Stanley Black & Decker Provides 2014 Outlook

  Stanley Black & Decker Provides 2014 Outlook

Business Wire

NEW BRITAIN, Conn. -- December 12, 2013

Stanley Black & Decker (NYSE: SWK) today provided additional information
regarding its near term operational priorities, capital allocation actions and
its 2014 financial outlook, and also reaffirmed its 2013 guidance^(1).

2013 / 2014 Guidance Highlights
                                                      
                                      2013                 2014

                                      Guidance             Guidance
- Organic Growth                      ~3%                  ~4%
- Earnings Per Share^(1)              ~$4.90 - $5.00       ~$5.30 - $5.50
- Earnings Per Share–GAAP             ~$3.05 - $3.15       ~$5.20 - $5.40
- Free Cash Flow^(2)                                       ~$675M
- Free Cash Flow Before Charges^(1)   ~$800M
                                                           

^(1) Excluding Charges/Payments
^(2) Includes $250M cash outlays in 2014 for payments related to M&A activity
and general restructuring, primarily for severance.

Stanley Black & Decker’s Chairman and CEO, John F. Lundgren, commented, “We
made significant progress driving organic growth during 2013 and expect
momentum to continue during 2014. The investments we made this year will help
us achieve overall organic growth of approximately 4% in 2014 driven by year
over year gains within the majority of our businesses despite a persistent low
growth macro environment. Additionally, benefits from the recent cost
reductions and operational actions to improve Security margins will result in
strong earnings per share growth while funding continued growth investments
and facing significant currency and tax headwinds.

“We believe these steps will drive operating leverage within our businesses
and combined with our recently announced capital allocation actions will
result in meaningful improvements in shareholder returns. Solid execution in
2014 enabled by the overall strength and diversity of our portfolio, combined
with our underlying strategic framework, position us well to deliver on our
long-term financial objectives.”

Key 2014 Planning Assumptions Include The Following (All EPS Impacts Assume
2013 At The $4.95 Midpoint Of Guidance):

  *Organic growth expected to be ~4% (+~$0.50 - $0.60) inclusive of
    carry-over growth investments
  *Security margin improvement of ~150 bps expected to contribute ~$0.15
  *Cost actions in CDIY, Industrial and Corporate ~$0.20
  *Infastech accretion and carry-over synergies ~$0.10
  *Partially offsetting these items are:

       *Foreign exchange (~$0.30)
       *Higher tax rate of ~21% - 22% (~$0.10 – $0.15)
       *Interest & other expenses (~$0.10 - $0.15)

  *One-time charges anticipated to be ~$25 million to support the Infastech
    integration

       *GAAP EPS of $5.20 – $5.40

  *Free cash flow expected to be ~$675 million which includes ~$250M of
    one-time payments

The Company hosted a conference call with investors today, Thursday December
12, at 8:00am ET. A slide presentation which accompanied the call is available
at www.stanleyblackanddecker.com.

You can also access the slides via the Stanley Black & Decker Investor
Relations iPad & iPhone app from the Apple App Store by searching for “SWK
Investor Relations”.

A replay will be available two hours after the call and can be accessed at
(888) 843-7419 or +1 (630) 652-3042 using the passcode 3617-3537#. The replay
will also be available as a podcast within 24 hours and can be accessed on our
website and via iTunes.

Stanley Black & Decker, an S&P 500 company, is a diversified global provider
of hand tools, power tools and related accessories, mechanical access
solutions and electronic security solutions, healthcare solutions, engineered
fastening systems, and more. Learn more at www.stanleyblackanddecker.com.

This guidance reflects the Company’s continuing operations. The Company sold
its Hardware & Home Improvement business (HHI), including the residential
portion of Tong Lung in December of 2012. The sale of this business occurred
in a First and Second Closing. The First closing, which excluded the
residential portion of Tong Lung, occurred on December 17, 2012. The Second
closing in which the residential portion of Tong Lung was sold occurred on
April 8, 2013 and the respective operating results were reported as
discontinued operations through this date. In addition, in 3Q’13 the Company
has reported two small businesses as discontinued operations.

Organic growth is defined as total sales growth less the sales of companies
acquired in the past twelve months and any foreign currency impacts. Operating
marginis defined as sales less cost of sales and selling, general and
administrative expenses. Management uses operating margin and its percentage
of net sales as key measures to assess the performance of the Company as a
whole, as well as the related measuresat the segment level. Free cash flow is
defined as cash flow from operations less capital and software expenditures.
Management considers free cash flow an important indicator 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.

                            CAUTIONARY STATEMENTS

          Under the Private Securities Litigation Reform Act of 1995

Statements in this press release that are not historical, including but not
limited to those regarding the Company’s ability to: (i) achieve full year
2013 diluted EPS of $4.90 - $5.00 ($3.05 - $3.15 on a GAAP basis); (ii)
generate approximately $800 million in free cash flow for 2013, excluding
charges and payments; (iii) deliver organic growth of approximately 3% in 2013
and 4% in 2014; (iv) achieve full year 2014 diluted EPS of $5.30 - $5.50
($5.20 - $5.40 on a GAAP basis); and (v) generate approximately $675 million
of free cash flow for 2014 which includes $250 million of one-time payments
(collectively, the “Results”); are “forward looking statements” and subject to
risk and uncertainty.

The Company’s ability to deliver the Results as described above is based on
current expectations and involves inherent risks and uncertainties, including
factors listed below and other factors that could delay, divert, or change any
of them, and could cause actual outcomes and results to differ materially from
current expectations. In addition to the risks, uncertainties and other
factors discussed in this press release, the risks, uncertainties and other
factors that could cause or contribute to actual results differing materially
from those expressed or implied in the forward looking statements include,
without limitation, those set forth under Item 1A Risk Factors of the
Company’s Annual Report on Form 10-K and any material changes thereto set
forth in any subsequent Quarterly Reports on Form 10-Q, or those contained in
the Company’s other filings with the Securities and Exchange Commission, and
those set forth below.

