NEW BRITAIN, Conn.,
April 24, 2019 /PRNewswire/ --
Stanley Black & Decker (NYSE:
SWK) today announced first quarter 2019 financial results.
- 1Q'19 Revenues Totaled $3.3
Billion, Up 4% Versus Prior Year, Fueled By 5% Organic
Growth And 3% Growth From Acquisitions
- 1Q'19 Diluted GAAP EPS Was $1.13;
Excluding Charges, 1Q'19 Diluted EPS Was $1.42, Overcoming $160
Million Or Approximately $0.90
Of EPS In External Headwinds
- EPS Outperformance Driven By Strong Operational Performance And
16 Cents (~50% Of Outperformance) Of
Tax Timing Within The Year
- Successfully Completed Acquisition Of IES Attachments
- Raising Full Year Diluted GAAP EPS Guidance Range to
$7.50 - $7.70 (From $7.45 -
$7.65), Raising Adjusted EPS Guidance
Range To $8.50 - $8.70 (From $8.45 -
$8.65) And Reiterating Free Cash Flow
Conversion Estimate Of Approximately 85% - 90%
1Q'19 Key Points:
- Net sales for the quarter were $3.3
billion, up 4% versus prior year, as positive volume (+3%),
acquisitions (+3%) and price (+2%) more than offset currency
(-4%).
- Gross margin rate for the quarter was 33.2%, down approximately
300 basis points versus prior year as volume leverage, productivity
and price were more than offset by carryover external headwinds
from prior year, including commodity inflation, foreign exchange
and tariffs.
- SG&A expenses were 23.4% of sales. Excluding charges,
SG&A expenses were 22.7% of sales compared to 24.0% in 1Q'18,
reflecting tight cost control, including the savings from the 4Q'18
cost reduction program.
- Restructuring costs for the quarter were $8.7 million. Excluding charges,
restructuring costs for the quarter were $1.6 million compared to $21.8 million in 1Q'18.
- Other, net totaled $65.4 million
for the quarter. Excluding charges, Other, net totaled
$49.3 million compared to
$52.1 million in 1Q'18.
- The tax rate was 12.7%. Excluding charges, the tax rate
was 15.0% versus 23.0% in 1Q'18 primarily due to the settlement of
a tax audit during the quarter.
- Average diluted shares outstanding for the quarter were 149.9
million versus 153.9 million a year ago, reflecting $500 million of share repurchases executed during
2018.
- Working capital turns for the quarter were 5.8, down 0.4 turns
from prior year as a result of carrying higher levels of inventory
associated with the Craftsman and other brand rollouts.
Stanley Black & Decker's
President and CEO, James M. Loree,
commented, "We had a strong start to 2019, with above-market
organic growth of 5%, led by 7% organic growth from Tools &
Storage, and the benefit of our cost actions helping to offset
carryover from the 2018 wave of significant external headwinds.
We closed our minority investment in MTD and the acquisition
of the IES Attachments businesses, Paladin and Pengo, during the
quarter. The teams are now focused on capturing the value from
those transactions.
"We continue to have a series of strong growth catalysts that
position us well to deliver share gains, including the ongoing
Craftsman brand rollout, Lenox and Irwin revenue synergies,
FlexVolt, e-commerce, emerging markets and new innovations.
The organization is also focused on margin expansion as we realize
the benefits from our $250 million
cost reduction program and recent pricing actions. We are
also in the process of defining and implementing a significant
multi-year margin expansion initiative which we will dimension and
provide details on at our upcoming Investor Day in May.
"Our seasoned management team is focused on leveraging our SFS
2.0 operating system and acting with the agility required to
achieve success in 2019 and beyond. We remain committed to
advancing progress against our vision to strive to become known as
one of the world's leading innovators, while continuing to deliver
top-quartile financial performance and elevate our commitment to
social responsibility."
