Also Provides Profit Indications for Security Solutions Segment
NEW BRITAIN, Conn., May 6 /PRNewswire-FirstCall/ -- At its analyst
conference in New York City today, James M. Loree, Executive Vice President &
Chief Financial Officer of The Stanley Works (NYSE: SWK), is updating second
quarter and full year 2005 earnings guidance. Mr. Loree is reiterating
estimates provided on April 27:
-- Full-year 2005 total sales growth of 8-10% and organic sales growth of
4-6%.
-- Full year 2005 earnings of $3.20-$3.30 per fully diluted share, an
increase of 12-16% over $2.85 earned in 2004 from continuing
operations.
-- A tax rate of approximately 27% for the year. Free cash flow of $300
million in 2005.
-- Second quarter sales growth consistent with rates indicated for the
full year.
-- Second quarter reported earnings of 72-76 cents per fully-diluted
share, versus 70 cents per fully-diluted share from continuing
operations in the second quarter of 2004.
-- Second quarter earnings of 75-79 cents per fully diluted share,
excluding 3 cents per fully-diluted share of acquisition integration
costs to be incurred in the second quarter.
-- A tax rate of approximately 29% in the quarter.
In addition, Mr. Loree and Christopher Eppel, Chief Financial Officer of
Stanley Security Solutions, confirmed that such second quarter estimates
anticipate a second quarter operating margin of approximately 15% in the
Security Solutions segment excluding approximately 100bps dilution related to
the acquisition integration costs. Accordingly, Mr. Loree and Mr. Eppel
reiterated that the company expects to report approximately 14% operating
margin for the Security Solutions segment.
Finally, Mr. Eppel indicated that operating margins in the Security
Solutions segment are expected to approximate 15% in the second half 2005 and
17% in 2006.
Earnings guidance for the second quarter of 2005 reflects the Security
Solutions segment operating margin percentage of sales and consolidated
diluted earnings per share both with and without expected acquisition
integration costs, as this information is considered useful for understanding
underlying business performance. 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 this press release including but not limited to those
regarding the company's ability to (i) achieve full year 2005 total sales
growth of 8-10% and organic sales growth of 4-6%; (ii) achieve full year 2005
earnings of $3.20-$3.30 per fully diluted share, an increase of 12-16% over
$2.85 earned in 2004 from continuing operations; (iii) achieve a tax rate of
approximately 27% for the year; (iv) generate free cash flow of $300 million
in 2005; (v) achieve second quarter sales growth consistent with rates
indicated for the full year; (vi) achieve second quarter reported earnings of
72-76 cents per fully-diluted share, versus 70 cents per fully-diluted share
from continuing operations in the second quarter of 2004; (vii) achieve second
quarter earnings of 75-79 cents per fully diluted share, excluding 3 cents per
fully-diluted share of acquisition integration costs to be incurred in the
second quarter; (viii) achieve a tax rate of approximately 29% in the quarter;
(ix) achieve a second quarter operating margin of approximately 15% in the
Security Solutions segment excluding approximately 100bps dilution related to
the acquisition integration costs and, accordingly, report approximately 14%
operating margin for the Security Solutions segment; and (x) achieve operating
margins in the Security Solutions segment of approximately 15% in the second
half of 2005 and 17% in 2006 are forward looking and inherently 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.
The company's ability to deliver the Results is dependent upon (i) the
success of the company in identifying, negotiating and closing future
acquisitions and integrating its recent (as well as future) acquisitions; (ii)
the success of the company's efforts to raise prices in order to, among other
things, offset the impact of steel and other commodity and material price
inflation; (iii) the need to respond to significant changes in product demand
due to economic and other changes; (iv) continued improvements in productivity
and cost reductions; (v) the final geographic distribution of future earnings;
(vi) the identification of overhead cost reduction opportunities and effective
execution of the same; (vii) the company's favorable settlement of routine tax
audits; (viii) the company's ability to successfully limit the costs incurred
in order to repatriate certain cash pursuant to the American Jobs Creation Act
of 2004 and the result of new legislative guidance that may be issued with
respect to the same; and (ix) 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 fulfill increasing demand
for its products; (vi) the ability to continue successfully managing and
defending claims and litigation; and (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.
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 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
Company News On-Call:
http://www.prnewswire.com/comp/874363.html
CONTACT:
Gerry Gould, V. P. - Investor Relations of
The Stanley Works, +1-860-827-3833, ggould@stanleyworks.com
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