Stanley Black & Decker, Inc. · NYSE:SWK
Stanley Black & Decker — Investor Presentation (May 2022)
69 slides from Stanley Black & Decker's investor presentation, May 3, 2022
Slide 1: Investor Presentation
INVESTOR PRESENTATION Version 05.03.2022
Slide 2: Cautionary Statements
Cautionary Statements 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 s
Slide 3: Contents
Contents Contacts Dennis Lange SWK Overview Pages 4 – 23 Vice President, Investor Relations 860-827-3833 2022 Outlook Pages 24 – 27 [email protected] Tools & Outdoor Pages 28 – 45 Cort Kaufman Senior Director, Investor Relations 860-515-2741 Industrial Pages 46 – 53 [email protected] SBD
Slide 4: A Global Leader With World Class Franchises
A Global Leader With World Class Franchises STANLEY BLACK & DECKER (NYSE: SWK) 2021 Revenue: $15.6B Market Cap: $18.5B Cash Dividend Yield: 2.6% Dividend Paid Consecutively For 146 Years; Increased For Past 54 Consecutive Years Tools & Outdoor Industrial 2021 Revenue: $12.8B 2021 Revenue: $2.5B Outd
Slide 5: Expanding Geographic Reach
Expanding Geographic Reach Stanley Black & Decker Segments Tools & Outdoor Industrial 9% 14% 9% 14% 13% 17% 17% 17% 61% 51% 60% 18% U.S. Europe Emerging Markets ROW Diversified Globally With Approximately 60% Of Our Revenues Generated In The U.S. Percentages As Of Fiscal Year 2021 Totals INVESTOR PR
Slide 6: Strategic & Financial Objectives
Strategic & Financial Objectives Strategic Framework Our Long-Term Financial Goals Continue Organic Growth Momentum Revenue • ~4-6% Organic • Utilize SBD Operating Model As A Catalyst Growth • ~10-12% Total • Mix Into Higher Growth, Higher Margin Businesses • Increase SBD Weighting Of Emerging Marke
Slide 7: 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 & In Tools & • Global Scale #1 Outdoor » Power & Hand Tools Outdoor Company To Own » Construction, DIY, Auto Repai
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 Long Term Financial Objectives • 4-6% Organic Growth • 10-12% Total Revenue Growth Differentiable Thr
Slide 9: Our Evolving Operating Model
Our Evolving Operating Model INVESTOR PRESENTATION 9
Slide 10: Acquisitive Growth
Acquisitive Growth Active Pipeline For Potential Acquisition Targets… Acquisition Criteria Acquisitive Growth Areas • Strategic Fit Tool Industry Consolidation • Organizational Capacity • Financial Evaluation » Organic Growth & Profitability Consistent With Company Targets Outdoor Expansion » Accret
Slide 11: Global Brand Power
Global Brand Power A Powerful Portfolio Of Well Managed Brands INVESTOR PRESENTATION 11
Slide 12: Global Brand Support
Global Brand Support 2.3 Billion + 404 Million 48.6 Million 1.9 Million Potential Fan Reach Sponsorship Social Media Followers Brand Website Visits Brand Mentions Web Visits: Primary web domains for SBD, STANLEY, CRAFTSMAN, B+D, DEWALT, MAC TOOLS, Porter Cable, Proto, IRWIN Brand Mentions: Crisp Mon
Slide 13: Our Approach To ESG
Our Approach To ESG Grounded By Stakeholder Capitalism Ro o t e d I n O u r P u r p o s e - F o r T h o s e W h o M a ke T h e Wo r l d ™ ALIGNED TO WORLD ECONOMIC FORUM FRAMEWORK ENVIRONMENT SOCIAL GOVERNANCE Planet People Prosperity Governance Protecting The Planet Furthering Fostering Purpose & P
Slide 14: Leading The Charge
Leading The Charge ESG FOCUS AREAS Climate Change DEI & Talent Development Governance Go Beyond Carbon Neutral By 2030 Racial Equity 10 Point Plan Diverse & Inclusive Board Zero Waste to Landfill Gender Parity Shareholder Rights Sustainable Water Use Skillset Development Risk Management & Oversight
