NEW BRITAIN, Conn.,
March 9, 2017 /PRNewswire/ --
Stanley Black & Decker (NYSE:
SWK), an S&P 500 global diversified industrial company,
announced today that it has successfully completed its purchase of
the Craftsman brand from Sears Holdings Corporation (NASDAQ: SHLD)
("Sears Holdings") for a net present value of approximately
$900 million in cash, giving
Stanley Black & Decker the right
to develop, manufacture and sell Craftsman-branded products outside
the Sears Holdings and Sears Hometown & Outlet Stores
distribution channels. This transaction was originally announced on
January 5, 2017.
Stanley Black & Decker's
President and Chief Executive Officer, James M. Loree commented, "We are pleased to
complete the purchase of the Craftsman brand, a legendary American
brand with tremendous consumer awareness built on a legacy of
providing reliable products at a good value and standing behind
them. We will invest in the brand with a focus on quality,
innovation and U.S. manufacturing, with the goal of rapidly
increasing sales through new channels and will provide more
information on our distribution plans as they are developed. We are
confident that we can grow Craftsman while continuing to execute on
our other core strategic initiatives, leveraging our world class
innovation, commercial and operational excellence and experienced
team. We also understand the Craftsman warranty is important
to existing customers and intend to honor existing and offer
similar warranties going forward. As we continue our growth
journey, we will pursue opportunities across the portfolio to build
upon our world-class franchises to create shareholder value."
As previously announced, Stanley
Black & Decker has made a $525
million cash payment to Sears Holdings at closing and will
make a $250 million payment at the
end of year three and annual payments to Sears Holdings of between
2.5% and 3.5% on new Stanley Black
& Decker sales of Craftsman products through year 15.
Updated 2017 EPS Outlook
As previously announced on January 26,
2017, Stanley Black and
Decker's 2017 GAAP earnings per share ("EPS") were expected to
approximate $6.85 - $7.05 (excluded
the estimated impacts from the Mechanical Security, Craftsman and
Newell Tools transactions which had
not closed at that time). The Craftsman transaction is
expected to be immediately accretive to 2017 EPS by approximately
$0.08 per share, excluding
approximately $20 million of
primarily deal-related costs. Inclusive of the previously
announced approximately $0.19 per
share dilution from the sale of the Mechanical Security business
and the related estimated after-tax book gain of $200-$215 million, Stanley Black and Decker's 2017 updated GAAP EPS
outlook is approximately $7.94 -
$8.14 per share. The company's 2017 adjusted
(excluding charges and gain from the Mechanical Security sale) EPS
outlook is $6.74 - $6.94 per
share. The following provides a reconciliation of the
company's updated GAAP and adjusted EPS outlooks for 2017
reflecting the impacts from the Craftsman and Mechanical Security
transactions:
2017 EPS Outlook
|
Initial 2017
Guidance
Range
(1/26/2017)
|
Mechanical
Security
Dilution
|
Mechanical
Security
Gain
|
Craftsman
Brand
Accretion
|
Craftsman
Brand
Charges
|
Updated 2017
Guidance
Range
(3/9/2017)
|
EPS,
GAAP
|
$6.85 -
$7.05
|
~($0.19)
|
~$1.30
|
~$0.08
|
~($0.10)
|
$7.94 -
$8.14
|
EPS,
Adjusted
|
$6.85 -
$7.05
|
~($0.19)
|
|
~$0.08
|
|
$6.74 -
$6.94
|
The above excludes the estimated 2017 earnings accretion of
~$0.20 - $0.25 per share, excluding
charges, from the pending Newell
Tools acquisition which assumes a first quarter 2017
closing.
Stanley Black & Decker, an
S&P 500 company, is a diversified global provider of hand
tools, power tools and related accessories, electronic security
solutions, healthcare solutions, engineered fastening systems, and
more. Learn more at www.stanleyblackanddecker.com.
Investor Contacts:
Greg Waybright
Vice President, Investor Relations
greg.waybright@sbdinc.com
(860) 827-3833
Michelle Hards
Director, Investor Relations
michelle.hards@sbdinc.com
(860) 827-3913
Media Contacts:
Shannon
Lapierre
Vice President Communications / Public Relations
shannon.lapierre@sbdinc.com
(860) 827-3575
Tim Perra
Vice President Communications
tim.perra@sbdinc.com
(860) 826-3260
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) significantly increase availability of Craftsman branded
products in previously underpenetrated channels including retail,
industrial, mobile and online and enhance innovation; (ii) achieve
full year 2017 GAAP EPS of $7.94 -
$8.14 per share and 2017 adjusted EPS to be $6.74 - $6.94 per share; (iii) recognize an
after-tax book gain from the sale of the Mechanical Security
business of approximately $1.30 and
limit the 2017 earnings per share impact of the sale of the
Mechanical Security business to approximately $0.19 dilutive per share; and (iv) cause the
Craftsman transaction to be accretive to earnings, excluding
charges, by approximately $0.08 per
share in year one and limit the charges associated with the
transaction to approximately $0.10
per share, (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 and the Cautionary Statements
under Item 7 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) successfully growing the Craftsman brand and
expanding its distribution; (ii) the Company's ability to achieve
the expected benefits of the sale of the Mechanical Security
business and limit related charges and costs; (iii) the Company's
ability to deliver organic growth of approximately 4%
(approximately +$0.45 to +$0.55 EPS); (iv) commodity inflation
being approximately $50 to $55
million; (v) foreign exchange headwinds of approximately
$50 million in 2017(combined with
commodity inflation, totaling approximately -$0.50 to -$0.55
EPS); (vi) the net impact from costs and productivity actions,
partially offset by higher share count, being approximately +$0.45
to +$0.50 EPS; (vii) embedded core restructuring charges (approx.
$50 million) and tax rate relatively
consistent with the 2016 levels; (viii) to identify, close and
integrate appropriate acquisition opportunities, within desired
timeframes at reasonable cost; (ix) successful integration of
existing and any newly acquired businesses and formation of new
business platforms; (x) the continued acceptance of technologies
used in the Company's products and services, including the new
DEWALT FLEXVOLTâ„¢ product; (xi) the Company's ability to manage
existing Sonitrol franchisee and Mac
Tools relationships; (xii) 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; (xiii) the proceeds realized with respect to any
business or product line disposals; (xiv) the extent of any asset
impairments with respect to any businesses or product lines that
are sold or discontinued; (xv) the success of the Company's efforts
to manage freight costs, steel and other commodity costs as well as
capital expenditures; (xvi) 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; (xvii) the Company's ability to generate free cash flow
and maintain a strong debt to capital ratio; (xviii) the Company's
ability to identify and effectively execute productivity
improvements and cost reductions, while minimizing any associated
restructuring charges; (xix) the Company's ability to obtain
favorable settlement of tax audits; (xx) the ability of the Company
to generate earnings sufficient to realize future income tax
benefits during periods when temporary differences become
deductible; (xxi) the continued ability of the Company to access
credit markets under satisfactory terms; (xxii) the Company's
ability to negotiate satisfactory price and payment terms under
which the Company buys and sells goods, services, materials and
products; and (xxiii) the Company's ability to successfully
develop, market and achieve sales from new products and
services.
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, 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
including, core innovation, breakthrough innovation, digital and
commercial excellence and functional transformation; 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,
possibly including impact from "Brexit" or other similar actions
from other EU member states; 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.
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SOURCE Stanley Black &
Decker