Stanley Black & Decker, Inc. · NYSE:SWK
Stanley Black & Decker — Investor Presentation (March 2023)
45 slides from Stanley Black & Decker's investor presentation, Mar 6, 2023
Slide 1: Investor Presentation
Investor Presentation Ve rs i on 03.06.2023
Slide 2: Contents and Contacts
Contents Contacts Dennis Lange SWK Overview Pages 4 – 19 Vice President, Investor Relations 860-827-3833 Tools & Outdoor Pages 20 – 30 [email protected] Industrial Pages 31 – 37 Cort Kaufman Senior Director, Investor Relations Appendix Pages 38 – 45 860-515-2741 [email protected] Christi
Slide 3: Cautionary Statement
Cautionary Statement This presentation contains “forward-looking statements,” that is, statements that address future, not past events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words su
Slide 4: More Streamlined Company With Great Franchises
More Streamlined Company With Great Franchises Tools & Outdoor Industrial1 2022 Revenue: $14.4 Billion 2022 Revenue: $2.5 Billion Outdoor Power Power Tools Equipment Infrastructure 2022 Revenue1: $16.9B 47% 25% 26%1 Market Cap: $13.2B Engineered Fastening Cash Dividend Yield: 3.6% 74% Hand Tools, Di
Slide 5: Geographic Reach
Geographic Reach Stanley Black & Decker Segments Tools & Outdoor Industrial* 10% 12% 9% 13% 11% 16% 15% 15% 16% 55% 63% 65% U.S. Europe Emerging Markets ROW Diversified Globally With 60%-65% Of Our Revenues Generated In The U.S. Percentages As Of Fiscal Year 2022 Totals * Includes Divested Oil & Gas
Slide 6: Transforming To Accelerate Organic Growth
Transforming To Accelerate Organic Growth A Clear Vision And New Strategy For Long-Term Success… Reduce Complexity – Invest In Core Growth Enhance ~$2B 3-Year Cost Savings $300M - $500M Shareholder Return Organic Revenue OPTIMIZE I N N O VAT I O N Growth* 2-3X Market C O R P O R AT E S T R U C T U R
Slide 7: Global Cost Reduction Plan
Global Cost Reduction Plan Rapidly Aligning Organization & Operating Model Around More Focused Portfolio... ~$2 Billion Total Annualized Cost Savings By 2025 | $1 Billion Annualized By 2023 Supply Chain Transformation SG&A Initiatives $1.5 Billion Total | $0.5 Billion By 2023 $0.5 Billion Total By 2
Slide 8: Stanley Black & Decker Value Creation Model
Stanley Black & Decker Value Creation Model Strong, Innovation-Driven Businesses World Class Brands In Diverse, Global Markets Attractive Growth Platforms Powered By: Scalable, Defensible Franchises Key Long-Term Metrics: • Organic Revenue Growth*: 2-3x Market Differentiable Through Innovation • 35%
Slide 9: Global Franchises – Long Term Value Drivers
Global Franchises – Long Term Value Drivers A Company That Has Built Well Established, Global Franchises… Business Value Drivers • Brands • Innovation & Outdoor Electrification The Tool & World’s Leading • Global Scale Outdoor Company In Tools & Outdoor » Power & Hand Tools To Own » Construction, DI
Slide 10: Global Brand Power
Global Brand Power A Powerful Portfolio Of Well Managed Brands Investor Presentation 10
Slide 11: Balance Sheet & Long-Term Capital Allocation Strategy
Balance Sheet & Long-Term Capital Allocation Strategy Maintain A Hybrid Model: A Company Focused On Growth… Balance Sheet – 4Q’22 Actual 2018 Actual Capital Allocation Strategy • Continue To Invest In Our Core Franchises | Capital Expenditures ~3.0%-3.5% Of Free Cash Flow ($M)* $521 Net Sales Book D
Slide 12: Our Approach To ESG
Our Approach To ESG Grounded By Stakeholder Capitalism Ro o te d I n O u r P u r p o s e - Fo r T h o s e W h o M a ke T h e Wo r l d ™ ENVIRONMENT SOCIAL GOVERNANCE Planet People Prosperity Governance Protecting The Planet Furthering Progress Fostering Purpose & Progress At Work Communities Against
Slide 13: Leading The Charge
Leading The Charge ESG FOCUS AREAS Climate Change D E I & Ta l e n t D e v e l o p m e n t Governance Go Beyond Carbon Neutral By 2030 Racial Equity Plan Diverse & Inclusive Board Eliminate Waste to Landfill Gender Parity Shareholder Rights Sustainable Water Use Skillset Development Risk Management
Slide 14: Electrification: Significant Growth & ESG Opportunity
Electrification: We Have A Significant Growth & ESG Opportunity Electrification Supports Carbon Reduction And Is A Multibillion Dollar Growth Opportunity ELECTRIC VEHICLES OUTDOOR PRODUCTS Electrification Drives 3x To 6x Higher Content $ Potential Per Well-Positioned To Be An Electrification Leader
