Upcoming AWS Coverage on Timken Post-Earnings Results

LONDON, UK / ACCESSWIRE / February 9, 2017 / Active Wall St. announces its post-earnings coverage on Stanley Black & Decker, Inc. (NYSE: SWK). The Company reported its fourth quarter and fiscal year 2016 results on January 26, 2017. The tool Company's sales grew 3% on a y-o-y basis. Register with us now for your free membership at:

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One of Stanley Black & Decker's competitors within the Machine Tools & Accessories space, The Timken Co. (NYSE: TKR), announced on January 19, 2017, that it will release its 2016 Q4 and full-year financial results on Thursday, February 09, prior to the opening of the NYSE. The Company will host a conference call that day to discuss its financial performance with investors and securities analysts. AWS will be initiating a research report on Timken in the coming days.

Today, AWS is promoting its earnings coverage on SWK; touching on TKR. Get our free coverage by signing up to:

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Earnings Reviewed

For the three months ended December 31, 2016, Stanley Black & Decker reported net sales of $2.92 billion, up 3% versus prior year, as positive volume grew 3% and price improvement of 1% more than offset currency (-1%). The Company's FY16 revenues totaled $11.4 billion, up 2% on a y-o-y basis, as 4% organic growth was partially offset by a 2% currency impact.

For Q4 2016, Stanley Black & Decker's gross margin was 36.9%, up 130 basis points from the prior year as price, productivity, cost actions, and commodity deflation more than offset unfavorable currency. The Company's operating margin was 13.5% in Q4 2016 compared to 14.2% in Q4 2015 as operational actions to improve profitability were more than offset by approximately $40 million of unfavorable currency and higher growth investments.

Stanley Black & Decker reported net income of $255.5 million, or $1.71 a share, for Q4 2016 down from $265.5 million, or $1.77 a share, in the year earlier same quarter. The Company reported restructuring charges for Q4 2016 were $21.7 million compared to $3.7 million in Q4 2015. Stanley Black & Decker's FY16 diluted GAAP EPS was $6.51, up 10% from FY15 as strong operational performance more than offset approximately $155 million of currency headwinds.

Analysts were forecasting earnings of $1.68 per share on $2.93 billion in revenue for Q4 2016.

Segment Results

During Q4 2016, Tools & Storage net sales increased 6% y-o-y to $1.93 billion as volume gain of 6% and price 1% more than offset unfavorable currency impact of -1%. The segment?s North American region reported organic growth of 8%, while Europe reported organic growth of 4% and emerging markets grew 7%. For Q4 2016, Tools & Storage segment's profit rate was 16.2% compared to Q4 2015 rate of 16.6%, as currency, mix, and growth investments more than offset the favorable benefits of volume leverage, price, productivity, and cost management.

Stanley Black & Decker's Q4 2016 Security segment's net sales decreased 1% versus Q4 2015 to $533 million as price gains and growth from small bolt-on electronic acquisitions were more than offset by lower volumes and currency. The segment's organic revenue declined 1% in Europe. The segment's North America's organic revenues were flat as higher volumes in the automatic doors business offset lower commercial electronic volumes. Overall Security segment's profit rate was 13.1% in Q4 2016, up 30 basis points from the prior year, reflecting benefits from a more disciplined assessment of new commercial opportunities, improved field productivity, and cost actions.

During Q4 2016, the Company's Industrial segment's net sales totaled $454 million, down 5% versus Q4 2015 due to lower volumes, price and currency. Infrastructure organic revenues decreased 12% as a decline in Oil & Gas, reflecting fewer off-shore pipeline projects, more than offset higher Hydraulic Tools volumes. Overall Industrial segment's profit rate was 15.2%, down 270 basis points from Q4 2015 as lower volumes and currency more than offset productivity gains and cost control actions.

Recent M&A

On October 12, 2016, Stanley Black & Decker acquired the tools business of Newell Brands for $1.95 billion in cash. The acquisition is now expected to be approximately $0.25 accretive to EPS in year one post-closing, excluding approximately $125 million to $140 million of restructuring and other deal related costs and approximately $40 million of non-cash inventory step-up charge. The transaction, which has received antitrust clearance under the Hart-Scott-Rodino Act in the US, is expected to close during Q1 2017.

On December 21, 2016, the Company announced the $725 million agreement to sell the majority of its Mechanical Security businesses to dormakaba. The sale includes the commercial hardware brands of BEST Access, phi Precision, and GMT. The Company expects FY17 earnings per share impact from this transaction to be approximately $0.15-$0.20 dilutive. This transaction is expected to close in Q1 2017.

On January 05, 2017 Stanley Black & Decker announced that it will purchase the Craftsman brand from Sears Holdings. The agreement consists of a $525 million cash payment at closing, $250 million at end of year three, and annual payments to Sears Holdings of between 2.5% and 3.5% on new Stanley Black & Decker sales of Craftsman products through year 15. The transaction is expected to be accretive to earnings, excluding charges, by approximately $0.10-$0.15 per share in year one, increasing to approximately $0.35-$0.45 by year five and to approximately $0.70-$0.80 by year ten. This transaction is expected to close during FY17.

Cash Flow & Balance Sheet

Stanley Black & Decker generated $1.14 billion in FY16, with a record 10.6 working capital turns, for a free cash flow conversion rate of 118% of net income. The Company had cash and cash equivalents of $1.13 billion as on December 31, 2016, up from $465.4 million as on January 02, 2016.

Outlook

For FY17, Stanley Black & Decker is forecasting for earnings in the range of $6.85?$7.05 per share, up 7% at the mid-point versus prior year. Organic revenue growth is predicted to be above-market at approximately 4%. The Company predicts commodity inflation in the range of $50 million?$55 million and FOREX headwinds to be $50 million. Free cash flow conversion is expected to be 100%.

Stock Performance

At the close of trading session on Wednesday, February 08, 2017, Stanley Black & Decker's stock price was marginally up 0.02% to end the day at $122.14. A total volume of 657.72 thousand shares were exchanged during the session. The Company's share price has rallied 4.66% in the past three months and 6.50% on YTD basis. The Company's shares are trading at a PE ratio of 18.74 and have a dividend yield of 1.90%. The stock currently has a market cap of $18.23 billion.

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