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Mar 31, 2020
Stanley Black & Decker Q1 2020 Earnings Report
Stanley Black & Decker reported a decrease in revenue due to COVID-19 impacts, and detailed a $1 billion cost reduction program.
Key Takeaways
Stanley Black & Decker's first quarter results were impacted by COVID-19, leading to a revenue decline of 6%. The company is implementing a cost reduction program expected to deliver $1 billion in annualized savings. Despite the challenges, the company maintains a strong financial position.
Revenues totaled $3.1 billion, a 6% decrease compared to the prior year, with a 7% organic decline primarily due to COVID-19 impacts.
Diluted GAAP EPS was $0.88; excluding charges, diluted EPS was $1.20.
A cost reduction program was announced, expecting $1 billion in annualized savings, with $500 million expected in 2020.
The company expects the second quarter to be the trough for 2020 revenue decline and continues suspension of guidance.
Stanley Black & Decker
Stanley Black & Decker
Stanley Black & Decker Revenue by Segment
Revenue by Segment
Tools & Outdoor Revenue
CapyFin.com Forward Guidance
Stanley Black & Decker anticipates COVID-19 driven demand disruptions to negatively impact 2020 results and has withdrawn its full year guidance. The company expects substantial revenue declines early in the second quarter, which is expected to be the trough quarter for the year.
Positive Outlook
- The company maintains strong investment grade credit ratings.
- The company possesses approximately $1B of cash on-hand as of quarter end.
- The company manages a robust and highly rated commercial paper program ($3B program with $1.7B outstanding as of quarter end).
- The company carries $3 billion of revolving credit facilities backed by a well-capitalized, diversified bank group.
- The company has the ability to generate additional cash proceeds of $750 million in the second quarter upon the successful remarketing of its Series C Convertible Preferred Stock.
Challenges Ahead
- COVID-19 driven demand disruptions are expected to negatively impact 2020 results.
- The company has withdrawn its full year guidance due to the uncertain macro environment.
- The company anticipates substantial revenue declines early in the second quarter.
- The company plans to reduce capital expenditures.
- The company will temporarily suspend acquisition-related activity and share repurchases until the demand outlook is clearer.