Stanley Black & Decker Reports 3Q 2022 Results
Stanley Black & Decker (NYSE: SWK) reported third quarter 2022 revenues of $4.1 billion, a 9% increase year-over-year, boosted by acquisitions in outdoor power equipment and industrial growth. Adjusted diluted EPS was $0.76, with a gross margin of 24.7%, down due to rising costs and lower sales volumes. The company also achieved $65 million in pre-tax savings through its cost reduction program, while reducing inventory by $290 million. However, it revised its full-year EPS guidance down to $0.10 to $0.80, reflecting challenges in European demand and inflationary pressures.
- Third quarter revenues of $4.1 billion, up 9% year-over-year.
- Achieved $65 million in pre-tax savings from cost reduction initiatives.
- Inventory reduced by $290 million sequentially, indicating improved cash flow management.
- Industrial segment profit rate improved to 11.1%, up 340 basis points versus prior year.
- Revised full-year diluted GAAP EPS guidance down to $0.10 to $0.80, from $0.80 to $2.05.
- Adjusted gross margin down 760 basis points due to commodity inflation and higher supply chain costs.
- Total pre-tax acquisition-related charges of $118.7 million in the third quarter.
Third Quarter Revenues of
Global Cost Reduction Program On-Track For Long-Term Targets and Delivers
Advanced Initiatives to Focus and Simplify Company and Transform Supply Chain
NEW BRITAIN, Conn., Oct. 27, 2022 /PRNewswire/ -- Stanley Black & Decker (NYSE: SWK) today announced third quarter 2022 financial results.
- Third Quarter Revenues Of
$4.1 Billion , Up9% Versus Prior Year, Led By Acquisitions In Outdoor Power Equipment, Industrial Growth And Price Realization - Third Quarter Diluted GAAP EPS Was
$0.24 ; Excluding Charges, Adjusted Diluted EPS* Was$0.76 - Successful Completion Of The Electronic Security, Access Technologies And Oil & Gas Divestitures Further Focuses Stanley Black & Decker's Portfolio On Its Core Businesses And Supported
$3.3 Billion Third Quarter Debt Reduction - Updating Full Year 2022 Diluted GAAP EPS Guidance Range To
$0.10 to$0.80 (From$0.80 to$2.05 ); Adjusted Diluted EPS* To$4.15 to$4.65 (From$5.00 -$6.00 ); Fourth Quarter Free Cash Flow Expected To Approximate$0.3 to$0.6 Billion
Donald Allan, Jr., Stanley Black & Decker's President & CEO, commented, "We made tangible progress in transforming our business during the third quarter as we improved customer fill rates, deployed a new organizational structure, implemented cost controls, and actively reduced our inventories. While the macroeconomic environment remains challenging, notably consumer and European demand weakness as well as cost inflation, there were relative bright spots with continued strength in professional construction and industrial customer demand, as well as incremental progress unlocking global supply chain constraints.
"Today we are a more focused company, centered around our market leadership positions in Tools & Outdoor and Industrial, and built upon the strength of our people and culture. Our new organizational structure is largely in-place and we are accelerating our supply chain transformation to better serve our customers and improve efficiency. We are continuing to invest in our iconic brands and are launching new advances in innovation, including the expansion of our DEWALT POWERSTACK battery technology and DEWALT FLEXVOLT System. Overall, we remain confident that our strategy and priorities position the Company for strong, sustainable long-term growth, cashflow generation, profitability and shareholder return."
The Company's primary areas of strategic focus are:
- Continuing to advance innovation, electrification and global market penetration to achieve organic growth of 2-3x the market
- Streamlining and simplifying the organization, as well as shifting resources to prioritize investments that we believe have a positive and more direct impact on our customers
- Accelerating the operations and supply chain transformation to improve fill rates and better match the needs of our customers while improving gross margins back to historical
35% + levels - Prioritizing cash flow generation and inventory optimization
The Company's results represent continuing operations and exclude the Security divestiture. Supplementary historical financial information reflecting the Security divestiture recorded in discontinued operations is available on the investor section of the website or can be accessed directly through the following link: Supplemental Historical Financial Information.
