Attached files
| file | filename |
|---|---|
| EX-99.1 - PRESS RELEASE - STANLEY BLACK & DECKER, INC. | ex991q32018.htm |
| 8-K - 8-K - STANLEY BLACK & DECKER, INC. | a8kq32018.htm |
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 | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
NET SALES | $ | 3,494.8 | $ | 3,359.4 | $ | 10,347.7 | $ | 9,502.4 | |||||||
COSTS AND EXPENSES | |||||||||||||||
Cost of sales | 2,256.4 | 2,106.4 | 6,656.5 | 5,970.1 | |||||||||||
Gross margin | 1,238.4 | 1,253.0 | 3,691.2 | 3,532.3 | |||||||||||
% of Net Sales | 35.4 | % | 37.3 | % | 35.7 | % | 37.2 | % | |||||||
Selling, general and administrative | 798.9 | 768.9 | 2,390.3 | 2,203.4 | |||||||||||
% of Net Sales | 22.9 | % | 22.9 | % | 23.1 | % | 23.2 | % | |||||||
Operating margin | 439.5 | 484.1 | 1,300.9 | 1,328.9 | |||||||||||
% of Net sales | 12.6 | % | 14.4 | % | 12.6 | % | 14.0 | % | |||||||
Other - net | 59.4 | 60.5 | 236.7 | 216.3 | |||||||||||
Loss (gain) on sales of businesses | — | 3.2 | 0.8 | (265.1 | ) | ||||||||||
Pension settlement | — | — | — | 12.8 | |||||||||||
Restructuring charges | 21.8 | 19.1 | 58.1 | 42.9 | |||||||||||
Income from operations | 358.3 | 401.3 | 1,005.3 | 1,322.0 | |||||||||||
Interest - net | 53.4 | 46.9 | 154.2 | 135.9 | |||||||||||
EARNINGS BEFORE INCOME TAXES | 304.9 | 354.4 | 851.1 | 1,186.1 | |||||||||||
Income taxes | 56.6 | 79.9 | 139.3 | 240.3 | |||||||||||
NET EARNINGS | 248.3 | 274.5 | 711.8 | 945.8 | |||||||||||
Less: net gain (loss) attributable to non-controlling interests | 0.5 | — | (0.2 | ) | — | ||||||||||
NET EARNINGS ATTRIBUTABLE TO COMMON SHAREOWNERS | $ | 247.8 | $ | 274.5 | $ | 712.0 | $ | 945.8 | |||||||
EARNINGS PER SHARE OF COMMON STOCK | |||||||||||||||
Basic | $ | 1.67 | $ | 1.83 | $ | 4.77 | $ | 6.33 | |||||||
Diluted | $ | 1.65 | $ | 1.80 | $ | 4.68 | $ | 6.22 | |||||||
DIVIDENDS PER SHARE | $ | 0.66 | $ | 0.63 | $ | 1.92 | $ | 1.79 | |||||||
WEIGHTED-AVERAGE SHARES OUTSTANDING (in thousands) | |||||||||||||||
Basic | 147,964 | 149,689 | 149,311 | 149,464 | |||||||||||
Diluted | 150,599 | 152,622 | 152,225 | 152,106 | |||||||||||
8
Exhibit 99.2
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
September 29, 2018 | December 30, 2017 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 368.7 | $ | 637.5 | ||||
Accounts and notes receivable, net | 2,236.2 | 1,628.7 | ||||||
Inventories, net | 2,649.7 | 2,018.4 | ||||||
Other current assets | 300.8 | 274.4 | ||||||
Total current assets | 5,555.4 | 4,559.0 | ||||||
Property, plant and equipment, net | 1,846.2 | 1,742.5 | ||||||
Goodwill and other intangibles, net | 12,554.1 | 12,283.5 | ||||||
Other assets | 492.0 | 512.7 | ||||||
Total assets | $ | 20,447.7 | $ | 19,097.7 | ||||
LIABILITIES AND SHAREOWNERS’ EQUITY | ||||||||
Short-term borrowings | $ | 1,408.1 | $ | 5.3 | ||||
Current maturities of long-term debt | 979.6 | 977.5 | ||||||
Accounts payable | 2,320.2 | 2,021.0 | ||||||
Accrued expenses | 1,344.1 | 1,387.7 | ||||||
Total current liabilities | 6,052.0 | 4,391.5 | ||||||
Long-term debt | 2,830.6 | 2,828.2 | ||||||
Other long-term liabilities | 3,480.0 | 3,573.0 | ||||||
Stanley Black & Decker, Inc. shareowners’ equity | 8,082.2 | 8,302.2 | ||||||
Non-controlling interests’ equity | 2.9 | 2.8 | ||||||
Total liabilities and shareowners' equity | $ | 20,447.7 | $ | 19,097.7 | ||||
9
Exhibit 99.2
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
SUMMARY OF CASH FLOW ACTIVITY
(Unaudited, Millions of Dollars)
Third Quarter | Year-to-Date | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
