Industrial tool maker,
Stanley Black & Decker
) reported earnings per share from continuing operations of $1.40
in the third quarter of 2012, up from $1.33 in the year-ago
comparable quarter. However, the quarter's earnings were below the
Zacks Consensus Estimate of $1.45.
GAAP EPS which included 71 cents of merger & acquisition
related charges and other charges was 69 cents compared with 96
cents in the third quarter of 2011.
Net revenue in the quarter jumped 6% year over year to roughly
$2,786.7 million. The increase can be attributed to a 9%
contribution from acquisitions, which were partially offset by a 3%
negative currency translation impact. Price and volume impact was
relatively flat in the quarter. Results, however, lagged behind the
Zacks Consensus Estimate of $2,837 million.
Revenue in the CDIY segment increased 2.9% year over year to
$1,376.1 million, while the Security segment reported revenues of
$789.7 million, reflecting a rise of 21.8%. Industrial segment
sales decreased 2.1% to $620.9 million.
In the third quarter 2012, normalized cost of sales, as a
percentage of revenue, was 63.4%, up from 62.5% in the year-ago
quarter. Gross margin fell 90 basis points to 36.6%.
Selling, general and administrative expenses registered a
year-over-year decline of 0.2% and as a percentage of revenue
declined 150 basis points to 22.1%. Operating margin in the quarter
was 14.5% versus 14.0% in the year-ago comparable quarter.
Exiting the third quarter, Stanley Black & Decker's cash and
cash equivalents stood at $769.5 million, an increase of 33.2% from
$577.8 million in the previous quarter. Roughly $901 million
long-term debt repayment during the quarter slashed the company's
long-term debt (net of current portion) balance by 6.7%
sequentially to $2,728.9 million.
Normalized net cash flow from operating activities was $234.7
million in the third quarter, up slightly from $228.7 million in
the year-ago quarter. Capital spending increased 25.6% year over
year to $65.8 million. Free cash flow in the quarter moved down to
$168.9 million from $176.3 million in the comparable period last
In the third quarter, the company expended approximately $82.5
million in paying dividends to shareholders.
Management revised down its earnings per share guidance excluding
merger related charges for 2012 from $5.40-$5.65 to roughly $5.25
due to organic volume pressures and increased investments in
Organic net sales growth expectation was lowered to 1%; the lower
end of the company's previously provided year-over-year growth
guidance of 1%-2% from the $11 billion base in 2011.
Cost synergies of approximately $115 million are still expected to
be realized in 2012, along with roughly $45 million synergies from
the Niscayah acquisition.
GAAP EPS for the year is expected to be roughly $3.65 versus
$3.98-$4.34 expected earlier. Free cash flow is projected to be
roughly $1.2 billion.
Stanley Black & Decker manufactures tools and engineered
security solutions across the globe. Prime competitors of the
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