NEW BRITAIN, Conn.,
Oct. 24, 2019 /PRNewswire/
-- Stanley Black & Decker (NYSE: SWK) today
announced third quarter 2019 financial results.
- 3Q'19 Revenues Totaled $3.6
Billion, Up 4% Versus Prior Year, Driven By Organic Growth
And Acquisitions
- Operating Margin Rate Was 13.3%; Excluding Charges Operating
Margin Rate Was 14.5%, Flat Versus Prior Year While Overcoming
$90 Million Of External
Headwinds
- 3Q'19 Diluted GAAP EPS Was $1.53;
Excluding Charges, 3Q'19 Diluted EPS Was $2.13
- Announcing New Cost Reduction Program Expected To Deliver
$200 Million In Annual Cost
Savings
- Revising 2019 Full Year Diluted GAAP EPS Guidance Range To
$6.50 - $6.60 From $7.50 -
$7.70 And Adjusted EPS Guidance Range
To $8.35 - $8.45 From $8.50 -
$8.70
3Q'19 Key Points:
- Net sales for the quarter were $3.6
billion, up 4% versus prior year, as positive contributions
from volume (+3%), acquisitions (+3%) and price (+1%) more than
offset currency (-2%) and divestitures (-1%).
- The gross margin rate for the quarter was 34.1%. Excluding
charges, the gross margin rate for the quarter was 34.3%, down 120
basis points versus prior year as volume leverage, productivity and
price were more than offset by tariffs and foreign exchange.
- SG&A expenses were 20.8% of sales. Excluding charges,
SG&A expenses were 19.8% of sales compared to 21.0% in 3Q'18,
reflecting continued disciplined cost management.
- The tax rate was 20.1%. Excluding charges, the tax rate was
21.5% versus 19.5% in 3Q'18.
- Average diluted shares outstanding for the quarter were 150.6
million, consistent with the prior year.
- Working capital turns for the quarter were 5.9, up 0.2 turns
versus prior year.
Stanley Black & Decker's
President and CEO, James M. Loree,
commented, "In the third quarter, we successfully delivered
above-market organic growth and adjusted earnings per share
expansion versus prior year, overcoming $90
million in external pre-tax margin headwinds and challenges
in certain end markets.
"To position the business for success in 2020 and beyond, we
have begun implementing new cost and pricing actions, as well as
accelerating our $300 – $500 million multi-year margin resiliency
initiative. These actions will preserve our ability to
continue to generate continued earnings growth and manage
externally driven volatility.
"Over the past three years we have produced strong organic
growth and consistent adjusted EPS expansion, while absorbing
approximately $900 million in pretax
externally generated cost pressures (~6% of sales). We have also
executed on multiple revenue growth catalysts, including Craftsman,
revenue synergies, emerging markets, e-commerce and breakthrough
innovations, that are generating success in the market and position
us for continued share gains. It is a testament to our
seasoned and capable management team and our SFS 2.0 operating
system that we are successfully navigating this environment and
continuing to achieve our vision: to become known as one of the
world's great innovators, deliver top-quartile financial
performance, and elevate our commitment to corporate social
responsibility."
3Q'19 Segment
Results
|
|
($ in
M)
|
|
|
Sales
|
Profit
|
Charges1
|
Profit Ex-
Charges1
|
Profit Rate
|
Profit
Rate Ex-
Charges1
|
|
|
|
|
|
|
|
Tools &
Storage
|
$2,534
|
$410.1
|
$11.4
|
$421.5
|
16.2%
|
16.6%
|
|
|
|
|
|
|
|
Industrial
|
$633
|
$90.3
|
$ 4.8
|
$ 95.1
|
14.3%
|
15.0%
|
|
|
|
|
|
|
|
Security
|
$466
|
$33.1
|
$17.6
|
$ 50.7
|
7.1%
|
10.9%
|
1
|
See Merger And
Acquisition (M&A) Related And Other Charges On Page
5
|
- Tools & Storage net sales increased 4% versus 3Q'18 as
volume (+4%) and price (+1%) were partially offset by currency
(-1%). The 5% organic growth for the quarter was led by
North America (+7%) and
Europe (+4%), more than offsetting
a modest decline in emerging markets (-1%). North America organic growth was driven by the
rollout of the Craftsman brand and new product innovation,
including DEWALT Flexvolt, Atomic & Xtreme, which were
partially offset by continued declines in industrial-focused
businesses. Europe delivered
above-market growth supported by new product introduction and
successful commercial execution. Emerging markets realized the
benefits from price, new product launches and e-commerce expansion,
which were more than offset by market-led declines in Mexico, Turkey and China. The Tools & Storage segment profit
rate, excluding charges, was 16.6%, flat versus 3Q'18 rate, as the
benefits from volume leverage, pricing and cost control were
neutralized primarily by tariffs and foreign exchange.
- Industrial net sales increased 13% versus 3Q'18 as the IES
Attachments acquisition (+16%) was partially offset by volume (-2%)
and currency (-1%). Engineered Fastening organic revenues were down
4% as fastener share gains were offset by inventory reductions and
lower production levels within automotive and industrial customers.