OPERATING ACTIVITIES | ||||||||||||||||
Net earnings | $ | 248.3 | $ | 274.5 | $ | 711.8 | $ | 945.8 | ||||||||
Depreciation and amortization | 129.7 | 120.7 | 381.0 | 338.0 | ||||||||||||
Loss (gain) on sales of businesses | — | 3.2 | 0.8 | (265.1 | ) | |||||||||||
Changes in working capital1 | (287.8 | ) | (456.9 | ) | (1,017.1 | ) | (1,253.9 | ) | ||||||||
Other | 101.3 | 174.1 | (36.4 | ) | 188.5 | |||||||||||
Net cash provided by (used in) operating activities | 191.5 | 115.6 | 40.1 | (46.7 | ) | |||||||||||
INVESTING AND FINANCING ACTIVITIES | ||||||||||||||||
Capital and software expenditures | (109.4 | ) | (91.0 | ) | (327.4 | ) | (277.9 | ) | ||||||||
(Payments) proceeds from sales of businesses, net of cash sold | (1.1 | ) | — | (3.0 | ) | 745.3 | ||||||||||
Business acquisitions, net of cash acquired | (15.1 | ) | (152.0 | ) | (521.9 | ) | (2,582.1 | ) | ||||||||
Net investment hedge settlements | (5.1 | ) | (27.9 | ) | 15.2 | (31.6 | ) | |||||||||
Proceeds related to deferred purchase price receivable | — | 241.3 | — | 469.1 | ||||||||||||
Stock purchase contract fees | (10.1 | ) | (9.9 | ) | (30.3 | ) | (9.9 | ) | ||||||||
Net short-term borrowings (repayments) | 309.5 | (64.4 | ) | 1,445.1 | 499.2 | |||||||||||
Premium paid on equity option | — | — | (57.3 | ) | (25.1 | ) | ||||||||||
Proceeds from issuance of preferred stock | — | — | — | 727.5 | ||||||||||||
Proceeds from issuances of common stock | 10.2 | 14.6 | 32.8 | 47.5 | ||||||||||||
Purchases of common stock for treasury | (301.8 | ) | (0.6 | ) | (514.5 | ) | (16.2 | ) | ||||||||
Cash dividends on common stock | (97.4 | ) | (94.7 | ) | (286.5 | ) | (267.9 | ) | ||||||||
Effect of exchange rate changes on cash | 5.8 | 22.3 | (54.1 | ) | 81.5 | |||||||||||
Other | (11.7 | ) | (9.5 | ) | (24.6 | ) | (6.6 | ) | ||||||||
Net cash used in investing and financing activities | (226.2 | ) | (171.8 | ) | (326.5 | ) | (647.2 | ) | ||||||||
Decrease in cash, cash equivalents and restricted cash | (34.7 | ) | (56.2 | ) | (286.4 | ) | (693.9 | ) | ||||||||
Cash, cash equivalents and restricted cash, beginning of period | 403.4 | 539.5 | 655.1 | 1,177.2 | ||||||||||||
Cash, cash equivalents and restricted cash, end of period | $ | 368.7 | $ | 483.3 | $ | 368.7 | $ | 483.3 | ||||||||
Free Cash Flow Computation2 | ||||||||||||||||
Operating cash flow | $ | 191.5 | $ | 115.6 | $ | 40.1 | $ | (46.7 | ) | |||||||
Less: capital and software expenditures | (109.4 | ) | (91.0 | ) | (327.4 | ) | (277.9 | ) | ||||||||
Free cash flow (before dividends) | $ | 82.1 | $ | 24.6 | $ | (287.3 | ) | $ | (324.6 | ) | ||||||
Impact of recently adopted accounting standards3 | 241.3 | 514.5 | ||||||||||||||
Free cash flow (before dividends), as previously reported3 | $ | 265.9 | $ | 189.9 | ||||||||||||
Reconciliation of Cash, Cash Equivalents and Restricted Cash | ||||||||||||||||
September 29, 2018 | December 30, 2017 | |||||||||||||||
Cash and cash equivalents | $ | 368.7 | $ | 637.5 | ||||||||||||
Restricted cash included in Other current assets | — | 17.6 | ||||||||||||||
Cash, cash equivalents and restricted cash | $ | 368.7 | $ | 655.1 | ||||||||||||
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. | |||||||||||||||
3 | Free cash flow as reported in the third quarter of 2017 was an inflow of $265.9 million and $189.9 million for the three and nine months ended September 30, 2017, respectively. As a result of the adoption of Accounting Standards Update ("ASU") 2016-15, "Classification of Certain Cash Receipts and Cash Payments" and ASU 2016-18, "Restricted Cash," free cash flow has decreased by $241.3 million and $514.5 million for the three and nine months ended September 30, 2017, respectively. | |||||||||||||||
