Stanley Black & Decker Earnings 2019-09-28

SWK 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Comparables ($MM TTM)
Ticker	M Cap	Assets	Liab	Rev	G Profit	Net Inc	EBITDA	EV	G Margin	EV/EBITDA	ROA
LRCX	29,765	12,001	7,278	9,654	4,358	2,191	2,873	30,364	45%	10.6	18%
CAJ	29,533	4,899,465	1,881,552	0	0	0	0	-126,510			0%
FTV	27,317	16,468	9,456	7,055	3,539	2,697	2,918	32,421	50%	11.1	16%
CMI	26,885	20,254	11,058	24,294	6,270	2,662	3,972	27,688	26%	7.0	13%
HRS	22,830	10,117	6,754	6,801	2,334	681	1,153	25,743	34%	22.3	7%
SWK	21,509	21,524	13,296	14,224	4,804	669	1,728	25,477	34%	14.7	3%
ROK	19,460	6,159	5,002	6,694	2,910	1,034	1,569	20,912	43%	13.3	17%
KEYS	19,020	6,348	3,410	3,183	1,869	312	742	19,416	59%	26.2	5%
GRMN	15,309	5,525	1,374	3,463	2,057	738	875	14,488	59%	16.6	13%
DOV	14,503	8,776		7,092	2,588	603	990	17,128	36%	17.3	7%

Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 28, 2019.

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from [ ] to [ ]

Commission File Number 001-05224

STANLEY BLACK & DECKER, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)



CT		06-0548860
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)		(I.R.S. EMPLOYER IDENTIFICATION NUMBER)

1000 STANLEY DRIVE

NEW BRITAIN, CT 06053

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)

REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE 860 225-5111

Securities registered pursuant to Section 12(b) of the Act:



Title Of Each Class		Trading Symbol	Name Of Each Exchange On Which Registered
Common Stock	- $2.50 Par Value per Share	SWK	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):



Large Accelerated Filer	þ	Accelerated Filer	¨

Non-Accelerated Filer	¨	Smaller Reporting Company	☐

		Emerging Growth Company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

152,011,804 shares of the registrant’s common stock were outstanding as of October 18, 2019.

TABLE OF CONTENTS

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

THREE AND NINE MONTHS ENDED SEPTEMBER 28, 2019 AND SEPTEMBER 29, 2018

(Unaudited, Millions of Dollars, Except Per Share Amounts)



	Third Quarter						Year-to-Date
	2019			2018			2019			2018
Net Sales	$	3,633.1		$	3,494.8		$	10,728.0		$	10,347.7
Costs and Expenses
Cost of sales	$	2,393.6		$	2,256.4		$	7,083.1		$	6,656.5
Selling, general and administrative	752.8			792.9			2,289.6			2,373.5
Provision for doubtful accounts	3.3			6.0			27.7			16.8
Other, net	55.0			59.4			182.6			236.7
(Gain) loss on sales of businesses	—			—			(17.2		)	0.8
Restructuring charges	74.0			21.8			91.2			58.1
Interest expense	72.4			72.1			219.2			204.3
Interest income	(12.7		)	(18.7		)	(41.4		)	(50.1		)
	$	3,338.4		$	3,189.9		$	9,834.8		$	9,496.6
Earnings before income taxes and equity interest	294.7			304.9			893.2			851.1
Income taxes	59.2			56.6			135.5			139.3
Net earnings before equity interest	$	235.5		$	248.3		$	757.7		$	711.8
Share of net (losses) earnings of equity method investment	(4.4		)	—			1.2			—
Net earnings	$	231.1		$	248.3		$	758.9		$	711.8
Less: Net gain (loss) attributable to non-controlling interests	0.6			0.5			2.2			(0.2		)
Net Earnings Attributable to Common Shareowners	$	230.5		$	247.8		$	756.7		$	712.0
Total Comprehensive Income Attributable to Common Shareowners	$	99.6		$	269.0		$	626.1		$	549.9
Earnings per share of common stock:
Basic	$	1.55		$	1.67		$	5.11		$	4.77
Diluted	$	1.53		$	1.65		$	5.03		$	4.68
Dividends per share of common stock	$	0.69		$	0.66		$	2.01		$	1.92
Weighted-average shares outstanding (in thousands):
Basic	148,350			147,964			148,111			149,311
Diluted	150,623			150,599			150,299			152,225

See Notes to (Unaudited) Condensed Consolidated Financial Statements.