Slide 15: Electrification: We Have A 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 SBD + MTD = Best Position In The World To Achieve Pe
Slide 16: ESG: Measuring Our Progress
ESG: Measuring Our Progress Our 2030 Strategy/Overall Objectives* Sustainability Performance* Link: 2021 Online ESG Report We Remain Focused On Our 2030 Goals Elevating & Executing On Our Commitment To Corporate Social Responsibility *Results Include The Convergent Security Solutions (“CSS”) Busines
Slide 17: Corporate Governance
Corporate Governance Board Composition And Governance Features Board Refreshment And Tenure ✓ Independent Chairperson Average Tenure Of 7 Years ✓ 4 New Non-Management Directors In The Last 3 Years ✓ Balance Of Institutional Knowledge And Fresh Perspective <= 3 years 4 ✓ Key Governance Features: 7 >
Slide 18: Historical Performance
Historical Performance Created World Class Global Franchises… Revenue ($B) Adjusted EPS* Free Cash Flow ($B)** 4% 9% $1B 2021 Three-Year CAGR*** 2021 Three-Year CAGR*** 2021 Three-Year Avg. Cash Generation $15.6 $10.48 $1.7 $8.04 $7.59 $12.9 $13.1 $1.1 Prioritized Inventory To Meet Strong Demand | E
Slide 19: Long Track Record Of Improvement (Return On Operating Assets)
Long Track Record Of Improvement (Return On Operating Assets) SBD Operating Model Drives Organic Growth, Margin Improvement, Asset Efficiency And Resiliency… Tariffs & Trade Brexit COVID-19 Referendum Pandemic Eurozone 24.2% 24.7% Debt Crisis 23.7% Ex. Excess Bursting Of The Dot.com Housing Crisis &
Slide 20: Remain A Top Performer (Return On Operating Assets)
Remain A Top Performer (Return On Operating Assets) Top Quartile Performance Against Industrial Peers… 26% 24% Top Tier Asset Efficiency 22% 21% 21% 20% 20% • High Working Capital Turns 18% 17% 17% 17% 16% • Disciplined Capital Expenditures 14% 14% 13% • Efficient Management Of Cash Balances Runway
Slide 21: Balance Sheet & Long-Term Capital Allocation Strategy
Balance Sheet & Long-Term Capital Allocation Strategy Maintain A Hybrid Model: A Company Focused On Growth… Balance2018 SheetActual - 2021 Actual Capital Allocation Strategy Free Cash Flow ($M)* $144 • Continue To Invest In Our Core Franchises | Capital Expenditures ~3.0%-3.5% Of Net Sales Book Debt
Slide 22: Focused Portfolio Positioned For Growth
Focused Portfolio Positioned For Growth Secular Trends & Growth Catalysts Outdoor Integration & Advancements Reconnection With Home & Garden Innovation eCommerce Electrification & Autonomous Win With The Professional Apply Innovation Leadership & Lead Large Format Gas & Dealer Network To Expand Into
Slide 23: Why Invest In Stanley Black & Decker?
Why Invest In Stanley Black & Decker? POWERED BY PURPOSE B U I LT TO L A ST World Class Businesses With A Track Record Of Performance Defined Path For Growth & Margin Expansion With An ESG Orientation Our 2030 Strategy Strong Growth & Shareholder Return Dividend >2X EPS* $10.48 $2.98 $3.54 ~10% CAGR
Slide 24: 2022 Outlook
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Slide 25: 2022 Guidance
2022 Guidance Expect Mid-Twenties Total Revenue Growth Vs. Prior Year And Adjusted EPS Of $9.50 To $10.50*... 2022 Updated Outlook Drivers For Updated Adjusted Diluted EPS* Tools & Outdoor Industrial Jan’22 Guidance (Midpoint) $12.25 Organic: Mid-To-High Single Digits Organic: High-Single Digits To
Slide 26: Cost & Actions Update
Cost & Actions Update Incremental Inflation Headwinds Necessitating Additional Price Actions… $XM & Transport Inflation Emerged In 2Q… Incremental Commodity …Focused Response And Actions To Latest Headwinds $XXM Key Commodity Spot Price* Changes Since Guidance $1.4B +93% Change Vs. Jan 31st +48% $0.