1Q'19 Segment
Results
|
|
($ in M)
|
|
|
Sales
|
Profit
|
Charges1
|
Profit Ex-
Charges1
|
Profit
Rate
|
Profit Rate
Ex-
Charges1
|
|
|
|
|
|
|
|
Tools &
Storage
|
$2,292
|
$265.8
|
$12.6
|
$278.4
|
11.6%
|
12.1%
|
|
|
|
|
|
|
|
Industrial
|
$555
|
$71.0
|
$6.0
|
$77.0
|
12.8%
|
13.9%
|
|
|
|
|
|
|
|
Security
|
$486
|
$39.5
|
$10.8
|
$50.3
|
8.1%
|
10.3%
|
1See
Merger And Acquisition (M&A) Related And Other
Charges On Page 5
|
- Tools & Storage net sales increased 3% versus 1Q'18 as
volume (+5%) and price (+2%) were partially offset by currency
(-4%). All regions contributed to the 7% organic growth for
the quarter with North America
+11%, Europe +3% and emerging
markets +1%. North America
organic growth was driven by the rollout of the Craftsman brand,
continued benefits from new product innovation and price
realization. Europe
delivered above-market growth supported by new product launches and
continued successful commercial actions. Emerging markets
growth was due to price, new products and e-commerce expansion,
which was largely offset by continued market contractions in
Argentina and Turkey.
Additionally, the Company recently settled its lawsuit with
Sears. Overall Tools & Storage segment profit rate,
excluding charges, was 12.1%, down from the 1Q'18 rate of 14.3%, as
the benefits from volume leverage, pricing and cost control were
more than offset by the impact from currency, commodity inflation
and tariffs.
- Industrial net sales increased 10% versus 1Q'18 as the Nelson
and IES Attachments acquisitions (+16%) were partially offset by
currency (-3%) and volume (-3%). Engineered Fastening organic
revenues were down 4% as automotive light vehicle production
declines and lower system shipments more than offset continued
fastener penetration gains. Infrastructure organic revenues
were up 5% primarily due to stronger North American pipeline
project activity in Oil & Gas, partially offset by lower
Hydraulic Tools volumes. Overall Industrial segment profit
rate, excluding charges, was 13.9%, down from the 1Q'18 rate of
16.4%, as productivity gains and cost control were more than offset
by the impact from lower Engineered Fastening automotive volume,
commodity inflation, and the modestly dilutive impact from
acquisitions.
- Security net sales declined 1% versus 1Q'18 as bolt-on
commercial electronic security acquisitions (+2%) and price (+1%)
were more than offset by currency (-4%). North America organic growth was up 2% as
higher volumes within automatic doors and healthcare were partially
offset by lower installations in commercial electronic
security. Europe was down 1%
organically as growth within France was offset by adverse market conditions
in Sweden and UK. The
overall Security segment profit rate, excluding charges, was 10.3%,
which was up 70 basis points versus the prior year, as a focus on
cost containment was partially offset by commercial investments to
support the business transformation in commercial electronic
security.
Updated 2019 Outlook
Management is raising its 2019 EPS outlook to $7.50 - $7.70 from
$7.45 - $7.65 on a GAAP basis, and to $8.50 - $8.70 from
$8.45 - $8.65 on an adjusted basis. The Company is also
reiterating its free cash flow conversion estimate of approximately
85% - 90%.
The following reflects the key assumption changes to the
Company's prior EPS outlook:
- Incremental organic growth and cost control realized in the
first quarter more than offset an incremental $20 million headwind from foreign currency
- The IES Attachments acquisition and the Sargent & Greenleaf
divestiture that was signed in the first quarter net to a
relatively neutral impact to EPS
Donald Allan Jr., Executive Vice
President and CFO, commented, "We were pleased that Security
continued to successfully execute its business transformation in
the first quarter, delivering operating margin rate and dollar
expansion through cost control and an intense focus on minimizing
recurring revenue attrition. At the same time, focused
investments in commercial resources and new customer solutions in
electronic security are expected to positively impact organic
growth as the year progresses.
