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Stanley Black (SWK) Q4 Earnings Beat, Down Y/Y on Supply Woes
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Stanley Black & Decker, Inc. (SWK - Free Report) has reported mixed fourth-quarter 2021 results. The company’s earnings surpassed the Zacks Consensus Estimate by 3.88%, whereas sales lagged the same by 8.7%.
In the reported quarter, the company’s adjusted earnings were $2.14 per share, surpassing the Zacks Consensus Estimate of $2.06. The bottom line decreased 29.1% from the year-ago quarter’s figure of $3.02. Lower volumes, forex woes, supply-chain restrictions and cost inflation played spoilsports in the quarter.
In 2021, the company’s adjusted earnings were $10.48 per share, increasing from the previous year’s figure of $8.04. However, the bottom line lagged the Zacks Consensus estimate of $10.86.
Revenue Details
In the quarter under review, the company’s net sales were $4,068.3 million, reflecting year-over-year growth of 1.6%. The results benefited 6% from acquired assets and 5% from favorable pricing. Foreign-currency translation had an adverse impact of 1%, and lower volume impacted sales by 8% due to logistics issues and supply-chain restrictions.
The company’s top line lagged the Zacks Consensus Estimate of $4,454 million.
It reports net sales under two segments, namely Tools & Storage and Industrial. The segmental information is briefly discussed below:
Revenues from the Tools & Storage segment totaled $3,372.1 million, rising 3.5% year over year. Acquisitions (Excel and MTD) contributed 7% and pricing added 5% to sales growth, while foreign-currency translations lowered sales by 1%. Lower volumes had an adverse impact of 8%.
Revenues from the Industrial segment grossed $609.7 million, decreasing 7.3% year over year. The segment suffered 9% from lower volumes and 1% from forex woes. Effective pricing had positive impact of 3%.
It is worth noting here that Corporate Overhead & Other revenues were $86.5 million, down 0.8% year over year. Also, Stanley Black signed an agreement to divest its Commercial Electronic and Healthcare Security business lines to Securitas AB for $3.2 billion in cash. The to-be divested businesses are recorded as discontinued operations. (For more information, please read: Stanley Black to Divest Security Business to Securitas)
In 2021, the company’s revenues totaled $15.6 billion, reflecting an increase of 19.6% from the previous year. However, the top line lagged the Zacks Consensus Estimate of $17.2 billion.
Margin Profile
In the reported quarter, Stanley Black’s cost of sales (normalized) increased 11.5% year over year to $2,887.6 million. It represented 71% of the quarter’s net sales versus 64.7% in the year-ago quarter. The gross profit (normalized) decreased 16.5% to $1,180.7 million. The gross margin decreased 630 basis points (bps) to 29%. Lower volumes, supply-chain issues and commodity inflation more than offset the positive impact of effective pricing.
Selling, general and administrative expenses increased 11.9% year over year to $814.6 million. It represented 20% of net sales in the reported quarter versus 18.2% in the year-ago quarter. Operating profits (normalized) decreased 46.6% to $366.1 million, whereas the margin declined 820 bps to 9% due to the adverse impacts of supply-chain woes and cost inflation.
The adjusted tax rate in the reported quarter was (31.7%) compared with the year-ago quarter figure of 13.9%.
Balance Sheet and Cash Flow
Exiting the fourth quarter, Stanley Black had cash and cash equivalents of $142.3 million, down 51.4% from $292.7 million at the end of the last reported quarter. The long-term debt balance increased 2.5% sequentially to $4,353.6 million.
Stanley Black generated net cash of $663.1 million from operating activities in 2021, reflecting a year-over-year decrease of 67.2%. Capital and software expenditures totaled $519.1 million compared with $348.1million in the previous year. Free cash flow in the year was $144 million, down 91.4% from the previous year.
During the year, Stanley Black spent $2,043.8 million net of cash acquired on business buyouts. It paid out dividends worth $474.8 million to its shareholders in 2021, up 10% from the previous year. Purchases of common stock for treasury totaled $34.3 million, up from $26.2 million in 2020.
