Stanley Black & Decker Q2 Earnings Beat Est. - Analyst Blog


Industrial tool maker, Stanley Black & Decker ( SWK ) reported earnings per share from continuing operations of $1.21 in the second quarter of 2013, up from $1.13 reported in the year-ago quarter and above the Zacks Consensus Estimate of $1.19.

GAAP earnings per share in the quarter were $1.23. The earnings result outperformance can be attributed to healthy performance at the company's three segments.


Stanley Black & Decker generated net revenues of $2,869.3 million, up 11.8% year over year and above the Zacks Consensus Estimate of $2,813 million. The increase can be attributed to roughly 6% volume gains and a 7% contribution from acquisitions, offset partially by 1% impact from unfavorable pricing. Currency translation had a neutral impact on results this quarter.

Revenue in the CDIY segment (50.4% of second quarter 2013 revenue) rose 8.6% year over year to $1,445.8 million, while the Security segment (21.3%) reported revenues of $610.7 million, reflecting a year over year increase of 1.6%. Industrial segment (28.3%) sales soared 28.1% to $812.8 million.


In the second quarter 2013, Stanley Black & Decker's normalized cost of sales, as a percentage of revenue came in at 64.6% versus 63.6% reported in the year-ago quarter. Gross margin was down 100 basis points to 35.4%, due primarily to higher cost of sales incurred in the quarter.

Selling, general and administrative expenses registered a year-over-year increase of 11.1% and as a percentage of revenue declined 20 basis points to 22.9%. Operating margin in the quarter was 12.4% versus 13.3% in the year-ago comparable quarter.

Balance Sheet

Cash and cash equivalents of Stanley Black & Decker exiting the second quarter 2013 were $561.74 million, up 0.8% from $557.5 million in the previous quarter. Long-term debt (net of current portions) was down 1.9% to $3,428.9 million as compared with $3,494.1 million in the previous quarter.

Cash Flow

Normalized net cash flow from operating activities was $271.7 million in the second quarter 2013 versus $366.4 million in the year-ago quarter. Capital spending declined 15.7% year over year to $53.8 million. Free cash flow in the quarter was $217.9 million versus $302.6 million in the year-ago quarter.

The company expended approximately $78.4 million in paying dividends to shareholders in the second quarter 2013.


For 2013, management reiterated its earnings guidance provided earlier. Earnings per share, excluding one-time charges, are expected to be within the $5.40-$5.65 range. Organic revenue growth expectation has, however, been increased from 2%-3% to 4%-5% range.

GAAP EPS for 2013 is expected to be in the range of $4.46-$4.71, same as predicted earlier. Free cash flow is projected to be roughly $1.0 billion.

Stanley Black & Decker manufactures tools and engineered security solutions across the globe. The stock currently carries a Zacks Rank #4 (Sell).

The companies that closely compete with Stanley Black & Decker are Kennametal Inc. ( KMT ) - reported adjusted earnings of 76 cents per share, down from $1.06 earned in the year-earlier quarter but ahead of the Zacks Consensus Estimate of 73 cents, Lincoln Electric Holdings Inc. ( LECO ) - expected to release on Jul 29, 2013, and Hardinge Inc. ( HDNG ) - expected to release on Aug 8, 2013.

HARDINGE INC (HDNG): Free Stock Analysis Report

KENNAMETAL INC (KMT): Free Stock Analysis Report

LINCOLN ELECTRC (LECO): Free Stock Analysis Report

STANLEY B&D INC (SWK): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: HDNG , KMT , LECO , SWK

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