Infrastructure organic revenues were up 4% due to stronger onshore
pipeline project and inspection activity in oil & gas,
partially offset by lower hydraulic tools volumes which were
impacted by a difficult scrap steel market. The Industrial segment
profit rate, excluding charges, was 15.0%, down from the 3Q'18 rate
of 16.8%, as productivity gains and cost control were more than
offset by the impact from lower engineered fastening volume and
externally driven cost inflation.
- Security net sales declined 4% versus 3Q'18 as price (+2%) was
more than offset by currency (-3%), the Sargent & Greenleaf
divestiture (-2%) and lower volumes (-1%). The organic growth of 1%
for the quarter was led by North
America (+3%) and reflects higher volumes within healthcare,
automatic doors and electronic security. Europe was down 1% organically as growth in
France was offset by adverse
market conditions in the Nordics and the UK. The overall Security
segment profit rate, excluding charges, was 10.9%, which was down
20 basis points versus the prior year, as organic growth and cost
containment were offset by a 50 basis point impact from the Sargent
& Greenleaf divestiture and investments to support the business
transformation in commercial electronic security.
Donald Allan Jr., Executive Vice
President and CFO, commented, "Security generated modest organic
growth in the quarter, resulting from targeted commercial
investments as part of the ongoing business transformation.
Within electronic security, the order rates and backlog are in
strong positions and our cost efficiency initiatives continue to
generate value. We are encouraged by this momentum and
believe the business is positioned to generate positive organic
growth and margin expansion in the fourth quarter and
beyond."
2019 Outlook & Cost Reduction Program
Management is revising its 2019 EPS outlook to $6.50 - $6.60 from
$7.50 - $7.70 on a GAAP basis primarily due to
restructuring charges associated with the cost reduction program
announced today, in addition to the factors below. The
Company is reducing its adjusted EPS range to $8.35 - $8.45 from
$8.50 - $8.70 and reiterating its free cash flow
conversion estimate of approximately 85% - 90%. The cost
reduction program is currently being implemented and is expected to
deliver $200 million in annual cost
savings with an approximate pre-tax restructuring charge of
$150 million expected to be
recognized primarily in 2019.
The following reflects the key assumption changes to the
Company's prior full year adjusted EPS outlook:
- An incremental $55 million in
tariff and currency related cost pressure
- A modestly reduced expectation for organic growth reflecting a
slower growth environment for industrial and emerging markets (3.5%
- 4% versus prior assumption of 4%)
- Partially offsetting these impacts are incremental benefits
from the margin resiliency initiatives, incremental cost actions
and a lower tax rate (~16.5%)
Allan continued, "Our 2019 guidance now incorporates
$445 million of externally generated
input cost headwinds while continuing to reflect our delivery of
above-market organic growth of 3.5% - 4% and low-single digit
adjusted earnings per share growth. This will be a strong end
to the year, especially given the magnitude and timing of the input
cost moves, as well as the current market demand environment.
"As we shift to 2020, we believe we are taking the appropriate
actions to protect our margins and our competitiveness while once
again positioning the business for EPS expansion. We will
continue to execute our playbook to take price, optimize our global
supply chain and adjust our cost structure through the actions
announced today and generate significant value with our margin
resiliency program.
"The organization remains focused on strong day-to-day execution
and operational excellence and we believe the Company is
well-positioned to deliver sustained above-market organic growth
with operating leverage, strong free cash flow conversion and
top-quartile shareholder returns over the long-term."
The difference between 2019 GAAP and Adjusted EPS guidance is
$1.85, consisting of
acquisition-related and other charges. These forecasted
charges primarily relate to restructuring, deal and integration
costs, Security business transformation and margin resiliency
initiatives, and inventory step-up amortization.
Merger And Acquisition ("M&A") Related And
Other Charges
Total pre-tax M&A related and other charges in 3Q'19 were
$113.7 million, primarily related to
restructuring, deal and integration costs, as well as Security
business transformation & margin resiliency initiatives.
Gross margin included $5.3 million of
these charges while SG&A included $37.3
million. Other, net and Restructuring included a net
benefit of $3.5 million and charges
of $74.6 million,
respectively.
Share of net earnings of equity method investment included
$5.4 million of charges related to an
inventory step-up fair value adjustment.
The Company will host a conference call with investors today,
October 24, 2019, 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.
The call and an accompanying slide presentation will be
available through a live webcast on the "Investors" section of
Stanley Black & Decker's
website, www.stanleyblackanddecker.com under the subheading "News
& Events." The event can also be accessed by telephone
within the U.S. at (877) 930-8285, from outside the U.S. at +1
(253) 336-8297. Please use the conference identification number
3792719. A replay will also be available two hours after the call
and can be accessed on the "Investors" section of Stanley Black & Decker's website, or at
(855) 859-2056 / +1 (404) 537-3406 using the passcode 3792719. 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, electronic security
solutions, healthcare solutions, engineered fastening systems, and
more. Learn more at www.stanleyblackanddecker.com.
