NEW BRITAIN, Conn.,
July 23, 2019 /PRNewswire/
-- Stanley Black & Decker (NYSE: SWK) today
announced second quarter 2019 financial results.
- 2Q'19 Revenues Totaled $3.8
Billion, Up 3% Versus Prior Year, Driven By Organic Growth
And Acquisitions
- Operating Margin Rate Was 13.8%; Excluding Charges, Operating
Margin Rate Expanded 60 Basis Points Versus Prior Year To 14.8% As
Price Actions And Cost Control More Than Offset $110 Million Of Tariff, Commodity And Currency
Headwinds
- 2Q'19 Diluted GAAP EPS Was $2.37;
Excluding Charges, 2Q'19 Diluted EPS Was $2.66
- Reiterating Full Year Diluted GAAP EPS Guidance Range Of
$7.50 - $7.70, Adjusted EPS Guidance Range Of
$8.50 - $8.70 And Free Cash Flow Conversion Estimate Of
Approximately 85% - 90%
2Q'19 Key Points:
- Net sales for the quarter were $3.8
billion, up 3% versus prior year, as positive contributions
from acquisitions (+3%), price (+2%) and volume (+1%) more than
offset currency (-3%).
- The gross margin rate for the quarter was 34.6%. Excluding
charges, rate for the quarter was 34.8%, down 80 basis points
versus prior year as volume leverage, productivity and price were
more than offset by commodity inflation, foreign exchange and
tariffs.
- SG&A expenses were 20.8% of sales. Excluding charges,
SG&A expenses were 20.1% of sales compared to 21.4% in 2Q'18,
reflecting continued disciplined cost management, including savings
from the 4Q'18 cost reduction program.
- Other, net totaled $62.2 million
for the quarter. Excluding charges, Other, net totaled $57.7 million compared to $32.2 million in 2Q'18 due to a favorable
resolution of a prior claim in 2018.
- The tax rate was 12.8%. Excluding charges, the tax rate was
11.6% versus 7.0% in 2Q'18.
- Average diluted shares outstanding for the quarter were 150.4
million versus 152.5 million a year ago, primarily reflecting share
repurchases executed during 2018.
- Working capital turns for the quarter were 6.7, up 0.1 turns
versus prior year.
Stanley Black & Decker's
President and CEO, James M. Loree,
commented, "We achieved a strong second quarter financial
performance which included above-market organic growth led by Tools
& Storage, 60 basis points of operating margin rate expansion,
and earnings per share growth, while successfully overcoming
$110 million in external pre-tax
margin headwinds.
"We are well-positioned to continue to deliver share gains from
our growth catalysts, including the ongoing Craftsman brand
rollout, Lenox and Irwin revenue synergies, our breakthrough
innovations – including FlexVolt, Atomic and Xtreme – e-commerce
and emerging markets. The organization is also focused on
margin expansion as we control costs, execute pricing actions and
capture the $300 - $500 million three-year savings associated with
the margin resiliency initiative.
"Our seasoned management team is operating with agility and
leveraging our SFS 2.0 operating system to successfully navigate a
dynamic operating environment, and pursue our vision: to become
known as one of the world's leading innovators, deliver
top-quartile financial performance and elevate our commitment to
corporate social responsibility."
