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|Stanley Black & Decker Reports Full Year And 4Q 2016 Results|
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4Q'16 Key Points:
"I'm also pleased with the actions we have recently taken in the M&A space to shape our portfolio and further our goal of building a powerful, diversified industrial growth company. M&A, combined with strong organic growth performance, will help enable us to reach our objective of doubling the size of the company by 2022 while expanding our margin rate. Adding notable and iconic brands, such as Lenox and Irwin, and now Craftsman, uniquely complements our existing, strong portfolio of world-class brands and franchises. The sale of the majority of our Mechanical Security businesses will allow us to redeploy that capital from a low-growth business and invest it in more robust growth opportunities.
"As we look ahead, we are expecting another strong year in 2017. Certainly, there are significant challenges from a currency and geopolitical perspective, but we are confident in our ability to manage through these uncertainties and focus on solid execution.
4Q'16 Segment Results
Recent (Previously Announced) Transactions
The following represents key 2017 assumptions:
We remain committed to a strong investment-grade credit rating and plan on using cash on the balance sheet, short-term debt, operating cash flow generated in 2017 and the expected proceeds from the sale of the Mechanical Security businesses to fund the Newell Tools & Craftsman acquisitions. We expect this capital allocation, combined with the incremental EBITDA from Newell, will bring our credit metric back in line by early 2018.
"While 2017 will have its share of externally driven challenges, our agile and experienced leadership team, our ability to deliver robust core and breakthrough innovation, and our powerful SFS 2.0 operating system, give us confidence in our ability to deliver solid organic growth, operating leverage and strong free cash flow conversion this year, consistent with our long-term financial objectives."
The Company will host a conference call with investors today,
You can also access the slides via the Stanley Black & Decker Investor Relations iPad & iPhone app from the
The call will be accessible by telephone within the U.S. at (877) 930-8285, from outside the U.S. at +1 (253) 336-8297, and via the Internet at www.stanleyblackanddecker.com. To participate, please register on the web site at least fifteen minutes prior to the call and download and install any necessary audio software. Please use the conference identification number 49123971. A replay will also be available two hours after the call and can be accessed at (855) 859-2056 or +1 (404) 537-3406 using the passcode 49123971. The replay will also be available as a podcast within 24 hours and can be accessed on our website and via iTunes.
These results reflect the Company's continuing operations. In 4Q'14, the Company classified the results of the Security segment's
Organic sales growth is defined as total sales growth less the sales of companies acquired in the past twelve months and any foreign currency impacts. Operating margin is 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 measures at 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. Free cash flow conversion is defined as free cash flow divided by net income.
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 2017 diluted EPS of
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
The Company's ability to deliver the Results is dependent, or based, upon: (i) the Company's ability to close the Newell Tools, Mechanical Security and Craftsman transactions when expected; (ii) the Company's ability to deliver organic growth of approximately 4% (approximately +$0.45 to +$0.55 EPS) and generate strong organic growth through 2022; (iii) commodity inflation being approximately
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 at the right price points 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 adverse earnings impact resulting from, for example, increases in the cost of energy or significant Chinese Renminbi, Canadian Dollar, Euro, British Pound, Brazilian Real or other currency fluctuations; (vi) the geographic distribution of the Company's earnings; (vii) the commitment to and success of the Stanley Fulfillment System including, core innovation, breakthrough innovation, digital and commercial excellence and functional transformation; 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 geopolitical and macroeconomic environment, possibly including impact from "Brexit" or other similar actions from other EU member states; the economic environment of emerging markets, particularly
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