With sales of new products blossoming and cost-cutting measures fattening profits, Black & Decker Corp., the giant Towson-based power tool and appliance company, reported its second-quarter earnings jumped by 28 percent -- excluding a tax adjustment in the previous second quarter.
"The numbers are better than many observers had been forecasting," said David S. Leibowitz, managing director of Burnham Securities Inc., a New York brokerage. "If the numbers prove a good harbinger of future profits, it could bring quite a few smiles to long-term shareholders."
His optimism was reflected in the stock market, which pushed the stock up $1.25 to close at $18.75 a share.
The company, which employs 2,900 people in Maryland, also declared a 10-cent quarterly dividend and announced that Kathleen W. Hyle, 35, a Baltimore native, was appointed vice president and treasurer of the Fortune 500 company.
Net income during the quarter jumped to $23 million compared to $18 million for the same period a year ago. The figures exclude a $1.5 million benefit for adjusting the company's tax rate. On a per-share basis, earnings increased by 33 percent to 24 cents from 18 cents, excluding the tax benefit.
The company, which has a worldwide work force of 37,300, had sales during the quarter of $1.22 billion, a 5.6 percent increase from $1.16 billion a year ago.
For the first six months, net income was $37.6 million, or 38 cents a share, a 12.9 percent increase over the same period a year ago when the company earned $33.3 million, or 33 cents a share, excluding a one-time charge of $29.2 million, or 35 cents, for accounting rule changes.
Sales for the first half were up 2.2 percent to $2.30 billion from $2.26 billion last year.
"Our results for the quarter reflect the benefits of a continuous flow of successful new products and our commitment to productivity improvement," Nolan D. Archibald, the company's chairman and chief executive officer, said.
The company, which is the state's second-largest industrial company with annual sales of $4.9 billion, is benefiting from an aggressive cost-cutting program that has been under way for the last year and a half, said Clifford F. Ransom III, director of special situation research for Raymond James & Associates Inc. in St. Petersburg, Fla.
Coupled with improving economies in other developed countries and a variety of new products, the stock price could hit $40 a share in the next three years, Mr. Ransom said.
"I think they are in an early sustainable upswing," he said. "I think this is the tip of an iceberg, a positive iceberg that will be unfolding over the next few years."
New products that boosted profits include the DeWalt line of power tools, introduced in February 1992, and the new Titan midprice-range locks, which entered the market early last year. They were particularly helpful to earnings this quarter because the company is no longer paying start-up costs, which ate into early sales, according to company spokeswoman Barbara B. Lucas.
Black & Decker Corp.
Ticker .... Yesterday's
Symbol ..... Cls. .. Chg.
BDK ........ 18 3/4 +1 1/4
7/3/94 .......... 2nd qtr. ..... Year ago ... Chg.
Revenue ....... $1,221,200 .... $1,155,900 .. +5.6%
Net Income ....... $23,000 ..... $19,500** .. +17.9%
Primary EPS* ....... $0.24 ....... $0.20** .. +20.0%
........ ....... 6 mos. ....... Year ago ..... Chg.
Revenue ..... $2,305,700 ..... $2,255,700 .... +2.2%
Net Income ..... $37,600 ...... $4,100*** ... +817.1%
Primary EPS* ..... $0.38 ..... $(0.02)*** ...... --
* Applicable to common shares after payment of preferred dividends.
** Includes a one-time gain of $1.5 million, or 2 cents a share, for adjustment of estimated tax rate.
*** Includes a charge against earnings of $29.2 million, or 35 cents a share, for accounting rule changes.
Figures in thousands (except per share data.)