Outlook
For 2022, Stanley Black anticipates adjusted earnings per share of $12.00-$12.50, suggesting year-over-year growth of 15-19%. Organic sales are expected to be up 7-8% year over year. Also, the company intends on repurchasing shares worth $4 billion in the year (including $2-$2.5 billion for the first quarter). Free cash flow is expected to be $2 billion.
It also noted that effective pricing, with a positive impact of 6-7%, will negate the effects of carryover headwinds. This is expected to boost earnings by $1.20-$1.30 per share. The net impact of growth investments and cost inflation is expected to hurt earnings by 20 cents. Acquisitive benefits are expected to boost earnings by 60 cents.
Share buybacks, net of multiple adjustments including tax rate, are anticipated to boost earnings by 10 cents.
Stanley Black & Decker, Inc. Price, Consensus and EPS Surprise
The company reported better-than-expected results in the last four quarters, with an average earnings surprise of 20.07%. In the past 60 days, the Zacks Consensus Estimate for Xylem’s fourth-quarter earnings has been revised down 1.6%.
Colfax Corporation is slated to release fourth-quarter results on Feb 22, before market open. It presently carries a Zacks Rank #4 (Sell).
In the last four quarters, the company recorded better-than-expected results in three and in-line results in one. It pulled off a trailing four-quarter earnings surprise of 5.64%, on average. The Zacks Consensus Estimate for CFX’s fourth-quarter earnings has been increased by 1.8% in the past 60 days.
Illinois Tool Works Inc. (ITW - Free Report) presently carries a Zacks Rank #3. The company is slated to report fourth-quarter 2021 results on Feb 3, before market open.
The company reported better-than-expected results in three of the last four quarters and laggedin one. The earnings beat for the quarters is 7.68%, on average. The Zacks Consensus Estimate for ITW’s fourth-quarter earnings has increased 0.5% in the past 60 days.
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Stanley Black (SWK) Q4 Earnings Beat, Down Y/Y on Supply Woes
Stanley Black & Decker, Inc. (SWK - Free Report) has reported mixed fourth-quarter 2021 results. The company’s earnings surpassed the Zacks Consensus Estimate by 3.88%, whereas sales lagged the same by 8.7%.
In the reported quarter, the company’s adjusted earnings were $2.14 per share, surpassing the Zacks Consensus Estimate of $2.06. The bottom line decreased 29.1% from the year-ago quarter’s figure of $3.02. Lower volumes, forex woes, supply-chain restrictions and cost inflation played spoilsports in the quarter.
In 2021, the company’s adjusted earnings were $10.48 per share, increasing from the previous year’s figure of $8.04. However, the bottom line lagged the Zacks Consensus estimate of $10.86.
Revenue Details
In the quarter under review, the company’s net sales were $4,068.3 million, reflecting year-over-year growth of 1.6%. The results benefited 6% from acquired assets and 5% from favorable pricing. Foreign-currency translation had an adverse impact of 1%, and lower volume impacted sales by 8% due to logistics issues and supply-chain restrictions.
The company’s top line lagged the Zacks Consensus Estimate of $4,454 million.
It reports net sales under two segments, namely Tools & Storage and Industrial. The segmental information is briefly discussed below:
Revenues from the Tools & Storage segment totaled $3,372.1 million, rising 3.5% year over year. Acquisitions (Excel and MTD) contributed 7% and pricing added 5% to sales growth, while foreign-currency translations lowered sales by 1%. Lower volumes had an adverse impact of 8%.
Revenues from the Industrial segment grossed $609.7 million, decreasing 7.3% year over year. The segment suffered 9% from lower volumes and 1% from forex woes. Effective pricing had positive impact of 3%.
It is worth noting here that Corporate Overhead & Other revenues were $86.5 million, down 0.8% year over year. Also, Stanley Black signed an agreement to divest its Commercial Electronic and Healthcare Security business lines to Securitas AB for $3.2 billion in cash. The to-be divested businesses are recorded as discontinued operations. (For more information, please read: Stanley Black to Divest Security Business to Securitas)
In 2021, the company’s revenues totaled $15.6 billion, reflecting an increase of 19.6% from the previous year. However, the top line lagged the Zacks Consensus Estimate of $17.2 billion.
