Stanley Black & Decker, Inc. (SWK), a provider of hand tools, power tools and related accessories, Wednesday lowered its full year earnings per share outlook, citing headwinds associated with foreign exchange. The company's profit in the second quarter fell over 21 percent, weighed down by charges. The firm also lifted its dividend and said it is considering the sale of a business.
The New Britain, Connecticut-based company now expects its full year earnings per share to be in the range of $5.40 - $5.65, excluding M&A charges, compared to the prior range of $5.75 - $6.00. On average, 16 analysts polled by Thomson Reuters expect earnings of $5.77 per share for the quarter. Analysts' estimates typically exclude special items.
Including charges, the company expects earnings per share of $3.98 to $4.34 in 2012. The company reiterated its guidance that organic net sales should increase 1-2 percent from a 2011 pro forma revenue base of $11 billion.
The guidance assumes that the firm is announcing an incremental $100 million of annualized cost actions with $50 million impacting the second half of 12. These actions are primarily a reduction of salaried workforce.
The tool maker is reviewing strategic alternatives for its Hardware & Home Improvement Group, which may include a divestiture of the business. The business had 2011 revenues of $940 million.
The company is also evaluating the purchase of a strategically attractive engineered fastening franchise with revenues totaling around $500 million.
Chief Operating Officer James Loree said, "...notwithstanding the outcome of these various potential transactions, we are announcing today that the company plans to curtail any other major bolt-on acquisition activity for a period of at least 12 to 18 months while it completes its ongoing integrations...''
Further, the company said its Board of Directors approved a 20 percent increase of its quarterly cash dividend to $0.49 per common share, marking the 45th consecutive annual dividend increase for the company.
Additionally, the Board of Directors approved a new share repurchase program of up to 20 million shares or $1.2 billion, using the current stock price.
The company upgraded its cost synergy estimate for the Black & Decker integration to $500 million from $450 million. This is the third major upgrade from the original estimate of $350 million.
Net earnings attributable to common shareowners for the second quarter fell to $154.8 million from $197.3 million in the prior year. Earnings per share dropped to $0.92 from $1.14.
Excluding merger & acquisition related charges, earnings per share fell to $1.32 from $1.46. Analysts expected earnings of $1.52 per share for the quarter.
According to the company, the negative impact of foreign exchange as well as the negative mix associated with Construction & Do-It-Yourself or CDIY segment volumes led to lower-than-anticipated earnings per share performance.
Net sales for the quarter climbed to $2.81 billion from $2.60 billion, trailing Wall Street expectation of $2.90 billion.
In CDIY, revenue grew 1.7 percent to $1.387 billion, while Security revenues climbed 29.2 percent to $792 million. Industrial revenue edged up 1.4 percent at $635 million.
Of the total net sales growth of 8 percent, 1 percent each came from pricing and volume and 10 percent from acquisitions with currency having a 4 percent adverse impact.
SWK closed on Tuesday at $59.72, down from the previous close of $59.72.
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