UPDATE: Stanley Black & Decker (SWK) Tops Q4 EPS by 4c, Beats on Revenues; Offers FY18 EPS Mid-Point Guidance Above Consensus

Stanley Black & Decker (NYSE: SWK) reported Q4 EPS of $2.18, $0.04 better than the analyst estimate of $2.14. Revenue for the quarter came in at $3.4 billion versus the consensus estimate of $3.27 billion.

• Full Year Revenues Totaled $12.7 Billion, Up 12% Versus Prior Year, As 7% Organic Growth And 7% Growth From Acquisitions Were Partially Offset By The Sale Of The Mechanical Security Business
• Full Year Operating Margin Rate Was 14.1%; Excluding M&A Related Charges, Full Year Operating Margin Rate Expanded 40 Basis Points To A Record 14.8%
• Full Year Diluted GAAP EPS Was $8.04; Excluding M&A Related Charges, Full Year Diluted EPS Was $7.45, Up 14% Versus Prior Year, Reflecting Strong Operational Performance And Accretive Acquisitions
• 2017 Free Cash Flow Conversion Was Approximately 100%
• 4Q'17 Revenues Totaled $3.4 Billion, Up 17% Versus Prior Year, Including Robust Organic Growth Of 8%
• 4Q'17 Diluted GAAP EPS Was $1.84; Excluding M&A Related Charges, 4Q\'17 Diluted EPS Was $2.18, Up 27% Versus Prior Year
• Signed Agreement To Acquire Nelson Fastener Systems ($200 Million Revenues) For $440 Million
• Expect 2018 Full Year Diluted GAAP EPS Of $7.80 To $8.00; Adjusted EPS Of $8.30 - $8.50, Up 11% - 14% Versus Prior Year; 2018 Free Cash Flow Conversion Expected To Approximate 100%

GUIDANCE:

Stanley Black & Decker sees FY2018 EPS of $8.30-$8.50, versus the consensus of $8.36.

4Q\'17 Key Points:

• Net sales for the quarter were $3.4 billion, up 17% versus prior year, as acquisitions (+9%), volume (+9%) and currency (+3%) more than offset divestitures (-3%) and price (-1%).
• Gross margin rate for the quarter was 36.6%. Excluding charges, the gross margin rate was 36.7% compared to 36.9% in 4Q'16, as volume leverage and productivity were more than offset by the impact from the Mechanical Security business divestiture and continued commodity inflation.
• SG&A expenses were 23.2% of sales. Excluding charges, SG&A expenses were 22.9% of sales, down 50 basis points versus 4Q'16, as tight cost management offset the impact from investments in growth initiatives.
• Operating margin rate was 13.3%. Excluding charges, operating margin rate was 13.8%, a 30 basis point expansion versus 4Q'16.
• Restructuring charges for the quarter were $8.6 million. Excluding M&A related charges, restructuring charges for the quarter were $4.9 million compared to $21.7 million in 4Q'16.
• Tax rate was 17.8%, which reflects a one-time net charge of $23.6 million related to the recently enacted U.S. tax legislation. Excluding M&A related charges and one-time tax charge, tax rate was 9.4%, no change from 4Q'16.
• Average diluted shares outstanding for the quarter were 153.4 million versus 149.4 million a year ago, due primarily to share issuances in 4Q'16 associated with the Company's 2013 Equity Units.
• Working capital turns for the quarter were 8.9, down 1.7 turns from prior year as a result of recent acquisitions. Excluding acquisitions, turns were flat versus prior year.

For earnings history and earnings-related data on Stanley Black & Decker (SWK) click here.

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