"Stanley Black & Decker's
updated outlook for 2019 includes above-market organic growth of
4%, adjusted earnings per share growth of 4% - 7% versus prior year
and strong free cash flow generation, all while offsetting
$340 million in external headwinds,
mostly from 2018 carryover. Our solid start to the year
reflects that we are successfully leveraging our continued strong
organic growth, pricing actions and the $250
million cost reduction program. These factors along with the
beginning impacts of certain margin enhancement initiatives will
result in operating margin and rate expansion in 2019.
"The organization remains focused on strong day-to-day execution
and operational excellence in accordance with our SFS 2.0 operating
system. We are confident that we have positioned the Company
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
$1.00, consisting of
acquisition-related and other charges. These forecasted
charges primarily relate to deal and integration costs,
restructuring, Security business transformation and margin
enhancement 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 1Q'19 were
$52.6 million, primarily related to
restructuring, deal and integration costs, as well as Security
business transformation & margin enhancement initiatives.
Gross margin included $6.4 million of
these charges while SG&A included $23.0
million. Other, net and Restructuring included
$16.1 million and $7.1 million of these charges, respectively.
Share of net earnings of equity method investment included
$3.4 million of charges related to an
inventory step-up fair value adjustment.
The Company will host a conference call with investors today,
April 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 US at (877) 930-8285, from outside the U.S. at +1 (253)
336-8297. Please use the conference identification number 3109819.
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 3109819. 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 and 13, 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. Sears
included within this press release is defined as Transform Holdco,
LLC which operates Sears & Kmart retail locations.
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIRST
QUARTER
|
|
|
|
2019
|
|
2018
|
|
|
|
|
|
|
NET
SALES
|
|
$
3,333.6
|
|
$
3,209.3
|
|
|
|
|
|
|
COSTS AND
EXPENSES
|
|
|
|
|
|
Cost of
sales
|
|
2,228.0
|
|
2,043.6
|
|
Gross
margin
|
|
1,105.6
|
|
1,165.7
|
|
% of Net
Sales
|
|
33.2%
|
|
36.3%
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
778.9
|
|
785.6
|
|
% of Net
Sales
|
|
23.4%
|
|
24.5%
|
|
|
|
|
|
|
|
Operating
margin
|
|
326.7
|
|
380.1
|
|
% of Net
Sales
|
|
9.8%
|
|
11.8%
|
|
|
|
|
|
|
|
Other -
net
|
|
65.4
|
|
58.0
|
|
Restructuring
charges
|
|
8.7
|
|
22.9
|
|
Income from
operations
|
|
252.6
|
|
299.2
|
|
|
|
|
|
|
|
Interest -
net
|
|
57.8
|
|
47.4
|
|
|
|
|
|
|
EARNINGS BEFORE
INCOME TAXES AND EQUITY INTEREST
|
194.8
|
|
251.8
|
|
Income
taxes
|
|
24.7
|
|
81.7
|
NET EARNINGS
BEFORE EQUITY INTEREST
|
|
170.1
|
|
170.1
|
|
Share of net earnings
of equity method investment
|
|
0.3
|
|
-
|
NET
EARNINGS
|
|
170.4
|
|
170.1
|
|
Less: net gain (loss)
attributable to non-controlling interests
|
0.5
