The Black & Decker Corp., Towson, Md., announced fourth-quarter and full-year 2009 results last week. Net earnings for the fourth quarter of 2009 were $33.9 million or $.55 per diluted share, versus $43.7 million or $.72 per diluted share for the fourth quarter of 2008. Fourth-quarter net earnings reflect $58.8 million of pre-tax expenses related to the proposed merger with The Stanley Works in 2009 and a $20.8 million pre-tax restructuring charge in 2008. Excluding these items, fourth-quarter net earnings per diluted share were $1.24 for 2009, versus $.96 for 2008.

For the full year 2009, net earnings were $132.5 million or $2.17 per diluted share, versus $293.6 million or $4.77 per diluted share for 2008. Excluding expenses related to the proposed merger, as well as pre-tax restructuring charges of $11.9 million in 2009 and $54.7 million in 2008, full-year net earnings per diluted share were $3.01 for 2009, versus $5.41 for 2008.

Sales decreased 6 percent for the quarter to $1.3 billion, including a positive 4 percent impact from foreign currency translation. For the full year, sales decreased 22 percent to $4.8 billion, including a negative 3 percent impact from foreign currency translation. Net cash generation was $584 million for the full year, versus $390 million in 2008.

“Sales in the quarter exceeded our expectations in all three of our business segments. While our end markets generally remain difficult, we benefited from improved economic activity in selected regions and businesses, as well as inventory restocking in some channels,” said Nolan Archibald, chairman and CEO. “Solid operating leverage on the better-than-expected sales, combined with ongoing cost control efforts, produced outstanding results. While 2009 was a very challenging year, we delivered profits well above our initial forecast and very strong net cash generation. As we prepare to merge with The Stanley Works, Black & Decker is well-positioned to take advantage of the economic recovery and to achieve profitable growth."

Archibald said sales in the Power Tools and Accessories segment decreased 11 percent for the quarter while the U.S. Industrial Products Group sales declined approximately 20 percent, reflecting continued weakness in both residential and commercial construction. "Sales decreased at a double-digit rate in the U.S. Consumer Products Group, partly due to timing of orders in the lawn and garden category. In Europe, sales decreased at a high single-digit rate, representing a meaningful improvement from the trend earlier in the year. Sales increased modestly in Latin America and Asia, but decreased at a double-digit rate in Canada. Ongoing cost reductions and component cost deflation enabled the segment to improve its operating margin sharply to 11.3 percent," he said.

“For the full year, sales in the Power Tools and Accessories segment decreased 19 percent. This was driven by declines of approximately 25 percent in the U.S. Industrial Products Group, Europe and Canada. Sales declined at single-digit rates in the U.S. Consumer Products Group and in the rest of the world. Operating margin for the year of 7.4 percent was flat to 2008, as the impact of lower sales volume was offset by cost reduction efforts and favorable pricing," he said.

"Sales in the Hardware and Home Improvement segment decreased 4 percent for the quarter. Lockset sales in the U.S. were nearly flat, reflecting stabilization of demand in most key channels and a comparison to weak results in the prior year. Sales of faucets in the U.S. decreased at a double-digit rate versus the prior year, but were roughly flat to the third quarter. For the full year, sales decreased 15 percent for the segment, with double-digit rates of decline for both locks and faucets. Due to successful cost initiatives and lower commodity prices, operating margin for the segment increased to 11.5 percent for the quarter and 10.2 percent for the full year," he said.

“Costs related to the proposed Stanley merger of $58.8 million include employment-related change-in-control costs triggered by the signing of the merger agreement, as well as legal and advisory fees. The tax rate in the fourth quarter was below the rate assumed in our earnings guidance, due to the geographical mix of earnings and the leveraging effect of improved earnings on the fixed cost components of tax expense. Our earnings in the prior year also benefited from a relatively low tax rate, due to the recognition of several discrete items," he said.

"Net cash generation of $584 million for the full year was significantly better than we expected and nearly $200 million higher than in 2008. Our team worked hard to drive down working capital and exercised discipline over capital spending. This strong cash generation, coupled with the proceeds from option exercises, resulted in net debt of $632 million and cash of nearly $1.1 billion at year-end," he said.

“Looking ahead, we anticipate a modest improvement this year in many of our markets. Our robust new product line-up, including expanded offerings in the lawn and garden and concrete portfolios, will help us take advantage of more favorable economic conditions. However, we remain cautious due to ongoing pressure in some sectors, notably U.S. commercial construction. Overall, we expect a mid single digit sales increase in the first quarter, as we benefit from the comparison to retail inventory adjustments in 2009, and a low single-digit growth rate for the full year, both including favorable currency translation. Our operating margin should improve by at least 200 basis points year-on-year in the first quarter and by approximately 100 to 150 basis points for the full year, excluding merger-related expenses and restructuring charges. Our guidance is on a stand-alone basis, excluding any impact of the proposed Stanley merger. Due to the pending transaction, we are not providing EPS guidance," he said.

Investors can listen to the replay of the fourth-quarter results conference call by visiting www.bdk.com.