Slide 15: ESG: Measuring Our Progress (2021)
ESG: Measuring Our Progress (2021) Our 2030 Strategy/Overall Objectives* Sustainability Performance** We Remain Focused On Our 2030 Goals Link: 2021 Online ESG Report Business Strategy And Social Responsibility Purposefully Intertwined…Priorities Set On People, Product And Planet *As Reported In The
Slide 16: 2023 Guidance
2023 Guidance StanleyBlack&Decker
Slide 17: 2023 Guidance Scenario Planning
2023 Guidance Scenario Planning 2023 EPS Expected To Be GAAP ($1.65)-$0.85 And Adjusted $0.00-$2.00 | Free Cash Flow* $0.5B-$1.0B 2023 Guidance Deeper Slowdown Base Case 2H Acceleration Scenarios Organic Growth* Down Mid-Single Digits Down Low-Single Digits Relatively Flat Tools & Outdoor Down Low-S
Slide 18: Inventory & Gross Margin Update
Inventory & Gross Margin Update Positive Inventory Reduction Trend Throughout 2H’22... $775 Million Inventory Reduction In 2H’22 And Expect Gross Margins* Are Now At An Inflection Point To Continue Trend Into 1H’23 ~$300M High-20s (2H Acceleration) Decrease ~$500M FY’23 Target Decrease ↓$750M Mid-To
Slide 19: Currency Impact
Currency Impact Currency Headwinds Due To Stronger USD… Currency Trends Vs. USD (12/31/21 – 12/31/22) Hedging Approach (11%) (7%) (6%) 5% (6%) GBP CAD EUR BRL AUD - Hedge Key Currency Exposures (CAD, 25.00% EUR, GBP, & AUD, Among Other) - Intent Is To Dampen Volatility And 20.00% Allow Time For Busi
Slide 20: Tools & Outdoor
Tools & Outdoor
Slide 21: Tools & Outdoor: 2022 Revenues $14.4B
Tools & Outdoor: 2022 Revenues: $14.4B Power Tools: $6.7B | Hand Tools Accessories & Storage: $4.0B | Outdoor Equipment: $3.7B 2022 Revenue Profile Segment Adjusted Operating Margins* Emerging ROW 17% 16% 16% 18% 17% Markets 9% 11% 8% Europe U.S. 15% DIY Pro Outdoor 65% Outdoor 17% FY17 FY18 FY19 FY
Slide 22: The World's Leading Tools & Outdoor Company
The World’s Leading Tools & Outdoor Company Proven Market Outperformance Driven By Our Powerful Growth Formula… A POWERFUL GROWTH FORMULA: COMMERCIALIZATION INNOVATION BRAND Across 5 Major Product Categories POWER TOOLS // OUTDOOR // HAND TOOLS // ACCESSORIES // STORAGE CONSUMER / DIY OUTDOOR PROFES
Slide 23: Mission: Driving Organic Growth
Mission: Driving Organic Growth To Be The WORLDWIDE LEADER (#1 Or #2 Position) In Defined Market Categories In Which Our Products Compete Through: Supply Chain World-Class Innovation Globalization Brand Building Excellence Organization From $600M Hand Tool Company To $14B Diversified Tools And Outdo
Slide 24: Hand & Power Tool Brand Positioning
Hand & Power Tool Brand Positioning HPP MPP OPP Consumer Tradesman Professional Automotive/Industrial DIY Advanced DIY Investor Presentation 24
Slide 25: Investments In Technology
Investments In Technology Electrical Charging Digital Motors & Electronics Faster Speed Asset Tracking Battery Cells Multiple Batteries Most Comprehensive Loss Most Power Dense Cordless Broadest Range Of Charging Prevention Solutions Solutions In The Industry Solutions In The Industry In The Industr
Slide 26: Applying Technology Across Our Cordless Platform
Applying Technology Across Our Cordless Platform Smaller Smarter Stronger Body Grip Tools 20V Core Tools 20V Expansion Tools High Power Tools POWER Investor Presentation 26
Slide 27: DEWALT Wave Of Innovation
DEWALT Wave Of Innovation 2011 125+ New Products Power Of Cordless Freedom With The Largest PRO Tool Brand In The World Investor Presentation 27
Slide 28: Cordless System
Cordless System 30 ~95 Coming Products Products Soon Focused On Increased Penetration Through Expanding The Cordless Power Tools System Investor Presentation 28
Slide 29: Hand Tools, Accessories & Storage Opportunities
Hand Tools, Accessories & Storage Opportunities $4B Global Business… #1/#2 In $42B Total Market - $34B Addressable 30+ Categories THREE KEY AREAS OF FOCUS TO SERVE EVERY END USER, JOB SITE & AUTO SHOP IN THE WORLD: Elite Series Accessories Own The Toolbox Mechanics Tools Of The Future Unmatched Perf
Slide 30: Outdoor Growth Opportunity
Outdoor Growth Opportunity Completed Two Major Complementary Acquisitions In 4Q 2021… ~$3.7 Billion Lawn & Garden Platform With Broad Coverage Across $25B+ Outdoor Category Fastest Growing Franchise In Cordless/Electric Outdoor Power Equipment MTD & Excel Acquisitions Provide Compelling Capacity Exp