2Q'19 Segment
Results
|
|
($ in M)
|
|
|
Sales
|
Profit
|
Charges1
|
Profit Ex-Charges1
|
Profit Rate
|
Profit Rate Ex-Charges1
|
|
|
|
|
|
|
|
Tools &
Storage
|
$2,626
|
$440.0
|
$7.5
|
$447.5
|
16.8%
|
17.0%
|
|
|
|
|
|
|
|
Industrial
|
$650
|
$95.1
|
$11.3
|
$106.4
|
14.6%
|
16.4%
|
|
|
|
|
|
|
|
Security
|
$485
|
$38.0
|
$16.3
|
$54.3
|
7.8%
|
11.2%
|
|
|
|
|
|
|
|
|
1 See
Merger And Acquisition (M&A) Related And Other
Charges On Page 5
|
- Tools & Storage net sales increased 2% versus 2Q'18 as
volume (+3%) and price (+2%) were partially offset by currency
(-3%). The 5% organic growth for the quarter was led by
North America (+7%) and
Europe (+5%), more than offsetting
a decline in emerging markets (-2%). North America organic growth was driven by the
rollout of the Craftsman brand, new product innovation, including
the continued expansion of the DEWALT cordless power tool system,
and price realization which was partially offset by a modest
decline in industrial-focused businesses. Europe delivered share gains supported by
continued successful commercial actions and new product
introductions. Emerging markets realized the benefits from price,
new product launches and e-commerce expansion, which was more than
offset by a three-point impact from market contractions in
Argentina, Mexico and Turkey. The Tools & Storage segment profit
rate, excluding charges, was 17.0%, an 80 basis point expansion
from the 2Q'18 rate of 16.2%, as the benefits from volume leverage,
pricing and cost control offset the impact from currency, commodity
inflation and tariffs.
- Industrial net sales increased 13% versus 2Q'18 as the IES
Attachments acquisition (+18%) was partially offset by volume (-3%)
and currency (-2%). Engineered Fastening organic revenues were down
4% as automotive and industrial market declines were partially
offset by continued fastener penetration gains. Infrastructure
organic revenues were up 2% primarily 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 16.4%, down from the 2Q'18 rate
of 16.8%, as productivity gains and cost control were more than
offset by the impact from lower Engineered Fastening volume and
commodity inflation.
- Security net sales declined 3% versus 2Q'18 as bolt-on
commercial electronic security acquisitions (+2%) and price (+1%)
were more than offset by currency (-3%), lower volume (-2%) and the
Sargent & Greenleaf divestiture (-1%). North America organic growth was flat as
higher volumes within healthcare were offset by lower automatic
doors installations. Europe was
down 2% organically as growth within France was offset by adverse market conditions
in Sweden and the UK. The overall
Security segment profit rate, excluding charges, was 11.2%, which
was up 120 basis points versus the prior year, as a focus on cost
containment was partially offset by investments to support the
business transformation in commercial electronic security.
Donald Allan Jr., Executive Vice
President and CFO, commented, "Security continued to demonstrate
forward progress on its business transformation, delivering
operating margin rate and dollar expansion for the third
consecutive quarter with an intense focus on operational efficiency
and cost control. We are encouraged by some early signs that
point to the value creation potential of our targeted commercial
investments in electronic security and we expect they will begin to
positively impact organic growth in the second half of 2019 and
beyond."
Updated 2019 Outlook
Management is reiterating its 2019 EPS outlook of $7.50 - $7.70 on a
GAAP basis and $8.50 - $8.70 on an adjusted basis and its free cash flow
conversion estimate of approximately 85% - 90%.
The following reflects the key assumption changes to the
Company's prior EPS outlook:
- An incremental $50 million in
external headwinds primarily due to the increase of 'List 3'
China tariffs to 25% net of
somewhat lower commodity inflation expectations
- A modestly reduced expectation for organic volume growth which
reflects a slower market outlook for industrial & emerging
markets due to global macro conditions
- Offsetting these impacts are incremental pricing actions,
benefits from the margin resiliency initiatives and the strong
operational out-performance during the second quarter
Allan continued, "Stanley Black
& Decker's outlook for 2019 includes above-market organic
growth of 4%, adjusted earnings per share growth of 4% - 7% and
strong free cash flow generation against an anticipated
$390 million in external
headwinds. The organization is focused on delivering earnings
growth and margin expansion in 2019 and beyond by successfully
leveraging our continued strong organic growth, pricing actions,
$250 million cost reduction program
and margin resiliency initiative to successfully navigate a dynamic
operating environment.