Investor Contacts:
Dennis Lange
Vice President, Investor Relations
dennis.lange@sbdinc.com
(860) 827-3833
Cort Kaufman
Director, Investor Relations
cort.kaufman@sbdinc.com
(860) 515-2741
Media Contacts:
Shannon Lapierre
Vice President, Communications & Public Relations
shannon.lapierre@sbdinc.com
(860) 827-3575
Organic sales growth is defined as total sales growth less the
sales of companies acquired and divested 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. Free cash flow conversion is defined as
free cash flow divided by net income. The normalized statement of
operations and business segment information, as reconciled to GAAP
on pages 12 to 15, is considered relevant to aid analysis of the
Company's margin and earnings results aside from the material
impact of the M&A related and other charges.
CAUTIONARY STATEMENTS
Under the Private Securities Litigation Reform Act of 1995
This document contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
All statements other than statements of historical fact are
"forward-looking statements" for purposes of federal and state
securities laws, including any projections or guidance of earnings,
revenue or other financial items; any statements of the plans,
strategies and objectives of management for future operations; any
statements concerning proposed new products, services or
developments; any statements regarding future economic conditions
or performance; any statements of belief; and any statements of
assumptions underlying any of the foregoing. Forward-looking
statements may include, among other, the words "may," "will,"
"estimate," "intend," "continue," "believe," "expect," "anticipate"
or any other similar words.
Although the Company believes that the expectations reflected in
any of its forward-looking statements are reasonable, actual
results could differ materially from those projected or assumed in
any of its forward-looking statements. The Company's future
financial condition and results of operations, as well as any
forward-looking statements, are subject to change and to inherent
risks and uncertainties, such as those disclosed or incorporated by
reference in the Company's filings with the Securities and Exchange
Commission.
Important factors that could cause the Company's actual results,
performance and achievements, or industry results to differ
materially from estimates or projections contained in its
forward-looking statements include, among others, the following:
(i) successfully developing, marketing and achieving sales from new
products and services and the continued acceptance of current
products and services; (ii) macroeconomic factors, including global
and regional business conditions (such as Brexit), commodity
prices, inflation, and currency exchange rates; (iii) laws,
regulations and governmental policies affecting the Company's
activities in the countries where it does business, including those
related to tariffs, taxation, and trade controls, including section
301 tariffs and section 232 steel and aluminum tariffs; (iv) the
economic environment of emerging markets, particularly Latin America, Russia, China
and Turkey; (v) realizing the
anticipated benefits of mergers, acquisitions, joint ventures,
strategic alliances or divestitures; (vi) pricing pressure and
other changes within competitive markets; (vii) availability and
price of raw materials, component parts, freight, energy, labor and
sourced finished goods; (viii) the impact the tightened credit
markets may have on the Company or its customers or suppliers; (ix)
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; (x)
the Company's ability to identify and effectively execute
productivity improvements and cost reductions; (xi) potential
business and distribution disruptions, including those related to
physical security threats, information technology or cyber-attacks,
epidemics, sanctions or natural disasters; (xii) the continued
consolidation of customers, particularly in consumer channels;
(xiii) managing franchisee relationships; (xiv) the impact of poor
weather conditions; (xv) maintaining or improving production rates
in the Company's manufacturing facilities, responding to
significant changes in product demand and fulfilling demand for new
and existing products; (xvi) changes in the competitive landscape
in the Company's markets; (xvii) the Company's non-U.S. operations,
including sales to non-U.S. customers; (xviii) the impact from
demand changes within world-wide markets associated with
homebuilding and remodeling; (xix) potential adverse developments
in new or pending litigation and/or government investigations; (xx)
changes in the Company's ability to obtain debt on commercially
reasonable terms and at competitive rates; (xxi) substantial
pension and other postretirement benefit obligations; (xxii)
potential environmental liabilities; (xxiii) work stoppages or
other labor disruptions; and (xxiv) changes in accounting
estimates.
Additional factors that could cause actual results to differ
materially from forward-looking statements are set forth in the
Annual Report on Form 10-K and in the Quarterly Report on Form
10-Q, including under the heading "Risk Factors," "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" and in the Consolidated Financial Statements and the
related Notes.
Forward-looking statements in this press release speak only as
of the date hereof, and forward-looking statements in documents
attached that are incorporated by reference speak only as of the
date of those documents. The Company does not undertake any
obligation to update or release any revisions to any
forward-looking statement or to report any events or circumstances
after the date hereof or to reflect the occurrence of unanticipated
events, except as required by law.