* Non-GAAP Financial Measure As Further Defined On Page 8 |
3Q'22 Key Points:
- Net sales for the quarter were
$4.1 billion , up9% versus prior year driven by strategic outdoor power equipment acquisitions (+16% ) and price realization (+8% ), partially offset by lower volume (-10% ), currency (-4% ) and divestitures (-1% ). - Gross margin for the quarter was
24.7% . Adjusted gross margin* was down 760 basis points from prior year, as price realization was more than offset by commodity inflation, higher supply chain costs including the impact of planned production curtailments, and lower volume. - SG&A was
19.4% of sales for the quarter. Excluding charges, third quarter adjusted SG&A expenses* were18.4% of sales, down 160 basis points versus prior year due to the successful implementation of cost control actions. - Operating margin was
5.3% of sales for the quarter. Excluding charges, operating margin* was6.2% of sales. The mix impact of Outdoor acquisitions was approximately 105 basis points dilutive to operating margin. - The tax rate was a benefit for the quarter. Excluding charges, the adjusted tax rate* was (
1.3% ) reflecting the impact of discrete tax benefits and mix, which favored lower earnings in higher tax jurisdictions. - Inventory at the end of the quarter was
$6.3 billion , down$290 million sequentially reflecting the benefit from our production curtailments. Net working capital however, sequentially increased by approximately$265 million primarily due to lower payables, as a result of reduced production schedules. The Company expects continued inventory reduction in the fourth quarter, which will translate to net working capital improvement and positive cash flow.
Third Quarter 2022 Segment Results
($ in M) | ||||||
Sales | Profit | Charges1 | Profit | Profit Rate | Profit Rate Ex- | |
Tools & | 6.5 % | 6.8 % | ||||
Industrial | 10.9 % | 11.1 % | ||||
1 See Acquisition-Related And Other Charges On Page 5 |
* Non-GAAP Financial Measure As Further Defined On Page 8 |
- Tools & Outdoor net sales increased
10% versus 3Q'21 as the acquisitions of MTD and Excel (+18% ) and price (+7% ) were partially offset by lower volume (-12% ) and currency (-3% ). The overall organic decline (-5% ) was a result of lower consumer and DIY market demand. Regional year-over-year organic revenue included: Emerging markets (-2% ), North America (-4% ), and Europe (-12% ). U.S. retail point-of-sale demand was supported by price increases and professional demand, which remained stable compared to levels exiting the second quarter 2022. The Tools & Outdoor segment profit rate*, excluding charges, was6.8% . Excluding charges and outdoor acquisitions**, the segment profit rate* was8.2% . The segment profit rate*, excluding charges, declined from15.5% in third quarter 2021 as the benefit from price realization was more than offset by commodity inflation, higher supply chain costs, production curtailment costs and lower volume. - Industrial net sales increased
5% versus third quarter 2021 as price (+9% ) and volume (+5% ) were partially offset by currency (-6% ) and the Oil & Gas divestiture (-3% ). Engineered Fastening organic revenues were up15% , with growth in the aerospace, automotive and general industrial markets. Infrastructure organic revenues were up12% , with attachment tools delivering19% growth, with a continued strong backlog. The Industrial segment profit rate*, excluding charges, was11.1% , up 340 basis points versus prior year, as volume growth and price realization were partially offset by commodity inflation and higher supply chain costs.
* Non-GAAP Financial Measure As Further Defined On Page 8 |
** Excludes acquisition sales of |
Global Cost Reduction Program Update
The Company advanced a series of initiatives in the third quarter designed to generate cost savings by resizing the organization and reducing inventory with the ultimate objective of driving long-term growth, improving profitability and generating strong cash flow. These initiatives are expected to optimize the cost base as well as provide a platform to fund investments to accelerate growth in the core businesses. The Company remains on track and expects these initiatives to generate cost savings of approximately
During the third quarter, the Company realized
* Non-GAAP Financial Measure As Further Defined On Page 8 |
2022 Outlook
Corbin Walburger, Interim CFO, commented, "We have substantially completed our initiatives focused on streamlining the organization and are taking additional measures to adjust our cost base and inventory levels over the next 6 to 9 months. While the impact of planned production curtailments temporarily increases our manufacturing costs and weighs on margins, we are improving inventory turns and prioritizing cash generation to position the Company for gross margin expansion and balance sheet strength in 2023 and beyond."
