Black & Decker Corporation (BDK) updated its third quarter earnings guidance yesterday. The company now expects third quarter EPS of 91 cents per shares, compared to the previous guidance range of 35 cents to 45 cents per share. Black & Decker attributed its guidance update to better-than-expected sales, operating margin improvement, and lower tax rate.
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.
Moreover, the company benefited from favorable currency translation. The company expects a year-over-year decline of 23% in third quarter sales compared to 28% and 27% respectively, in the first two quarters.
Black & Decker forecasts operating margin of approximately 7.5% for the quarter, driven by a combination of operating leverage on the incremental revenue, the impact of ongoing cost reduction initiatives, and lower component costs. The company anticipates full year savings of over $75 million from its cost reduction initiatives.
The company’s tax rate was low due to certain favorable tax adjustments recognized in the quarter. A lower tax rate is expected to contribute around 14 cents to the EPS.
Before this announcement, the Zacks Consensus Earnings Estimate for the third quarter was 43 cents per share.
Black & Decker will report its third quarter earnings next week and will provide the full-year guidance update.
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