10
Exhibit 99.2
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
Third Quarter | Year-to-Date | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
NET SALES | |||||||||||||||
Tools & Storage | $ | 2,448.0 | $ | 2,369.2 | $ | 7,231.6 | $ | 6,571.5 | |||||||
Industrial | 562.0 | 510.9 | 1,639.3 | 1,494.0 | |||||||||||
Security | 484.8 | 479.3 | 1,476.8 | 1,436.9 | |||||||||||
Total | $ | 3,494.8 | $ | 3,359.4 | $ | 10,347.7 | $ | 9,502.4 | |||||||
SEGMENT PROFIT | |||||||||||||||
Tools & Storage | $ | 356.2 | $ | 394.1 | $ | 1,056.2 | $ | 1,050.5 | |||||||
Industrial | 88.4 | 92.2 | 254.4 | 272.0 | |||||||||||
Security | 47.4 | 54.0 | 141.0 | 156.5 | |||||||||||
Segment Profit | 492.0 | 540.3 | 1,451.6 | 1,479.0 | |||||||||||
Corporate Overhead | (52.5 | ) | (56.2 | ) | (150.7 | ) | (150.1 | ) | |||||||
Total | $ | 439.5 | $ | 484.1 | $ | 1,300.9 | $ | 1,328.9 | |||||||
Segment Profit as a Percentage of Net Sales | |||||||||||||||
Tools & Storage | 14.6 | % | 16.6 | % | 14.6 | % | 16.0 | % | |||||||
Industrial | 15.7 | % | 18.0 | % | 15.5 | % | 18.2 | % | |||||||
Security | 9.8 | % | 11.3 | % | 9.5 | % | 10.9 | % | |||||||
Segment Profit | 14.1 | % | 16.1 | % | 14.0 | % | 15.6 | % | |||||||
Corporate Overhead | (1.5 | )% | (1.7 | )% | (1.5 | )% | (1.6 | )% | |||||||
Total | 12.6 | % | 14.4 | % | 12.6 | % | 14.0 | % | |||||||
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 2018 | |||||||||||||
Reported | Acquisition- Related Charges1 | 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 | |||||||
1 | Acquisition-related charges relate primarily to inventory step-up, integration and consulting costs, and a non-cash fair value adjustment. | ||||||||||||
Third Quarter 2017 | |||||||||||||
Reported | Acquisition- Related Charges & Other2 | Normalized3 | |||||||||||
Gross margin | $ | 1,253.0 | $ | 9.6 | $ | 1,262.6 | |||||||
% of Net Sales | 37.3 | % | 37.6 | % | |||||||||
Selling, general and administrative | 768.9 | (7.4 | ) | 761.5 | |||||||||
% of Net Sales | 22.9 | % | 22.7 | % | |||||||||
Operating margin | 484.1 | 17.0 | 501.1 | ||||||||||
% of Net Sales | 14.4 | % | 14.9 | % | |||||||||
Earnings before income taxes | 354.4 | 33.3 | 387.7 | ||||||||||
Income taxes | 79.9 | 9.3 | 89.2 | ||||||||||
Net earnings attributable to common shareowners | 274.5 | 24.0 | 298.5 | ||||||||||
Diluted earnings per share of common stock | $ | 1.80 | $ | 0.15 | $ | 1.96 | |||||||
2 | Acquisition-related charges and other relates primarily to inventory step-up, integration and consulting costs, and gains or losses on sales of businesses. | ||||||||||||
3 | The normalized 2018 and 2017 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 charges, non-cash fair value adjustment, and gains or losses on sales of businesses, as applicable. | ||||||||||||
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 2018 | |||||||||||||
Reported | Acquisition- Related Charges & Other1 | 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 | |||||||
1 | 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 recently enacted U.S. tax legislation. | ||||||||||||
Year-to-Date 2017 | |||||||||||||
Reported | Acquisition- Related Charges & Other2 | Normalized3 | |||||||||||
Gross margin | $ | 3,532.3 | $ | 42.5 | $ | 3,574.8 | |||||||
% of Net Sales | 37.2 | % | 37.6 | % | |||||||||
Selling, general and administrative | 2,203.4 | (26.8 | ) | 2,176.6 | |||||||||
% of Net Sales | 23.2 | % | 22.9 | % | |||||||||
