2015 Year In Review

Financial Highlights**

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(millions of dollars,
except per-share amounts)
SWK
2015 2014 2013(1) 2012(1) 2011(1)
Revenue 11,171.8 11,338.6 10,889.5 10,022.4 9,332.3
Gross Margin – $ 4,072.0 4,102.7 3,933.2 3,686.9 3,461.3
Gross Margin – % 36.4% 36.2% 36.1% 36.8% 37.1%
Working Capital Turns 9.2 9.2 8.1 7.8 7.3
Free Cash Flow* 871 1,005 528 593 706
Diluted EPS from Continuing Operations 5.92 5.37 4.98 4.72 4.65
Tools & Storage
Revenue 7,140.7 7,033.0 6,705.0 6,413.0 6,213.3
Segment Profit – $ 1,170.1 1,074.4 969.6 951.3 850.1
Segment Profit – % 16.4% 15.3% 14.5% 14.8% 13.7%
Security
Revenue 2,092.9 2,261.2 2,295.9 2,259.3 1,813.1
Segment Profit – $ 239.6 259.2 273.0 342.6 307.4
Segment Profit – % 11.4% 11.5% 11.9% 15.2% 17.0%
Industrial
Revenue 1,938.2 2,044.4 1,888.6 1,350.1 1,305.9
Segment Profit – $ 339.9 350.6 300.3 232.1 223.2
Segment Profit – % 17.5% 17.1% 15.9% 17.2% 17.1%
(1) Excludes merger and acquisition-related charges, with the exception of Free Cash Flow.
* Free Cash Flow = Net cash provided by operating activities minus capital expenditures.
** In the first quarter of 2015, the Company combined the CDIY business with certain complementary elements of the IAR and Healthcare businesses (formerly part of the Industrial and Security segments, respectively) to form one Tools & Storage business. As a result of this change, the legacy CDIY segment was renamed Tools & Storage. The results from 2011–2014 were recast to align with this change in organizational structure. There is no impact to the consolidated financial statements of the Company as a result of this change.

2015 Scorecard**

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EBITDA
(Continuing Operations)(a)
($ Millions)

EPS
(Continuing Operations)(b)

Free Cash Flow(c)
($ Millions)

Total Sales Growth
Long-Term Objective: +10–12%

Organic Sales Growth
Long-Term Objective: +4–6%

Working Capital Turns(d)

Average Capital Employed(e)
($ Billions)

Cash Flow Return on
Investment
(f)

 

(millions of dollars) 2015 2014 2013 2012 2011
Net earnings from continuing operations 904 857 520 458 612
Interest income (15) (14) (13) (10) (27)
Interest expense 180 177 160 144 140
Income taxes 249 227 69 76 54
Depreciation and amortization 414 444 434 400 366
EBITDA from continuing operations 1,732 1,691 1,170 1,068 1,145
(a) “EBITDA” (earnings before interest, taxes, depreciation, and amortization) is a non-GAAP measurement. Management believes it is important for the ability to determine the earnings power of the Company.
(b) The Company has excluded the 2013, 2012, and 2011 after-tax merger and acquisition-related charges of $270 million ($1.70 of diluted EPS), $329 million ($1.97 of diluted EPS), and $180 million ($1.06 of diluted EPS), respectively, in the calculation of diluted EPS. These amounts were excluded because the Company believes doing so provides a better indicator of operating trends when analyzing diluted EPS, due to the unusually large magnitude of these charges and the fact that they are non-recurring. Therefore, the Company has provided these measures both including and excluding such charges.
(c) Free Cash Flow = Net cash provided by operating activities minus capital expenditures.
(d) Working Capital turns are computed as year-end working capital (accounts receivable, inventory, accounts payable, and deferred revenue) divided by fourth quarter sales, annualized.
(e) Average Capital Employed is computed as the 2-point average of debt and equity.
(f) CFROI is computed as cash from operations plus after-tax expense, divided by the 2-point average of debt and equity.

Comparison of 5-Year Cumulative Total Return Among Stanley Black & Decker, S&P 500 Index and Peer Group

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Set forth below is a line graph comparing the yearly percentage change in the Company’s cumulative total shareholder return for the last five years to that of the Standard & Poor’s 500 Index (an index made up of 500 companies including Stanley Black & Decker) and the Peer Group. The Peer Group is a group of eight companies that serve the same markets the Company serves and many of which compete with one or more of the Company’s product lines. Total return assumes reinvestment of dividends.

Comparison of 5-Year Cumulative Total Return (value of $100 investment at year end)

the points in the above table are as follows: 2010 2011 2012 2013 2014 2015
Stanley Black & Decker $100.00 $103.53 $113.30 $130.52 $158.29 $179.65
S&P 500 100.00 102.11 116.46 156.17 178.19 180.67
Peer Group 100.00 89.91 129.54 184.61 217.30 235.46
Assumes $100 invested at the closing price on December 31, 2010, in the Company’s common stock, S&P 500 Index and the Peer Group. The Peer Group consists of the following eight companies: Eaton Corporation plc, Danaher Corporation, Illinois Tool Works, Inc., Ingersoll-Rand Company, Masco Corporation, Newell Rubbermaid, Inc., Snap-On Incorporated and The Sherwin-Williams Company. Prior to 2013, the Company included Cooper Industries, Inc. in its Peer Group. Due to the acquisition of Cooper Industries, Inc. by Eaton Corporation in November 2012, the results of Eaton Corporation have been included in the Peer Group in place of Cooper Industries, Inc. for all years.