EX-99.2 3 exhibit992financialsq3.htm FINANCIAL STATEMENTS AND SUPPORTING SCHEDULES CONTAINED IN PRESS RELEASE Exhibit
Exhibit 99.2

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, Millions of Dollars Except Per Share Amounts)
 
 
Third Quarter
 
Year-to-Date
 
2019
 
2018
 
2019
 
2018
NET SALES
$
3,633.1

 
$
3,494.8

 
$
10,728.0

 
$
10,347.7

COSTS AND EXPENSES
 
 
 
 
 
 
 
Cost of sales
2,393.6

 
2,256.4

 
7,083.1

 
6,656.5

Gross margin
1,239.5


1,238.4

 
3,644.9

 
3,691.2

% of Net Sales
34.1
%
 
35.4
%
 
34.0
%
 
35.7
%
Selling, general and administrative
756.1

 
798.9

 
2,317.3

 
2,390.3

% of Net Sales
20.8
%
 
22.9
%
 
21.6
%
 
23.1
%
Operating margin
483.4

 
439.5

 
1,327.6

 
1,300.9

% of Net sales
13.3
%
 
12.6
%
 
12.4
%
 
12.6
%
Other - net
55.0

 
59.4

 
182.6

 
236.7

(Gain) loss on sales of businesses
—

 
—

 
(17.2
)

0.8

Restructuring charges
74.0

 
21.8

 
91.2

 
58.1

Income from operations
354.4

 
358.3

 
1,071.0

 
1,005.3

Interest - net
59.7

 
53.4

 
177.8

 
154.2

EARNINGS BEFORE INCOME TAXES AND EQUITY INTEREST
294.7

 
304.9

 
893.2

 
851.1

Income taxes
59.2

 
56.6

 
135.5

 
139.3

NET EARNINGS BEFORE EQUITY INTEREST
235.5

 
248.3

 
757.7

 
711.8

Share of net (losses) earnings of equity method investment
(4.4
)
 
—

 
1.2

 
—

NET EARNINGS
231.1

 
248.3

 
758.9

 
711.8

Less: net gain (loss) attributable to non-controlling interests
0.6

 
0.5

 
2.2

 
(0.2
)
NET EARNINGS ATTRIBUTABLE TO COMMON SHAREOWNERS
$
230.5

 
$
247.8

 
$
756.7

 
$
712.0

 
 
 
 
 
 
 
 
EARNINGS PER SHARE OF COMMON STOCK
 
 
 
 
 
 
 
Basic
$
1.55

 
$
1.67

 
$
5.11

 
$
4.77

Diluted
$
1.53

 
$
1.65

 
$
5.03

 
$
4.68

DIVIDENDS PER SHARE
$
0.69

 
$
0.66

 
$
2.01

 
$
1.92

WEIGHTED-AVERAGE SHARES OUTSTANDING (in thousands)
 
 
 
 
 
 
 
Basic
148,350

 
147,964

 
148,111

 
149,311

Diluted
150,623

 
150,599

 
150,299

 
152,225

 

 


8
Exhibit 99.2

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
 
 
 
September 28, 2019
 
December 29, 2018
ASSETS
 
 
 
 
Cash and cash equivalents
 
$
311.7

 
$
288.7

Accounts and notes receivable, net
 
1,902.6

 
1,607.8

Inventories, net
 
2,743.5

 
2,373.5

Other current assets
 
370.2

 
299.4

Total current assets
 
5,328.0

 
4,569.4

Property, plant and equipment, net
 
1,911.9

 
1,915.2

Goodwill and other intangibles, net
 
12,813.0

 
12,441.1

Other assets
 
1,269.6

 
482.3

Total assets
 
$
21,322.5

 
$
19,408.0

LIABILITIES AND SHAREOWNERS’ EQUITY
 
 
 
