Stanley Black & Decker
Q3 sales rose 6% to $3.9 billion, with volume up 3%, acquisitions up 2% and price up 1% contributing to the growth. Operating margins rose to 17.7%.
Tools & Storage net sales increased 11% versus Q3 2019 with volume up 10% and price up 1%. Organic revenues across all regions were positive, as consumers continue to focus on their homes and ecommerce sales were strong.
Q3 Conference Call:
North America Tools & Storage sales were up 11% organically. US retail delivered 16% organic growth, driven by strong DIY performance and improving demand from Pros, along with robust ecommerce sales.
Approximately $100 to $125M of promotional shipments in Tools & Storage shifted into October from September, negatively impacting the segment for the quarter by 4 to 5 points.
Exceptionally strong point-of-sale (POS) demand in US retail continued through the end of the third quarter; retailer inventory levels improved only marginally.
Overall the Tools & Storage segment profit rate, excluding charges, was a record 21.5%, up 490 basis points versus Q3 2019, with volume, productivity, cost control and price all contributing.
Power tools and equipment delivered 22% organic growth, benefiting from strong execution and new product introductions. Craftsman is growing ahead of expectations and getting close to their annual goal of $1 billion in revenue.
DeWalt is benefiting from the recovery of the Pro business and new product introductions including Power Direct, as well as expansion of FlexVolt, Atomic and Xtreme.
They expect Tools & Storage to grow 8% to 10% organically in the fourth quarter and expect overall organic revenue growth between 3% and 5%. October numbers will be very strong because of the sales that were pushed into the month.
POS in North American retail has remained strong. Demand has dropped somewhat from very strong levels in Q2 but POS growth has been in the low 20s for the last eight weeks of the quarter.
They took $1 billion out of costs, including $0.5 billion of indirect or non-people related costs. They believe about $625 million of that $1 billion will stick, resulting in carryover benefits next year that will yield $100 to $150 million of additional margin tailwind.
They believe tools and outdoor will be very strong in 2021, and the segments that are down significantly this year, industrial, security and industrial tools, will bounce back. They also believe pandemic demand will continue through at least the first half of 2021. They are basing projections on their belief that the global economy will not be severely pressured in 2021.
Ecommerce sales will approach $2 billion in 2020. Ecommerce represented 18% of global Tools & Storage revenue for the third quarter. They will continue to make targeted investments to bring in world class talent and continue to expand their market share in ecommerce. Their ecommerce business has grown from virtually non-existent in 2010 to nearly $2 billion in 2020. They have a vast network of ecommerce partners around the world, including Amazon and Alibaba. SB&D ecommerce sales are all business-to-business rather than direct to the consumer, which works well for them. Their competitors have not focused on ecommerce which has given them even more opportunity.
The Black & Decker brand resonates very well with the younger generation, which will form the core of ecommerce growth in the future.
The pandemic is not over, and they are not letting their guard down. They are committed to serving customers and keeping employees safe.
They believe MTD will bring between $2 billion and $3 billion in revenue beginning in July 2021.
They are also working on items that mesh well with the new emphasis on security and safety such as automated entries with facility threshold controls, contact and proximity tracing and touchless doors for commercial establishments.
Keeping up with inventory replenishment right now is a real challenge because of very strong POS; both they and their customers would like about four weeks of inventory, but that is very challenging now. They need to solve that in the first quarter.
SB&D launched its third annual Maker Month in October, an annual celebration of the makers, creators and tradespeople shaping the world. The month-long campaign will focus on the trade skills gap, which was described as one of the greatest challenges facing the workforce today. According to World Economic Forum, there are an estimated 10 million global manufacturing jobs currently unfilled due to the skills gap. Generation T estimates that by 2028, 3 million jobs in the skilled trades will be open in the US. SB&D will be using social media to spotlight a diverse range of makers and creators, showcasing one individual each day of the month and then featuring all 31 on their website. In addition, the company has established two scholarship programs to support future trades professionals, one for DeWalt and one for Stanley Security.
SB&D received the 2020 Reuters Responsible Business Award, which honors leadership in sustainable business. SB&D won in the Business Transformation category, which recognizes companies that are embracing innovating opportunities to address social and environmental challenges and develop sustainable business models for the future.
SB&D used their Techstar partnership with Dynamic Green Products (DGP) to launch a line of FDA-approved hand sanitizer gels. SB&D will be selling the plant-based sanitizer gel online at homedepot.com as well as through other retail outlets. The gel uses a proprietary plant-based thickener and 72% ethyl alcohol. SB&D will also distribute the hand sanitizer in each of their facilities around the globe and donate $100,000 worth of sanitizer to those in critical need at senior living facilities. In addition, the Craftsman team, which is building a new manufacturing facility in Fort Worth, Texas, will provide hand sanitizer to food banks across the state.
TTI and discount retailer Harbor Freight Tools are battling it out in federal curt over allegations of stolen trade secrets, patents and laborers. TTI alleges that Harbor Freight, which is also based in Anderson County, South Carolina, began luring away TTI’s top employees in January as part of an effort to expand into tool production. TTI claims that a wave of engineers, researchers and lab directors started resigning without notice and took thousands of pages of blue prints, confidential documents and sales and supply chain secrets with them. Harbor Freight denies any wrongdoing and contends that the non-compete clauses in TTI’s employee agreements are illegal. TTI employs about 500 people at the Anderson site.
TTI has stepped up efforts to find Vietnamese suppliers for their project underway in the Saigon Hi-Tech Park (SHTP) HCMC. According to Saigon Times Weekly, they are looking for up to 200 local suppliers for this $650 million project.
Trimble is selling their construction logistics business to Birmingham, Alabama Construction technology company Command Alkon. Command Alkon will combine Trimble’s construction logistics telematics offerings with their fleet and workforce management products and services for heavy construction. Trimble’s construction logistics solutions provide ready-mix and aggregates delivery managers with tools to track, schedule, route and communicate across their fleet.
Trimble has formed an alliance with robotics firm Boston Dynamics (BD) to market of version of BD’s Spot dog-like robot geared toward construction. The robot will include a variety of Trimble’s sensors that automate tasks such as site scans, surveying and progress monitoring in potentially unsafe environments. The robot can also mount 3-D cameras and laser scanners or other materials weighing up to 30 pounds.
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