Profits soar 76% for toolmaker

April 21, 1995|By Ross Hetrick | Ross Hetrick,Sun Staff Writer

Topping even the highest expectations on Wall Street, Black & Decker Corp. yesterday reported that first-quarter profits soared by 76 percent as the company racked up big sales gains and continued to cut expenses and debt.

"Management's focus on productivity is coming home in spades," said Clifford F. Ransom, director of special situation research for Raymond James & Associates Inc. in St. Petersburg, Fla. "It's a happy combination of the right macroeconomic environment in the U.S. and Europe and the right microeconomic environment at Black & Decker," he said.

Black & Decker reported net income of $25.7 million, or 27 cents per share. The most optimistic prediction for the quarter had been 24 cents per share, according to services that track the predictions. The mean estimate was 20 cents a share.

The good report was the latest in a series for the Towson-based power tool and appliance company, whose stock has gained 74 percent in the last nine months.

Yesterday, Black & Decker stock closed at $29.75, up 25 cents for the day.

Mr. Ransom said the stock price is likely to continue its rise. "We think this story is just beginning," he said.

In a prepared statement, company Chairman and Chief Executive Nolan D. Archibald said Black & Decker "is firmly on track to meet our aggressive return on sales, cash flow and debt reduction goals."

One of the company's star performers in the first quarter was its North American Household Products division, whose sales hit the highest level in six years, lead by the SnakeLight, the company's popular flexible flashlight. Sales of Genesis faucets, produced by the company's Price Pfister division, were maintaining a double-digit rate of growth, the company said.

Total revenue was up 10.6 percent, to $1.2 billion. The dollar's weakness also worked in the company's favor, adding 3 percent to revenue growth as overseas sales were worth more in dollars.

Revenue for the company's PRC information services division were down 6.2 percent, to $178.4 million because of lower-than-expected equipment purchases by the federal government in PRC's Super-Minicomputer contract. But the division still has a record backlog of work, the company said.

The company's improved sales were amplified by the reduction of its $1.8 billion debt with money from a stronger cash flow, according to R. Bentley Offutt, president of Offutt Securities Inc., a Hunt Valley-based institutional research and brokerage firm.

He also cited cost-cutting efforts, particularly the company's decision in March to close its power tool plant in Tarboro, N.C., and transfer that work to plants in Easton, Fayetteville, N.C., and Asheboro, N.C.

"It's just a constant effort of trying to improve the value of the existing operation," Mr. Offutt said.

The company also reduced its debt with the $60 million it received from selling PRC Realty Systems, a real estate multiple listings business, to News Holdings Corp.

Black & Decker Corp.

Towson ... ... ... ... ... ... Ticker ... ... ... ... Yesterday's

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

... ... ... ... ... ... .. ... BDK ... ... .. ... ... 29 3/4 .. .. + 1/4

Period ended

4/2 ... ... ... ... ... ... 1st qtr. ... ... ... Year ago ... ... Chg.

Revenue ... ... ... ... ... $1,199,800 ... .. .. $1,084,600 .. .. +10.6%

Net Income .. .. .. ... ... $25,700 ... .. .. .. $14,600 .. .. .. +76.0%

Primary EPS ... ... ... ... $0.27 ... ... ... .. $0.14 ... ... .. +92.9%

Figures in thousands (except per share data.)

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