The Company is revising its 2022 EPS outlook to
Free cash flow is expected to be
Key assumption changes to the Company's prior EPS outlook at the midpoint include:
- Lower fourth quarter revenue, primarily driven by Europe (-
$0.30 ) - Currency translation (-
$0.23 ) - Higher production curtailment and destocking costs (-
$0.82 ) - Tax impact from lower earnings (+
$0.25)
These assumptions imply a muted second half adjusted net income due to turning high-cost inventory and the cost implications of planned production curtailments, however this is a strategic choice as we prioritize cashflow generation through inventory reductions.
The difference between 2022 GAAP and adjusted EPS guidance is
* Non-GAAP Financial Measure As Further Defined On Page 8 |
Acquisition-Related And Other Charges
Total pre-tax acquisition-related and other charges in the third quarter of 2022 were
* Non-GAAP Financial Measure As Further Defined On Page 8 |
Earnings Webcast
The Company will host a webcast with investors today, October 27, 2022, at 8:00 am ET. A slide presentation, which will accompany the call, will be available at www.stanleyblackanddecker.com/investors and will remain available after the call.
The call will be available through a live, listen-only webcast or teleconference. Links to access the webcast, register for the teleconference, and view the accompanying slide presentation will be available on the "Investors" section of Stanley Black & Decker's website, www.stanleyblackanddecker.com/investors under the subheading "News & Events." 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.
About Stanley Black & Decker
Headquartered in the USA, Stanley Black & Decker (NYSE: SWK) is the world's largest tool company operating manufacturing facilities worldwide. Guided by its purpose – for those who make the world – the company's approximately 60,000 diverse and high-performing employees produce innovative, award-winning power tools, hand tools, storage, digital tool solutions, lifestyle products, outdoor products, engineered fasteners and other industrial equipment to support the world's makers, creators, tradespeople and builders. The company's iconic brands include DEWALT®, BLACK+DECKER®, CRAFTSMAN®, STANLEY®, CUB CADET®, HUSTLER® and TROY-BILT®. Recognized for its leadership in environmental, social and governance (ESG), Stanley Black & Decker strives to be a force for good in support of its communities, employees, customers and other stakeholders. To learn more visit: www.stanleyblackanddecker.com.
Investor Contacts:
Dennis Lange
Vice President, Investor Relations
dennis.lange@sbdinc.com
(860) 827-3833
Cort Kaufman
Senior Director, Investor Relations
cort.kaufman@sbdinc.com
(860) 515-2741
Christina Francis
Director, Investor Relations
christina.francis@sbdinc.com
(860) 438-3470
Media Contacts:
Debora Raymond
Vice President, Public Relations
debora.raymond@sbdinc.com
(203) 640-8054
Non-GAAP Financial Measures
Organic sales growth, or organic growth, is defined as the difference between total current and prior year sales less the impact of companies acquired and divested in the past twelve months and any foreign currency impacts divided by prior year sales. Operating profit is defined as sales less cost of sales and selling, general and administrative expenses. Operating margin is operating profit as a percentage of sales. Operating profit and operating margin are shown both inclusive and exclusive of acquisition-related and other charges. Management uses operating profit and operating margin as key measures to assess the performance of the Company as a whole, as well as the related measures at the segment level. Diluted EPS, excluding charges, or adjusted EPS, is diluted GAAP EPS excluding the impacts of acquisition-related and other charges. 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, and is useful information for investors. Free cash flow does not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company's common and preferred stock and business acquisitions, among other items. Free cash flow conversion is defined as free cash flow divided by net income. The Non-GAAP statement of operations and business segment information is reconciled to GAAP on pages 13 through 16. The Company considers the use of the Non-GAAP financial measures above relevant to aid analysis and understanding of the Company's results, business trends and outlook measures aside from the material impact of acquisition-related and other charges and ensures appropriate comparability to operating results of prior periods.