Table of Contents

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

SEPTEMBER 28, 2019 AND DECEMBER 29, 2018

(Unaudited, Millions of Dollars, Except Per Share Amounts)



	September 28, 2019			December 29, 2018
ASSETS
Current Assets
Cash and cash equivalents	$	311.7		$	288.7
Accounts and notes receivable, net	1,902.6			1,607.8
Inventories, net	2,743.5			2,373.5
Other current assets	370.2			299.4
Total Current Assets	5,328.0			4,569.4
Property, plant and equipment, net	1,911.9			1,915.2
Goodwill	9,160.0			8,956.7
Intangibles, net	3,653.0			3,484.4
Other assets	1,269.6			482.3
Total Assets	$	21,322.5		$	19,408.0
LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities
Short-term borrowings	$	1,454.9		$	376.1
Current maturities of long-term debt	3.1			2.5
Accounts payable	2,070.3			2,233.2
Accrued expenses	1,913.6			1,389.8
Total Current Liabilities	5,441.9			4,001.6
Long-term debt	3,908.8			3,819.8
Deferred taxes	729.6			705.3
Post-retirement benefits	544.1			595.4
Other liabilities	2,429.9			2,446.0
Commitments and Contingencies (Notes R and S)
Shareowners’ Equity
Stanley Black & Decker, Inc. Shareowners’ Equity
Preferred stock, without par value: Authorized 10,000,000 shares in 2019 and 2018 Issued and outstanding 750,000 shares in 2019 and 2018	750.0			750.0
Common stock, par value $2.50 per share: Authorized 300,000,000 shares in 2019 and 2018 Issued 176,902,738 shares in 2019 and 2018	442.3			442.3
Retained earnings	6,678.1			6,219.0
Additional paid in capital	4,653.3			4,621.0
Accumulated other comprehensive loss	(1,944.9		)	(1,814.3		)
ESOP	(2.3		)	(10.5		)
	10,576.5			10,207.5
Less: cost of common stock in treasury	(2,314.2		)	(2,371.3		)
Stanley Black & Decker, Inc. Shareowners’ Equity	8,262.3			7,836.2
Non-controlling interests	5.9			3.7
Total Shareowners’ Equity	8,268.2			7,839.9
Total Liabilities and Shareowners’ Equity	$	21,322.5		$	19,408.0

See Notes to (Unaudited) Condensed Consolidated Financial Statements.

Table of Contents

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE AND NINE MONTHS ENDED SEPTEMBER 28, 2019 AND SEPTEMBER 29, 2018

(Unaudited, Millions of Dollars)



	Third Quarter						Year-to-Date
	2019			2018			2019			2018
OPERATING ACTIVITIES
Net earnings	$	231.1		$	248.3		$	758.9		$	711.8
Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation and amortization of property, plant and equipment	93.1			85.2			280.8			249.7
Amortization of intangibles	47.8			44.5			139.6			131.3
(Gain) loss on sales of businesses	—			—			(17.2		)	0.8
Share of net losses (earnings) of equity method investment	4.4			—			(1.2		)	—
Changes in working capital	(278.3		)	(287.8		)	(859.2		)	(1,017.1		)
Changes in other assets and liabilities	94.6			101.3			(39.3		)	(36.4		)
Cash provided by operating activities	192.7			191.5			262.4			40.1
INVESTING ACTIVITIES
Capital and software expenditures	(96.7		)	(109.4		)	(283.5		)	(327.4		)
(Payments) proceeds from sales of businesses, net of cash sold	—			(1.1		)	76.7			(3.0		)
Business acquisitions, net of cash acquired	(6.2		)	(15.1		)	(682.2		)	(521.9		)
Purchase of investments	(4.9		)	(5.8		)	(258.6		)	(16.1		)
Net investment hedge settlements	11.3			(5.1		)	15.2			15.2
Other	(3.9		)	2.1			(7.5		)	5.0
Cash used in investing activities	(100.4		)	(134.4		)	(1,139.9		)	(848.2		)
FINANCING ACTIVITIES
Payment on long-term debt	—			—			(400.0		)	—
Proceeds from debt issuance, net of fees	—			—			496.2			—
Stock purchase contract fees	(10.1		)	(10.1		)	(30.3		)	(30.3		)
Net short-term borrowings	28.6			309.5			1,117.9			1,445.1
Premium paid on equity option	—			—			—			(57.3		)
Proceeds from issuances of common stock	21.5			10.2			46.1			32.8
Purchases of common stock for treasury	(2.7		)	(301.8		)	(11.9		)	(514.5		)
Cash dividends on common stock	(102.3		)	(97.4		)	(297.6		)	(286.5		)
Other	(2.4		)	(8.0		)	(9.5		)	(13.5		)
Cash (used in) provided by financing activities	(67.4		)	(97.6		)	910.9			575.8
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(25.4		)	5.8			(20.4		)	(54.1		)
Change in cash, cash equivalents and restricted cash	(0.5		)	(34.7		)	13.0			(286.4		)
Cash, cash equivalents and restricted cash, beginning of period	324.9			403.4			311.4			655.1
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD	$	324.4		$	368.7		$	324.4		$	368.7

The following table provides a reconciliation of the cash, cash equivalents and restricted cash balances as of September 28, 2019 and December 29, 2018, as shown above:



	September 28, 2019		December 29, 2018
Cash and cash equivalents	$	311.7	$	288.7
Restricted cash included in Other current assets	12.7		22.7
Cash, cash equivalents and restricted cash	$	324.4	$	311.4

See Notes to (Unaudited) Condensed Consolidated Financial Statements.