Slide 27: Currency Impact
Currency Impact Currency Headwinds Due To Stronger USD… Hedging Approach - Hedge key currency exposures (CAD, EUR, GBP, & AUD, Among Other) - Intent Is to dampen volatility and allow time for business teams to mitigate fluctuations with cost & Price actions Estimated 2022 OM Annual Impact - CAD 1% M
Slide 28: Tools & Outdoor
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Slide 29: Tools & Outdoor
Tools & Outdoor 2021 Revenues: $12.8B Power Tools | $7.3B Hand Tools Accessories & Storage | $4.3B Outdoor Equipment | $1.2B Revenue 2021 Results Emerging ROW Markets 9% Revenue Operating Profit Operating Margin 13% 17% $12.8B +16% VPY* Europe By Region 20% Organic Growth* 16.9%* 61% +39% Vs. 2019 U
Slide 30: The World’s Leading Tool Company
The World’s Leading Tool Company A POWERFUL GROWTH FORMULA: COMMERCIALIZATION INNOVATION BRAND Across 4 Major POWER TOOLS // HAND TOOLS // ACCESSORIES // STORAGE Product Categories CONSUMER / DIY AUTO REPAIR And 4 Major Customer Segments CONSTRUCTION INDUSTRIAL INVESTOR INVESTORPRESENTATION PRESENTA
Slide 31: Accelerating Core Growth With Strategic Investments
Accelerating Core Growth With Strategic Investments eCommerce Core Programs Innovation Total Trade Solutions Growth Initiatives PTG Global Expansion COMMERCIAL INDUSTRIAL CONSTRUCTION IRWIN | LENOX | 2-Step Investing New Business World Class EMERGING (RENEWABLE) Black + Decker +$75M Models Content D
Slide 32: 2020 Market Position
2020 Market Position* Global Market Share Leader For 11 Straight Years And Running Tools Global Served Market Size ~$67B* GTS Global Served Market Share 15% 10% 5% 0% TTI Bosch Makita Snap On Hikoki Hilti Private ITW Label 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 *Other Brands Not Disp
Slide 33: 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 $10B Diversified Tool Industry L
Slide 34: Vision
Vision Key Pillars: CUSTOMER EXTREME NEW GLOBAL OBSESSION INNOVATION GROWTH Enabled By: PEOPLE TECHNOLOGY Diversity, Equity Digital & & Inclusion Data Solutions Diversity, Equity INVESTOR PRESENTATION 34 & Inclusion
Slide 35: Hand & Power Tool Brand Positioning
Hand & Power Tool Brand Positioning HPP MPP OPP Consumer Tradesman Professional Automotive / Industrial INVESTOR PRESENTATION 35
Slide 36: Diversified Innovation Fueled By Customer Insights
Diversified Innovation Fueled By Customer Insights Application-Based Innovation Lifestyle Products & Solutions “I need to work in “I need more tight spaces for solutions to fit long periods of my lifestyle.” time.” Cordless & High-Powered Solutions 62+ Innovation Technology & Digital Solutions “I ne
Slide 37: 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 38: 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 38
Slide 39: 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 39
Slide 40: Cordless System
Cordless System 30 85 Coming Tools Tools Soon Fastest Growing Brand In The Industry… $1B+ In Power Tools INVESTOR PRESENTATION 40
Slide 41: Hand Tools, Accessories & Storage Opportunities
Hand Tools, Accessories & Storage Opportunities $4B Global Business… #1/#2 In $25B Addressable Market 22+ Categories THREE KEY AREAS OF FOCUS TO SERVE EVERY END USER, JOB SITE & AUTO SHOP IN THE WORLD: Elite Construction Cutting Own The Toolbox Mechanics Tools Of The Future State Of The Art Material
Slide 42: eCommerce Hypergrowth Is A Key Strategy
eCommerce Hypergrowth Is A Key Strategy People E-Captain Capabilities ACCELERATION .Com Acceleration Advanced Analytics Premium B2B Advanced Fulfilment & +400 Content CORE Platform Analytics Customer Service New Talent Partner Of First Call Superior Insights Global Marketplaces Direct To Consumer Pr