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 others, 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 deflation, 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, data privacy, anti-bribery, anti-corruption, government contracts and trade controls such as section 301 tariffs and section 232 steel and aluminum tariffs; (iv) the economic, political, cultural and legal 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 and change to LIBOR and other benchmark rates 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, pandemics, sanctions, political unrest, war, terrorism or natural disasters; (xii) the continued consolidation of customers, particularly in consumer channels and the Company's continued reliance on significant customers; (xiii) managing franchisee relationships; (xiv) the impact of poor weather conditions and climate change; (xv) maintaining or improving production rates in the Company's manufacturing facilities, responding to significant changes in customer preferences, product demand and fulfilling demand for new and existing products, and learning, adapting and integrating new technologies into products, services and processes; (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) the incurrence of debt and 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 regulatory liabilities, including environmental, privacy, data breach, workers compensation and product liabilities; (xxiii) attracting and retaining key employees, managing a workforce in many jurisdictions, work stoppages or other labor disruptions; (xxiv) the Company's ability to keep abreast with the pace of technological change; (xxv) changes in accounting estimates; (xxvi) the Company's ability to protect its intellectual property rights and associated reputational impacts; (xxvii) the continued adverse effects of the COVID-19 pandemic and an indeterminate recovery period; (xxviii) the possibility that the Company does not achieve the intended financial benefits from the acquisitions of MTD and Excel including failure to achieve the Company's plans to design, develop and manufacture battery and electric-powered solutions for professional and residential users; and (xxix) the Company's ability to implement, and achieve the expected benefits (including cost savings and reduction in working capital) from its Global Cost Reduction Program including: continuing to advance innovation, electrification and global market penetration to achieve organic growth of 2-3 times the market; streamlining and simplifying the organization, as well as shifting resources to prioritize investments believed to have a positive and more direct impact to customers; accelerating the operations and supply chain transformation to improve fill rates and better match the needs of its customers while improving gross margins back to historical
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) | ||||||||||
THIRD QUARTER | YEAR-TO-DATE | |||||||||
2022 | 2021 | 2022 | 2021 | |||||||
NET SALES | $ 4,119.6 | $ 3,779.7 | $ 12,960.6 | $ 11,299.4 | ||||||
COSTS AND EXPENSES | ||||||||||
Cost of sales | 3,101.5 | 2,564.1 | 9,430.0 | 7,334.2 | ||||||
Gross profit | 1,018.1 | 1,215.6 | 3,530.6 | 3,965.2 | ||||||
% of Net Sales | 24.7 % | 32.2 % | 27.2 % | 35.1 % | ||||||
Selling, general and administrative | 799.8 | 773.5 | 2,612.8 | 2,259.7 | ||||||
% of Net Sales | 19.4 % | 20.5 % | 20.2 % | 20.0 % | ||||||
Operating profit | 218.3 | 442.1 | 917.8 | 1,705.5 | ||||||
% of Net Sales | 5.3 % | 11.7 % | 7.1 % | 15.1 % | ||||||
Other - net | 69.1 | 28.9 | 210.2 | 119.4 | ||||||