Slide 31: Industrial
Industrial Engineered Fastening Infrastructure
Slide 32: Stanley Industrial Overview
Stanley Industrial Overview $2.4 BILLION - DIVERSIFIED INDUSTRIAL SEGMENT* Vision Mission Our Purpose A Global Leader Of Highly The #1 Innovation Catalyst & Solution Engineered, Application Based Partner For Industrial Customers FOR THOSE WHO MAKE Solutions, Where Safety, Reliability & Productivity
Slide 33: Engineered Fastening Business Overview
Engineered Fastening Business Overview 2022 Revenue: ~$1.9B Global Fastener Market - $85B Geographic End Market 7% 19% Automotive Asia Americas Industrial 24% 29% 40% 10% 20% ~$29B 49% 20% Value Add 51% Market Segments 20% Europe 11% General Industry Electronics Automotive Construction Aerospace Aer
Slide 34: Engineered Fastening Advantage
Engineered Fastening Advantage To Be The Worldwide Leader In Highly Engineered Products Vision With Opportunities To Grow Organically & Through Acquisitions Engineering Capabilities Leading Industry Technologies Growth Strategy Enhance The Core New Fastening Markets & Technologies Build Regional Sca
Slide 35: Addressable Market Increases Significantly For EV vs ICE
Addressable Market Increases Significantly For EV vs ICE Internal Combustion (ICE) Vehicle - Average Content Fully Electric & Hybrid Electric Vehicle - Projected Content Common Applications To ICE & EV $9.5/car Chassis / BIW Interior Trim Exterior Trim Low Voltage Wiring Auto Electronics $15/car $30
Slide 36: Electrification Opportunities In STANLEY Industrial
Electrification Opportunities In STANLEY Industrial Electrification Across The Industrial Platform Focus Areas Attachment Auto Industrial Tools Chassis EV Tier Applications Suppliers Wire Harness EV Battery Mgmt. System And Thermal Management Cordless Rail Drill Heavy Equip Transfer Safety Solutions
Slide 37: Attachment Tools
Attachment Tools: 2022 Revenues: $550M Segment Overview • Leader In Specialized Attachments For Off-Highway Paladin Sweeper, Construction Equipment That Build And Maintain Bucket, & Fork The World’s Infrastructure • Focused On Professional End-Users And Applications Where Safety, Productivity, And R
Slide 38: Appendix
Appendix StanleyBlack&Decker
Slide 39: Non-GAAP & Other Financial Measures
Non-GAAP & Other Financial Measures This presentation also contains non-GAAP and other financial measures, including organic sales growth, operating profit, free cash flow, and cash flow return on investment (“CFROI”). Organic sales growth is defined as the difference between total current and prior
Slide 40: Reconciliation Of FCF & EBITDA
Reconciliation Of FCF & EBITDA Free Cash Flow EBITDA* 2022 2021 2020 (MILLIONS OF DOLLARS) 2022 2021 2020 Net earnings before equity interest $ 170 $ 1,532 $ 1,146 Net Cash (Used In) Provided By Operating Activities (1,460) 663 2,022 Interest income (55) (10) (18) Less: Capital And Software Interest
Slide 41: End Markets
End Markets End Market - % Of Revenue* Industrial Tools & Outdoor SWK Existing Residential / Repair / DIY 0% 22% 19% New Residential Construction 0% 26% 23% Non-Resi. / Commercial Construction 0% 16% 13% Industrial & Automotive Repair 31% 10% 13% Automotive OEM 37% 0% 5% Infrastructure 23% 0% 3% Aer
Slide 42: Portfolio Transformation
Portfolio Transformation ~$10B Has Been Invested In Acquisitions Since 2005 To Advance Growth Opportunities Tools & Outdoor Industrial Divestitures Purchase Purchase Purchase Year Company Year Company Year Company Price ($M) Price ($M) Price ($M) 2005 National $170 2010 CRC-Evans (Infrastructure) $4
Slide 43: Material Spend
Material Spend Direct Material Spend* Components Finished Goods 2022 ($M) Finished Goods $1,840 25% Components 3,900 52% Steel 690 9% Resin / Plastic Moldings 530 7% Packaging 350 5% Base Metals 130 2% $7,440 Top Three Raw Material Exposures (Finished Goods + Direct + Components) 1. Steel 2. Resin 3
Slide 44: Liquidity
Liquidity Near Term Liquidity Sources Long-Term Debt Outstanding ($M) December 2022 Cash Position $0.4B Revolving Credit Facilities $4.5B Notes/Bonds Total Near Term Liquidity $4.9B O/S 5-Year Agreement – Sep 2026 $2.5B 364-Day Facility – Sep 2023 $1.5B 364-Day Facility – Sep 2023 $0.5B Adequate Liq
Slide 45: Investor Presentation
Investor Presentation Ve rs i on 03.06.2023
Stanley Black & Decker — Investor Presentation (March 2023) on 6ix