Stanley Also Reiterates 1Q and FY07 Earnings Guidance
NEW BRITAIN, Conn., March 8 /PRNewswire-FirstCall/ -- At its Investor
Day in New York City today, John F. Lundgren, Chairman and Chief Executive
Officer, and the management team of The Stanley Works updated investors and
analysts on the company's growth strategies and key profit-enhancing
initiatives. Among the points emphasized were the following:
* The company's recent portfolio transition has yielded a diversified
portfolio of primarily industrial and commercial businesses that is much
less dependent upon large U.S. retailers than just five years ago. For
the first time since 1996, no single customer is expected to represent
10% of consolidated sales in 2007 or thereafter. Further, 2007 aggregate
sales to U.S. home centers and mass merchants are projected to be
approximately 18% of consolidated sales versus 40% just five years ago.
* The company's highest priorities include the continuation of its 130-
year history of paying cash dividends, the maintenance of upper-tier
investment grade debt ratings and the utilization of free cash flow
after dividends for strategic acquisitions and opportunistic repurchases
of Stanley shares.
* Management reported that major initiatives including the integrations of
recently acquired businesses and profit-improvement plans in its
fastening systems business were progressing as expected.
Mr. Lundgren commented: "Today a very capable and experienced
management team updated Wall Street analysts and investors on the exciting
growth and cost reduction initiatives that represent the heart of their
day-to-day efforts. Along with a solid long-term strategy, brand and new
product vitality and continued execution, the future is bright for the
company and its investors."
James M. Loree, Executive Vice President & Chief Financial Officer of
The Stanley Works (NYSE: SWK), updated first quarter and full year 2007
earnings guidance. Mr. Loree reiterated estimates provided on January 25,
2007:
* Full-year 2007 total sales growth of approximately 8% and organic sales
growth of approximately 2%.
* Full year 2007 earnings of $4.00-$4.10 per diluted share, an increase of
15-18% over $3.47 earned in 2006 from continuing operations.
* A tax rate in the 25%-27% range for the year.
* Free cash flow of $400-$450 million in 2007.
* First quarter sales growth of 7-8% and organic sales growth of 1-2%.
* First quarter reported earnings of approximately $0.80 per diluted
share, up 78% on continuing operations, including $0.06 of restructuring
related charges and $0.06 of non-cash amortization expenses related to
acquired HSM monitoring contracts.
* A tax rate of approximately 26-28% in the quarter.
Mr. Loree reiterated the company's long-term objectives: 3-5% organic
annual sales growth, 8-12% total annual sales growth, mid-teens percentage
annual EPS growth, free cash flow in excess of net income and return on
capital employed (ROCE) in the 12-15% range.
Free cash flow is defined as cash flow from operations less capital
investments; the company believes this is an important measure of its
liquidity, as well as its ability to fund future growth and to provide a
return to the shareowners.
The Stanley Works, an S&P 500 company, is a worldwide supplier of
consumer products, industrial tools and security solutions for
professional, industrial and consumer use. More information about The
Stanley Works can be found at http://www.stanleyworks.com.
The Stanley Works corporate press releases are available on the
company's Internet web site at http://www.stanleyworks.com.
CAUTIONARY STATEMENTS
Under the Private Securities Litigation Reform Act of 1995
Statements in the Company's press release attached to this Current
Report on Form 8-K, including but not limited to those regarding the
Company's ability to: (i) deliver 2007 earnings of $4.00 - $4.10 per
diluted share; (ii) deliver 2007 total sales growth of approximately 8% and
organic growth of approximately 2%; (iii) limit 2007 taxes to a rate of
25-27% (iv) deliver free cash flow of $400 - $450 million in 2007; (v)
deliver first quarter total sales growth of 7-8% with organic sales growth
of 1-2%; (vi) deliver first quarter reported earnings of approximately 80
cents per diluted share; (vii) limit first quarter restructuring related
charges to 6 cents, (viii) limit first quarter non-cash amortization
expense related to acquired HSM monitoring contracts to 6 cents (ix) limit
the income tax rate applicable in the first quarter to 26-28% and (x) in
the long term, to deliver 3-5% organic annual sales growth, 8-12% total
annual sales growth, mid-teens percentage annual EPS growth, free cash flow
in excess of net income, and return on capital employed (ROCE) in the
12-15% range are "forward looking statements" and subject to risk and
uncertainty.
