Stanley Black & Decker Q3 Profit Tops View; Slashes 2013 Outlook, Shares Plunge

(RTTNews) - Tool maker Stanley Black & Decker, Inc. (SWK) reported Wednesday a profit for the third quarter that surged 44 percent from last year, reflecting lower restructuring charges and a 10 percent revenue growth. Adjusted earnings per share topped analysts' expectations by a penny, while sales missed their estimates.

The company's shares are plunging nearly 15 percent in early deals after it slashed earning outlook for the full-year 2013, citing slower margin rate recovery within its security unit, weakening emerging markets and the impact of the U.S. government shutdown on organic growth.

"We continue to make significant progress driving organic growth throughout the organization. Our focused organic growth initiatives have resulted in a strong third quarter performance and maintained the momentum we achieved in the second quarter," Chairman and CEO John Lundgren said in a statement.

The New Britain, Connecticut-based company reported net earnings of $166.0 million or $1.04 per share for the third quarter, higher than $115.2 million or $0.69 per share in the prior-year quarter.

Net earnings from continuing operations grew to $169.9 million or $1.07 per share from $90.2 million or $0.54 per share in the year-ago quarter.

Excluding merger and acquisition-related and other charges, normalized earnings from continuing operations were $221.2 million or $1.39 per share, compared to last year's $202.9 million or $1.07 per share.

On average, 14 analysts polled by Thomson Reuters expected the company to earn $1.38 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter rose 10 percent to $2.76 billion from $2.52 billion in the same quarter last year, but missed thirteen Wall Street analysts' consensus estimate of $2.82 billion. Organic revenues grew 4 percent.

The sales growth for the quarter was attributable to 5 percent volume growth, and 7 percent contribution from acquisitions, partially offset by 1 percent price decline and 1 percent negative currency effect.

"Growth was robust across the portfolio with our CDIY and Industrial segments posting another strong organic growth quarter, and with the exception of Europe, Security also achieved solid, mid-single digit organic growth," Lundgren noted.

Construction & DIY net sales grew 5 percent to $1.39 billion, industrial net sales increased 25 percent to $771.4 million and security net sales improved 3 percent to $600.4 million from last year.

The company incurred restructuring charges of $28.5 million in the third quarter, lower than $52.9 million in the prior-year quarter.

Looking ahead to fiscal 2013, the company slashed its adjusted earnings guidance to a range of $4.90 to $5.00 per share from the previous forecast of $5.40 to $5.65 per share. Street is currently looking for full-year 2013 earnings of $5.44 per share.

"Progress from our organic growth initiatives combined with the overall strength and diversity of our portfolio and underlying strategic framework position us well to deliver on our previously stated long-term financial objectives," Lundgren added.

The company noted that it sees conditions in 2014 that support its long-term 4 to 6 percent organic growth expectations and 2014 adjusted earnings per share growth in a range of 7 to 9 percent.

In Wednesday's regular trading session, SWK is currently trading at $76.35, down $13.22 or 14.77 percent on a volume of 1.49 million shares.