Stanley Black & Decker (
reported its financial results for the second quarter of 2012 on
July 18, 2012. Earnings per share from continuing operations were
$1.32, down 14 cents from $1.46 reported in the year-ago quarter.
Earnings results for the quarter also lagged behind the Zacks
Consensus Estimate of $1.52.
GAAP EPS including 40 cents of merger related charges was 92
cents compared with $1.14 in the second quarter of 2011.
Net revenue in the quarter jumped 8.1% year over year to roughly
$2.8 billion. The increase reflects a 1% improvement from unit
volume; a 1% positive price impact and a 10% positive impact from
acquisitions. These were, however, offset by a 4% negative currency
Revenue in the CDIY segment increased 1.7% year over year to
$1,387.2 million, while the Security segment reported revenues of
$792.3 million, reflecting a rise of 29.2%. Industrial segment
sales increased 1.4% to $634.7 million.
In the second quarter 2012, normalized cost of sales, as a
percentage of revenue was 63.4%, down as compared with 62.8% in the
year-ago quarter. Gross margin fell 60 basis points to 36.6%.
Selling, general and administrative expenses registered an
increase of 3.8% year over year, but as a percentage of revenue
declined 90 basis points to 22.6%. Operating margin in the quarter
was 14.1% versus 13.7% in the year-ago comparable quarter.
Exiting the second quarter, Stanley Black & Decker's cash
and cash equivalents decreased 34.6% sequentially to $577.8
million. Long-term debt, net of current portion was $2,924.5
million, up compared with $2,905.7 million in the previous
Normalized net cash flow from operating activities was
approximately $366.3 million in the second quarter of 2012, up from
$213.2 million in the year-ago quarter. Capital spending increased
17.9% year over year to $63.8 million. Free cash flow in the
quarter was $302.5 million versus $159.1 million in the comparable
period last year.
In the second quarter, the company expended approximately $68.9
million in paying dividends to shareholders.
The company's Board of Directors' announcement of dividend
increase and a share buyback program came in as a surprise.
Quarterly dividend rate was increased 20% from 41 cents earlier to
49 cents, which will be paid on September 18, 2012 to shareholders
of record as on September 7, 2012. This was the company's 45
consecutive annual dividend increase.
A share buyback program of roughly 20 million common stock, or
worth $1.2 billion at current share price was also announced.
Management revised down its earnings per share guidance,
excluding merger related charges, for 2012 from $5.75-$6.00 to
$5.40-$5.65 range due to a negative impact from foreign currency
Organic net sales growth expectation was reiterated at 1%-2%
year over year from the $11 billion base in 2011.
Total cost synergies from the Black & Decker acquisition is
now expected to reach $500 million as compared with the prior
estimate of $450 million. Of this, approximately $115 million is
still expected to be realized in 2012, which, along with $45
million synergies from the Niscayah acquisition will be roughly 70
cents accretive to EPS. Also, the $150 million cost reduction
program along with pre-tax benefits will add roughly 70 cents to
GAAP EPS for the year is expected to be roughly within the
$3.98-$4.34 range versus its prior guidance of $4.71-$4.97. Free
cash flow is expected to be roughly $1.2 billion.
Stanley Black & Decker manufactures tools and engineered
security solutions across the globe. Prime competitors of the
Danaher Corp. (
Makita Corp. (
Snap-on Inc. (
We currently maintain a Neutral recommendation on the stock.
DANAHER CORP (DHR): Free Stock Analysis Report
(MKTAY): ETF Research Reports
SNAP-ON INC (SNA): Free Stock Analysis Report
STANLEY B&D INC (SWK): Free Stock Analysis
To read this article on Zacks.com click here.