Synergies begin at Stanley Black & Decker

Stanley Black & Decker elaborated on two major trends in its first quarterly earnings release since the merger of the two tool giants in March. One is the continued synergies of the combination. Another is what CFO Donald Allen described as the "improving macro environment."

"While we still do not expect a dramatic turnaround in the housing sector in 2010, we are confident our hand and power tool businesses will grow mid-single digits this year," Allen added.

The company's results were better than Wall Street expected, but, because of merger-related costs, the company swung to a loss of $108.6 million, compared with earnings of $178.7 million in the first quarter last year.

After completing its merger in March, the combined Stanley Black & Decker posted net sales of $1.3 billion for the first quarter ended April 3, up 38%. Sales in the quarter benefited from the Black & Decker "stub period" from March 13 to April 3.

The combined company's Construction and DIY segment, including the Black & Decker partial period, showed an 85% increase in revenues compared with Stanley's first quarter of 2009.

The Stanley Fulfillment System (SFS) also led to performance improvements, the company announced today.

"We continue to further develop our cost synergy plans and remain confident in meeting or exceeding our original estimate of $350 million in cost synergies," said CEO John Lundgren.

Cost synergy realization related to the Stanley Black & Decker merger in the remaining nine months of 2010 is expected to be approximately $90 million.

“The operating margin increases achieved during the first quarter -- specifically within our hand tool, power tool and industrial businesses -- illustrate the strong operating leverage potential of both legacy companies as a result of actions taken over the past two years," said James Loree, EVP and chief operating officer.

The company also posted its first ever video annual review for 2009, including an introduction from CEO John Lundgren, financial reporting and updates on company initiatives.