Revision Of 2012 Outlook
As a result of continued organic volume pressures and the negative mix effect associated with them, as well as increased investments in organic growth, the company is lowering expectations for its full year 2012 EPS to approximately $5.25, excluding charges, based on the following key operating assumptions:
- Organic net sales to increase 1% from a 2011 pro forma (to include Niscayah) revenue base of $11 billion, at the low end of the previously guided range of 1-2%. This is largely due to lower volumes in the Industrial businesses in Europe as well as the MAS businesses. Paired with mix effect these volume adjustments drive, the company is guiding for this to result in a negative $0.30 headwind to its full year 2012 EPS.
- This implies organic growth in 4Q’12 will decline approximately 1% and that 4Q’12 EPS will approximate $1.45
- The company will invest $15M of operating expense during 4Q’12 in the organic growth initiatives outlined in this release.
- The improvement of foreign exchange rates in late September versus where they were at the end of 2Q will result in an approximate $0.10 tailwind to full year EPS.
- As previously communicated, the company expects to realize $115 million in cost synergies related to the Black & Decker merger and $45 million due to the Niscayah acquisition in 2012.
- The cost reduction actions announced in January and July are expected to drive pre-tax benefits totaling approximately $200 million in 2012.
- As previously guided, the tax rate is expected to approximate 22.5%, shares outstanding should approximate 167 million and ‘interest/other net’ should approximate $400 million for the full year.
Free cash flow, excluding one-time charges and payments, is expected to be approximately $1.2 billion as the company anticipates a significant 4Q’12 working capital benefit.