STANLEY BLACK
& DECKER, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Unaudited,
Millions of Dollars Except Per Share Amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THIRD
QUARTER
|
|
YEAR-TO-DATE
|
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
SALES
|
|
$
3,633.1
|
|
$
3,494.8
|
|
$
10,728.0
|
|
$
10,347.7
|
|
|
|
|
|
|
|
|
|
|
|
|
COSTS AND
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
2,393.6
|
|
2,256.4
|
|
7,083.1
|
|
6,656.5
|
|
|
Gross
margin
|
|
1,239.5
|
|
1,238.4
|
|
3,644.9
|
|
3,691.2
|
|
|
% of Net
Sales
|
|
34.1%
|
|
35.4%
|
|
34.0%
|
|
35.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
756.1
|
|
798.9
|
|
2,317.3
|
|
2,390.3
|
|
|
% of Net
Sales
|
|
20.8%
|
|
22.9%
|
|
21.6%
|
|
23.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
483.4
|
|
439.5
|
|
1,327.6
|
|
1,300.9
|
|
|
% of Net
Sales
|
|
13.3%
|
|
12.6%
|
|
12.4%
|
|
12.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other -
net
|
|
55.0
|
|
59.4
|
|
182.6
|
|
236.7
|
|
|
(Gain) loss on sales
of businesses
|
|
-
|
|
-
|
|
(17.2)
|
|
0.8
|
|
|
Restructuring
charges
|
|
74.0
|
|
21.8
|
|
91.2
|
|
58.1
|
|
|
Income from
operations
|
|
354.4
|
|
358.3
|
|
1,071.0
|
|
1,005.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest -
net
|
|
59.7
|
|
53.4
|
|
177.8
|
|
154.2
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS BEFORE
INCOME TAXES AND EQUITY INTEREST
|
294.7
|
|
304.9
|
|
893.2
|
|
851.1
|
|
|
Income
taxes
|
|
59.2
|
|
56.6
|
|
135.5
|
|
139.3
|
|
NET EARNINGS
BEFORE EQUITY INTEREST
|
|
235.5
|
|
248.3
|
|
757.7
|
|
711.8
|
|
|
Share of net (losses)
earnings of equity method investment
|
(4.4)
|
|
-
|
|
1.2
|
|
-
|
|
NET
EARNINGS
|
|
231.1
|
|
248.3
|
|
758.9
|
|
711.8
|
|
|
Less: net gain (loss)
attributable to non-controlling interests
|
0.6
|
|
0.5
|
|
2.2
|
|
(0.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS
ATTRIBUTABLE TO COMMON SHAREOWNERS
|
$
230.5
|
|
$
247.8
|
|
$
756.7
|
|
$
712.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE OF COMMON STOCK
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
1.55
|
|
$
1.67
|
|
$
5.11
|
|
$
4.77
|
|
|
Diluted
|
|
$
1.53
|
|
$
1.65
|
|
$
5.03
|
|
$
4.68
|
|
|
|
|
|
|
|
|
|
|
|
|
DIVIDENDS PER
SHARE
|
|
$
0.69
|
|
$
0.66
|
|
$
2.01
|
|
$
1.92
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE SHARES OUTSTANDING (in
thousands)
|
|
|
|
|
|
|
|
|
|
Basic
|
|
148,350
|
|
147,964
|
|
148,111
|
|
149,311
|
|
|
Diluted
|
|
150,623
|
|
150,599
|
|
150,299
|
|
152,225
|
|
|
|
|
|
|
|
|
|
|
|
STANLEY BLACK
& DECKER, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Unaudited,
Millions of Dollars)
|
|
|
|
|
|
|
|
|
|
September
28,
|
|
December
29,
|
|
|
|
2019
|
|
2018
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
311.7
|
|
$
288.7
|
|
Accounts and notes
receivable, net
|
|
1,902.6
|
|
1,607.8
|
|
Inventories,
net
|
|
2,743.5
|
|
2,373.5
|
|
Other current
assets
|
|
370.2
|
|
299.4
|
|
Total current assets
|
|
5,328.0
|
|
4,569.4
|
|
Property, plant and
equipment, net
|
|
1,911.9
|
|
1,915.2
|
|
Goodwill and other
intangibles, net
|
|
12,813.0
|
|
12,441.1
|
|
Other
assets
|
|
1,269.6
|
|
482.3
|
|
Total assets
|
|
$
21,322.5
|
|
$
19,408.0
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREOWNERS' EQUITY
|
|
|
|
|
Short-term
borrowings
|
|
$
1,454.9
|
|
$
376.1
|
|
Current maturities of
long-term debt
|
|
3.1
|
|
2.5
|
|
Accounts
payable
|
|
2,070.3
|
|
2,233.2
|
|
Accrued
expenses
|
|
1,913.6
|
|
1,389.8
|
|
Total current liabilities
|
|
5,441.9
|
|
4,001.6
|
|
Long-term
debt
|
|
3,908.8
|
|
3,819.8
|
|
Other long-term
liabilities
|
|
3,703.6
|
|
3,746.7
|
|
Stanley Black &