Loss on sales of businesses | 8.6 | - | 8.4 | 3.6 | ||||||
Asset impairment charge | - | - | 168.4 | - | ||||||
Restructuring charges | 68.6 | 0.6 | 140.8 | 12.8 | ||||||
Income from operations | 72.0 | 412.6 | 390.0 | 1,569.7 | ||||||
Interest - net | 76.3 | 43.4 | 199.9 | 131.8 | ||||||
(LOSS) EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND EQUITY INTEREST | (4.3) | 369.2 | 190.1 | 1,437.9 | ||||||
Income taxes on continuing operations | (40.9) | (0.5) | (80.8) | 182.3 | ||||||
NET EARNINGS FROM CONTINUING OPERATIONS BEFORE EQUITY INTEREST | 36.6 | 369.7 | 270.9 | 1,255.6 | ||||||
Share of net earnings of equity method investment | - | 9.8 | - | 16.0 | ||||||
NET EARNINGS FROM CONTINUING OPERATIONS | 36.6 | 379.5 | 270.9 | 1,271.6 | ||||||
Less: Net (losses) earnings attributable to non-controlling interests | - | (0.1) | 0.2 | (1.7) | ||||||
NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO STANLEY BLACK & DECKER, INC. | $ 36.6 | $ 379.6 | $ 270.7 | $ 1,273.3 | ||||||
Less: Preferred stock dividends and beneficial conversion feature | - | - | - | 14.2 | ||||||
NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREOWNERS | $ 36.6 | $ 379.6 | $ 270.7 | $ 1,259.1 | ||||||
Add: Contract adjustment payments accretion | 0.3 | 0.4 | 1.0 | 0.9 | ||||||
NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREOWNERS - DILUTED | $ 36.9 | $ 380.0 | $ 271.7 | $ 1,260.0 | ||||||
Earnings from discontinued operations before income taxes (including pre-tax gain on Security sale of | 1,204.9 | 34.7 | 1,233.5 | 98.2 | ||||||
Income taxes on discontinued operations (including income taxes for gain on Security sale of | 396.9 | 0.1 | 396.7 | 10.4 | ||||||
NET EARNINGS FROM DISCONTINUED OPERATIONS | $ 808.0 | $ 34.6 | $ 836.8 | $ 87.8 | ||||||
NET EARNINGS ATTRIBUTABLE TO COMMON SHAREOWNERS - DILUTED | $ 844.9 | $ 414.6 | $ 1,108.5 | $ 1,347.8 | ||||||
NET EARNINGS ATTRIBUTABLE TO STANLEY BLACK & DECKER, INC. | $ 844.6 | $ 414.2 | $ 1,107.5 | $ 1,361.1 | ||||||
BASIC EARNINGS PER SHARE OF COMMON STOCK | ||||||||||
Continuing operations | $ 0.25 | $ 2.38 | $ 1.82 | $ 7.94 | ||||||
Discontinued operations | $ 5.60 | $ 0.22 | $ 5.64 | $ 0.55 | ||||||
Total basic earnings per share of common stock | $ 5.85 | $ 2.60 | $ 7.46 | $ 8.50 | ||||||
DILUTED EARNINGS PER SHARE OF COMMON STOCK | ||||||||||
Continuing operations | $ 0.24 | $ 2.30 | $ 1.72 | $ 7.64 | ||||||
Discontinued operations | $ 5.26 | $ 0.21 | $ 5.30 | $ 0.53 | ||||||
Total diluted earnings per share of common stock | $ 5.50 | $ 2.51 | $ 7.02 | $ 8.17 | ||||||
DIVIDENDS PER SHARE OF COMMON STOCK | $ 0.80 | $ 0.79 | $ 2.38 | $ 2.19 | ||||||
WEIGHTED-AVERAGE SHARES OUTSTANDING (in thousands) | ||||||||||
Basic | 144,379 | 159,444 | 148,384 | 158,494 | ||||||
Diluted | 153,600 | 165,336 | 157,966 | 164,900 | ||||||
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES | |||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
(Unaudited, Millions of Dollars) | |||||
October 1, | January 1, | ||||
2022 | 2022 | ||||
ASSETS | |||||
Cash and cash equivalents | $ 408.7 | $ 142.1 | |||
Accounts and notes receivable, net | 1,503.2 | 1,481.7 | |||
Inventories, net | 6,347.2 | 5,419.9 | |||
Current assets held for sale | - | 869.6 | |||
Other current assets | 545.5 | 613.1 | |||
Total current assets | 8,804.6 | 8,526.4 | |||
Property, plant and equipment, net | 2,305.6 | 2,336.8 | |||
Goodwill and other intangibles, net | 12,860.9 | 13,285.7 | |||
Long-term assets held for sale | - | 2,635.8 | |||
Other assets | 1,552.8 | 1,395.3 | |||
Total assets | $ 25,523.9 | $ 28,180.0 | |||
