Stanley Black & Decker (SWK 117.52, -19.36, -14.14%) opened lower
by 12% as the company’s cautious guidance overshadowed slightly better than
expected results for its latest quarter.
The industrial company, which manufactures tools, power tools, security systems, and fasteners, reported above-consensus fourth quarter earnings of $2.11 per share on a 4.9% year/year increase in revenue to $3.63 bln, which was just ahead of expectations.
However, the company issued guidance that was conservative relative to market expectations. The company expects to generate full-year earnings between $8.45 per share and $8.65 per share, which is below current market estimates.
The growth rate for fourth quarter revenue was driven by higher volume, benefits from acquisitions, and pricing actions, which outweighed unfavorable currency translations. Gross margin weakened by 280 basis points to 33.3% due to commodity inflation, unfavorable foreign exchange, and the impact of tariffs.
Growth in revenue did not prevent the company from reporting a decline in profits in all three segments.
Tools & Storage net sales grew 4.4% to $2.58 bln as volume and price growth outweighed unfavorable exchange rates. Sales in North America grew 10% while sales in Europe and Emerging Markets increased 4% and 3%, respectively. Segment operating profit decreased 1.4% to $382.8 mln.
Industrial sales increased 14.2% to $548.5 mln due to acquisitions and volume growth, which outweighed negative currency exchange rates. Infrastructure organic revenue grew 18% due to stronger oil and gas pipeline project activity in North America. Segment operating profit decreased 7.4% to $68.4 mln, mostly due to commodity inflation.
Security sales decreased 1.3% to $503.8 mln due to lower unit volume and negative exchange rates, which outweighed the impact of acquisitions and pricing actions. Organic revenue in North America declined 2% due to lower installations in commercial electronic security. Segment operating profit decreased 45.3% to $30.2 mln.
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