The Company’s ability to deliver the Results is dependent, or based, upon: (i)
the Company’s ability to execute its integration plans and achieve synergies
primarily from the Infastech acquisition sufficient to generate $0.20 of EPS
accretion in 2013 and $0.10 in 2014; (ii) the Company’s ability to generate
organic net sales increases of approximately 3% in 2013 and 4% in 2014; (iii)
the Company’s ability to generate a modest increase in operating margin vs.
the prior year in the CDIY segment and to minimize any decrease in operating
margin vs. the prior year in the Security and Industrial segments in 2013;
(iv) the Company’s ability to continue to identify and execute upon sales
opportunities to increase its CDIY, IAR and Security businesses in the
emerging markets while minimizing associated costs; (v) the Company’s ability
to achieve a tax rate of approximately 20% in 2013 and 21-22% in 2014; (vi)
the Company’s ability to limit interest expense to approximately $145 million
and other-net to approximately $250 million in 2013 and to limit the increase
in interest and other expense to approximately $0.10-$0.15 of EPS in 2014;
(vii) the Company’s ability to improve margins in the Security business by at
least 150 basis points in 2014; (viii) the Company’s ability to generate
approximately $0.20 of EPS accretion in 2014 through cost reductions in its
CDIY and Industrial segments and its corporate functions; (ix) the Company’s
ability to limit one-time charges primarily associated with the Infastech
acquisition to $25 million in 2014; (x) the Company’s ability to minimize tax
liabilities associated with the HHI divestiture; (xi) successful integration
of acquisitions completed in 2012 and 2013, and any additional acquisitions
completed during the year, as well as integration of existing businesses;
(xii) the continued acceptance of technologies used in the Company’s products
and services; (xiii) the Company’s ability to manage existing Sonitrol
franchisee and Mac Tools relationships; (xiv) the Company’s ability to
minimize costs associated with any sale or discontinuance of a business or
product line, including any severance, restructuring, legal or other costs;
(xv) the proceeds realized with respect to any business or product line
disposals; (xvi) the extent of any asset impairments with respect to any
businesses or product lines that are sold or discontinued; (xvii) the success
of the Company’s efforts to manage freight costs, steel and other commodity
costs as well as capital expenditures; (xviii) the Company’s ability to
sustain or increase prices in order to, among other things, offset or mitigate
the impact of steel, freight, energy, non-ferrous commodity and other
commodity costs and any inflation increases; (xix) the Company’s ability to
generate free cash flow and maintain a strong debt to capital ratio; (xx) the
Company’s ability to identify and effectively execute productivity
improvements and cost reductions, while minimizing any associated
restructuring charges; (xxi) the Company’s ability to obtain favorable
settlement of tax audits; (xxii) the ability of the Company to generate
earnings sufficient to realize future income tax benefits during periods when
temporary differences become deductible; (xxiii) the continued ability of the
Company to access credit markets under satisfactory terms; (xxiv) the
Company’s ability to negotiate satisfactory payment terms under which the
Company buys and sells goods, services, materials and products; and (xxv) the
Company’s ability to successfully develop, market and achieve sales from new
products and services.

The Company’s ability to deliver the Results is also dependent upon: (i) the
success of the Company’s marketing and sales efforts, including the ability to
develop and market new and innovative products in both existing and new
markets; (ii) the ability of the Company to maintain or improve production
rates in the Company’s manufacturing facilities, respond to significant
changes in product demand and fulfill demand for new and existing products;
(iii) the Company’s ability to continue improvements in working capital
through effective management of accounts receivable and inventory levels; (iv)
the ability to continue successfully managing and defending claims and
litigation; (v) the success of the Company’s efforts to mitigate any cost
increases generated by, for example, increases in the cost of energy or
significant Chinese Renminbi or other currency appreciation; (vi) the
geographic distribution of the Company’s earnings; (vii) the commitment to and
success of the Stanley Fulfillment System; and (viii) successful
implementation with expected results of cost reduction programs.

The Company’s ability to achieve the Results will also be affected by external
factors. These external factors include: challenging global macroeconomic
environment; the continued economic growth of emerging markets, particularly
Latin America; pricing pressure and other changes within competitive markets;
the continued consolidation of customers particularly in consumer channels;
inventory management pressures on the Company’s customers; the impact the
tightened credit markets may have on the Company or its customers or
suppliers; the extent to which the Company has to write off accounts
receivable or assets or experiences supply chain disruptions in connection
with bankruptcy filings by customers or suppliers; increasing competition;
changes in laws, regulations and policies that affect the Company, including,
but not limited to trade, monetary, tax and fiscal policies and laws; the
timing and extent of any inflation or deflation; currency exchange
fluctuations; the impact of dollar/foreign currency exchange and interest
rates on the competitiveness of products and the Company’s debt program; the
strength of the U.S. and European economies; the extent to which world-wide
markets associated with homebuilding and remodeling stabilize and rebound; the
impact of events that cause or may cause disruption in the Company’s supply,
manufacturing, distribution and sales networks such as war, terrorist
activities, and political unrest; and recessionary or expansive trends in the
economies of the world in which the Company operates. The Company undertakes
no obligation to publicly update or revise any forward-looking statements to
reflect events or circumstances that may arise after the date hereof.

Contact:

For Stanley Black & Decker
Greg Waybright, 860-827-3833
Vice President, Investor & Government Relations
greg.waybright@sbdinc.com
 
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