NEW BRITAIN, Conn.--(BUSINESS WIRE)--Jul 25, 2014--Stanley Black & Decker (NYSE: SWK) today announced second quarter 2014 financial results.
2Q’14 Key Points:
•Net sales for the period were $2.9 billion, up 1% versus the prior year, primarily attributable to price (+1%) as volume, acquisitions and currency were all relatively flat for the quarter. Organic growth was negatively impacted by unusually weak emerging markets due to economic and political circumstances as well as a delayed and shortened CDIY North American outdoor product season. These factors muted organic growth by two points.
•The gross margin rate for the quarter was 36.5%. Excluding charges the gross margin rate was also 36.5%, up 100 basis points from the prior year rate of 35.5%, as price, productivity and cost actions more than offset significant unfavorable currency.
•SG&A expenses were 23.0% of sales. Excluding charges, SG&A expenses were 22.8% of sales, compared to a 2Q’13 level of 22.9%.
•Operating margin rate was 13.5%. Excluding charges, operating margin rate was 13.7%, up 110 basis points from 2Q’13, as actions taken in 4Q’13 to improve profitability and generate operating leverage more than offset unfavorable currency of $20 million which was in line with expectations.
•The tax rate was 25.1%. Excluding charges, the tax rate was 23.0%, 170 basis points lower than the 2Q’13 rate of 24.7% due primarily to a higher level of earnings in lower-taxed foreign jurisdictions.
•Working capital turns for the quarter were 6.7, down 0.4 turns from 2Q’13. Free cash flow for the quarter inclusive of $35 million of one-time payments was $376 million, a $272 million increase over 2Q’13.
Stanley Black & Decker’s Chairman and CEO, John F. Lundgren, commented, “Our focus is on executing our 2014 operating priorities and our strong second quarter and first half results demonstrate the benefits of initiatives to drive margin expansion and operating leverage through pricing and cost management across the organization. What makes the results even more notable is that we overcame significant headwinds relating to currency, the impact of cold weather on our North American CDIY outdoor product business and a continued volatile environment in the emerging markets. Given our encouraging performance thus far, and our visibility into the remainder of the year, we have the confidence to increase our EPS guidance for 2014.
“Our focus for the balance of 2014 remains on continuing to deliver improved operating performance including both organic growth and margin expansion as well as achieving our previously communicated capital allocation objectives. This will position us well to drive long-term sustainable improvements to the Company’s cash flow return on investment.”