Connecticut | 1-5224 | 06-0548860 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
1000 Stanley Drive, New Britain, | ||||
Connecticut | 06053 | |||
(Address of principal executive offices) | (Zip Code) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Stanley Black & Decker, Inc. | ||||||
April 21, 2016 | By: | /s/ Bruce H. Beatt | ||||
Name: | Bruce H. Beatt | |||||
Title: | Senior Vice President, General Counsel and Secretary |
Exhibit No. | Description | ||
99.1 | Press release dated April 21, 2016, issued by Stanley Black & Decker, Inc. | ||
99.2 | Financial statements and supporting schedules contained in Stanley Black & Decker, Inc.'s April 21, 2016 press release. |
• | 1Q’16 Revenues Totaled $2.7 Billion, Up 2% Versus Prior Year, Fueled By 5% Organic Growth |
• | 1Q’16 Diluted EPS Was $1.28, Up 20% From 1Q’15 As Strong Operational Performance Combined With Lower Share Count And Lower Restructuring More Than Offset Severe Currency Headwinds |
• | Raising Full Year Organic Growth Estimate From ~3% To 3-4% |
• | Raising 2016 Full Year Diluted EPS Guidance Range To $6.20 To $6.40 (Up 5% To 8% Versus 2015) From $6.00 To $6.20, Due Primarily To Modestly Higher Organic Growth And Approximately $40 Million Reduction In Foreign Currency Headwinds; Reiterating Free Cash Flow Conversion Of Approximately 100% |
• | Net sales for the quarter were $2.7 billion, up 2% versus prior year, as positive volume (+4%) and price (+1%) more than offset currency (-3%). |
• | Gross margin rate for the quarter was 36.6%, down from prior year rate of 37.0% as price, productivity, cost actions and commodity deflation were more than offset by unfavorable currency. |
• | SG&A expenses were 23.5% of sales compared to 23.7% in 1Q’15 reflecting continued tight cost management. |
• | Operating margin rate was 13.1% compared to 13.3% in 1Q’15, as operational actions to improve profitability were more than offset by approximately $35 million of unfavorable currency. |
• | Restructuring charges for the quarter were $8.0 million compared to $24.9 million in 1Q’15. |
• | Tax rate was 25.8%, relatively flat to 1Q’15 rate. |
• | Average diluted shares outstanding for the quarter were 147.6 million versus 156.5 million a year ago, reflecting the impact of share actions. |
• | Working capital turns for the quarter were 7.0, up 0.4 turns from 1Q’15 resulting from our continued focus on working capital management. |
($ in M) | 1Q’16 Segment Results | ||
Sales | Profit | Profit Rate | |
Tools & Storage | $1,707 | $262.0 | 15.3% |
Security | $504 | $60.2 | 11.9% |
Industrial | $461 | $76.0 | 16.5% |
• | Tools & Storage net sales increased 4% versus 1Q’15 as volume (+7%) and price (+1%) more than offset unfavorable currency (-4%). Organic growth of 8% was broad based across the globe with North America +10%, Europe +5%, and emerging markets +9%. The U.S. construction tool market remained robust while new products, brand extensions and strong commercial execution continued to generate share gains in North America. Pressure, albeit less than expected, persisted in the industrial channels. In addition, favorable weather conditions in much of the U.S. contributed approximately one to two points of growth for Tools & Storage in the quarter. |
• | Security net sales decreased 1% versus 1Q’15 as price (+1%) and flat volumes were more than offset by currency (-2%). Europe continued its momentum posting 3% organic growth on higher installation revenues across a broad swath of countries. North America’s organic revenues were down 1% due primarily to lower volumes within the automatic doors business. Overall Security segment profit rate was 11.9%, the highest first quarter rate since 1Q’12 and a 110 basis point increase versus prior year, reflecting improved operating performance within both North America and Europe. |
• | Industrial net sales decreased 5% versus 1Q’15 due to lower volumes (-3%) and currency (-2%). Engineered Fastening organic revenues declined 4% in line with expectations due primarily to lower industrial and electronics volumes and a challenging automotive comp stemming largely from prior year system sales. Infrastructure organic revenues were flat as higher Oil & Gas volumes from increased on-shore activity offset lower Hydraulic Tools volumes due to a difficult scrap steel market. Overall Industrial segment profit rate was 16.5%, up 120 basis points from the 1Q’15 rate, as productivity gains and cost control, particularly within Engineered Fastening, more than offset the impact of currency and lower volumes. |
First Quarter | |||||||
2016 | 2015 | ||||||
NET SALES | $ | 2,672.1 | $ | 2,630.0 | |||
COSTS AND EXPENSES | |||||||
Cost of sales | 1,694.5 | 1,656.4 | |||||
Gross margin | 977.6 | 973.6 | |||||
% of Net Sales | 36.6 | % | 37.0 | % | |||
Selling, general and administrative | 627.8 | 623.0 | |||||
% of Net Sales | 23.5 | % | 23.7 | % | |||