 
Short-term borrowings
 
$
1,454.9

 
$
376.1

Current maturities of long-term debt
 
3.1

 
2.5

Accounts payable
 
2,070.3

 
2,233.2

Accrued expenses
 
1,913.6

 
1,389.8

Total current liabilities
 
5,441.9

 
4,001.6

Long-term debt
 
3,908.8

 
3,819.8

Other long-term liabilities
 
3,703.6

 
3,746.7

Stanley Black & Decker, Inc. shareowners’ equity
 
8,262.3

 
7,836.2

Non-controlling interests’ equity
 
5.9

 
3.7

Total liabilities and shareowners' equity
 
$
21,322.5

 
$
19,408.0



9
Exhibit 99.2

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
SUMMARY OF CASH FLOW ACTIVITY
(Unaudited, Millions of Dollars)
 
 
 
Third Quarter
 
Year-to-Date
 
 
2019
 
2018
 
2019
 
2018
 
OPERATING ACTIVITIES
 
 
 
 
 
 
 
 
Net earnings
$
231.1

 
$
248.3

 
$
758.9

 
$
711.8

 
Depreciation and amortization
140.9

 
129.7

 
420.4

 
381.0

 
(Gain) loss on sales of businesses
—

 
—

 
(17.2
)
 
0.8

 
Share of net losses (earnings) of equity method investment
4.4

 
—

 
(1.2
)
 
—

 
Changes in working capital1
(278.3
)
 
(287.8
)
 
(859.2
)
 
(1,017.1
)
 
Other
94.6

 
101.3

 
(39.3
)
 
(36.4
)
 
Net cash provided by operating activities
192.7

 
191.5

 
262.4

 
40.1

 
INVESTING AND FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
Capital and software expenditures
(96.7
)
 
(109.4
)
 
(283.5
)
 
(327.4
)
 
(Payments) proceeds from sales of businesses, net of cash sold
—

 
(1.1
)
 
76.7

 
(3.0
)
 
Business acquisitions, net of cash acquired
(6.2
)
 
(15.1
)
 
(682.2
)
 
(521.9
)
 
Purchases of investments
(4.9
)
 
(5.8
)
 
(258.6
)
 
(16.1
)
 
Payments on long-term debt
—

 
—

 
(400.0
)
 
—

 
Proceeds from debt issuance, net of fees
—

 
—

 
496.2

 
—

 
Stock purchase contract fees
(10.1
)
 
(10.1
)
 
(30.3
)
 
(30.3
)
 
Net short-term borrowings
28.6

 
309.5

 
1,117.9

 
1,445.1

 
Premium paid on equity option
—

 
—

 
—

 
(57.3
)
 
Proceeds from issuances of common stock
21.5

 
10.2

 
46.1

 
32.8

 
Purchases of common stock for treasury
(2.7
)
 
(301.8
)
 
(11.9
)
 
(514.5
)
 
Cash dividends on common stock
(102.3
)
 
(97.4
)
 
(297.6
)
 
(286.5
)
 
Effect of exchange rate changes on cash
(25.4
)
 
5.8

 
(20.4
)
 
(54.1
)
 
Other
5.0

 
(11.0
)
 
(1.8
)
 
6.7

 
Net cash used in investing and financing activities
(193.2
)
 
(226.2
)
 
(249.4
)
 
(326.5
)
 
(Decrease) increase in cash, cash equivalents and restricted cash
(0.5
)
 
(34.7
)
 
13.0

 
(286.4
)
 
Cash, cash equivalents and restricted cash, beginning of period
324.9

 
403.4

 
311.4

 
655.1

 
Cash, cash equivalents and restricted cash, end of period
$
324.4

 
$
368.7

 
$
324.4

 
$
368.7

 
Free Cash Flow Computation2
 
 
 
 
 
 
 
 
Operating cash flow
$
192.7

 
$
191.5

 
$
262.4

 
$
40.1

 
Less: capital and software expenditures
(96.7
)
 
(109.4
)
 
(283.5
)
 
(327.4
)
 
Free cash flow (before dividends)
$
96.0

 
$
82.1

 
$
(21.1
)
 
$
(287.3
)
 
 
 
 
 
 
 
 
 
 
Reconciliation of Cash, Cash Equivalents and Restricted Cash
 
 
 
 
 
 
 
 
 
 
 
 
 
September 28, 2019
 
December 29, 2018
 
Cash and cash equivalents
 
 
 
 
$
311.7

 
$
288.7

 
Restricted cash included in Other current assets
 
 
 
 
12.7

 
22.7

 
Cash, cash equivalents and restricted cash


 


 
$
324.4

 
$
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.