"We believe the Company is well-positioned for 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 2Q'19 were
$32.9 million, primarily related to
restructuring, deal and integration costs, as well as Security
business transformation & margin enhancement initiatives.
Gross margin included $10.7 million
of these charges while SG&A included $26.6 million. Other, net and Restructuring
included $4.5 million and
$8.3 million of these charges,
respectively. M&A related and other charges in 2Q'19 also
included a pre-tax gain of $17.2
million related to the sale of Sargent & Greenleaf.
Share of net earnings of equity method investment included
$10.2 million of charges related to
an inventory step-up fair value adjustment.
The Company will host a conference call with investors today,
July 23, 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
2568494. 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 2568494. 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SECOND
QUARTER
|
|
YEAR-TO-DATE
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
NET
SALES
|
|
$
3,761.3
|
|
$
3,643.6
|
|
$
7,094.9
|
|
$
6,852.9
|
|
|
|
|
|
|
|
|
|
|
COSTS AND
EXPENSES
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
2,461.5
|
|
2,356.5
|
|
4,689.5
|
|
4,400.1
|
|
Gross
margin
|
|
1,299.8
|
|
1,287.1
|
|
2,405.4
|
|
2,452.8
|
|
% of Net
Sales
|
|
34.6%
|
|
35.3%
|
|
33.9%
|
|
35.8%
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
782.3
|
|
805.8
|
|
1,561.2
|
|
1,591.4
|
|
% of Net
Sales
|
|
20.8%
|
|
22.1%
|
|
22.0%
|
|
23.2%
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
517.5
|
|
481.3
|
|
844.2
|
|
861.4
|
|
% of Net
Sales
|
|
13.8%
|
|
13.2%
|
|
11.9%
|
|
12.6%
|
|
|
|
|
|
|
|
|
|
|
|
Other -
net
|
|
62.2
|
|
119.3
|
|
127.6
|
|
177.3
|
|
(Gain) loss on sales
of businesses
|
|
(17.2)
|
|
0.8
|
|
(17.2)
|
|
0.8
|
|
Restructuring
charges
|
|
8.5
|
|
13.4
|
|
17.2
|
|
36.3
|
|
Income from
operations
|
|
464.0
|
|
347.8
|
|
716.6
|
|
647.0
|
|
|
|
|
|
|
|
|
|
|
|
Interest -
net
|
|
60.3
|
|
53.4
|
|
118.1
|
|
100.8
|
|
|
|
|
|
|
|
|
|
|
EARNINGS BEFORE
INCOME TAXES AND EQUITY INTEREST
|
403.7
|
|
294.4
|
|
598.5
|
|
546.2
|
|
Income
taxes
|
|
51.6
|
|
1.0
|
|
76.3
|
|
82.7
|
NET EARNINGS
BEFORE EQUITY INTEREST
|
|
352.1
|
|
293.4
|
|
522.2
|
|
463.5
|
|
Share of net earnings
of equity method investment
|
|
5.3
|
|
-
|
|
5.6
|
|
-
|
NET
EARNINGS
|
|
357.4
|
|
293.4
|
|
527.8
|
|
463.5
|
|
Less: net gain (loss)
attributable to non-controlling interests
|
1.1
|
|
(0.2)
|
|
1.6
|
|
(0.7)
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS
ATTRIBUTABLE TO COMMON SHAREOWNERS
|
$
356.3
|
|
$
293.6
|
|
$
526.2
|
|
$
464.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE OF COMMON STOCK
|
|
|
|
|
|
|
|
|
Basic
|
|
$
2.41
|
|
$
1.96
|
|
$
3.56
|
|
$
3.09
|
|
Diluted
|
|
$
2.37
|
