Propelled by the purchases of several hardware companies that performed well, Towson-based Black & Decker Corp. posted yesterday record sales and earnings for last year and for the fourth quarter.
Net earnings for continued operations in the quarter that ended Dec. 31 rose to a high of $133.7 million. That amounted to $1.60 per diluted share, about 3 cents more than estimates by analysts polled by Thomson First Call. The earnings figure was also 39 percent more than the $96.2 million in net earnings during the corresponding quarter a year earlier.
Nevertheless, shares of the power-tool manufacturer closed down $3.89, or nearly 5 percent, to $79.47 on the New York Stock Exchange. More than 3.3 million shares traded, five times the typical volume.
Sales growth was spurred by the performance of the company's U.S. based DeWalt business, as well as other recently acquired companies. Baldwin Hardware Corp. and Weiser Lock Corp., which Black & Decker bought in 2003, each posted double-digit sales increases. Pentair Inc.'s Tools Group, which includes Porter-Cable and Delta brands and which Black & Decker bought last year, also did well.
Nolan D. Archibald, chairman and chief executive officer, said during a conference call with analysts yesterday that the company will continue its acquisition strategy and has its eye on other businesses.
"We look forward to building on this momentum in 2005," he said. "Our strategy is working."
Black & Decker also reported annual net earnings from continued operations of $441.1 million, up nearly 54 percent from $287.2 million in 2003.
Sales from continuing operations rose 29 percent to a record $1.73 billion from $1.34 billion for the comparable quarter a year earlier. The company ended the year with sales of $5.4 billion, a 20 percent gain over 2003 sales of $4.5 billion.
Discontinued operations added $1.6 million to the fourth-quarter net profit and 2 cents to the undiluted share.
Calling it an issue of "very high expectations," Eric Bosshard, an analyst director of research for Cleveland-based Midwest Research, said he wasn't surprised that the stock fell.
"The stock has been an [excellent] performer," he said. "It's not unusual for the stock to give back some of those gains."
Each of Black & Decker's business segments posted growth last year: Power-tool sales rose 15 percent for the year and 33 percent for the quarter; hardware and home-improvement sales jumped 34 percent for the year and 10 percent for the quarter; and sales in the fastening and assembly systems segments were up 11 percent for both the year and the quarter.
Black & Decker launched a restructuring program in 2002 that saved about $70 million last year, Chief Financial Officer Michael D. Mangan said during the conference call. Now that the company is "coming to the back end" of the effort, Mangan said, he expects the impact to lessen. He predicted about $30 million in savings in 2005.
The decrease has led Black & Decker to be cautious in its forecast, predicting "low to mid-single-digit sales growth," excluding currency translation from foreign sales and acquisitions.