10
Exhibit 99.2

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
 
 
Third Quarter
 
Year-to-Date
 
2019
 
2018
 
2019
 
2018
NET SALES
 
 
 
 
 
 
 
Tools & Storage
$
2,534.0

 
$
2,448.0

 
$
7,452.3

 
$
7,231.6

Industrial
632.7

 
562.0

 
1,837.6

 
1,639.3

Security
466.4

 
484.8

 
1,438.1

 
1,476.8

Total
$
3,633.1

 
$
3,494.8

 
$
10,728.0

 
$
10,347.7

SEGMENT PROFIT
 
 
 
 
 
 
 
Tools & Storage
$
410.1

 
$
356.2

 
$
1,115.9

 
$
1,056.2

Industrial
90.3

 
88.4

 
256.4

 
254.4

Security
33.1

 
47.4

 
110.6

 
141.0

Segment Profit
533.5

 
492.0

 
1,482.9

 
1,451.6

Corporate Overhead
(50.1
)
 
(52.5
)
 
(155.3
)
 
(150.7
)
Total
$
483.4

 
$
439.5

 
$
1,327.6

 
$
1,300.9

Segment Profit as a Percentage of Net Sales
 
 
 
 
 
 
 
Tools & Storage
16.2
 %
 
14.6
 %
 
15.0
 %
 
14.6
 %
Industrial
14.3
 %
 
15.7
 %
 
14.0
 %
 
15.5
 %
Security
7.1
 %
 
9.8
 %
 
7.7
 %
 
9.5
 %
Segment Profit
14.7
 %
 
14.1
 %
 
13.8
 %
 
14.0
 %
Corporate Overhead
(1.4
)%
 
(1.5
)%
 
(1.4
)%
 
(1.5
)%
Total
13.3
 %
 
12.6
 %
 
12.4
 %
 
12.6
 %


11
Exhibit 99.2

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)
 
 
 
 
Third Quarter 2019
 
 
 
Reported
 
Acquisition-
Related Charges & Other1
 
Normalized3
 
Gross margin
 
$
1,239.5

 
$
5.3

 
$
1,244.8

 
% of Net Sales
 
34.1
%
 
 
 
34.3
%
 
Selling, general and administrative
 
756.1

 
(37.3
)
 
718.8

 
% of Net Sales
 
20.8
%
 
 
 
19.8
%
 
Operating margin
 
483.4

 
42.6

 
526.0

 
% of Net Sales
 
13.3
%
 
 
 
14.5
%
 
Earnings before income taxes and equity interest
 
294.7

 
113.7

 
408.4

 
Income taxes
 
59.2

 
28.6

 
87.8

 
Share of net (losses) earnings of equity method investment
 
(4.4
)
 
5.4

 
1.0

 
Net earnings attributable to common shareowners
 
230.5

 
90.5

 
321.0

 
Diluted earnings per share of common stock
 
$
1.53

 
$
0.60

 
$
2.13

 
 
 
 
 
 
 
 
1 
Acquisition-related charges and other relates primarily to restructuring, Security business transformation and margin resiliency initiatives.
 
 
 
 
 
 
 
 
 
 
 
Third Quarter 2018
 
 
 
Reported
 
Acquisition-
Related Charges & Other2
 
Normalized3
 
Gross margin
 
$
1,238.4

 
$
3.3

 
$
1,241.7

 
% of Net Sales
 
35.4
%
 
 
 
35.5
%
 
Selling, general and administrative
 
798.9

 
(63.6
)
 
735.3

 
% of Net Sales
 
22.9
%
 
 
 
21.0
%
 
Operating margin
 
439.5

 
66.9

 
506.4

 
% of Net Sales
 
12.6
%
 
 
 
14.5
%
 
Earnings before income taxes
 
304.9

 
85.4

 
390.3

 
Income taxes
 
56.6

 
19.5

 
76.1

 
Net earnings attributable to common shareowners
 
247.8

 
65.9

 
313.7

 
Diluted earnings per share of common stock
 
$
1.65

 
$
0.43

 
$
2.08

 
 
 
 
 
 
 
 
2 
Acquisition-related charges and other relates primarily to inventory step-up, integration and consulting costs, and a non-cash fair value adjustment.
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.
 