|
$
1.93
|
|
$
3.50
|
|
$
3.03
|
|
|
|
|
|
|
|
|
|
|
DIVIDENDS PER
SHARE
|
|
$
0.66
|
|
$
0.63
|
|
$
1.32
|
|
$
1.26
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE SHARES OUTSTANDING (in
thousands)
|
|
|
|
|
|
|
|
|
Basic
|
|
148,099
|
|
149,748
|
|
147,982
|
|
150,101
|
|
Diluted
|
|
150,358
|
|
152,494
|
|
150,139
|
|
153,124
|
STANLEY BLACK
& DECKER, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Unaudited,
Millions of Dollars)
|
|
|
|
|
|
|
|
June
29,
|
|
December
29,
|
|
|
2019
|
|
2018
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
$
310.7
|
|
$
288.7
|
|
Accounts and notes
receivable, net
|
1,823.9
|
|
1,607.8
|
|
Inventories,
net
|
2,863.2
|
|
2,373.5
|
|
Other current
assets
|
347.4
|
|
299.4
|
|
Total current assets
|
5,345.2
|
|
4,569.4
|
|
Property, plant and
equipment, net
|
1,933.3
|
|
1,915.2
|
|
Goodwill and other
intangibles, net
|
12,954.9
|
|
12,441.1
|
|
Other
assets
|
1,290.2
|
|
482.3
|
|
Total assets
|
$
21,523.6
|
|
$
19,408.0
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREOWNERS' EQUITY
|
|
|
|
|
Short-term
borrowings
|
$
1,461.6
|
|
$
376.1
|
|
Current maturities of
long-term debt
|
3.1
|
|
2.5
|
|
Accounts
payable
|
2,323.8
|
|
2,233.2
|
|
Accrued
expenses
|
1,864.6
|
|
1,389.8
|
|
Total current liabilities
|
5,653.1
|
|
4,001.6
|
|
Long-term
debt
|
3,909.1
|
|
3,819.8
|
|
Other long-term
liabilities
|
3,728.1
|
|
3,746.7
|
|
Stanley Black &
Decker, Inc. shareowners' equity
|
8,228.0
|
|
7,836.2
|
|
Non-controlling
interests' equity
|
5.3
|
|
3.7
|
|
Total liabilities and shareowners' equity
|
$
21,523.6
|
|
$
19,408.0
|
STANLEY
BLACK & DECKER, INC. AND SUBSIDIARIES
|
SUMMARY OF CASH
FLOW ACTIVITY
|
(Unaudited,
Millions of Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SECOND
QUARTER
|
|
YEAR-TO-DATE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
$
357.4
|
|
$
293.4
|
|
$
527.8
|
|
$
463.5
|
|
|
Depreciation and
amortization
|
141.7
|
|
127.7
|
|
279.5
|
|
251.3
|
|
|
(Gain) loss on sales
of businesses
|
(17.2)
|
|
0.8
|
|
(17.2)
|
|
0.8
|
|
|
Share of net earnings
of equity method investment
|
(5.3)
|
|
-
|
|
(5.6)
|
|
-
|
|
|
Changes in working
capital1
|
35.9
|
|
(185.0)
|
|
(580.9)
|
|
(729.3)
|
|
|
Other
|
|
(11.5)
|
|
(38.9)
|
|
(133.9)
|
|
(137.7)
|
|
|
Net cash provided
by (used in) operating activities
|
501.0
|
|
198.0
|
|
69.7
|
|
(151.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING AND
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Capital and software
expenditures
|
(97.2)
|
|
(111.7)
|
|
(186.8)
|
|
(218.0)
|
|
|
Proceeds (payments)
from sales of businesses, net of cash sold
|
76.7
|
|
(1.7)
|
|
76.7
|
|
(1.9)
|
|
|
Business
acquisitions, net of cash acquired
|
0.2
|
|
(505.6)
|
|
(676.0)
|
|
(506.8)
|
|
|
Purchases of
investments
|
(8.3)
|
|
(6.3)
|
|
(253.7)
|
|
(10.3)
|
|
|
