Stanley Black & Decker, Inc. (NYSE:SWK) Q4 2014 Earnings Conference Call - Final Transcript

Jan 29, 2015 • 08:00 am ET


Stanley Black & Decker, Inc. (NYSE:SWK) Q4 2014 Earnings Conference Call - Final Transcript


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Good morning and welcome to the Q4 and Fiscal Year 2014 Stanley Black & Decker Incorporated Earnings Conference Call. My name is John. I'll be your operator for today's call. [Operator Instructions]

I'll now turn the call over to Vice President of Investor and Government Relations, Greg Waybright. You may begin.

Gregory Waybright

Thank you, John. Good morning, everyone, and thank you all for joining us for Stanley Black & Decker's fourth quarter 2014 conference call. On the call, in addition to myself, is John Lundgren, Chairman and CEO; Jim Loree, President and COO; and Don Allan, Senior Vice President and CFO.

Our earnings release, which was issued earlier this morning, and a supplemental presentation, which we will refer to during the call, are available on the IR section of our Web site as well as on our iPhone and iPad app. A replay of this morning's call will also be available beginning at 2 p.m. today. The replay number and access code are in our press release.

This morning, John, Jim and Don will review our fourth quarter results and various other matters, followed by a Q&A session. Consistent with prior calls, we're going to be sticking with just one question per caller. And as we normally do, we will be making some forward-looking statements during the call.

Such statements are based on assumptions of future events that may not prove to be accurate, and as such, they involve risk and uncertainty. It is, therefore, possible that actual results may differ materially from any forward-looking statements that we might make today. We direct you to the cautionary statements in the 8-K that we filed with our press release and in our most recent '34 Act filing.

I'll now turn the call over to our Chairman and CEO, John Lundgren.

John F. Lundgren

Thanks, Greg, and good morning, everybody. We've got a great deal to talk about this morning. So I'm going to run very quickly through the highlights. So Jim Loree and Don Allan can get into more detail and then we can jump right into the Q&A. Looking at fourth quarter highlights, revenue expanded 7% organically led by CDIY was up 11% and strong performance in industrial up 5%. But it's also noticeable that Security expanded in the quarter with mid single-digit organic growth in North American emerging markets and flat performance in Europe.

Operating margin for the quarter was 13.7% which was up 50 basis points versus the prior year. Volume, sharp cost focus and pricing benefits were partially offset by the currency headwinds. The currency issues that you've heard a lot about intensified in the fourth quarter, as we absorbed a headwind of approximately $30 million in the fourth quarter, which was $10 million worse than we expected. And that brought the total for the year to approximately $85 million of foreign exchange headwinds, a combination of translational and transactional.

The Security turnaround continues and we were encouraged that the European operating margin rate improved sequentially and versus prior year by approximately