Big profits, big acquisition for Stanley Black & Decker

1/29/2020
Stanley Black & Decker reported fourth quarter 2019 sales increased 2% to $3.71 billion compared to net sales of $3.63 billion for the fourth quarter 2018.

Sales for the full year rose 3.3% to $14.44 billion from 2018 sales of $13.98 billion.

The New Britain, Conn.-based tool manufacturer and security solutions provider also reported net earnings of $199.1 million, a big swing from a net loss of $106 million in the fourth quarter of 2018.

For the full year, earnings surged better than 58% to $958 million compared to earnings of $605.8 for all of 2018.

Sales in tools and storage products increased 1% during the quarter, primarily driven by higher volume. Industrial sales declined 9% while security sales were up 1%.

The company also announced that it has entered into a definitive agreement to acquire CAM for up to $1.5 billion in cash, with $200 million of the purchase price held back and contingent on the Boeing 737 MAX receiving FAA authorization to return to service and Boeing achieving certain production levels.  When adjusted for approximately $185 million of expected cash tax benefits, the net transaction value is approximately $1.1 - $1.3 billion.

CAM is a manufacturer of specialty fasteners and components for the aerospace and defense markets. CAM will become part of Stanley Black & Decker's portfolio of engineered fastening and component solutions, Stanley Black & Decker said.

Stanley Black & Decker reported that Jeffery Ansell, executive vice president of tools and storage, will assume responsibilities for a strategic intiative to revitalize the Black+Decker brand. Ansell will report directly to CEO and President James Loree.

Jaime Ramirez, current senior vice president and chief operating officer of tools and storage, will succeed Ansell, effective July 1.

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The Bottom Line: Earnings soar in Q4 2019 as the Stanley Black & Decker rebounds with profits $199.1 million from a loss of $106 million in Q4 2018.

What the CEO said: “Stanley Black & Decker delivered a strong 2019 overcoming approximately $445 million in external headwinds,” said James Loree, president and CEO.  "Growing and diversifying our Industrial business through M&A is a key priority for the Company and a focus of our strategic capital deployment.  Today we are excited to announce the acquisition of CAM which is an ideal platform asset to scale within our Engineered Fastening business and significantly adds to our exposure in the high growth, high margin aerospace and defense segment.  CAM is a quality asset bringing well-recognized brands, a proven business model, an experienced management team and compelling cash flow characteristics which create an attractive pathway for profitable growth and shareholder returns.”

Company info: The full Q4 2019 report from Stanley Black & Decker can be found here.

 

 

 
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