The Company's ability to deliver the results as described above (the
"Results") is based on current expectations and involves inherent risks and
uncertainties, including factors listed below and other factors that could
delay, divert, or change any of them, and could cause actual outcomes and
results to differ materially from current expectations. In addition to the
risks, uncertainties and other factors discussed in this press release, the
risks, uncertainties and other factors that could cause or contribute to
actual results differing materially from those expressed or implied in the
forward looking statements include, without limitation, those set forth
under Item 1A Risk Factors of the Company's Annual Report on Form 10-K and
any material changes thereto set forth in any subsequent Quarterly Reports
on Form 10-Q, those contained in the Company's other filings with the
Securities and Exchange Commission, and those set forth below.
The Company's ability to deliver the Results is dependent upon: (i) the
Company's ability to successfully integrate the Facom, National, HSM and
other recent acquisitions, as well as future acquisitions, while limiting
associated costs; (ii) the Company's ability to deliver profit improvement
in its Fastening Systems business; (iii) the success of the Company's
efforts to negotiate severance arrangements and lease terminations related
to its European reorganization within established parameters; (iv) the
Company's ability to minimize the costs to relocate equipment and
inventory; (v) the Company's ability to complete the Fastening and European
reorganizations within anticipated time frames; (vi) the Company's ability
to continue making strategic acquisitions; (vii) the Company's ability to
reduce large customer concentrations; (viii) the success of the Company's
effort to build a growth platform and market leadership in Security
Solutions; (ix) the success of the Company's efforts to identify and
develop new markets for Security Solutions; (x) the Company's ability to
expand the branded tools and hardware platform; (xi) the Company's success
at new product development and introduction and identifying and developing
new markets; (xii) the Company's success in continuing to increase brand
support and roll out of the Stanley Fulfillment System; (xiii) the success
of the Company's efforts to manage freight costs, steel and other commodity
costs; (xiv) the success of the Company's efforts to sustain or increase
prices in order to, among other things, offset or mitigate the impact of
steel, freight, energy, non-ferrous commodity and other commodities costs
and other inflation increases; (xv) the Company's ability to generate free
cash flow and maintain a strong debt to capital ratio; (xvi) the Company's
ability to identify and effectively execute productivity improvements and
cost reductions while minimizing any associated restructuring charges;
(xvii) the Company's ability to obtain favorable settlement of routine tax
audits; (xviii) the ability of the Company to generate earnings sufficient
to realize future income tax benefits during periods when temporary
differences become deductible; (xix) the continued ability of the Company
to access credit markets under satisfactory terms; and (xx) the Company's
ability to negotiate satisfactory payment terms under which the Company
buys and sells goods, materials and products.
The Company's ability to deliver the results is also dependent upon:
(i) the continued success of the Company's marketing and sales efforts,
including the Company's ability to recruit and retain an adequate sales
force; (ii) the continued success of The Home Depot, Lowe's and Wal-Mart
sales initiatives as well as other programs to stimulate demand for Company
products; (iii) the success of recruiting programs and other efforts to
maintain or expand overall Mac Tools truck count versus prior years; (iv)
the ability of the sales force to adapt to changes made in the sales
organization and achieve adequate customer coverage; (v) the ability of the
Company to maintain or improve production rates in the Company's
manufacturing facilities, respond to significant changes in product demand
and fulfill demand for new and existing products; (vi) the ability to
continue successfully managing and defending claims and litigation; (vii)
the absence or mitigation of increased pricing pressures from customers and
competitors and the ability to defend market share in the face of price
competition; (viii) the Company's ability to continue improvements in
working capital, including inventory reductions and payment terms; (ix) the
success of the Company's efforts to mitigate any cost increases generated
by, for example, continued increase in the cost of energy or significant
Chinese Renminbi or other currency appreciation; and (x) the geographic
distribution of the Company's earnings.
The Company's ability to achieve the results will also be affected by
external factors. These external factors include pricing pressure and other
changes within competitive markets, the continued consolidation of
customers particularly in consumer channels, inventory management pressures
on the Company's customers, increasing competition, changes in trade,
monetary, tax and fiscal policies and laws, inflation, currency exchange
fluctuations, the impact of dollar/foreign currency exchange and interest
rates on the competitiveness of products and the Company's debt program,
the strength of the U.S. economy and the impact of events that cause or may
cause disruption in the Company's manufacturing, distribution and sales
networks such as war, terrorist activities, political unrest and
recessionary or expansive trends in the economies of the world in which the
Company operates.
The Company undertakes no obligation to publicly update or revise any
forward-looking statements to reflect events or circumstances that may
arise after the date hereof.
SOURCE The Stanley Works
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Related links:
http://www.StanleyWorks.com/
http://www.prnewswire.com/comp/874363.html/
CONTACT:
Gerry Gould, V. P. - Investor Relations,
+1-860-827-3833, or ggould@stanleyworks.com
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