Stanley Black & Decker, Inc. · NYSE:SWK
Stanley Black & Decker — Investor Presentation (February 2022)
70 slides from Stanley Black & Decker's investor presentation, Feb 22, 2022
Slide 1: Investor Presentation
INVESTOR PRESENTATION Version 02.22.2022
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 – 24 Vice President, Investor Relations 860-827-3833 2022 Outlook Pages 25 – 28 dennis.lange@sbdinc.com Tools & Storage Pages 29 – 46 Cort Kaufman Senior Director, Investor Relations 860-515-2741 Industrial Pages 47 – 54 cort.kaufman@sbdinc.com 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: $31B Cash Dividend Yield: 1.7% Dividend Paid Consecutively For 145 Years; Increased For Past 54 Consecutive Years Tools & Storage Industrial 2021 Revenue: $12.8B 2021 Revenue: $2.5B Outdoo
Slide 5: Expanding Geographic Reach
Expanding Geographic Reach Stanley Black & Decker Segments Tools & Storage 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. INVESTOR PRESENTATION 5
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: Substantial Long Term Value Creation
Substantial Long Term Value Creation A Track Record Of Long-Term Value Creation 967% Peer Group* 791% Average 394% S&P 500 Data From: Jan 2000 – Dec 2021 Note: Data As Of 12/31/2021; Median Excludes Stanley Black & Decker And S&P 500 TSR Defined As : Total Share Price Appreciation / (Depreciation) I
Slide 10: Our Evolving Operating Model
Our Evolving Operating Model INVESTOR PRESENTATION 10
Slide 11: 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 12: Global Brand Power
Global Brand Power A Powerful Portfolio Of Well Managed Brands INVESTOR PRESENTATION 12
Slide 13: 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 14: Our Approach To ESG
Our Approach To ESG G ro unde d By S ta ke ho l d e r C a pi ta l i s m Ro o ted In O u r Pu rp o se - Fo r T h o se W h o M a ke T h e Wo rld ™ ALIGNED TO WORLD ECONOMIC FORUM FRAMEWORK ENVIRONMENTAL SOCIAL GOVERNANCE Planet People Prosperity Governance Protecting The Planet Furthering Fostering Pu
Slide 15: 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 16: 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 SBD + MTD = Best Position In The World To Achieve Pe
Slide 17: ESG: Measuring Our Progress
ESG: Measuring Our Progress Sustainability Performance Global 2030 CSR Strategy Exceeded All Five-Year Sustainability Goals Set In 2015 Link: 2020 Online ESG Report Elevating & Executing On Our Commitment To Corporate Social Responsibility INVESTOR PRESENTATION 17
Slide 18: Corporate Governance
Corporate Governance Board Composition And Governance Features Board Refreshment And Tenure ✓ Independent Chairman Average Tenure Of 6.8 Years ✓ 5 New Non-Management Directors In The Last 5 Years ✓ Balance Of Institutional Knowledge And Fresh Perspective 4 <= 3 years ✓ Key Governance Features: 2 4 -
Slide 19: 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 $1.1 Prioritized Inventory To Meet Strong Demand | E
Slide 20: Long Track Record Of Improvement (Return On Operating Assets)
Long Track Record Of Improvement (Return On Operating Assets) SBD Operating Model Drives Organic Growth, Margin Improvement, Asset Efficiency And Resiliency… Tariffs & Trade Brexit COVID-19 Referendum Pandemic Eurozone 24.2% 24.7% Debt Crisis 23.7% Ex. Excess Bursting Of The Dot.com Housing Crisis &
Slide 21: Remain A Top Performer (Return On Operating Assets)
Remain A Top Performer (Return On Operating Assets) Top Quartile Performance Against Industrial Peers… 26% 24% Top Tier Asset Efficiency 22% 21% 21% 20% 20% • High Working Capital Turns 18% 17% 17% 17% 16% • Disciplined Capital Expenditures 14% 14% 13% • Efficient Management Of Cash Balances Runway
Slide 22: Balance Sheet & Long-Term Capital Allocation Strategy
Balance Sheet & Long-Term Capital Allocation Strategy Maintain A Hybrid Model: A Company Focused On Growth… Balance Sheet - 2021 Actual 2018 Actual Capital Allocation Strategy Free Cash Flow ($M)* $144 • Continue To Invest In Our Core Franchises | Capital Expenditures ~3.0%-3.5% Of Net Sales Book De
Slide 23: 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 24: Why Invest In Stanley Black & Decker?