Table of Contents

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY

THREE AND NINE MONTHS ENDED SEPTEMBER 28, 2019

(Unaudited, Millions of Dollars, Except Per Share Amounts)



	Preferred Stock		Common Stock		Additional Paid In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			ESOP			Treasury Stock			Non- Controlling Interests		Shareowners’ Equity
Balance December 29, 2018	$	750.0	$	442.3	$	4,621.0		$	6,219.0		$	(1,814.3	)	$	(10.5	)	$	(2,371.3	)	$	3.7	$	7,839.9
Net earnings	—		—		—			169.9			—			—			—			0.5		170.4
Other comprehensive income	—		—		—			—			1.0			—			—			—		1.0
Cash dividends declared — $0.66 per share	—		—		—			(97.6		)	—			—			—			—		(97.6		)
Issuance of common stock (284,438)	—		—		(15.2		)	—			—			—			25.4			—		10.2
Repurchase of common stock (61,663 shares)	—		—		—			—			—			—			(8.1		)	—		(8.1		)
Stock-based compensation related	—		—		16.7			—			—			—			—			—		16.7
ESOP	—		—		—			—			—			4.2			—			—		4.2
Balance March 30, 2019	$	750.0	$	442.3	$	4,622.5		$	6,291.3		$	(1,813.3	)	$	(6.3	)	$	(2,354.0	)	$	4.2	$	7,936.7
Net earnings	—		—		—			356.3			—			—			—			1.1		357.4
Other comprehensive loss	—		—		—			—			(0.7		)	—			—			—		(0.7		)
Cash dividends declared — $0.66 per share	—		—		—			(97.7		)	—			—			—			—		(97.7		)
Issuance of common stock (191,538)	—		—		(2.8		)	—			—			—			17.2			—		14.4
Repurchase of common stock (7,461 shares)	—		—		—			—			—			—			(1.1		)	—		(1.1		)
Stock-based compensation related	—		—		21.4			—			—			—			—			—		21.4
ESOP	—		—		—			—			—			2.9			—			—		2.9
Balance June 29, 2019	$	750.0	$	442.3	$	4,641.1		$	6,549.9		$	(1,814.0	)	$	(3.4	)	$	(2,337.9	)	$	5.3	$	8,233.3
Net earnings	—		—		—			230.5			—			—			—			0.6		231.1
Other comprehensive loss	—		—		—			—			(130.9		)	—			—			—		(130.9		)
Cash dividends declared — $0.69 per share	—		—		—			(102.3		)	—			—			—			—		(102.3		)
Issuance of common stock (295,328)	—		—		(4.9		)	—			—			—			26.4			—		21.5
Repurchase of common stock (18,315 shares)	—		—		—			—			—			—			(2.7		)	—		(2.7		)
Stock-based compensation related	—		—		17.1			—			—			—			—			—		17.1
ESOP	—		—		—			—			—			1.1			—			—		1.1
Balance September 28, 2019	$	750.0	$	442.3	$	4,653.3		$	6,678.1		$	(1,944.9	)	$	(2.3	)	$	(2,314.2	)	$	5.9	$	8,268.2

See Notes to (Unaudited) Condensed Consolidated Financial Statements.

Table of Contents

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY

THREE AND NINE MONTHS ENDED SEPTEMBER 29, 2018

(Unaudited, Millions of Dollars, Except Per Share Amounts)



	Preferred Stock		Common Stock		Additional Paid In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			ESOP			Treasury Stock			Non- Controlling Interests			Shareowners’ Equity
Balance December 30, 2017	$	750.0	$	442.3	$	4,643.2		$	5,998.7		$	(1,589.1	)	$	(18.8	)	$	(1,924.1	)	$	2.8		$	8,305.0
Net earnings	—		—		—			170.6			—			—			—			(0.5		)	170.1
Other comprehensive income	—		—		—			—			95.8			—			—			—			95.8
Cash dividends declared — $0.63 per share	—		—		—			(94.8		)	—			—			—			—			(94.8		)
Issuance of common stock (325,214)	—		—		(13.0		)	—			—			—			26.1			—			13.1
Repurchase of common stock (69,880 shares)	—		—		—			—			—			—			(11.4		)	—			(11.4		)
Premium paid on equity option	—		—		(57.3		)	—			—			—			—			—			(57.3		)
Non-controlling interest dissolution	—		—		—			—			—			—			—			0.3			0.3
Stock-based compensation related	—		—		17.7			—			—			—			—			—			17.7
ESOP	—		—		—			—			—			3.3			—			—			3.3
Balance March 31, 2018	$	750.0