LIABILITIES AND SHAREOWNERS' EQUITY | |||||
Short-term borrowings | $ 2,569.2 | $ 2,241.1 | |||
Current maturities of long-term debt | 1.2 | 1.3 | |||
Accounts payable | 2,492.8 | 3,423.6 | |||
Accrued expenses | 2,543.8 | 2,641.0 | |||
Current liabilities held for sale | - | 460.4 | |||
Total current liabilities | 7,607.0 | 8,767.4 | |||
Long-term debt | 5,350.5 | 4,353.6 | |||
Long-term liabilities held for sale | - | 137.4 | |||
Other long-term liabilities | 3,017.7 | 3,329.2 | |||
Stanley Black & Decker, Inc. shareowners' equity | 9,546.6 | 11,590.5 | |||
Non-controlling interests' equity | 2.1 | 1.9 | |||
Total liabilities and shareowners' equity | $ 25,523.9 | $ 28,180.0 | |||
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES | ||||||||||||
SUMMARY OF CASH FLOW ACTIVITY | ||||||||||||
(Unaudited, Millions of Dollars) | ||||||||||||
THIRD QUARTER | YEAR-TO-DATE | |||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||
OPERATING ACTIVITIES | ||||||||||||
Net earnings from continuing operations | $ 36.6 | $ 379.5 | $ 270.9 | $ 1,271.6 | ||||||||
Net earnings from discontinued operations | 808.0 | 34.6 | 836.8 | 87.8 | ||||||||
Depreciation and amortization | 138.0 | 144.2 | 425.1 | 430.6 | ||||||||
Loss on sales of businesses | 8.6 | - | 8.4 | 3.6 | ||||||||
Gain on sale of discontinued operations | (1,220.0) | - | (1,220.0) | - | ||||||||
Asset impairment charge | - | - | 168.4 | - | ||||||||
Share of net earnings of equity method investment | - | (9.8) | - | (16.0) | ||||||||
Changes in working capital1 | (393.3) | (456.7) | (2,297.4) | (1,373.5) | ||||||||
Other | 196.5 | (87.2) | (302.8) | (112.9) | ||||||||
Net cash (used in) provided by operating activities | (425.6) | 4.6 | (2,110.6) | 291.2 | ||||||||
INVESTING AND FINANCING ACTIVITIES | ||||||||||||
Capital and software expenditures | (114.4) | (129.1) | (399.9) | (322.5) | ||||||||
Proceeds from sales of assets | 24.7 | 1.7 | 39.9 | 7.1 | ||||||||
Proceeds from sales of businesses, net of cash sold | 4,146.9 | - | 4,147.1 | (1.9) | ||||||||
Business acquisitions, net of cash acquired | (26.5) | (9.3) | (72.1) | (10.8) | ||||||||
Purchase of long-term investments | (2.9) | (3.5) | (12.2) | (14.5) | ||||||||
Acquisition of assets | (14.4) | (0.5) | (15.2) | (1.4) | ||||||||
Net investment hedge settlements | 1.7 | (1.3) | 10.6 | (53.9) | ||||||||
Proceeds from debt issuances, net of fees | - | - | 992.6 | - | ||||||||
Stock purchase contract fees | (9.9) | (9.9) | (29.5) | (29.5) | ||||||||
Net short-term (repayments) borrowings | (3,263.4) | 149.6 | 328.0 | 150.7 | ||||||||
Proceeds from issuances of common stock | 3.4 | 7.7 | 23.0 | 108.1 | ||||||||
Purchases of common stock for treasury | (4.6) | (2.8) | (2,318.7) | (20.1) | ||||||||
Redemption of preferred stock for treasury | - | - | - | (750.0) | ||||||||
Craftsman contingent consideration | (11.4) | (7.6) | (32.5) | (21.5) | ||||||||
Termination of interest rate swaps | - | - | 22.7 | - | ||||||||
Cash dividends on common stock | (115.5) | (126.0) | (345.8) | (347.7) | ||||||||
Cash dividends on preferred stock | - | - | - | (18.9) | ||||||||
Effect of exchange rate changes on cash | (78.2) | (15.5) | (95.8) | (45.9) | ||||||||
Other | (3.4) | (4.2) | (11.8) | (13.4) | ||||||||
Net cash provided by (used in) investing and financing activities | 532.1 | (150.7) | 2,230.4 | (1,386.1) | ||||||||
Increase (decrease) in cash, cash equivalents and restricted cash | 106.5 | (146.1) | 119.8 | (1,094.9) | ||||||||
Cash, cash equivalents and restricted cash, beginning of period | 308.1 | 449.5 | 294.8 | 1,398.3 | ||||||||