Operating margin | 349.8 | 350.6 | |||||
% of Net sales | 13.1 | % | 13.3 | % | |||
Other - net | 46.2 | 63.7 | |||||
Restructuring charges | 8.0 | 24.9 | |||||
Income from operations | 295.6 | 262.0 | |||||
Interest - net | 41.5 | 40.7 | |||||
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 254.1 | 221.3 | |||||
Income taxes on continuing operations | 65.5 | 55.3 | |||||
NET EARNINGS FROM CONTINUING OPERATIONS | 188.6 | 166.0 | |||||
Less: net loss attributable to non-controlling interests | (0.8 | ) | (0.8 | ) | |||
NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREOWNERS | 189.4 | 166.8 | |||||
NET LOSS FROM DISCONTINUED OPERATIONS | — | (4.5 | ) | ||||
NET EARNINGS ATTRIBUTABLE TO COMMON SHAREOWNERS | $ | 189.4 | $ | 162.3 | |||
BASIC EARNINGS (LOSS) PER SHARE OF COMMON STOCK | |||||||
Continuing operations | $ | 1.30 | $ | 1.10 | |||
Discontinued operations | — | (0.03 | ) | ||||
Total basic earnings per share of common stock | $ | 1.30 | $ | 1.07 | |||
DILUTED EARNINGS (LOSS) PER SHARE OF COMMON STOCK | |||||||
Continuing operations | $ | 1.28 | $ | 1.07 | |||
Discontinued operations | — | (0.03 | ) | ||||
Total diluted earnings per share of common stock | $ | 1.28 | $ | 1.04 | |||
DIVIDENDS PER SHARE | $ | 0.55 | $ | 0.52 | |||
AVERAGE SHARES OUTSTANDING (in thousands) | |||||||
Basic | 145,870 | 152,172 | |||||
Diluted | 147,619 | 156,537 |
April 2, 2016 | January 2, 2016 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 352.2 | $ | 465.4 | ||||
Accounts and notes receivable, net | 1,592.8 | 1,331.8 | ||||||
Inventories, net | 1,685.0 | 1,526.4 | ||||||
Other current assets | 386.8 | 338.5 | ||||||
Total current assets | 4,016.8 | 3,662.1 | ||||||
Property, plant and equipment, net | 1,462.9 | 1,450.2 | ||||||
Goodwill and other intangibles, net | 9,700.9 | 9,625.8 | ||||||
Other assets | 426.8 | 389.7 | ||||||
Total assets | $ | 15,607.4 | $ | 15,127.8 | ||||
LIABILITIES AND SHAREOWNERS’ EQUITY | ||||||||
Short-term borrowings | $ | 489.0 | $ | 7.6 | ||||
Accounts payable | 1,662.3 | 1,533.1 | ||||||
Accrued expenses | 1,545.3 | 1,261.9 | ||||||
Total current liabilities | 3,696.6 | 2,802.6 | ||||||
Long-term debt | 3,817.2 | 3,792.1 | ||||||
Other long-term liabilities | 2,378.4 | 2,673.9 | ||||||
Stanley Black & Decker, Inc. shareowners’ equity | 5,668.6 | 5,811.6 | ||||||
Non-controlling interests’ equity | 46.6 | 47.6 | ||||||
Total liabilities and shareowners' equity | $ | 15,607.4 | $ | 15,127.8 |
First Quarter | |||||||||
2016 | 2015 | ||||||||
OPERATING ACTIVITIES | |||||||||
Net earnings from continuing operations | $ | 188.6 | $ | 166.0 | |||||
Net loss from discontinued operations | — | (4.5 | ) | ||||||
Depreciation and amortization | 100.1 | 102.5 | |||||||
Changes in working capital1 | (268.0 | ) | (377.9 | ) | |||||
Other | (113.8 | ) | (83.6 | ) | |||||
Net cash used in operating activities | (93.1 | ) | (197.5 | ) | |||||
INVESTING AND FINANCING ACTIVITIES | |||||||||
Capital and software expenditures | (64.9 | ) | (45.9 | ) | |||||
Proceeds from issuances of common stock | 8.5 | 43.0 | |||||||
Net short-term borrowings | 481.2 | 598.9 | |||||||
Net investment hedge settlements | (2.4 | ) | 30.4 | ||||||
Cash dividends on common stock | (79.6 | ) | (82.7 | ) | |||||
Purchases of common stock for treasury | (361.4 | ) | (348.0 | ) | |||||
Effect of exchange rate changes on cash | 17.1 | (45.6 | ) | ||||||
Other | (18.6 | ) | (13.7 | ) | |||||
Net cash (used in) provided by investing and financing activities | (20.1 | ) | 136.4 | ||||||
Decrease in Cash and Cash Equivalents | (113.2 | ) | (61.1 | ) | |||||
Cash and Cash Equivalents, Beginning of Period | 465.4 | 496.6 | |||||||
Cash and Cash Equivalents, End of Period | $ | 352.2 | $ | 435.5 | |||||
Free Cash Flow Computation2 | |||||||||
Operating cash outflow | $ | (93.1 | ) | $ | (197.5 | ) | |||
Less: Capital and software expenditures | (64.9 | ) | (45.9 | ) | |||||
Free cash outflow (before dividends) | $ | (158.0 | ) | $ | (243.4 | ) | |||
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. |
First Quarter | ||||||||
2016 | 2015 | |||||||
NET SALES | ||||||||
Tools & Storage | $ | 1,706.9 | $ | 1,632.1 | ||||
Security | 504.2 | 509.6 | ||||||
Industrial | 461.0 | 488.3 | ||||||
Total | $ | 2,672.1 | $ | 2,630.0 | ||||
SEGMENT PROFIT | ||||||||
Tools & Storage | $ | 262.0 | $ | 256.8 | ||||
Security | 60.2 | 54.8 | ||||||
Industrial | 76.0 | 74.7 | ||||||
Segment Profit | 398.2 | 386.3 | ||||||
Corporate Overhead | (48.4 | ) | (35.7 | ) | ||||
Total | $ | 349.8 | $ | 350.6 | ||||
Segment Profit as a Percentage of Net Sales | ||||||||
Tools & Storage | 15.3 | % | 15.7 | % | ||||
Security | 11.9 | % | 10.8 | % | ||||
Industrial | 16.5 | % | 15.3 | % | ||||
Segment Profit | 14.9 | % | 14.7 | % | ||||
Corporate Overhead | (1.8 | )% | (1.4 | )% | ||||
Total | 13.1 | % | 13.3 | % |
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