|
|
(0.5)
|
|
|
|
|
|
|
NET EARNINGS
ATTRIBUTABLE TO COMMON SHAREOWNERS
|
$
169.9
|
|
$
170.6
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE OF COMMON STOCK
|
|
|
|
|
|
Basic
|
|
$
1.15
|
|
$
1.13
|
|
Diluted
|
|
$
1.13
|
|
$
1.11
|
|
|
|
|
|
|
DIVIDENDS PER
SHARE
|
|
$
0.66
|
|
$
0.63
|
|
|
|
|
|
|
WEIGHTED-AVERAGE SHARES OUTSTANDING (in
thousands)
|
|
|
|
|
Basic
|
|
147,863
|
|
150,612
|
|
Diluted
|
|
149,908
|
|
153,905
|
STANLEY BLACK
& DECKER, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Unaudited,
Millions of Dollars)
|
|
|
|
|
|
|
|
|
|
March
30,
|
|
December
29,
|
|
|
|
2019
|
|
2018
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
281.8
|
|
$
288.7
|
|
Accounts and notes
receivable, net
|
|
1,882.1
|
|
1,607.8
|
|
Inventories,
net
|
|
2,791.6
|
|
2,373.5
|
|
Other current
assets
|
|
298.4
|
|
299.4
|
|
Total current assets
|
|
5,253.9
|
|
4,569.4
|
|
Property, plant and
equipment, net
|
|
1,927.4
|
|
1,915.2
|
|
Goodwill and other
intangibles, net
|
|
13,028.3
|
|
12,441.1
|
|
Other
assets
|
|
1,250.7
|
|
482.3
|
|
Total assets
|
|
$
21,460.3
|
|
$
19,408.0
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREOWNERS' EQUITY
|
|
|
|
|
Short-term
borrowings
|
|
$
1,780.7
|
|
$
376.1
|
|
Current maturities of
long-term debt
|
|
3.1
|
|
2.5
|
|
Accounts
payable
|
|
2,264.3
|
|
2,233.2
|
|
Accrued
expenses
|
|
1,718.1
|
|
1,389.8
|
|
Total current liabilities
|
|
5,766.2
|
|
4,001.6
|
|
Long-term
debt
|
|
3,909.4
|
|
3,819.8
|
|
Other long-term
liabilities
|
|
3,848.0
|
|
3,746.7
|
|
Stanley Black &
Decker, Inc. shareowners' equity
|
7,932.5
|
|
7,836.2
|
|
Non-controlling
interests' equity
|
|
4.2
|
|
3.7
|
|
Total liabilities and shareowners' equity
|
$
21,460.3
|
|
$
19,408.0
|
STANLEY
BLACK & DECKER, INC. AND SUBSIDIARIES
|
SUMMARY OF CASH
FLOW ACTIVITY
|
(Unaudited,
Millions of Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIRST
QUARTER
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
$
170.4
|
|
$
170.1
|
|
|
|
Depreciation and
amortization
|
|
|
137.8
|
|
123.6
|
|
|
|
Share of net earnings
of equity method investment
|
|
|
(0.3)
|
|
-
|
|
|
|
Changes in working
capital1
|
|
|
(616.8)
|
|
(544.3)
|
|
|
|
Other
|
|
|
|
(122.4)
|
|
(98.8)
|
|
|
|
Net cash used in
operating activities
|
|
|
(431.3)
|
|
(349.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING AND
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Capital and software
expenditures
|
|
|
(89.6)
|
|
(106.3)
|
|
|
|
Business
acquisitions, net of cash acquired
|
|
|
(676.2)
|
|
(1.2)
|
|
|
|
Purchases of
investments
|
|
|
(245.4)
|
|
(4.0)
|
|
|
|
Net investment hedge
settlements
|
|
|
3.9
|
|
(17.5)
|
|
|
|
Payment on long-term
debt
|
|
|
(400.0)
|
|
-
|
|
|
|
Proceeds from debt
issuance, net of fees
|
|
|
496.9
|
|
-
|
|
|
|
Stock purchase
contract fees
|
|
|
(10.1)
|
|
(10.1)
|
|
|
|
Net short-term
borrowings
|
|
|
1,419.9
|
|
382.0
|
|
|
|
Premium paid on
equity option
|
|
|
-
|
|
(57.3)
|
|
|
|
Cash dividends on
common stock
|
|
|
(97.6)
|
|
(94.9)
|
|
|
|
Effect of exchange
rate changes on cash
|
|
|
4.8
|
|
27.9
|
|
|
|
Other
|
|
|
|
(0.9)
|
|
(1.1)
|
|
|
|
Net cash provided
by investing and financing activities
|
