Stanley Works Sees Modest Gains in 2010 - TheStreet



) -- Security solutions provider

Stanley Works

(SWK) - Get Report

has forecast a 2010 earnings outlook roughly in line with analysts' estimates.

"We are projecting very modest market-driven improvement, but our cost base has been properly adjusted for this potential environment and we are well-prepared if a stronger rebound occurs," Donald Allan, Stanley Works' CFO said in statement.

"Additionally, we remain committed to the financial guidance we provided with respect to the combined company following the completion of the combination of Stanley and

power tools business Black & Decker."

Excluding all impacts of the Black & Decker transaction, Stanley expects 2010 EPS in the range of $3 to $3.25, compared with a consensus forecast of $3.04.

This full year 2010 guidance range is based on assumptions including net sales to increase between 2% to 4% from 2009 levels; that certain one-time 2009 events, including the 34 cents gain on the extinguishment of debt the company realized in the second quarter and the 22 cent charge related to the Black & Decker transaction and integration planning costs in the fourth quarter, will not reoccur in 2010; and a higher share count primarily associated with the previously announced issuance of approximately 6 million shares in May 2010, which are linked to the equity unit hybrid instrument. This will have a dilutive impact in 2010 of 17 cents, the company said.

Stanley Works expects free cash flow for 2010 to be approximately $300 million to $350 million, which assumes a modest improvement in working capital turns from 2009 year-end levels.

For the fourth quarter, Stanley Works reported net earnings from continuing operations attributable to common shareholders of 54.6 million, or 68 cents compared with $3.6 million, or a penny loss in the previous year. The company would have reported earnings of 89 cents excluding a charge related to transaction costs associated with the Black & Decker merger.

Analysts surveyed by Thomson Reuters expected earnings of 73 cents per share on revenue of $973.69 million.

"Despite the headwinds in 2009, we are very pleased we were able to achieve -- and in some cases exceed -- many of our financial objectives," Allan said.

Stanley Works and subsidiaries' net sales from continuing operations were $969 million, down 11% versus the prior year. The company's security segment achieved a 20% segment profit while absorbing a 4% revenue decline.

Stanley Works' gross margin rate improved 460 bps versus the fourth quarter of fiscal 2008 to 40.7%.

-- Reported by Andrea Tse in New York

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