Net investment hedge
settlements
|
-
|
|
37.8
|
|
3.9
|
|
20.3
|
|
|
Payments on long-term
debt
|
-
|
|
-
|
|
(400.0)
|
|
-
|
|
|
Proceeds from debt
issuance, net of fees
|
(0.7)
|
|
-
|
|
496.2
|
|
-
|
|
|
Stock purchase
contract fees
|
(10.1)
|
|
(10.1)
|
|
(20.2)
|
|
(20.2)
|
|
|
Net short-term
(repayments) borrowings
|
(330.6)
|
|
753.6
|
|
1,089.3
|
|
1,135.6
|
|
|
Premium paid on
equity option
|
-
|
|
-
|
|
-
|
|
(57.3)
|
|
|
Proceeds from
issuances of common stock
|
14.4
|
|
9.5
|
|
24.6
|
|
22.6
|
|
|
Purchases of common
stock for treasury
|
(1.1)
|
|
(201.3)
|
|
(9.2)
|
|
(212.7)
|
|
|
Cash dividends on
common stock
|
(97.7)
|
|
(94.2)
|
|
(195.3)
|
|
(189.1)
|
|
|
Effect of exchange
rate changes on cash
|
0.2
|
|
(87.8)
|
|
5.0
|
|
(59.9)
|
|
|
Other
|
|
(7.7)
|
|
-
|
|
(10.7)
|
|
(2.6)
|
|
|
Net cash used in
investing and financing activities
|
(461.9)
|
|
(217.8)
|
|
(56.2)
|
|
(100.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
(decrease) in cash, cash equivalents and restricted
cash
|
39.1
|
|
(19.8)
|
|
13.5
|
|
(251.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
285.8
|
|
423.2
|
|
311.4
|
|
655.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash
equivalents and restricted cash, end of period
|
$
324.9
|
|
$
403.4
|
|
$
324.9
|
|
$
403.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
Computation2
|
|
|
|
|
|
|
|
|
Operating cash
flow
|
$
501.0
|
|
$
198.0
|
|
$
69.7
|
|
$
(151.4)
|
|
Less: capital and
software expenditures
|
(97.2)
|
|
(111.7)
|
|
(186.8)
|
|
(218.0)
|
|
Free cash flow
(before dividends)
|
$
403.8
|
|
$
86.3
|
|
$
(117.1)
|
|
$
(369.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Cash, Cash Equivalents and Restricted Cash
|
|
|
|
|
|
|
|
|
|
|
|
June 29,
2019
|
|
December 29,
2018
|
|
|
|
|
|
Cash and cash
equivalents
|
$
310.7
|
|
$
288.7
|
|
|
|
|
|
Restricted cash
included in Other current assets
|
14.2
|
|
22.7
|
|
|
|
|
|
Cash, cash
equivalents and restricted cash
|
$
324.9
|
|
$
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SECOND
QUARTER
|
|
YEAR-TO-DATE
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
NET
SALES
|
|
|
|
|
|
|
|
|
Tools &
Storage
|
$
2,626.0
|
|
$
2,567.8
|
|
$
4,918.3
|
|
$
4,783.6
|
|
Industrial
|
649.9
|
|
573.1
|
|
1,204.9
|
|
1,077.3
|
|
Security
|
485.4
|
|
502.7
|
|
971.7
|
|
992.0
|
|
Total
|
$
3,761.3
|
|
$
3,643.6
|
|
$
7,094.9
|
|
$
6,852.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
PROFIT
|
|
|
|
|
|
|
|
|
Tools &
Storage
|
$
440.0
|
|
$
398.6
|
|
$
705.8
|
|
$
700.0
|
|
Industrial
|
95.1
|
|
85.5
|
|
166.1
|
|
166.0
|
|
Security
|
38.0
|
|
48.1
|
|
77.5
|
|
93.6
|
|
Segment
Profit
|
573.1
|
|
532.2
|
|
949.4
|
|
959.6
|
|
Corporate
Overhead
|
(55.6)
|
|
(50.9)
|
|
(105.2)
|
|
(98.2)
|
|
Total
|
$
517.5
|
|
$
481.3
|
|
$
844.2
|
|
$