Margin Profile
In the reported quarter, Stanley Black’s cost of sales (normalized) increased 11.5% year over year to $2,887.6 million. It represented 71% of the quarter’s net sales versus 64.7% in the year-ago quarter. The gross profit (normalized) decreased 16.5% to $1,180.7 million. The gross margin decreased 630 basis points (bps) to 29%. Lower volumes, supply-chain issues and commodity inflation more than offset the positive impact of effective pricing.
Selling, general and administrative expenses increased 11.9% year over year to $814.6 million. It represented 20% of net sales in the reported quarter versus 18.2% in the year-ago quarter. Operating profits (normalized) decreased 46.6% to $366.1 million, whereas the margin declined 820 bps to 9% due to the adverse impacts of supply-chain woes and cost inflation.
The adjusted tax rate in the reported quarter was (31.7%) compared with the year-ago quarter figure of 13.9%.
Balance Sheet and Cash Flow
Exiting the fourth quarter, Stanley Black had cash and cash equivalents of $142.3 million, down 51.4% from $292.7 million at the end of the last reported quarter. The long-term debt balance increased 2.5% sequentially to $4,353.6 million.
Stanley Black generated net cash of $663.1 million from operating activities in 2021, reflecting a year-over-year decrease of 67.2%. Capital and software expenditures totaled $519.1 million compared with $348.1million in the previous year. Free cash flow in the year was $144 million, down 91.4% from the previous year.
During the year, Stanley Black spent $2,043.8 million net of cash acquired on business buyouts. It paid out dividends worth $474.8 million to its shareholders in 2021, up 10% from the previous year. Purchases of common stock for treasury totaled $34.3 million, up from $26.2 million in 2020.
Outlook
For 2022, Stanley Black anticipates adjusted earnings per share of $12.00-$12.50, suggesting year-over-year growth of 15-19%. Organic sales are expected to be up 7-8% year over year. Also, the company intends on repurchasing shares worth $4 billion in the year (including $2-$2.5 billion for the first quarter). Free cash flow is expected to be $2 billion.
It also noted that effective pricing, with a positive impact of 6-7%, will negate the effects of carryover headwinds. This is expected to boost earnings by $1.20-$1.30 per share. The net impact of growth investments and cost inflation is expected to hurt earnings by 20 cents. Acquisitive benefits are expected to boost earnings by 60 cents.
Share buybacks, net of multiple adjustments including tax rate, are anticipated to boost earnings by 10 cents.
Stanley Black & Decker, Inc. Price, Consensus and EPS Surprise
Stanley Black & Decker, Inc. price-consensus-eps-surprise-chart | Stanley Black & Decker, Inc. Quote
Zacks Rank & Other Important Earnings Releases
With a market capitalization of $28 billion, Stanley Black currently carries a Zacks Rank #3 (Hold).
Three other companies from the Zacks Industrial Products sector to soon report results are discussed below:
Xylem Inc. (XYL - Free Report) will release fourth-quarter results on Feb 3, before market open. It presently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The company reported better-than-expected results in the last four quarters, with an average earnings surprise of 20.07%. In the past 60 days, the Zacks Consensus Estimate for Xylem’s fourth-quarter earnings has been revised down 1.6%.
Colfax Corporation is slated to release fourth-quarter results on Feb 22, before market open. It presently carries a Zacks Rank #4 (Sell).
In the last four quarters, the company recorded better-than-expected results in three and in-line results in one. It pulled off a trailing four-quarter earnings surprise of 5.64%, on average. The Zacks Consensus Estimate for CFX’s fourth-quarter earnings has been increased by 1.8% in the past 60 days.
Illinois Tool Works Inc. (ITW - Free Report) presently carries a Zacks Rank #3. The company is slated to report fourth-quarter 2021 results on Feb 3, before market open.
The company reported better-than-expected results in three of the last four quarters and laggedin one. The earnings beat for the quarters is 7.68%, on average. The Zacks Consensus Estimate for ITW’s fourth-quarter earnings has increased 0.5% in the past 60 days.