Black & Decker Corporation (BDK) reported third-quarter earnings of 91 cents per share, above the Zacks Consensus Estimate of 89 cents and in line with its recently-updated guidance. However, quarterly earnings declined 43% compared to the previous year.

Revenue in the quarter was down 23.0% year over year at $1.2 billion. This includes an unfavorable currency translation impact of 3%. Black & Decker was initially expecting a 27%-28% decline in sales. Though there wasn’t any significant improvement in its end markets, the company said that the quarterly sales were better than expected due to early shipments of promotional items in the U.S. industrial power tools and accessories business. These shipments were previously expected in the fourth quarter.

The company witnessed sales declines in all three segments. The Power Tools and Accessories segment posted a 21% decline in sales due to lower construction activity, weak demand for discretionary items and discontinuation of certain low margin products.

Sales in the Hardware and Home Improvement segment were down 17% because the weak housing industry led to depressed sales in the lockset and faucet businesses. Fastening and Assembly Systems continued to be affected by weak demand from automotive and industrial divisions, and posted 24% lower sales in the quarter.

Black & Decker generated operating cash flow of $368 million in the first nine months and expects to exceed $400 million for the full year. Though debt reduction remains its top priority, the company believes that its strong cash flows provide flexibility to pursue small bolt-on acquisitions.

The company expects fourth-quarter sales to be similar to that in the reported quarter. It forecasts an operating margin of 7.5% for the fourth quarter, which is again the same as in the third quarter. The company forecasts EPS in the range of 68–78 cents for the fourth quarter and $2.45–$2.55 for the full year.

BDK has cut down costs significantly in response to the economic downturn. It anticipates full-year savings of over $75 million from its cost reduction initiatives.

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