Slide 43: Growth In Outdoor
Growth In Outdoor Brand & Product Portfolio Positioned For Growth 2021 Acquisition Pro Forma Results* ~$3B ~7-8% Revenue Operating Margin Adjusted EPS Contribution Ahead Of Expectations ~$1.40 Electrification & Autonomous Win With The Professional ~$0.85 Apply Innovation Leadership & Lead Large Form
Slide 44: SBD And MTD Combination - Highly Complementary Capabilities
SBD And MTD Combination - Highly Complementary Capabilities Two Industry Leading Companies... Dealer Channel (Professional Global Sales Distribution) Manufacturing (Worldwide Expertise Electrification Distribution) (Local Footprint) (Batteries, Motors & Modules) Engineering Expertise (Grass Cutting
Slide 45: Outdoor Growth Journey Over Next 36 Months
Outdoor Growth Journey Over Next 36 Months Clear Strategies To Drive Organic Growth And Share Gain… Lead Large Format Customer Independent Parts & Gas & Electric Partnerships Dealer Channel Accessories A Complete Gas Lineup To Meet Global Retail & Expand Into Higher-End Lawn & Further Penetrate ~$4B
Slide 46: Industrial
INDUSTRIAL Engineered Fastening Infrastructure
Slide 47: Stanley Industrial Overview
Stanley Industrial Overview $2.5 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 A
Slide 48: Engineered Fastening Business Overview
Engineered Fastening Business Overview 2021 Revenue: ~$1.8B Global Fastener Market - $85B Geographic End Market 7% Automotive 19% Asia Americas Industrial 24% 31% 46% 41% 50% 10% 20% ~$29B 20% Value Add Market Segments Europe 23% 9% General Industry Electronics Automotive Construction Aerospace Aero
Slide 49: 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 Inorganic Growth Strategy Enhance The Core New Fastening Markets & Technologies Build Re
Slide 50: Customized Value Proposition
Customized Value Proposition Global Leader In Technology-Based Fasteners + Systems With Data & Analytics Capabilities… Product Design Fastener Design IoT Enabled Common Systems Platform Analytics Insights Helping Our Customers Achieve: Cost Efficiencies ● Improved Quality ● Lower Warranty Cost Reduc
Slide 51: 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 52: Electrification Opportunities In Stanley Industrial
Electrification Opportunities In STANLEY Industrial SEGMENTS FOCUS AREAS WHY WE WIN ELECTRIC BUS & TRUCK • Extensive Customer Relationships Chassis Applications • Auto–Industrial Platform $400M 12% EV Tier Suppliers ‘20 Market CAGR • Local Manufacturing Footprint ELECTRIC TWO WHEELER • Supplier: 20+
Slide 53: Infrastructure
Infrastructure 2021 Revenues: $621M Attachment Tools Oil & Gas ~$480M ~$140M • Provider Of Tools For Applications That Build And Maintain The • A Niche Market Leader In Oil & Gas Infrastructure & Integrity World’s Infrastructure Services • Leader In Specialized Attachments For Off-Highway Constructi
Slide 54: SBD Operating Model
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Slide 55: Operational Excellence: SFS & Customer-Focused Service
Operational Excellence: SFS & Customer-Focused Service SFS Delivers Breakthrough Value To The Customer As Well As High Asset Efficiency… 2021 FCF Conversion 5YR-Average* Operational Excellence 118% ~89% Customer-Driven Service Metrics Agile Supply Chain SWK Industrial Peers 2021 WCT 5YR-Average** Le
Slide 56: Technology Solutions