12
Exhibit 99.2

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
 
$
3,644.9

 
$
22.4

 
$
3,667.3

 
% of Net Sales
 
34.0
%
 
 
 
34.2
%
 
Selling, general and administrative
 
2,317.3

 
(86.9
)
 
2,230.4

 
% of Net Sales
 
21.6
%
 
 
 
20.8
%
 
Operating margin
 
1,327.6

 
109.3

 
1,436.9

 
% of Net Sales
 
12.4
%
 
 
 
13.4
%
 
Earnings before income taxes and equity interest
 
893.2

 
199.2

 
1,092.4

 
Income taxes
 
135.5

 
40.1

 
175.6

 
Share of net earnings of equity method investment
 
1.2

 
19.0

 
20.2

 
Net earnings attributable to common shareowners
 
756.7

 
178.1

 
934.8

 
Diluted earnings per share of common stock
 
$
5.03

 
$
1.19

 
$
6.22

 
 
 
 
 
 
 
 
1 
Acquisition-related charges and other relates primarily to restructuring, deal and integration costs, Security business transformation, margin resiliency initiatives, and a gain on a sale of a business.
 
 
 
 
 
 
 
 
 
 
 
Year-to-Date 2018
 
 
 
Reported
 
Acquisition-
Related Charges & Other2
 
Normalized3
 
Gross margin
 
$
3,691.2

 
$
13.8

 
$
3,705.0

 
% of Net Sales
 
35.7
%
 
 
 
35.8
%
 
Selling, general and administrative
 
2,390.3

 
(105.5
)
 
2,284.8

 
% of Net Sales
 
23.1
%
 
 
 
22.1
%
 
Operating margin
 
1,300.9

 
119.3

 
1,420.2

 
% of Net Sales
 
12.6
%
 
 
 
13.7
%
 
Earnings before income taxes
 
851.1

 
237.2

 
1,088.3

 
Income taxes
 
139.3

 
30.0

 
169.3

 
Net earnings attributable to common shareowners
 
712.0

 
207.2

 
919.2

 
Diluted earnings per share of common stock
 
$
4.68

 
$
1.36

 
$
6.04

 
 
 
 
 
 
 
 
2 
Acquisition-related charges and other relates primarily to inventory step-up, integration and consulting costs, a non-cash fair value adjustment, 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.
 


13
Exhibit 99.2

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP SEGMENT PROFIT FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars)
 
 
 
 
Third Quarter 2019
 
 
 
Reported
 
Acquisition-
Related and Other
Charges1
 
Normalized3
 
SEGMENT PROFIT
 
 
 
 
 
 
 
Tools & Storage
 
$
410.1

 
$
11.4

 
$
421.5

 
Industrial
 
90.3

 
4.8

 
95.1

 
Security
 
33.1

 
17.6

 
50.7

 
Segment Profit
 
533.5

 
33.8

 
567.3

 
Corporate Overhead
 
(50.1
)
 
8.8

 
(41.3
)
 
Total
 
$
483.4

 
$
42.6

 
$
526.0

 
Segment Profit as a Percentage of Net Sales
 
 
 
 
 
 
 
Tools & Storage
 
16.2
 %
 
 
 
16.6
 %
 
Industrial
 
14.3
 %
 
 
 
15.0
 %
 
Security
 
7.1
 %
 
 
 
10.9
 %
 
Segment Profit
 
14.7
 %
 
 
 
15.6
 %
 
Corporate Overhead
 
(1.4
)%
 
 
 
(1.1
)%
 
Total
 
13.3
 %
 
 
 
14.5
 %
 
 
 
 
 
 
 
 
1 
Acquisition-related and other charges relate primarily to Security business transformation and margin resiliency initiatives.
 
