(Source: PRNewswire)
TOWSON, Md., April 23 /PRNewswire-FirstCall/ -- Black & Decker Corporation (NYSE: BDK) today announced that net earnings for the first quarter of 2009 were $4.9 million or $.08 per diluted share, versus $67.4 million or $1.08 per diluted share for the first quarter of 2008. First-quarter net earnings reflect pre-tax restructuring charges of $11.9 million for 2009, and $18.3 million for 2008. Excluding these charges in each year, first-quarter net earnings per diluted share were $.22 for 2009, versus $1.28 for 2008. Sales decreased 28% for the quarter to $1.1 billion, including a negative 5% impact from foreign currency translation.
Nolan D. Archibald, Chairman and Chief Executive Officer, commented, "End-market conditions, particularly in Europe and the automotive industry, continued to deteriorate sharply in the first quarter. Therefore, Black & Decker's sales were lower than we had anticipated. As the global economy has contracted over the past year, we have intensified our efforts to reduce costs. These actions helped us to reduce selling, general and administrative expenses 23% this quarter and to offset the effect of lower-than-expected sales.
"Sales in the Power Tools and Accessories segment decreased 23% for the quarter. In the U.S. Industrial Products Group, sales decreased approximately 30% due to lower construction activity and retailer inventory reductions. Sales decreased at a mid single- digit rate in the U.S. Consumer Products Group, primarily due to significant orders for lawn and garden products shipped in late 2008 rather than early 2009. Our European sales decreased nearly 30%, much worse than we anticipated. Economic conditions in the region deteriorated rapidly, especially in Eastern Europe. Sales were flat in Latin America and declined at a double-digit rate in Asia, as economies in these regions slowed. The segment's operating margin decreased to 3.9%, as volume de-leveraging, cost inflation and unfavorable mix were only partly offset by cost reductions.
"Sales in the Hardware and Home Improvement segment decreased 19% for the quarter. In the U.S. lockset business, sales decreased more than 20%, reflecting declines in residential construction and in retail sales for higher-priced products. Sales in the U.S. Price Pfister business decreased at a double-digit rate, due to both the housing downturn and weaker demand at retail. The segment's operating margin decreased to 4.0%, primarily due to lower volume.
"In the Fastening and Assembly Systems segment, sales decreased 34% for the quarter. Sales to the global automotive industry fell nearly 40%, slightly less than the decline in automotive production. Sales were also down sharply in the industrial business, as global manufacturing slowed significantly. The segment's operating margin decreased to 1.9% due to the sharp sales decline.
"Our management team is focused on cash flow and liquidity, and we continue to be well-positioned. Including cash flows from net investment hedging activities, net cash generation was negative $123 million, versus negative $71 million in the first quarter of 2008. Lower earnings drove this comparison, as seasonal working capital requirements were typical for our first quarter. We continue to expect net cash generation in excess of earnings and a reduction in net debt for the full year. After the end of the quarter, we issued $350 million of senior notes due in 2014, further strengthening our liquidity position. The Corporation's dividend will be reviewed next week by our Board of Directors at its regularly scheduled meeting.
"Looking ahead, we expect that the weak demand we saw in the first quarter will continue. We anticipate that sales will decline in the second quarter at a rate similar to the first quarter, including approximately 7 percentage points of unfavorable foreign currency translation. For the full year, we expect a sales decline of approximately 20%, including 5 points of unfavorable currency. As a result of additional cost reductions, including restructuring savings and salary decreases, we continue to expect operating margins around 5% for the year. Primarily due to the recent debt issuance, interest expense will be approximately $.21 per share higher than we previously anticipated. We are reducing our diluted EPS guidance to a range of $1.50-to-$1.90 for the full year, excluding the restructuring charge, reflecting higher interest and lower sales volume. For the second quarter, we expect diluted EPS in the range of $.35-to-$.45.
"While today's economic environment is the most challenging in decades, I believe Black & Decker's leading brands and world-class innovation will lead us through the recession. We are strengthening our position in the cordless market with next-generation DEWALT(R) XRP(TM) tools, and our new Porter-Cable(R) offering for the tradesman and home workshop is quickly gaining traction. Our management team is effectively balancing cost control, cash flow and growth initiatives, which should keep us profitable in the short- term and lead to continued success in the long-term. We appreciate all of the efforts and sacrifices made by our associates to build a great future for Black & Decker."
The Corporation will hold a conference call today at 10:00 a.m., E.T., to discuss first-quarter results and the outlook for the remainder of 2009. Investors can listen to the conference call by visiting www.bdk.com and clicking on the icon labeled "Live Webcast."__ Listeners should log-in at least ten minutes prior to the beginning of the event to ensure timely access. A replay of the call will be available at www.bdk.com.
This release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. By their nature, all forward- looking statements involve risks and uncertainties. For a more detailed discussion of the risks and uncertainties that may affect Black & Decker's operating and financial results and its ability to achieve the financial objectives discussed in this press release, interested parties should review the "Risk Factors" sections in Black & Decker's reports filed with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the fiscal year ended December 31, 2008.
This release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. Included with this release is a reconciliation of the differences between these non-GAAP financial measures with the most directly comparable financial measures calculated in accordance with GAAP.
Black & Decker is a leading global manufacturer and marketer of power tools and accessories, hardware and home improvement products, and technology-based fastening systems.