861.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Profit
as a Percentage of Net Sales
|
|
|
|
|
|
|
|
|
Tools &
Storage
|
16.8%
|
|
15.5%
|
|
14.4%
|
|
14.6%
|
|
Industrial
|
14.6%
|
|
14.9%
|
|
13.8%
|
|
15.4%
|
|
Security
|
7.8%
|
|
9.6%
|
|
8.0%
|
|
9.4%
|
|
Segment
Profit
|
15.2%
|
|
14.6%
|
|
13.4%
|
|
14.0%
|
|
Corporate
Overhead
|
(1.5%)
|
|
(1.4%)
|
|
(1.5%)
|
|
(1.4%)
|
|
Total
|
13.8%
|
|
13.2%
|
|
11.9%
|
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
SECOND QUARTER
2019
|
|
|
|
|
Reported
|
|
Acquisition-
Related
Charges &
Other1
|
|
Normalized3
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
$
1,299.8
|
|
$
10.7
|
|
$
1,310.5
|
|
|
% of Net
Sales
|
|
34.6%
|
|
|
|
34.8%
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
782.3
|
|
(26.6)
|
|
755.7
|
|
|
% of Net
Sales
|
|
20.8%
|
|
|
|
20.1%
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
517.5
|
|
37.3
|
|
554.8
|
|
|
% of Net
Sales
|
|
13.8%
|
|
|
|
14.8%
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes and equity interest
|
403.7
|
|
32.9
|
|
436.6
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
51.6
|
|
(0.9)
|
|
50.7
|
|
|
|
|
|
|
|
|
|
|
|
Share of net earnings
of equity method investment
|
5.3
|
|
10.2
|
|
15.5
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to common shareowners
|
356.3
|
|
44.0
|
|
400.3
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share of common stock
|
$
2.37
|
|
$
0.29
|
|
$
2.66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Acquisition-related
charges and other relates primarily to restructuring, deal and
integration costs, Security business
transformation and margin enhancement initiatives, a gain on a sale
of a business, and inventory step-up amortization.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SECOND QUARTER
2018
|
|
|
|
|
Reported
|
|
Acquisition-
Related
Charges &
Other2
|
|
Normalized3
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
$
1,287.1
|
|
$
8.8
|
|
$
1,295.9
|
|
|
% of Net
Sales
|
|
35.3%
|
|
|
|
35.6%
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
805.8
|
|
(25.5)
|
|
780.3
|
|
|
% of Net
Sales
|
|
22.1%
|
|
|
|
21.4%
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
481.3
|
|
34.3
|
|
515.6
|
|
|
% of Net
Sales
|
|
13.2%
|
|
|
|
14.2%
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes
|
|
294.4
|
|
126.7
|
|
421.1
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
1.0
|
|
28.5
|
|
29.5
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to common shareowners
|
293.6
|
|
98.2
|
|
391.8
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share of common stock
|
$
1.93
|
|
$
0.64
|
|
$
2.57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
Acquisition-related
charges and other relates primarily to inventory step-up,
integration and consulting costs, and an
environmental remediation settlement.