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$0.00	150	$21,509

10-Q	2019-10-25	Quarter: 2019-09-28
10-Q	2019-07-23	Quarter: 2019-06-29
10-Q	2019-04-26	Quarter: 2019-03-30
10-K	2019-02-26	Annual: 2018-12-29
10-Q	2018-10-26	Quarter: 2018-09-29
10-Q	2018-07-20	Quarter: 2018-06-30
10-Q	2018-04-23	Quarter: 2018-03-31
10-K	2018-02-27	Annual: 2017-12-30
10-Q	2017-10-25	Quarter: 2017-09-30
10-Q	2017-07-25	Quarter: 2017-07-01
10-Q	2017-04-25	Quarter: 2017-04-01
10-K	2017-02-15	Annual: 2016-12-31
10-Q	2016-10-28	Quarter: 2016-10-01
10-Q	2016-07-25	Quarter: 2016-07-02
10-Q	2016-04-22	Quarter: 2016-04-02
10-K	2016-02-19	Annual: 2016-01-02
10-Q	2015-10-27	Quarter: 2015-10-03
10-Q	2015-07-31	Quarter: 2015-07-04
10-Q	2015-04-29	Quarter: 2015-04-04
10-K	2015-02-19	Annual: 2015-01-03
10-Q	2014-10-23	Quarter: 2014-09-27
10-Q	2014-07-31	Quarter: 2014-06-28
10-Q	2014-04-25	Quarter: 2014-03-29
10-K	2014-02-21	Annual: 2013-12-28
10-Q	2013-10-28	Quarter: 2013-09-28
10-Q	2013-07-31	Quarter: 2013-06-29
10-Q	2013-04-26	Quarter: 2013-03-30
10-K	2013-02-20	Annual: 2012-12-29
10-Q	2012-10-29	Quarter: 2012-09-29
10-Q	2012-07-30	Quarter: 2012-06-30
10-Q	2012-05-02	Quarter: 2012-03-31
10-K	2012-02-23	Annual: 2011-12-31
10-Q	2011-11-07	Quarter: 2011-10-01
10-Q	2011-07-27	Quarter: 2011-07-02
10-Q	2011-05-12	Quarter: 2011-04-02
10-K	2011-02-18	Annual: 2011-01-01
10-Q	2010-11-01	Quarter: 2010-10-02
10-Q	2010-07-30	Quarter: 2010-07-03
10-Q	2010-05-13	Quarter: 2010-04-03
10-K	2010-02-22	Annual: 2010-01-02

8-K	2019-11-07	Enter Agreement, Shareholder Rights, Amend Bylaw, Exhibits
8-K	2019-10-24	Earnings, Exhibits
8-K	2019-09-11	Enter Agreement, Leave Agreement, Off-BS Arrangement, Exhibits
8-K	2019-07-23	Earnings, Exhibits
8-K	2019-04-24	Earnings, Exhibits
8-K	2019-04-17
8-K	2019-02-27	Enter Agreement, Off-BS Arrangement, Exhibits
8-K	2019-02-19	Other Events
8-K	2019-02-14	Officers
8-K	2019-01-22	Earnings, Exhibits
8-K	2018-11-06	Enter Agreement, Off-BS Arrangement, Exhibits
8-K	2018-11-05	Enter Agreement, Exhibits
8-K	2018-10-30	Other Events, Exhibits
8-K	2018-10-25	Earnings, Exhibits
8-K	2018-09-12	Enter Agreement, Leave Agreement, Off-BS Arrangement, Exhibits
8-K	2018-07-20	Earnings, Exhibits
8-K	2018-07-17	Officers, Amend Bylaw, Exhibits
8-K	2018-07-09	Other Events
8-K	2018-04-20	Earnings, Exhibits
8-K	2018-04-19
8-K	2018-02-27	Officers
8-K	2018-01-24	Regulation FD, Exhibits
8-K	2018-01-24	Earnings, Exhibits

EX-31.A	ex31a-q32019.htm
EX-31.B	ex31b-q32019.htm
EX-32.I	ex32i-q32019.htm
EX-32.II	ex32ii-q32019.htm




PART I — FINANCIAL INFORMATION	3
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	3
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	37
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	47
ITEM 4. CONTROLS AND PROCEDURES	47
PART II — OTHER INFORMATION	49
ITEM 1. LEGAL PROCEEDINGS	49
ITEM 1A. RISK FACTORS	49
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	49
ITEM 6. EXHIBITS	50
SIGNATURE	51