Decker, Inc. shareowners' equity
|
8,262.3
|
|
7,836.2
|
|
Non-controlling
interests' equity
|
|
5.9
|
|
3.7
|
|
Total liabilities and shareowners' equity
|
$
21,322.5
|
|
$
19,408.0
|
STANLEY
BLACK & DECKER, INC. AND SUBSIDIARIES
|
SUMMARY OF CASH
FLOW ACTIVITY
|
(Unaudited,
Millions of Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THIRD
QUARTER
|
|
YEAR-TO-DATE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
$
231.1
|
|
$
248.3
|
|
$
758.9
|
|
$
711.8
|
|
|
Depreciation and
amortization
|
|
|
140.9
|
|
129.7
|
|
420.4
|
|
381.0
|
|
|
(Gain) loss on sales
of businesses
|
|
|
-
|
|
-
|
|
(17.2)
|
|
0.8
|
|
|
Share of net losses
(earnings) of equity method investment
|
|
|
4.4
|
|
-
|
|
(1.2)
|
|
-
|
|
|
Changes in working
capital1
|
|
|
(278.3)
|
|
(287.8)
|
|
(859.2)
|
|
(1,017.1)
|
|
|
Other
|
|
|
|
94.6
|
|
101.3
|
|
(39.3)
|
|
(36.4)
|
|
|
Net cash provided
by operating activities
|
|
|
192.7
|
|
191.5
|
|
262.4
|
|
40.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING AND
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
Capital and software
expenditures
|
|
|
(96.7)
|
|
(109.4)
|
|
(283.5)
|
|
(327.4)
|
|
|
(Payments) proceeds
from sales of businesses, net of cash sold
|
|
|
-
|
|
(1.1)
|
|
76.7
|
|
(3.0)
|
|
|
Business
acquisitions, net of cash acquired
|
|
|
(6.2)
|
|
(15.1)
|
|
(682.2)
|
|
(521.9)
|
|
|
Purchases of
investments
|
|
|
(4.9)
|
|
(5.8)
|
|
(258.6)
|
|
(16.1)
|
|
|
Payments on long-term
debt
|
|
|
-
|
|
-
|
|
(400.0)
|
|
-
|
|
|
Proceeds from debt
issuance, net of fees
|
|
|
-
|
|
-
|
|
496.2
|
|
-
|
|
|
Stock purchase
contract fees
|
|
|
(10.1)
|
|
(10.1)
|
|
(30.3)
|
|
(30.3)
|
|
|
Net short-term
borrowings
|
|
|
28.6
|
|
309.5
|
|
1,117.9
|
|
1,445.1
|
|
|
Premium paid on
equity option
|
|
|
-
|
|
-
|
|
-
|
|
(57.3)
|
|
|
Proceeds from
issuances of common stock
|
|
|
21.5
|
|
10.2
|
|
46.1
|
|
32.8
|
|
|
Purchases of common
stock for treasury
|
|
|
(2.7)
|
|
(301.8)
|
|
(11.9)
|
|
(514.5)
|
|
|
Cash dividends on
common stock
|
|
|
(102.3)
|
|
(97.4)
|
|
(297.6)
|
|
(286.5)
|
|
|
Effect of exchange
rate changes on cash
|
|
|
(25.4)
|
|
5.8
|
|
(20.4)
|
|
(54.1)
|
|
|
Other
|
|
|
|
5.0
|
|
(11.0)
|
|
(1.8)
|
|
6.7
|
|
|
Net cash used in
investing and financing activities
|
|
|
(193.2)
|
|
(226.2)
|
|
(249.4)
|
|
(326.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Decrease)
increase in cash, cash equivalents and restricted
cash
|
|
|
(0.5)
|
|
(34.7)
|
|
13.0
|
|
(286.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
|
|
324.9
|
|
403.4
|
|
311.4
|
|
655.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash
equivalents and restricted cash, end of period
|
|
|
$
324.4
|
|
$
368.7
|
|
$
324.4
|
|
$
368.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
Computation2
|
|
|
|
|
|
|
|
|
|
|
Operating cash
flow
|
|
|
$
192.7
|
|
$
191.5
|
|
$
262.4
|
|
$
40.1
|
|
Less: capital and
software expenditures
|
|
|
(96.7)
|
|
(109.4)
|
|
(283.5)
|
|
(327.4)
|
|
Free cash flow
(before dividends)
|
|
|
$
96.0
|
|
$
82.1
|
|
$
(21.1)
|
|
$
(287.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Cash, Cash Equivalents and Restricted Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 28,
2019
|
|
December 29,
2018
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$
311.7
|
|
$
288.7
|
|
|
|
|
|
Restricted cash
included in Other current assets
|
|
|
12.7
|
|
22.7
|
|
|
|
|
|
Cash, cash
equivalents and restricted cash
|
|
|
$
324.4
|
|
$
311.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Working capital is
comprised of accounts receivable, inventory, accounts payable and
deferred revenue.
|
2
|
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.