 
 
 
 
 
 
 
 
 
 
Third Quarter 2018
 
 
 
Reported
 
Acquisition-
Related
Charges2
 
Normalized3
 
SEGMENT PROFIT
 
 
 
 
 
 
 
Tools & Storage
 
$
356.2

 
$
49.7

 
$
405.9

 
Industrial
 
88.4

 
6.2

 
94.6

 
Security
 
47.4

 
6.6

 
54.0

 
Segment Profit
 
492.0

 
62.5

 
554.5

 
Corporate Overhead
 
(52.5
)
 
4.4

 
(48.1
)
 
Total
 
$
439.5

 
$
66.9

 
$
506.4

 
Segment Profit as a Percentage of Net Sales
 
 
 
 
 
 
 
Tools & Storage
 
14.6
 %
 
 
 
16.6
 %
 
Industrial
 
15.7
 %
 
 
 
16.8
 %
 
Security
 
9.8
 %
 
 
 
11.1
 %
 
Segment Profit
 
14.1
 %
 
 
 
15.9
 %
 
Corporate Overhead
 
(1.5
)%
 
 
 
(1.4
)%
 
Total
 
12.6
 %
 
 
 
14.5
 %
 
 
 
 
 
 
 
 
2 
Acquisition-related charges relate primarily to inventory step-up, integration and consulting costs, and a non-cash fair value adjustment.
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.


14
Exhibit 99.2

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
 
$
1,115.9

 
$
31.5

 
$
1,147.4

 
Industrial
 
256.4

 
22.1

 
278.5

 
Security
 
110.6

 
44.7

 
155.3

 
Segment Profit
 
1,482.9

 
98.3

 
1,581.2

 
Corporate Overhead
 
(155.3
)
 
11.0

 
(144.3
)
 
Total
 
$
1,327.6

 
$
109.3

 
$
1,436.9

 
Segment Profit as a Percentage of Net Sales
 
 
 
 
 
 
 
Tools & Storage
 
15.0
 %
 
 
 
15.4
 %
 
Industrial
 
14.0
 %
 
 
 
15.2
 %
 
Security
 
7.7
 %
 
 
 
10.8
 %
 
Segment Profit
 
13.8
 %
 
 
 
14.7
 %
 
Corporate Overhead
 
(1.4
)%
 
 
 
(1.3
)%
 
Total
 
12.4
 %
 
 
 
13.4
 %
 
 
 
 
 
 
 
 
1 
Acquisition-related and other charges relate primarily to integration costs, Security business transformation and margin resiliency initiatives.
 
 
 
 
 
 
 
 
 
 
 
Year-to-Date 2018
 
 
 
Reported
 
Acquisition-
Related
Charges2
 
Normalized3
 
SEGMENT PROFIT
 
 
 
 
 
 
 
Tools & Storage
 
$
1,056.2

 
$
82.2

 
$
1,138.4

 
Industrial
 
254.4

 
19.1

 
273.5

 
Security
 
141.0

 
9.9

 
150.9

 
Segment Profit
 
1,451.6

 
111.2

 
1,562.8

 
Corporate Overhead
 
(150.7
)
 
8.1

 
(142.6
)
 
Total
 
$
1,300.9

 
$
119.3

 
$
1,420.2

 
Segment Profit as a Percentage of Net Sales
 
 
 
 
 
 
 
Tools & Storage
 
14.6
 %
 
 
 
15.7
 %
 
Industrial
 
15.5
 %
 
 
 
16.7
 %
 
Security
 
9.5
 %
 
 
 
10.2
 %
 
Segment Profit
 
14.0
 %
 
 
 
15.1
 %
 
Corporate Overhead
 
(1.5
)%
 
 
 
(1.4
)%
 
Total
 
12.6
 %
 
 
 
13.7
 %
 
 
 
 
 
 
 
 
2 
Acquisition-related charges relate primarily to inventory step-up, integration and consulting costs, and a non-cash fair value adjustment.
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.


15