04


$ 1.02








DIVIDENDS PER SHARE

$ 0.52


$ 0.50








AVERAGE SHARES OUTSTANDING (in thousands)






Basic

152,172


155,905



Diluted

156,537


158,951








STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED BALANCE SHEETS


(Unaudited, Millions of Dollars)












April 4,


January 3,





2015


2015









ASSETS







Cash and cash equivalents


$ 435.5


$ 496.6



Accounts and notes receivable, net

1,612.8


1,396.7



Inventories, net


1,742.2


1,562.7



Assets held for sale


24.9


29.5



Other current assets


509.3


463.3



Total current assets


4,324.7


3,948.8



Property, plant and equipment, net

1,411.5


1,454.1



Goodwill and other intangibles, net

9,788.6


10,027.2



Other assets


418.9


419.0



Total assets


$ 15,943.7


$ 15,849.1
















LIABILITIES AND SHAREOWNERS' EQUITY






Short-term borrowings


$ 606.2


$ 7.5



Accounts payable


1,674.8


1,579.2



Accrued expenses


1,144.2


1,221.9



Liabilities held for sale


21.6


23.4



Total current liabilities

3,446.8


2,832.0



Long-term debt


3,855.7


3,839.8



Other long-term liabilities


2,944.0


2,665.4



Stanley Black & Decker, Inc. shareowners' equity

5,615.2


6,429.1



Non-controlling interests' equity

82.0


82.8



Total liabilities and equity

$ 15,943.7


$ 15,849.1








STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES


SUMMARY OF CASH FLOW ACTIVITY


(Unaudited, Millions of Dollars)













FIRST QUARTER














2015


2014




OPERATING ACTIVITIES








Net earnings from continuing operations

$ 166.0


$ 169.9





Net loss from discontinued operations

(4.5)


(7.8)





Depreciation and amortization

102.5


110.4





Changes in working capital1

(377.9)


(330.3)





Other

(83.6)


(94.2)





Net cash used in operating activities

(197.5)


(152.0)




















INVESTING AND FINANCING ACTIVITIES








Capital and software expenditures

(45.9)


(57.8)





Proceeds from issuances of common stock

43.0


13.2





Net short-term borrowings

598.9


282.3





Net investment hedge settlements

30.4


(6.3)





Cash dividends on common stock

(82.7)


(80.7)





Purchases of common stock for treasury

(348.0)


(19.4)





Effect of exchange rate changes on cash

(45.6)


(7.1)





Other

(13.7)


(35.8)





Net cash provided by investing and financing activities

136.4


88.4












Decrease in Cash and Cash Equivalents

(61.1)


(63.6)












Cash and Cash Equivalents, Beginning of Period

496.6


496.2












Cash and Cash Equivalents, End of Period

$ 435.5


$ 432.6




















Free Cash Flow Computation2







Operating cash outflow

$ (197.5)


$ (152.0)




Less: Capital and software expenditures

(45.9)


(57.8)




Free cash outflow (before dividends)

$ (243.4)


$ (209.8)




Merger & Acquisition-related charges and payments4

19.8


51.8




Free cash outflow, normalized (before dividends)3

$ (223.6)


$ (158.0)











1

The change in working capital is comprised of accounts receivable, inventory, accounts payable and deferred revenue.










2,3

Free cash flow is defined as cash flow from operations less capital and software expenditures. Management considers free cash flow an important measure of its liquidity, as well as its ability to fund future growth and to provide a return to the shareowners. Free cash flow does not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company's common stock and business acquisitions, among other items. Normalized free cash flow, as reconciled above, is considered a meaningful pro forma metric to aid the understanding of the Company's cash flow performance aside from the material impact of merger and acquisition-related activities.










4

Merger & Acquisition-related charges and payments relate primarily to the Black & Decker merger and Niscayah and Infastech acquisitions, including facility closure-related charges, employee-related charges and integration costs.











STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES


BUSINESS SEGMENT INFORMATION


(Unaudited, Millions of Dollars)
















FIRST QUARTER




2015


2014






NET SALES






Tools & Storage

$ 1,632.1


$ 1,574.8



Security

509.6


544.9



Industrial

488.3


497.4



Total

$ 2,630.0


$ 2,617.1














SEGMENT PROFIT






Tools & Storage

$ 256.8


$ 212.8



Security

54.8


52.8



Industrial

74.7


86.7



Segment Profit

386.3


352.3



Corporate Overhead

(35.7)


(36.5)



Total

$ 350.6


$ 315.8














Segment Profit as a Percentage of Net Sales






Tools & Storage

15.7%


13.5%



Security

10.8%


9.7%



Industrial

15.3%


17.4%



Segment Profit

14.7%


13.5%



Corporate Overhead

(1.4%)


(1.4%)



Total

13.3%


12.1%