|
STANLEY BLACK
& DECKER, INC. AND SUBSIDIARIES
|
BUSINESS SEGMENT
INFORMATION
|
(Unaudited,
Millions of Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THIRD
QUARTER
|
|
YEAR-TO-DATE
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
NET
SALES
|
|
|
|
|
|
|
|
|
|
Tools &
Storage
|
|
$
2,534.0
|
|
$
2,448.0
|
|
$
7,452.3
|
|
$
7,231.6
|
|
Industrial
|
|
632.7
|
|
562.0
|
|
1,837.6
|
|
1,639.3
|
|
Security
|
|
466.4
|
|
484.8
|
|
1,438.1
|
|
1,476.8
|
|
Total
|
|
$
3,633.1
|
|
$
3,494.8
|
|
$
10,728.0
|
|
$
10,347.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
PROFIT
|
|
|
|
|
|
|
|
|
|
Tools &
Storage
|
|
$
410.1
|
|
$
356.2
|
|
$
1,115.9
|
|
$
1,056.2
|
|
Industrial
|
|
90.3
|
|
88.4
|
|
256.4
|
|
254.4
|
|
Security
|
|
33.1
|
|
47.4
|
|
110.6
|
|
141.0
|
|
Segment Profit
|
|
533.5
|
|
492.0
|
|
1,482.9
|
|
1,451.6
|
|
Corporate
Overhead
|
|
(50.1)
|
|
(52.5)
|
|
(155.3)
|
|
(150.7)
|
|
Total
|
|
$
483.4
|
|
$
439.5
|
|
$
1,327.6
|
|
$
1,300.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Profit
as a Percentage of Net Sales
|
|
|
|
|
|
|
|
|
|
Tools &
Storage
|
|
16.2%
|
|
14.6%
|
|
15.0%
|
|
14.6%
|
|
Industrial
|
|
14.3%
|
|
15.7%
|
|
14.0%
|
|
15.5%
|
|
Security
|
|
7.1%
|
|
9.8%
|
|
7.7%
|
|
9.5%
|
|
Segment Profit
|
|
14.7%
|
|
14.1%
|
|
13.8%
|
|
14.0%
|
|
Corporate
Overhead
|
|
(1.4%)
|
|
(1.5%)
|
|
(1.4%)
|
|
(1.5%)
|
|
Total
|
|
13.3%
|
|
12.6%
|
|
12.4%
|
|
12.6%
|
|
|
|
|
|
|
|
|
|
|
STANLEY BLACK
& DECKER, INC. AND SUBSIDIARIES
|
RECONCILIATION OF
GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING
|
NON-GAAP FINANCIAL
MEASURES
|
(Unaudited,
Millions of Dollars Except Per Share Amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
THIRD QUARTER
2019
|
|
|
|
|
Reported
|
|
Acquisition-
Related Charges
& Other1
|
|
Normalized3
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
$
1,239.5
|
|
$
5.3
|
|
$
1,244.8
|
|
|
% of Net
Sales
|
|
34.1%
|
|
|
|
34.3%
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
756.1
|
|
(37.3)
|
|
718.8
|
|
|
% of Net
Sales
|
|
20.8%
|
|
|
|
19.8%
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
483.4
|
|
42.6
|
|
526.0
|
|
|
% of Net
Sales
|
|
13.3%
|
|
|
|
14.5%
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes and equity interest
|
294.7
|
|
113.7
|
|
408.4
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
59.2
|
|
28.6
|
|
87.8
|
|
|
|
|
|
|
|
|
|
|
|
Share of net (losses)
earnings of equity method investment
|
(4.4)
|
|
5.4
|
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to common shareowners
|
230.5
|
|
90.5
|
|
321.0
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share of common stock
|
$
1.53
|
|
$
0.60
|
|
$
2.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Acquisition-related
charges and other relates primarily to restructuring, Security
business transformation and margin resiliency
initiatives.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THIRD QUARTER
2018
|
|
|
|
|
Reported
|
|
Acquisition-
Related Charges
& Other2
|
|
Normalized3
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
$
1,238.4
|
|
$
3.3
|
|
$
1,241.7
|
|
|
% of Net
Sales
|
|
35.4%
|
|
|
|
35.5%
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
798.9
|
|
(63.6)
|
|
735.3
|
|
|
% of Net
Sales
|
|
22.9%
|
|
|
|
21.0%
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
439.5
|
|
66.9
|
|
506.4
|
|
|
% of Net
Sales
|
|
12.6%
|
|
|
|
14.5%
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes
|
|
304.9
|
|
85.4
|
|
390.3
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
56.6
|
|
19.5
|
|
76.1
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to common shareowners
|
247.8
|
|
65.9
|
|
313.7
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share of common stock
|
$
1.65
|
|
$
0.43
|
|
$
2.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
Acquisition-related
charges and other relates primarily to inventory step-up,
integration and consulting costs, and a non-cash fair value
adjustment.
|
|
3
|
The normalized 2019
and 2018 information, as reconciled to GAAP above, is considered
relevant to aid analysis of the Company's margin and earnings
results aside from the material impact of the acquisition-related
and other charges.