|
|
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
|
|
$
2,405.4
|
|
$
17.1
|
|
$
2,422.5
|
|
|
% of Net
Sales
|
|
33.9%
|
|
|
|
34.1%
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
1,561.2
|
|
(49.6)
|
|
1,511.6
|
|
|
% of Net
Sales
|
|
22.0%
|
|
|
|
21.3%
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
844.2
|
|
66.7
|
|
910.9
|
|
|
% of Net
Sales
|
|
11.9%
|
|
|
|
12.8%
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes and equity interest
|
598.5
|
|
85.5
|
|
684.0
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
76.3
|
|
11.5
|
|
87.8
|
|
|
|
|
|
|
|
|
|
|
|
Share of net earnings
of equity method investment
|
5.6
|
|
13.6
|
|
19.2
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to common shareowners
|
526.2
|
|
87.6
|
|
613.8
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share of common stock
|
$
3.50
|
|
$
0.59
|
|
$
4.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Acquisition-related
charges and other relates primarily to restructuring, deal and
integration costs, Security business
transformation and margin enhancement initiatives, a gain on a sale
of a business, and inventory step-up amortization.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YEAR-TO-DATE
2018
|
|
|
|
|
Reported
|
|
Acquisition-
Related
Charges &
Other2
|
|
Normalized3
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
$
2,452.8
|
|
$
10.5
|
|
$
2,463.3
|
|
|
% of Net
Sales
|
|
35.8%
|
|
|
|
35.9%
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
1,591.4
|
|
(41.9)
|
|
1,549.5
|
|
|
% of Net
Sales
|
|
23.2%
|
|
|
|
22.6%
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
861.4
|
|
52.4
|
|
913.8
|
|
|
% of Net
Sales
|
|
12.6%
|
|
|
|
13.3%
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes
|
|
546.2
|
|
151.8
|
|
698.0
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
82.7
|
|
10.5
|
|
93.2
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to common shareowners
|
464.2
|
|
141.3
|
|
605.5
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share of common stock
|
$
3.03
|
|
$
0.92
|
|
$
3.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
Acquisition-related
charges and other relates primarily to inventory step-up,
integration and consulting costs, 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SECOND QUARTER
2019
|
|
|
|
|
|
Reported
|
|
Acquisition-
Related and
Other
Charges1
|
|
Normalized3
|
|
|
|
|
|
|
|
|
|
SEGMENT
PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tools &
Storage
|
|
$
440.0
|
|
$
7.5
|
|
$
447.5
|
|
|
|
Industrial
|
|
95.1
|
|
11.3
|
|
106.4
|
|
|
|
Security
|
|
38.0
|
|
16.3
|
|
54.3
|
|
|
|
Segment
Profit
|
|
573.1
|
|
35.1
|
|
608.2
|
|
|
|
Corporate
Overhead
|
|
(55.6)
|
|
2.2
|
|
(53.4)
|
|
|
|
Total
|
|
$
517.5
|
|
$
37.3
|
|
$
554.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Profit
as a Percentage of Net Sales
|
|
|
|
|
|
|
|
|
Tools &
Storage
|
|
16.8%
|
|
|
|
17.0%
|
|
|
|
Industrial
|
|
14.6%
|
|
|
|
16.4%
|
|
|
|
Security
|
|
7.8%
|
|
|
|
11.2%
|
|
|
|
Segment
Profit
|
|
15.2%
|
|
|
|
16.2%
|
|
|
|
Corporate
Overhead
|
|
(1.5%)
|
|
|
|
(1.4%)
|
|
|
|
Total
|
|
13.8%
|
|
|
|
14.8%
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Acquisition-related
and other charges relates primarily to inventory step-up
amortization, integration costs, and Security
business transformation and margin enhancement
initiatives.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SECOND QUARTER
2018
|
|
|
|
|
|
Reported
|
|
Acquisition-
Related
Charges2
|
|
Normalized3
|
|
|
|
|
|
|
|
|
|
SEGMENT
PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tools &
Storage
|
|
$
398.6
|
|
$
17.8
|
|
$
416.4
|
|
|
|
Industrial
|
|
85.5
|
|
10.9
|
|
96.4
|
|
|
|
Security
|
|
48.1
|
|
2.0
|
|
50.1
|
|
|
|
Segment
Profit
|
|
532.2
|
|
30.7
|
|
562.9
|
|
|
|
Corporate
Overhead
|
|
(50.9)
|
|
3.6
|
|
(47.3)
|
|
|
|
Total
|
|
$
481.3
|
|
$
34.3
|
|
$
515.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Profit
as a Percentage of Net Sales
|
|
|
|
|
|
|
|
|
Tools &
Storage
|
|
15.5%
|
|
|
|
16.2%
|
|
|
|
Industrial
|
|
14.9%
|
|
|
|
16.8%
|
|
|
|
Security
|
|
9.6%
|
|
|
|
10.0%
|
|
|
|
Segment
Profit
|
|
14.6%
|
|
|
|
15.4%
|
|
|
|
Corporate
Overhead
|
|
(1.4%)
|
|
|
|
(1.3%)
|
|
|
|
Total
|
|
13.2%
|
|
|
|
14.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
Acquisition-related
charges relate primarily to inventory step-up and integration and
consulting costs.