Technology Solutions AI & Machine Learning Robotics • Yield Optimization • Eliminate Repetitive Tasks • Predictive Algorithms • Real Time Fault Detection & • Pro-active Maintenance Work Resolution Connected Factory Digital Apps Digital Twins • Guided Digital Work • Remote Problem Solving Expertise F
Slide 57: Stanley Production System
Stanley Production System Our Industry 4.0 Journey Has Accelerated Due To Our COE & Data Capabilities… Connecting Our Factories… One Standard… Transformed With Automation… Traditional Apps & Data Sources Proprietary Performance Apps AI-Based System Driving Real- Time Value Realization …To Capture Th
Slide 58: Margin Resiliency Value Pools
Margin Resiliency Value Pools Our Capabilities Have Been Firmly Established In These 4 Focus Areas… Price & Margin Next Generation Supply Chain & Indirect Cost & Functional Excellence Procurement Industry 4.0 Excellence Center Of Excellence To Deliver Integrated Data Structure, AI & Accelerating Mak
Slide 59: Lifelong Learning
Lifelong Learning Individual Enterprise Essentials New skills Culture of lifelong 15% of jobs will be new, learning e.g. UX designer Up-skilling Spirit of 55% of jobs will involve experimentation new content, e.g. and innovation Marketing Building new Re-skilling organizational 30% of today's jobs w
Slide 60: Extreme Innovation: Our Ecosystem
Extreme Innovation: Our Ecosystem 3X Market Cap Growth 2.6X Revenue Growth R&D Spend $276M $188M 2015 2021 Innovation Ecosystem Expanding At An 1 Of Only 2 Companies That Qualified As High- Impressive Rate leverage Innovators Over 15 Years INVESTOR PRESENTATION 60
Slide 61: Extraordinary Customer Experience
Extraordinary Customer Experience Rapid Changes In Technology & Information Are Changing How We Engage With Our Customers… Commercial Personalized Distinctive Products & World Class Excellence Execution Brands Solutions Service …Embedding Creative & Deliberate Best In Class Customer Experiences To D
Slide 62: Appendix
StanleyBlack&Decker APPENDIX
Slide 63: 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, working capital turns and cash flow return on investment (“CFROI”). Organic sales growth is defined as the difference between t
Slide 64: Reconciliation Of FCF & EBITDA
Reconciliation Of FCF & EBITDA Free Cash Flow EBITDA 2021 2020 2019 (MILLIONS OF DOLLARS) 2021 2020 2019 Net earnings before equity interest $ 1,580 $ 1,177 $ 968 Net Cash Provided By Operating Activities 663 2,022 1,506 Interest income (10) (18) (52) Less: Capital And Software Interest expense 185
Slide 65: End Markets
End Markets End Market Industrial Tools & Outdoor SWK Existing Residential / Repair / DIY 0% 29% 25% New Residential Construction 0% 23% 20% Non-Resi. / Commercial Construction 0% 15% 13% Industrial / Electronics 31% 5% 9% Retail 0% 3% 2% Automotive Production 37% 0% 5% Automotive Aftermarket 0% 4%
Slide 66: 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) $4
Slide 67: Material Spend
Material Spend Direct Material Spend Components Finished Goods 2021* ($M) Finished Goods $2,000 29% Components 3,300 47% Steel 570 8% Resin / Plastic Moldings 640 9% Packaging 350 5% Base Metals 100 1% $6,960 Top Three Raw Material Exposures (Finished Goods + Direct + Components) 1. Steel 2. Resin 3
Slide 68: Liquidity
Liquidity Near Term Liquidity Sources Combined Debt Outstanding ($M) March 2022 Cash Position* $0.3B Revolving Credit Facilities $7.0B Notes/Bonds* Credit Revolver Draw ($2.3B) O/S Total Near Term Liquidity $5.1B 5-Year Agreement – Sep 2026 $2.5B 364-Day Facility – Sep 2022 $1.0B 364-Day Facility –
Slide 69: Investor Presentation
INVESTOR PRESENTATION Version 05.03.2022
Stanley Black & Decker — Investor Presentation (May 2022) on 6ix