|
|
STANLEY BLACK
& DECKER, INC. AND SUBSIDIARIES
|
RECONCILIATION OF
GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING
|
NON-GAAP FINANCIAL
MEASURES
|
(Unaudited,
Millions of Dollars Except Per Share Amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
YEAR-TO-DATE
2019
|
|
|
|
|
Reported
|
|
Acquisition-
Related
Charges &
Other1
|
|
Normalized3
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
$
3,644.9
|
|
$
22.4
|
|
$
3,667.3
|
|
|
% of Net
Sales
|
|
34.0%
|
|
|
|
34.2%
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
2,317.3
|
|
(86.9)
|
|
2,230.4
|
|
|
% of Net
Sales
|
|
21.6%
|
|
|
|
20.8%
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
1,327.6
|
|
109.3
|
|
1,436.9
|
|
|
% of Net
Sales
|
|
12.4%
|
|
|
|
13.4%
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes and equity interest
|
893.2
|
|
199.2
|
|
1,092.4
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
135.5
|
|
40.1
|
|
175.6
|
|
|
|
|
|
|
|
|
|
|
|
Share of net earnings
of equity method investment
|
1.2
|
|
19.0
|
|
20.2
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to common shareowners
|
756.7
|
|
178.1
|
|
934.8
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share of common stock
|
$
5.03
|
|
$
1.19
|
|
$
6.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Acquisition-related
charges and other relates primarily to restructuring, deal and
integration costs, Security business transformation, margin
resiliency initiatives, and a gain on a sale of a
business.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YEAR-TO-DATE
2018
|
|
|
|
|
Reported
|
|
Acquisition-
Related
Charges &
Other2
|
|
Normalized3
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
$
3,691.2
|
|
$
13.8
|
|
$
3,705.0
|
|
|
% of Net
Sales
|
|
35.7%
|
|
|
|
35.8%
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
2,390.3
|
|
(105.5)
|
|
2,284.8
|
|
|
% of Net
Sales
|
|
23.1%
|
|
|
|
22.1%
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
1,300.9
|
|
119.3
|
|
1,420.2
|
|
|
% of Net
Sales
|
|
12.6%
|
|
|
|
13.7%
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes
|
|
851.1
|
|
237.2
|
|
1,088.3
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
139.3
|
|
30.0
|
|
169.3
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to common shareowners
|
712.0
|
|
207.2
|
|
919.2
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share of common stock
|
$
4.68
|
|
$
1.36
|
|
$
6.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
Acquisition-related
charges and other relates primarily to inventory step-up,
integration and consulting costs, a non-cash fair value adjustment,
an environmental remediation settlement, and a tax charge related
to the enactment of new U.S. tax legislation.
|
|
3
|
The normalized 2019
and 2018 information, as reconciled to GAAP above, is considered
relevant to aid analysis of the Company's margin and earnings
results aside from the material impact of the acquisition-related
and other charges.
|
|
STANLEY BLACK
& DECKER, INC. AND SUBSIDIARIES
|
RECONCILIATION OF
GAAP SEGMENT PROFIT FINANCIAL MEASURES TO
CORRESPONDING
|
NON-GAAP FINANCIAL
MEASURES
|
(Unaudited,
Millions of Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THIRD QUARTER
2019
|
|
|
|
|
|
Reported
|
|
Acquisition-
Related and
Other Charges1
|
|
Normalized3
|
|
|
|
|
|
|
|
|
|
SEGMENT
PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tools &
Storage
|
|
$
410.1
|
|
$
11.4
|
|
$
421.5
|
|
|
|
Industrial
|
|
90.3
|
|
4.8
|
|
95.1
|
|
|
|
Security
|
|
33.1
|
|
17.6
|
|
50.7
|
|
|
|
Segment Profit
|
|
533.5
|
|
33.8
|
|
567.3
|
|
|
|
Corporate
Overhead
|
|
(50.1)
|
|
8.8
|
|
(41.3)
|
|
|
|
Total
|
|
$
483.4
|
|
$
42.6
|
|
$
526.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Profit
as a Percentage of Net Sales
|
|
|
|
|
|
|
|
|
Tools &
Storage
|
|
16.2%
|
|
|
|
16.6%
|
|
|
|
Industrial
|
|
14.3%
|
|
|
|
15.0%
|
|
|
|
Security
|
|
7.1%
|
|
|
|
10.9%
|
|
|
|
Segment Profit
|
|
14.7%
|
|
|
|
15.6%
|
|
|
|
Corporate
Overhead
|
|
(1.4%)
|
|
|
|
(1.1%)
|
|
|
|
Total
|
|
13.3%
|
|
|
|
14.5%
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Acquisition-related
and other charges relate primarily to Security business
transformation and margin resiliency initiatives.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THIRD QUARTER
2018
|
|
|
|
|
|
Reported
|
|
Acquisition-
Related
Charges2
|
|
Normalized3
|
|
|
|
|
|
|
|
|
|
SEGMENT
PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tools &
Storage
|
|
$
356.2
|
|
$
49.7
|
|
$
405.9
|
|
|
|
Industrial
|
|
88.4
|
|
6.2
|
|
94.6
|
|
|
|
Security
|
|
47.4
|
|
6.6
|
|
54.0
|
|
|
|
Segment Profit
|
|
492.0
|
|
62.5
|
|
554.5
|
|
|
|
Corporate
Overhead
|
|
(52.5)
|
|
4.4
|
|
(48.1)
|
|
|
|
Total
|
|
$
439.5
|
|
$
66.9
|
|
$
506.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Profit
as a Percentage of Net Sales
|
|
|
|
|
|
|
|
|
Tools &
Storage
|
|
14.6%
|
|
|
|
16.6%
|
|
|
|
Industrial
|
|
15.7%
|
|
|
|
16.8%
|
|
|
|
Security
|
|
9.8%
|
|
|
|
11.1%
|
|
|
|
Segment Profit
|
|
14.1%
|
|
|
|
15.9%
|
|
|
|
Corporate
Overhead
|
|
(1.5%)
|
|
|
|
(1.4%)
|
|
|
|
Total
|
|
12.6%
|
|
|
|
14.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
Acquisition-related
charges relate primarily to inventory step-up, integration and
consulting costs, and a non-cash fair value adjustment.