|
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
|
|
$
705.8
|
|
$
20.1
|
|
$
725.9
|
|
|
|
Industrial
|
|
166.1
|
|
17.3
|
|
183.4
|
|
|
|
Security
|
|
77.5
|
|
27.1
|
|
104.6
|
|
|
|
Segment
Profit
|
|
949.4
|
|
64.5
|
|
1,013.9
|
|
|
|
Corporate
Overhead
|
|
(105.2)
|
|
2.2
|
|
(103.0)
|
|
|
|
Total
|
|
$
844.2
|
|
$
66.7
|
|
$
910.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Profit
as a Percentage of Net Sales
|
|
|
|
|
|
|
|
|
Tools &
Storage
|
|
14.4%
|
|
|
|
14.8%
|
|
|
|
Industrial
|
|
13.8%
|
|
|
|
15.2%
|
|
|
|
Security
|
|
8.0%
|
|
|
|
10.8%
|
|
|
|
Segment
Profit
|
|
13.4%
|
|
|
|
14.3%
|
|
|
|
Corporate
Overhead
|
|
(1.5%)
|
|
|
|
(1.5%)
|
|
|
|
Total
|
|
11.9%
|
|
|
|
12.8%
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Acquisition-related
and other charges relates primarily to inventory step-up
amortization, integration costs, and Security
business transformation and margin enhancement
initiatives.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YEAR-TO-DATE
2018
|
|
|
|
|
|
Reported
|
|
Acquisition-
Related
Charges2
|
|
Normalized3
|
|
|
|
|
|
|
|
|
|
SEGMENT
PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tools &
Storage
|
|
$
700.0
|
|
$
32.5
|
|
$
732.5
|
|
|
|
Industrial
|
|
166.0
|
|
12.9
|
|
178.9
|
|
|
|
Security
|
|
93.6
|
|
3.3
|
|
96.9
|
|
|
|
Segment
Profit
|
|
959.6
|
|
48.7
|
|
1,008.3
|
|
|
|
Corporate
Overhead
|
|
(98.2)
|
|
3.7
|
|
(94.5)
|
|
|
|
Total
|
|
$
861.4
|
|
$
52.4
|
|
$
913.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Profit
as a Percentage of Net Sales
|
|
|
|
|
|
|
|
|
Tools &
Storage
|
|
14.6%
|
|
|
|
15.3%
|
|
|
|
Industrial
|
|
15.4%
|
|
|
|
16.6%
|
|
|
|
Security
|
|
9.4%
|
|
|
|
9.8%
|
|
|
|
Segment
Profit
|
|
14.0%
|
|
|
|
14.7%
|
|
|
|
Corporate
Overhead
|
|
(1.4%)
|
|
|
|
(1.4%)
|
|
|
|
Total
|
|
12.6%
|
|
|
|
13.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
Acquisition-related
charges relate primarily to inventory step-up and integration and
consulting costs.
|
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-2q-2019-results-300889078.html
SOURCE Stanley Black &
Decker