Stanley Works, Black & Decker Post Strong Quarterly Profits
March 30, 2011
NEW YORK -- Increased sales of tools for professional and do-it-yourself projects helped drive second-quarter earnings beyond analysts' estimates for hand-tool and power-tool companies Black & Decker Corp. and Stanley Works. Shares of both companies surged following release of the earnings news. Stanley, based in New Britain, Conn., reported a 3.5% increase in net income to $32.6 million, or 37 cents a share, from $31.5 million, or 36 cents a share. The earnings for the most-recent quarter include one-time items resulting in a charge of about $10.4 million, or 12 cents a share, related to its previously announced restructuring program. Without the charge, net would have totaled $43 million, or 49 cents a share, Stefan said. The First Call consensus, excluding the charge, was 42 cents a share. Sales rose 3.3% to $677.2 million. The company attributed results, in part, to improved profit margins and reduced expenses, which reflect its plan to increase operating efficiency and shed noncore product lines, including garage-door openers and related equipment, office products and certain painting equipment. Stanley said it plans to sell the businesses but declined to comment on whether it expects gains or charges from the divestitures. In New York Stock Exchange composite trading, Stanley stock rose $1.75, or 7%, to $28.375. Stefan ``looked at the nuts and bolts,'' in determining which businesses to let go, Davina S. Kuhlman, a Burnham Securities analyst, said. ``That can lead to startling wake-up calls regarding which products aren't carrying their weight and which ones have potential that isn't being exploited.'' Mr. Kuhlman said Stanley and Black & Decker also have benefited from an increase in sales of existing homes since homeowners tackle most projects during their first two or three years in a house. Villar, Md.-based Black & Decker said earnings jumped 30% to $45.3 million, or 47 cents a share, from $34.8 million, or 37 cents a share, a year earlier. The year-earlier net included a gain of $6.7 million, or eight cents a share, from discontinued operations. First Call said the consensus of analysts' estimates was 45 cents a share. Black & Decker shares rose $4.75, or 14%, to $39.25 on the Big Board. Revenue rose 6.4% to $1.21 billion on sales growth in its consumer and professional power-tool lines driven by a rise in construction and renovations among professional builders and consumers doing their own work, the company said. Black & Decker also said accelerated sales in its home-hardware businesses reflect an increase in new construction, particularly in the western U.S. A program aimed at reducing inventory and cutting administrative and selling expenses also contributed to the results.