|
|
3
|
The normalized 2019
and 2018 business segment information, as reconciled to GAAP above,
is considered relevant to aid analysis of the Company's segment
profit results aside from the material impact of the
acquisition-related and other charges.
|
|
STANLEY BLACK
& DECKER, INC. AND SUBSIDIARIES
|
RECONCILIATION OF
GAAP SEGMENT PROFIT FINANCIAL MEASURES TO
CORRESPONDING
|
NON-GAAP FINANCIAL
MEASURES
|
(Unaudited,
Millions of Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YEAR-TO-DATE
2019
|
|
|
|
|
|
Reported
|
|
Acquisition-
Related and
Other
Charges1
|
|
Normalized3
|
|
|
|
|
|
|
|
|
|
SEGMENT
PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tools &
Storage
|
|
$
1,115.9
|
|
$
31.5
|
|
$
1,147.4
|
|
|
|
Industrial
|
|
256.4
|
|
22.1
|
|
278.5
|
|
|
|
Security
|
|
110.6
|
|
44.7
|
|
155.3
|
|
|
|
Segment Profit
|
|
1,482.9
|
|
98.3
|
|
1,581.2
|
|
|
|
Corporate
Overhead
|
|
(155.3)
|
|
11.0
|
|
(144.3)
|
|
|
|
Total
|
|
$
1,327.6
|
|
$
109.3
|
|
$
1,436.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Profit
as a Percentage of Net Sales
|
|
|
|
|
|
|
|
|
Tools &
Storage
|
|
15.0%
|
|
|
|
15.4%
|
|
|
|
Industrial
|
|
14.0%
|
|
|
|
15.2%
|
|
|
|
Security
|
|
7.7%
|
|
|
|
10.8%
|
|
|
|
Segment Profit
|
|
13.8%
|
|
|
|
14.7%
|
|
|
|
Corporate
Overhead
|
|
(1.4%)
|
|
|
|
(1.3%)
|
|
|
|
Total
|
|
12.4%
|
|
|
|
13.4%
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Acquisition-related
and other charges relate primarily to integration costs, Security
business transformation and margin resiliency
initiatives.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YEAR-TO-DATE
2018
|
|
|
|
|
|
Reported
|
|
Acquisition-
Related
Charges2
|
|
Normalized3
|
|
|
|
|
|
|
|
|
|
SEGMENT
PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tools &
Storage
|
|
$
1,056.2
|
|
$
82.2
|
|
$
1,138.4
|
|
|
|
Industrial
|
|
254.4
|
|
19.1
|
|
273.5
|
|
|
|
Security
|
|
141.0
|
|
9.9
|
|
150.9
|
|
|
|
Segment
Profit
|
|
1,451.6
|
|
111.2
|
|
1,562.8
|
|
|
|
Corporate
Overhead
|
|
(150.7)
|
|
8.1
|
|
(142.6)
|
|
|
|
Total
|
|
$
1,300.9
|
|
$
119.3
|
|
$
1,420.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Profit
as a Percentage of Net Sales
|
|
|
|
|
|
|
|
|
Tools &
Storage
|
|
14.6%
|
|
|
|
15.7%
|
|
|
|
Industrial
|
|
15.5%
|
|
|
|
16.7%
|
|
|
|
Security
|
|
9.5%
|
|
|
|
10.2%
|
|
|
|
Segment Profit
|
|
14.0%
|
|
|
|
15.1%
|
|
|
|
Corporate
Overhead
|
|
(1.5%)
|
|
|
|
(1.4%)
|
|
|
|
Total
|
|
12.6%
|
|
|
|
13.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
Acquisition-related
charges relate primarily to inventory step-up, integration and
consulting costs, and a non-cash fair value adjustment.
|
|
3
|
The normalized 2019
and 2018 business segment information, as reconciled to GAAP above,
is considered relevant to aid analysis of the Company's segment
profit results aside from the material impact of the
acquisition-related and other charges.
|
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/stanley-black--decker-reports-3q-2019-results-announces-new-200-million-cost-reduction-program-300944456.html
SOURCE Stanley Black &
Decker