Power Tool Industry May 2017
Bosch introduced a new app that offers end-to-end project management for users of the Bosch Blaze GLM 50 C and Bosch GLM 100 C laser measures. The app reportedly speeds up and improves the measuring process, improves precision, enhances the organization and reliability of project documents, reduces information transfer mistakes, stores project images with measurements and notes and creates floorplans. Data can be transferred to an iOS or Android smart device.
STANLEY BLACK & DECKER
First quarter sales rose 5% to $2.8 billion, as positive organic growth (+5%) and acquisitions (+3%) more than offset currency (-1%) and divestitures (-2%). Tools and Storage net sales rose 9%, with 6% of the increase from volume and 4% from acquisitions, offset somewhat by unfavorable currency (-1%). Sales were positive in all regions, with North America up 8%. New products, including gains from DeWalt’s FlexVolt system, and consistently strong commercial execution, helped fuel the gains in North America.
In early March SB&D upgraded their 2017 earnings guidance based on the sale of the majority of their Mechanical Security business and the purchase of the Craftsman brand from Sears and the Irwin and Lenox brands from Newell-Rubbermaid. They have now raised their guidance again as they expect even stronger full year results, which they attribute primarily to an improved outlook for their industrial businesses.
They will continue to focus on integrating the Newell Tools business and building the Craftsman brand, while continuing to make balanced investments to support organic growth.
From their Q1 Conference Call with Analysts:
Their plans for a new state-of-the-art U.S. manufacturing plant for Craftsman are beginning to take shape; it is possible they may build more than one facility. Overall customer reaction to the acquisition has been extremely enthusiastic, and many customers are asking about carrying Craftsman products.
They spoke to more than 1,000 customers in the first 48 hours after they began integrating Newell Tools’ Lenox and Irwin brands and the feedback was universally very positive.
For Newell Tools they are focused on integrating employees, suppliers and customers into their existing operations. They are also focusing on achieving the substantial cost synergies they already identified. In addition, they are investigating new distribution channels for Lenox and Irwin, including previously underserved markets where SB&D has a strong presence.
FlexVolt met their expectations for the quarter, and they expect the momentum to be maintained and bolstered by their commercial teams launch strategy, which has a well-crafted plan of promotions and new FlexVolt tool and accessory SKUs that will be regularly introduced over the next few years.
They are expecting mid-single-digit organic growth for Tools & Storage as construction markets in the U.S. are healthy and markets in Europe are stable.
Profits in the Tools segment are very volume driven, and the robust growth in volume has given them a lot of freedom inside their supply chain. It’s driven great productivity and major quality improvements that have lowered their warranty return rates. The volume growth they’ve had has been very profitable.
There is incredible demand for Craftsman products across their U.S. customer base in particular. They believe their absolute share today is about 20% of the global market, which means 80% of the market is still available. Craftsman represents close to two billion dollars in the marketplace today and has a loyal installed customer base that would very much prefer to be able to find Craftsman in locations other than Sears.
While they are very busy integrating the businesses they bought, the M&A pipeline is very robust and there are some very interesting strategic assets they are thinking about. They may do some very small acquisitions this year, but will more likely focus on next year, and probably outside of the Tools segment.
They are estimating a combined total of currency and commodity inflation of $100 to $105 million.
CFO Jim Loree commented that the new administration seems to be backing off the idea of a border tax and now understands that it would not really be beneficial to the U.S. or many U.S. companies. However, their commitment to U.S. manufacturing really has nothing to do with the possibility of a VAT tax, instead it reflects the fact that they are able to cost effectively manufacture in the U.S. due to today’s manufacturing technology. They want to increase the overall percentage of their tools they manufacture in the U.S., particularly Craftsman.
They are extremely happy about FlexVolt. Half of their 8% first quarter growth in North America can be attributed to FlexVolt. Their retail execution of FlexVolt is now more than double-digits ahead of what the customer expectations work suggested. FlexVolt has been adopted much more quickly than is typical with a new power tool platform. The average user rating of FlexVolt is 4.9 out of 5. They are very active in the development of 20, 60 and even 120 volt tools going forward. They are now planning for a more rapid ramp up than $100 million a year over ten years.
They have ten innovation teams up and running and every business in the company has at least one team dedicated to discovering breakthrough innovations.
A lawsuit filed by iRobot accuses Hoover and Stanley Black & Decker of patent infringement covering robotic vacuums. The complaint also named Shenzhen Silver Star Intelligent Technology and Suzhou Real Power. The company is looking to block the further use of its robotic vacuum inventions.
Milwaukee Tool grew sales 21% in 2016 and Joe Galli, CEO of Milwaukee’s parent company, Techtronic Industries, says that Milwaukee plans to increase revenue by 20% annually over at least the next five years. That would mean about $6 billion in sales by 2021, although according to the company, their mission is to reach $5 billion by 2020. Galli believes the markets served by Milwaukee, which targets professionals, and Ryobi, their DIY brand, could more than double over the five years, reaching $36 billion. He believes that TTI will drive much of that increase, much as Apple did with iPhone and iPad. Galli said that the replacement cycle for power tools has decreased from around eight years to just three years, which has helped boost the market. Galli’s biggest worry at the moment is not being able to hire enough engineers to develop the products the company has ideas for, the product pipeline is so stacked. TTI plans to hire 522 new employees from college campuses alone in 2017, a 28% increase over 2016. Galli said Milwaukee is growing in a number of geographies, with sales up 20.6% in North America, 21.3% in Europe, the Middle East and Africa and 24.7% in the rest of the world in 2016.
Milwaukee’s Phase II expansion at their Greenwood, Wisconsin plant will include the construction of an on-site quality assurance lab, funded in part by Community Development Block Grants. Eventually the Phase II expansion will bring an additional 75 jobs to Greenwood. Milwaukee kicked in $13,385 and the city and the county pitched in another $150,000 for construction.
Milwaukee Tool has invested $47 million into U.S. operations in the last 5 years and is continuing to grow their domestic production at their three manufacturing facilities located in Greenwood and Jackson, Mississippi, and Mukwonago, Wisconsin. According to Milwaukee Tool President Steve Richman their U.S. production provides critical components for their global manufacturing footprint. If the U.S. enacts some sort of border tax they have China ready to supply the rest of the world and the U.S. able to focus on local production.
Trimble is changing the reporting of their segment financial results to better reflect the company’s customer base and end markets. Beginning with first quarter results, announced the end of April, Trimble will report revenue and operating income based on four operating segments: Buildings and Infrastructure, Geospatial, Resources and Utilities and Transportation. The Buildings and Infrastructure segment primarily serves customers working in architecture, engineering, construction and operations and maintenance. Under the new structure the segment had 2016 full-year revenue of $743 million.
First quarter revenue rose 5.3% to $613.9 million, beating analysts expectations. That translated to underlying core organic growth of more than 6.5%, after allowing for acquisition, divestiture and exchange rate effects. It was the highest growth rate since 2014.
Buildings and Infrastructure segment revenue was up 8% year-over-year, with currency translation subtracting about 2% and acquisitions and divestitures providing a minor positive effect. Across the board from architecture and design to their estimating design and engineering solutions for MEP and structural trades, all businesses performed well in the quarter, with concentrated strength in North America and Europe.
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