Why Invest In Stanley Black & Decker? POWERED BY PURPOSE B U I LT TO L A S T World Class Businesses With A Track Record Of Performance Defined Path For Growth & Margin Expansion With An ESG Orientation Global 2030 CSR Strategy Strong Growth & Shareholder Return Dividend >2X EPS* $10.48 $2.98 $3.54 ~
Slide 25: 2022 Outlook
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Slide 26: 2022 Guidance
2022 Guidance Expect ~7-8% Organic Growth, GAAP EPS Of $10.10 - $10.70 And Adjusted EPS Of $12.00 To $12.50*... 2022 Outlook EPS* Assumptions At The Mid-Point Tools & Outdoor Industrial • Price To Exceed Carryover +$1.20 - $1.30 Organic: High Single Digits Organic: High-Single To Low- Headwinds** Or
Slide 27: Cost & Actions Update
Cost & Actions Update Implemented 4Q Price Actions To Offset Inflation… $XMChain Environment Remain Dynamic… Inflation & Supply …Executing On Multiple Fronts To Support Margin Recovery $XXM Cost Headwinds Rapidly Accelerated During 2021 Robust Price Recovery Actions In Place FY’21 Headwind $1.5B Ann
Slide 28: Currency Impact
Currency Impact Currency Headwind Due To Strong USD… Hedging Approach Currency Trends Vs. USD (12/31/20 – 12/31/2021) ‒ Hedge Key Currency Exposures (CAD, 15% 3% 2% 10% (23%) 9% EUR, GBP, & AUD, Among Others) 10% ‒ Intent Is To Dampen Volatility And Allow Time For Business Teams To Mitigate 5% Fluct
Slide 29: Tools & Storage
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Slide 30: Tools & Storage
Tools & Storage 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 31: 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 32: 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 33: 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 2016 2010 2011 2012 2013 2014 2015 2017 2018 2019 2020 *Other Brands Not Disp
Slide 34: 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 35: 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 35 & Inclusion
Slide 36: Hand & Power Tool Brand Positioning
Hand & Power Tool Brand Positioning HPP MPP OPP Consumer Tradesman Professional Automotive / Industrial INVESTOR PRESENTATION 36
Slide 37: 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 38: 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 39: 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 39
Slide 40: 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 40
Slide 41: Cordless System
Cordless System 30 85 Coming Tools Tools Soon Fastest Growing Brand In The Industry… $1B+ In Power Tools INVESTOR PRESENTATION 41
Slide 42: 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 43: 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 CORE Content Platform Analytics Customer Service New Talent Partner Of First Call Superior Insights Global Marketplaces Direct To Consumer Pr
Slide 44: 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 45: 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 46: 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 47: Industrial
INDUSTRIAL Engineered Fastening Infrastructure
Slide 48: 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 49: 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 50: 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 51: 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 52: 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 53: 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 54: 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 55: Stanley Black & Decker Operating Model
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Slide 56: 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% ~81% Customer-Driven Service Metrics Agile Supply Chain SWK Industrial Peers 2021 WCT 5YR-Average** Le
Slide 57: 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 58: 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 59: 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 60: 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 61: 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 61
Slide 62: 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 63: Appendix
StanleyBlack&Decker APPENDIX
Slide 64: 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 65: 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 66: End Markets
End Markets Estimates Based On 2021 Revenues* End Market Industrial Tools & Storage 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
Slide 67: Portfolio Transformation
Portfolio Transformation ~$10B Has Been Invested In Acquisitions Since 2005 To Advance Growth Opportunities Tools & Storage Industrial Divestitures Purchase Purchase Purchase Year Company Year Company Year Company Price ($M) Price ($M) Price ($M) 2005 National $170 2010 CRC-Evans (Infrastructure) $4
Slide 68: Material Spend
Material Spend Direct Material Spend Components Finished Goods 2021* ($M) Industrial Finished Goods $2,000 29% Components 3,300 47% Steel 570 8% Resin / Plastic Moldings 640 9% Packaging 350 5% Base Metals 100 1% Tools & Storage $6,960 Top Three Raw Material Exposures (Finished Goods + Direct + Comp
Slide 69: Liquidity
Liquidity Near Term Liquidity Sources Combined Debt Outstanding ($M) December 2021 $750 $750 $750 $700 Cash Position* $0.3B $555 Notes/Bonds* $500 Revolving Credit Facilities $4.5B O/S $400 Total Near Term Liquidity $4.8B 5-Year Agreement – Sep 2026 $2.5B 2022 … 2026 … 2028 … 2030 … 2040 … 2048 … 20
Slide 70: Investor Presentation
INVESTOR PRESENTATION Version 02.22.2022
Stanley Black & Decker — Investor Presentation (February 2022) on 6ix