|
|
405.7
|
|
117.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in cash,
cash equivalents, and restricted cash
|
|
|
(25.6)
|
|
(231.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash
equivalents, and restricted cash, beginning of
period
|
|
|
311.4
|
|
655.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash
equivalents, and restricted cash, end of period
|
|
|
$
285.8
|
|
$
423.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
Computation2
|
|
|
|
|
|
|
|
Operating cash
flow
|
|
|
$
(431.3)
|
|
$
(349.4)
|
|
|
Less: capital and
software expenditures
|
|
|
(89.6)
|
|
(106.3)
|
|
|
Free cash flow
(before dividends)
|
|
|
$
(520.9)
|
|
$
(455.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Cash, Cash Equivalents and Restricted Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
March 30,
2019
|
|
December 29,
2018
|
|
|
Cash and cash
equivalents
|
|
|
$
281.8
|
|
$
288.7
|
|
|
Restricted cash
included in Other current assets
|
|
|
4.0
|
|
22.7
|
|
|
Cash, cash
equivalents and restricted cash
|
|
|
$
285.8
|
|
$
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIRST
QUARTER
|
|
|
|
2019
|
|
2018
|
NET
SALES
|
|
|
|
|
|
Tools &
Storage
|
|
$
2,292.3
|
|
$
2,215.8
|
|
Industrial
|
|
555.0
|
|
504.2
|
|
Security
|
|
486.3
|
|
489.3
|
|
Total
|
|
$
3,333.6
|
|
$
3,209.3
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
PROFIT
|
|
|
|
|
|
Tools &
Storage
|
|
$
265.8
|
|
$
301.4
|
|
Industrial
|
|
71.0
|
|
80.5
|
|
Security
|
|
39.5
|
|
45.5
|
|
Segment
Profit
|
|
376.3
|
|
427.4
|
|
Corporate
Overhead
|
|
(49.6)
|
|
(47.3)
|
|
Total
|
|
$
326.7
|
|
$
380.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Profit
as a Percentage of Net Sales
|
|
|
|
|
|
Tools &
Storage
|
|
11.6%
|
|
13.6%
|
|
Industrial
|
|
12.8%
|
|
16.0%
|
|
Security
|
|
8.1%
|
|
9.3%
|
|
Segment
Profit
|
|
11.3%
|
|
13.3%
|
|
Corporate
Overhead
|
|
(1.5%)
|
|
(1.5%)
|
|
Total
|
|
9.8%
|
|
11.8%
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
FIRST QUARTER
2019
|
|
|
|
Reported
|
|
Acquisition-
Related and
Other
Charges1
|
|
Normalized3
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
$
1,105.6
|
|
$
6.4
|
|
$
1,112.0
|
|
% of Net
Sales
|
|
33.2%
|
|
|
|
33.4%
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
778.9
|
|
(23.0)
|
|
$
755.9
|
|
% of Net
Sales
|
|
23.4%
|
|
|
|
22.7%
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
326.7
|
|
29.4
|
|
356.1
|
|
% of Net
Sales
|
|
9.8%
|
|
|
|
10.7%
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes and equity interest
|
194.8
|
|
52.6
|
|
247.4
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
24.7
|
|
12.4
|
|
37.1
|
|
|
|
|
|
|
|
|
|
Share of net earnings
of equity method investment
|
0.3
|
|
3.4
|
|
3.7
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to common shareowners
|
169.9
|
|
43.6
|
|
213.5
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share of common stock
|
$
1.13
|
|
$
0.29
|
|
$
1.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Acquisition-related
and other charges relates primarily to restructuring, deal and
integration costs, Security business transformation
and margin enhancement initiatives, and inventory step-up
amortization.