Operating margin | 1,328.9 | 69.3 | 1,398.2 | ||||||||||
% of Net Sales | 14.0 | % | 14.7 | % | |||||||||
Earnings before income taxes | 1,186.1 | (134.9 | ) | 1,051.2 | |||||||||
Income taxes | 240.3 | 8.8 | 249.1 | ||||||||||
Net earnings attributable to common shareowners | 945.8 | (143.7 | ) | 802.1 | |||||||||
Diluted earnings per share of common stock | $ | 6.22 | $ | (0.95 | ) | $ | 5.27 | ||||||
2 | Acquisition-related charges and other relates primarily to inventory step-up, integration and consulting costs and gains or losses on sales of businesses. | ||||||||||||
3 | The normalized 2018 and 2017 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 charges, non-cash fair value adjustment, gain or loss on sales of businesses, environmental remediation settlement, and a tax charge related to recently enacted U.S. tax legislation, as applicable. | ||||||||||||
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 2018 | |||||||||||||
Reported | Acquisition- Related Charges1 | Normalized2 | |||||||||||
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 | % | |||||||||
Third Quarter 2017 | |||||||||||||
Reported | Acquisition- Related Charges1 | Normalized2 | |||||||||||
SEGMENT PROFIT | |||||||||||||
Tools & Storage | $ | 394.1 | $ | 16.8 | $ | 410.9 | |||||||
Industrial | 92.2 | — | 92.2 | ||||||||||
Security | 54.0 | — | 54.0 | ||||||||||
Segment Profit | 540.3 | 16.8 | 557.1 | ||||||||||
Corporate Overhead | (56.2 | ) | 0.2 | (56.0 | ) | ||||||||
Total | $ | 484.1 | $ | 17.0 | $ | 501.1 | |||||||
Segment Profit as a Percentage of Net Sales | |||||||||||||
Tools & Storage | 16.6 | % | 17.3 | % | |||||||||
Industrial | 18.0 | % | 18.0 | % | |||||||||
Security | 11.3 | % | 11.3 | % | |||||||||
Segment Profit | 16.1 | % | 16.6 | % | |||||||||
Corporate Overhead | (1.7 | )% | (1.7 | )% | |||||||||
Total | 14.4 | % | 14.9 | % | |||||||||
1 | Acquisition-related charges relate primarily to inventory step-up, integration and consulting costs, and a non-cash fair value adjustment, as applicable. | ||||||||||||
2 | The normalized 2018 and 2017 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 charges and non-cash fair value adjustment, as applicable. | ||||||||||||
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 2018 | |||||||||||||
Reported | Acquisition- Related Charges1 | Normalized2 | |||||||||||
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 | % | |||||||||
Year-to-Date 2017 | |||||||||||||
Reported | Acquisition- Related Charges1 | Normalized2 | |||||||||||
SEGMENT PROFIT | |||||||||||||
Tools & Storage | $ | 1,050.5 | $ | 68.2 | $ | 1,118.7 | |||||||
Industrial | 272.0 | — | 272.0 | ||||||||||
Security | 156.5 | 0.9 | 157.4 | ||||||||||
Segment Profit | 1,479.0 | 69.1 | 1,548.1 | ||||||||||
Corporate Overhead | (150.1 | ) | 0.2 | (149.9 | ) | ||||||||
Total | $ | 1,328.9 | $ | 69.3 | $ | 1,398.2 | |||||||
Segment Profit as a Percentage of Net Sales | |||||||||||||
Tools & Storage | 16.0 | % | 17.0 | % | |||||||||
Industrial | 18.2 | % | 18.2 | % | |||||||||
Security | 10.9 | % | 11.0 | % | |||||||||
Segment Profit | 15.6 | % | 16.3 | % | |||||||||
Corporate Overhead | (1.6 | )% | (1.6 | )% | |||||||||
Total | 14.0 | % | 14.7 | % | |||||||||
1 | Acquisition-related charges relate primarily to inventory step-up, integration and consulting costs, and a non-cash fair value adjustment, as applicable. | ||||||||||||
2 | The normalized 2018 and 2017 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 charges and non-cash fair value adjustment, as applicable. | ||||||||||||
15