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3Q’12 Diluted GAAP EPS, Including Charges, Was $0.69
Excluding Charges, 3Q’12 Diluted EPS Was $1.40
3Q’12 Free Cash Flow Of $169 Million, Excluding Charges
3Q’12 Key Points:
Net sales for the period were $2.8 billion, up 6% versus prior year. Both price and volume were relatively flat while currency (-3%) partially offset the contribution from acquisitions (+9%).
Organic revenues in Europe across the entire company declined 3% for the quarter. This was driven by continued market retractions in Security, Industrial & Automotive Repair and Industrial Engineered Fasteners. CDIY organic revenues in Europe were flat as continued share gains offset weakness in Southern Europe. Within the Security segment, volume in Europe declined in the mid-single digits, as expected. Organic revenues in North America increased 1%, largely due to strength in CDIY, while organic revenues in the emerging markets increased 10%, slightly below expectations primarily due to slowing markets in China.
Diluted GAAP EPS, including Merger & Acquisition charges, the charges associated with the $200 million in cost actions implemented thus far in 2012, as well as the charges relating to the extinguishment of debt during the quarter (“charges”), was $0.69. Excluding charges, 3Q’12 diluted EPS was $1.40.
The gross margin rate for the quarter was 36.2%. Excluding charges, the gross margin rate was 36.6%, down from prior year largely due to the negative mix associated with the significantly higher volumes in CDIY versus the Industrial and Security segments.
SG&A expenses were 23.5% of sales. Excluding charges, SG&A expenses were 22.1% of sales, 150 basis points lower than prior year.
Operating margin was 12.7% of sales. Excluding charges, operating margin was 14.5% of sales, up 50 bps from the 3Q’11 operating margin of 14.0%, due to cost reduction actions and cost synergies. This marks the highest operating margin rate the company has attained since the merger with Black & Decker in March of 2010.
The tax rate was 20.0%. Excluding charges, the tax rate was 24.0%, slightly lower than anticipated due to the timing of the favorable settlement of certain tax contingencies. The full year tax rate is still anticipated to be at the midpoint of the previously guided range of 22 – 23%.
Working capital turns for the quarter were 6.1, up 0.1 turns from 3Q’11.
Stanley Black & Decker’s President and CEO, John F. Lundgren, commented,
“During the quarter, we saw pockets of strength within our Hand and Power Tool businesses in the U.S. and the emerging markets, largely driven by our successful new product innovations, which are enabling us to continue to gain market share. Our Engineered Fastening business was a bright spot in our Industrial segment, as increased vehicle platform penetration drove growth in the U.S. and in Asia, which more than offset the pullback we saw in the European industrial markets. Conversely, our Industrial & Automotive Repair business in Europe, which is one of the most profitable in the Industrial segment, continued to experience market-related contraction.
Separately, we announced last week that we had reached agreement to divest our Hardware & Home Improvement (HHI) business, an important step in our ongoing transformation to a diversified industrial company. The company maintains the significant upside potential of a housing market recovery through our $5 billion CDIY portfolio of world class brands and products as well as market-leading positions. Lastly, when factoring in Infastech and the other smaller acquisitions we’ve announced this year in conjunction with the divestiture of HHI, approximately 46% of our revenues will be in the U.S, 27% of revenues are in Europe and 16% of revenues are in the emerging markets, improving the diversity of our global footprint.”