|
|
|
|
|
|
|
|
|
|
|
|
FIRST QUARTER
2018
|
|
|
|
Reported
|
|
Acquisition-
Related
Charges &
Other2
|
|
Normalized3
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
$
1,165.7
|
|
$
1.7
|
|
$
1,167.4
|
|
% of Net
Sales
|
|
36.3%
|
|
|
|
36.4%
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
785.6
|
|
(16.4)
|
|
$
769.2
|
|
% of Net
Sales
|
|
24.5%
|
|
|
|
24.0%
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
380.1
|
|
18.1
|
|
398.2
|
|
% of Net
Sales
|
|
11.8%
|
|
|
|
12.4%
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes
|
|
251.8
|
|
25.1
|
|
276.9
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
81.7
|
|
(18.0)
|
|
63.7
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to common shareowners
|
170.6
|
|
43.1
|
|
213.7
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share of common stock
|
$
1.11
|
|
$
0.28
|
|
$
1.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
Acquisition-related
charges and other relates primarily to facility-related charges,
integration and consulting costs, and a tax charge
related to the enactment of new U.S. tax legislation.
|
3
|
The normalized 2018
and 2019 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIRST QUARTER
2019
|
|
|
|
|
|
Reported
|
|
Acquisition-
Related and
Other
Charges1
|
|
Normalized3
|
|
|
SEGMENT
PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tools &
Storage
|
|
$
265.8
|
|
$
12.6
|
|
$
278.4
|
|
|
|
Industrial
|
|
71.0
|
|
6.0
|
|
77.0
|
|
|
|
Security
|
|
39.5
|
|
10.8
|
|
50.3
|
|
|
|
Segment
Profit
|
|
376.3
|
|
29.4
|
|
405.7
|
|
|
|
Corporate
Overhead
|
|
(49.6)
|
|
-
|
|
(49.6)
|
|
|
|
Total
|
|
$
326.7
|
|
$
29.4
|
|
$
356.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Profit
as a Percentage of Net Sales
|
|
|
|
|
|
|
|
|
Tools &
Storage
|
|
11.6%
|
|
|
|
12.1%
|
|
|
|
Industrial
|
|
12.8%
|
|
|
|
13.9%
|
|
|
|
Security
|
|
8.1%
|
|
|
|
10.3%
|
|
|
|
Segment
Profit
|
|
11.3%
|
|
|
|
12.2%
|
|
|
|
Corporate
Overhead
|
|
(1.5%)
|
|
|
|
(1.5%)
|
|
|
|
Total
|
|
9.8%
|
|
|
|
10.7%
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Acquisition-related
and other charges relate primarily to inventory step-up
amortization, integration costs, and Security business
transformation and margin enhancement initiatives.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIRST QUARTER
2018
|
|
|
|
|
|
Reported
|
|
Acquisition-
Related
Charges2
|
|
Normalized3
|
|
|
SEGMENT
PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tools &
Storage
|
|
$
301.4
|
|
$
14.7
|
|
$
316.1
|
|
|
|
Industrial
|
|
80.5
|
|
2.0
|
|
82.5
|
|
|
|
Security
|
|
45.5
|
|
1.3
|
|
46.8
|
|
|
|
Segment
Profit
|
|
427.4
|
|
18.0
|
|
445.4
|
|
|
|
Corporate
Overhead
|
|
(47.3)
|
|
0.1
|
|
(47.2)
|
|
|
|
Total
|
|
$
380.1
|
|
$
18.1
|
|
$
398.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Profit
as a Percentage of Net Sales
|
|
|
|
|
|
|
|
|
Tools &
Storage
|
|
13.6%
|
|
|
|
14.3%
|
|
|
|
Industrial
|
|
16.0%
|
|
|
|
16.4%
|
|
|
|
Security
|
|
9.3%
|
|
|
|
9.6%
|
|
|
|
Segment
Profit
|
|
13.3%
|
|
|
|
13.9%
|
|
|
|
Corporate
Overhead
|
|
(1.5%)
|
|
|
|
(1.5%)
|
|
|
|
Total
|
|
11.8%
|
|
|
|
12.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
Acquisition-related
charges relate primarily to facility-related charges, integration
and consulting costs.
|
3
|
The normalized 2018
and 2019 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.
|
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SOURCE Stanley Black &
Decker