Cash, cash equivalents and restricted cash, end of period | $ 414.6 | $ 303.4 | $ 414.6 | $ 303.4 | ||||||||
Free Cash Flow Computation2 | ||||||||||||
Net cash (used in) provided by operating activities | $ (425.6) | $ 4.6 | $ (2,110.6) | $ 291.2 | ||||||||
Less: capital and software expenditures | (114.4) | (129.1) | (399.9) | (322.5) | ||||||||
Free cash flow (before dividends) | $ (540.0) | $ (124.5) | $ (2,510.5) | $ (31.3) | ||||||||
Reconciliation of Cash, Cash Equivalents and Restricted Cash | ||||||||||||
October 1, 2022 | January 1, 2022 | |||||||||||
Cash and cash equivalents | $ 408.7 | $ 142.1 | ||||||||||
Restricted cash included in Other current assets | 5.9 | 7.6 | ||||||||||
Cash and cash equivalents included in Current assets held for sale | - | 145.1 | ||||||||||
Cash, cash equivalents and restricted cash | $ 414.6 | $ 294.8 | ||||||||||
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 |
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES | |||||||||
BUSINESS SEGMENT INFORMATION | |||||||||
(Unaudited, Millions of Dollars) | |||||||||
THIRD QUARTER | YEAR-TO-DATE | ||||||||
2022 | 2021 | 2022 | 2021 | ||||||
NET SALES | |||||||||
Tools & Outdoor | $ 3,494.7 | $ 3,185.9 | $ 11,040.8 | $ 9,445.3 | |||||
Industrial | 624.8 | 593.5 | 1,919.5 | 1,853.4 | |||||
Segment Net Sales | 4,119.5 | 3,779.4 | 12,960.3 | 11,298.7 | |||||
Corporate Overhead | 0.1 | 0.3 | 0.3 | 0.7 | |||||
Total | $ 4,119.6 | $ 3,779.7 | $ 12,960.6 | $ 11,299.4 | |||||
SEGMENT PROFIT | |||||||||
Tools & Outdoor | $ 228.4 | $ 478.5 | $ 968.5 | $ 1,750.2 | |||||
Industrial | 68.4 | 42.6 | 168.0 | 202.9 | |||||
Segment Profit | 296.8 | 521.1 | 1,136.5 | 1,953.1 | |||||
Corporate Overhead | (78.5) | (79.0) | (218.7) | (247.6) | |||||
Total | $ 218.3 | $ 442.1 | $ 917.8 | $ 1,705.5 | |||||
Segment Profit as a Percentage of Net Sales | |||||||||
Tools & Outdoor | 6.5 % | 15.0 % | 8.8 % | 18.5 % | |||||
Industrial | 10.9 % | 7.2 % | 8.8 % | 10.9 % | |||||
Segment Profit | 7.2 % | 13.8 % | 8.8 % | 17.3 % | |||||
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 2022 | ||||||||
GAAP | Acquisition- | Non-GAAP3 | ||||||
Gross profit | $ 3,530.6 | $ 102.9 | $ 3,633.5 | |||||
% of Net Sales | 27.2 % | 28.0 % | ||||||
Selling, general and administrative | 2,612.8 | (153.1) | 2,459.7 | |||||
% of Net Sales | 20.2 % | 19.0 % | ||||||
Operating profit | 917.8 | 256.0 | 1,173.8 | |||||
% of Net Sales | 7.1 % | 9.1 % | ||||||
Earnings from continuing operations before income taxes and equity interest | 190.1 | 588.2 | 778.3 | |||||
Income taxes on continuing operations | (80.8) | 121.7 | 40.9 | |||||
Net earnings from continuing operations attributable to common shareowners - Diluted | 271.7 | 466.5 | 738.2 | |||||
Diluted earnings per share of common stock - Continuing operations | $ 1.72 | $ 2.95 | $ 4.67 | |||||
1 | Acquisition-related charges and other relate primarily to a non-cash asset impairment charge related to the Oil & Gas business, restructuring, integration- | |||||||
YEAR-TO-DATE 2021 | ||||||||
GAAP | Acquisition- | Non-GAAP3 | ||||||
Gross profit | $ 3,965.2 | $ 10.8 | $ 3,976.0 | |||||
% of Net Sales | 35.1 % | 35.2 % | ||||||
Selling, general and administrative | 2,259.7 | (52.1) | 2,207.6 | |||||
% of Net Sales | 20.0 % | 19.5 % | ||||||
Operating profit | 1,705.5 | 62.9 | 1,768.4 | |||||
% of Net Sales | 15.1 % | 15.7 % | ||||||
Earnings from continuing operations before income taxes and equity interest | 1,437.9 | 89.5 | 1,527.4 | |||||
Income taxes on continuing operations | 182.3 | 21.2 | 203.5 | |||||
Share of net earnings of equity method investment | 16.0 | 11.2 | 27.2 | |||||
