Black & Decker profits rose 50.3% in 3rd period

October 25, 1994|By Ross Hetrick | Ross Hetrick,Sun Staff Writer

Helped by a strong stable of new products and aggressive cost-cutting, Black & Decker Corp. yesterday announced that third-quarter earnings jumped by 50.3 percent to $29.3 million, a record for third-quarter net income.

Wall Street reacted enthusiastically to the news from the Towson-based power tool and appliance manufacturer, pushing up the stock's price by 75 cents a share to close at $23.50 on volume of 1.7 million shares.

"It's the first time in a while the earnings were truly from very good operations," said Richard E. Cripps, director of equity markets for Legg Mason Inc., a Baltimore brokerage firm.

Sales in the quarter that ended Oct. 2 increased by 11.1 percent, to $1.3 billion, higher than any previous third quarter. Most of the company's operating divisions had double-digit sales improvements, except its glass machinery business, which makes equipment that makes glass containers.

Per-share earnings for the quarter were up 55 percent, to 31 cents a share.

"Although we are pleased to report 11 percent revenue growth, our continued improvement in profitability is even more significant," Nolan D. Archibald, Black & Decker's chairman and chief executive officer, said in a statement.

For the first nine months, the company had net income of $66.9 million, or 69 cents a share, a 26.7 percent increase over the same period a year ago, excluding a charge for an accounting change.

R. Bentley Offutt, president of Offutt Securities Inc., a Baltimore-based institutional research and brokerage firm, said he was impressed with the company's improved cash flow, which should help the company pay off some of the remaining $1.9 billion long-term debt left from the acquisition of Emhart Corp. in 1989.

The prospects for the company's stock also were improved by Black & Decker officials' telling analysts that they do not expect to have another stock offering in the next two years, he said.

"I think that was one of the big considerations," Mr. Offutt said.

Black & Decker's stock was approaching $25 a share in early 1992 when the company announced a $20.7 million stock sale, which broke the stock price's momentum. It has not reached that height since then.

Besides the company's actions, increases in home construction and the growth in the do-it-yourself market also have helped the company, according to David S. Leibowitz, managing director of Burnham Securities Inc., a New York brokerage.

"They have an awful lot going in their favor," he said.

The Fortune 500 company, which was the 106th-largest industrial company in the country last year, has boosted its sales in recent years with strong new product lines, such as DeWalt power tools, Titan locks and Genesis faucets.

Profits have been further fattened by an aggressive cost-cutting effort. The company is in the midst of a $100 million cost-cutting program, which includes the closing of plants in South Carolina, Germany and Singapore this year, according to Barbara B. Lucas, the company's vice president of public affairs.

These actions will cut about 1,000 jobs from the company's work force, which stood at a worldwide total of 37,300 at the end of last year, she said.

The company also is building an 800,000-square-foot distribution center in Fort Mills, S.C., where consolidation of other operations is expected to save the company $10 million annually after the facility opens early next year.

The new facility will affect about 100 of the 800 workers at the company's Hampstead facility. But Ms. Lucas said the company expects to be able to absorb those people into the accessories packaging operation, which also is at Hampstead.

The company has a total Maryland work force of about 3,000, with a power tool and outdoor products plant in Easton and the headquarters for the corporation and power tools division in Towson.

Black & Decker Corp.

Towson .. .. .. .. .. .. Ticker .. .. .. .. Yesterday

.. .. .... .. .. .. .. .. Symbol .. .. .. .. Cls. ... Chg.

.. .. .. .. .. .. ... .. BDK .. .. .. .. .. 23 1/2 .. .. + 3/4

Period ended

10/2 .. .. .. .. 3rd qtr. .. .. .. Year ago ... ... ... Chg.

Revenue .. .. .. $1,323,400 ... .. $1,189,600 .. .. ... +11.2%

Net Income .. .. $29,300 .. .. ... $19,500 .. ... .. .. +50.3%

Primary EPS .. .. $0.31 ... .. ... $0.20 ... ... ... .. +55.0%

.. .. .. .. .. .. 9 mos. .. ... .. Year ago ... ... ... Chg.

Revenue .. .. ... $3,629,100 .. .. $3,445,300 ... .. .. +5.3%

Net Income ... .. $66,900 .. .. .. $23,600* ... ... ... +183.5%

Primary EPS .. .. $0.69 .. ... ... $0.18* ... .. ... .. +283.3%

* Includes a charge to earnings of $29.2 million, or 35 cents a share, for change in accounting for postemployment benefits.

Figures in thousands (except per share data and footnotes.)

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.