Stanley Works 2Q Earnings Down 11% On Debt Gain

Stanley Works' (SWK) second-quarter earnings fell 11% as a debt-repurchase gain masked the tool maker's slumping sales, though its security business remained a bright spot as it continued to benefit from acquisitions.

The company also lowered its 2009 shipments forecast by 5 percentage points, now predicting volume will drop 18% to 20%. Stanley Works, which unveiled a $100 million cost-cutting initiative when it released first-quarter results in April, is trying to combat steep volume declines in the face of stalled manufacturing projects and consumer cutbacks.

The company - with such tools brands as Stanley, Mac Tools, Bostich and Husky - has thus far found enough savings to announce earlier this week it would raise its quarterly dividend by a penny to 33 cents.

Stanley Works reported earnings of $69.5 million, or 87 centsa share, down from $78.1 million, or 99 cents a share, a year earlier. Results from the most recent period include a 34-cents debt-repurchase gain.11

Revenue dropped 20% to $919.2 million with volume down 24%.

Analysts polled by Thomson Reuters forecast per-share earnings of 54 cents on revenue of $979 million.

Gross margin rose to 39.9% from 38.3% as higher prices, lower materials costs and increased sales in its security segment more than offset the volume drop.

Revenue from the consumer do-it-yourself business fell 28%, pushing profit down 45%. But sales trends have begun to show some signs of improvement, the company said. Industrial revenue fell 40% and profit declined 56% as volume tumbled 39%.

But revenue in the security segment rose 8%, though organic revenue fell by the same amount. Earnings climbed 13%.

Shares closed Tuesday at $38.03 and were inactive premarket. The stock is up 12% this year.

 
   -By Melissa Korn and Tess Stynes, Dow Jones Newswires; [e-mail]