Net earnings from continuing operations attributable to common shareowners - Diluted | 1,260.0 | 79.5 | 1,339.5 | |||||
Diluted earnings per share of common stock - Continuing operations | $ 7.64 | $ 0.48 | $ 8.12 | |||||
2 | Acquisition-related charges and other relate primarily to functional transformation initiatives, restructuring, deal costs and facility-related costs. | |||||||
3 | The non-GAAP 2022 and 2021 information, as reconciled to GAAP above, is considered relevant to aid analysis and understanding of the Company's | |||||||
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 2022 | |||||||||
GAAP | Acquisition- | Non-GAAP3 | |||||||
SEGMENT PROFIT | |||||||||
Tools & Outdoor | $ 228.4 | $ 10.6 | $ 239.0 | ||||||
Industrial | 68.4 | 1.0 | 69.4 | ||||||
Segment Profit | 296.8 | 11.6 | 308.4 | ||||||
Corporate Overhead | (78.5) | 27.2 | (51.3) | ||||||
Total | $ 218.3 | $ 38.8 | $ 257.1 | ||||||
Segment Profit as a Percentage of Net Sales | |||||||||
Tools & Outdoor | 6.5 % | 6.8 % | |||||||
Industrial | 10.9 % | 11.1 % | |||||||
Segment Profit | 7.2 % | 7.5 % | |||||||
1 | Acquisition-related charges and other relate primarily to integration-related costs. | ||||||||
THIRD QUARTER 2021 | |||||||||
GAAP | Acquisition- | Non-GAAP3 | |||||||
SEGMENT PROFIT | |||||||||
Tools & Outdoor | $ 478.5 | $ 14.2 | $ 492.7 | ||||||
Industrial | 42.6 | 3.2 | 45.8 | ||||||
Segment Profit | 521.1 | 17.4 | 538.5 | ||||||
Corporate Overhead | (79.0) | 6.4 | (72.6) | ||||||
Total | $ 442.1 | $ 23.8 | $ 465.9 | ||||||
Segment Profit as a Percentage of Net Sales | |||||||||
Tools & Outdoor | 15.0 % | 15.5 % | |||||||
Industrial | 7.2 % | 7.7 % | |||||||
Segment Profit | 13.8 % | 14.2 % | |||||||
2 | Acquisition-related charges and other relate primarily to functional transformation initiatives and facility-related costs. | ||||||||
3 | The non-GAAP 2022 and 2021 business segment information, as reconciled to GAAP above, is considered | ||||||||
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 2022 | |||||||||
GAAP | Acquisition- | Non-GAAP3 | |||||||
SEGMENT PROFIT | |||||||||
Tools & Outdoor | $ 968.5 | $ 205.6 | $ 1,174.1 | ||||||
Industrial | 168.0 | 6.4 | 174.4 | ||||||
Segment Profit | 1,136.5 | 212.0 | 1,348.5 | ||||||
Corporate Overhead | (218.7) | 44.0 | (174.7) | ||||||
Total | $ 917.8 | $ 256.0 | $ 1,173.8 | ||||||
Segment Profit as a Percentage of Net Sales | |||||||||
Tools & Outdoor | 8.8 % | 10.6 % | |||||||
Industrial | 8.8 % | 9.1 % | |||||||
Segment Profit | 8.8 % | 10.4 % | |||||||
1 | Acquisition-related charges and other relate primarily to integration-related costs, non-cash inventory step-up | ||||||||
YEAR-TO-DATE 2021 | |||||||||
GAAP | Acquisition- | Non-GAAP3 | |||||||
SEGMENT PROFIT | |||||||||
Tools & Outdoor | $ 1,750.2 | $ 27.6 | $ 1,777.8 | ||||||
Industrial | 202.9 | 9.8 | 212.7 | ||||||
Segment Profit | 1,953.1 | 37.4 | 1,990.5 | ||||||
Corporate Overhead | (247.6) | 25.5 | (222.1) | ||||||
Total | $ 1,705.5 | $ 62.9 | $ 1,768.4 | ||||||
Segment Profit as a Percentage of Net Sales | |||||||||
Tools & Outdoor | 18.5 % | 18.8 % | |||||||
Industrial | 10.9 % | 11.5 % | |||||||
Segment Profit | 17.3 % | 17.6 % | |||||||
2 | Acquisition-related charges and other relate primarily to functional transformation initiatives and facility-related | ||||||||
3 | The non-GAAP 2022 and 2021 business segment information, as reconciled to GAAP above, is considered relevant | ||||||||
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SOURCE Stanley Black & Decker
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