Robert Bosch Tool Corporation
The Bosch Group is investing $295 million to set up a new venture capital fund for startups. Bosch Chairman of the Board of Management Stefan Hartung noted that their investment in startups promotes technological progress in business and society and is also good for Bosch. Solutions to ever more complex tasks are often discovered more quickly in partnership, according to Hartung. Bosch will also be investing billions in energy efficiency, climate neutral technology and the digital transformation of their business.
Stanley Black & Decker
Wolfe Research and UBS Global Industrials & Transportation Conferences:
With the sale of their Securities companies, they are now a simpler company with a simpler organizational structure so will be able to focus their investments in areas that drive growth, margin expansion and strong free cash flow.
There are a lot of opportunities in the Power Tools and Hand Tools businesses that focus around battery technology, motor technology, tool size and productivity and digital innovations.
They believe they can grow two to three times faster than the GDP; if GDP is 3%, their growth should be somewhere between 6% and 9%. They believe in order to achieve that growth, they may need to shift their focus in some areas. They will look closely at corporate investments and centers of excellence and if their paybacks are more than three or four years, they will reallocate those resources and reinvest in key categories, such as innovation, adding engineers to the Power Tools and Outdoors business and other growth categories.
They need to aggressively accelerate their supply chain transformation that was put on hold because of the significant growth driven by pandemic demand. They believe they can gain $1 billion in P&L efficiencies over the next five years.
They are also testing much higher levels of automation that could take the number of people needed for a particular line from 10 to just two; in addition to needing less labor, it would make it much easier to run production lines around the clock.
They are delayering their business and moving to a more corporate operating model in order to get closer to the 5-layer model truly great companies have instead the 8-layer one they currently have.
They see significant growth opportunities in ecommerce. Ecommerce is about 20% of their business for Tools & Outdoor.
Partnerships with battery and semiconductor manufacturers will help assure the supply of components that are integral parts of their products.
Power Tools demand continues to be very strong, especially in the Pro business. The demand for Pro Tools is high and inventory in that channel is very low.
In the Power Tools space they believe they and one major competitor made significant share gains, the next two major competitors maintained share and most of the smaller manufacturers lost significant share. Many of the smaller players sell niche tools, which must have a significant competitive advantage and enough demand in the market for the big customers to give them shelf space.
Hand Tools & Storage sales have flattened out from a demand perspective, but still represent significant growth over 2019. If their customers start to worry about inventory levels they may pull back on orders, so they are watching orders very closely. If demand changes, they will modify production levels.
They need to do a fourth round of pricing actions for Power Tools and will be in discussions with their partners in early summer. They have a hard time factoring in even more inflation going forward since everyone has already priced in significant cost impacts.
They’ve been through many types of recessions and are looking at their various playbooks. While no one likes recessions, they do give them an opportunity to accelerate margin rate expansion and get back to the rates they require to grow.
JPMorgan Homebuilding and Building Products Conference:
They’ve dealt with $2.7 billion in hyperinflation over the past three years which requires a different approach to price recovery. Everyone is taking price increases in some way, whether it’s new product introductions, mix management, promotional limitations or other actions. When looking at price over the year, it’s about a 20% increase over 12 months.
They now anticipate their volume for the full year will be down 2% to 3% with about one-half to one percent due to the closure of their Russian business after Russia’s invasion of Ukraine.
TTI is a very serious competitor and they expect TTI to continue to gain share. They believe they will also continue to gain share. They believe they are better positioned to take advantage of growth opportunities in the digital space. Robotics and automation are also great opportunities going forward.
Wells Fargo Industrial Conference:
They intend to defend their share in Power Tools. If market prices start coming down and pricing gets more aggressive, they will defend share and serve their channel partners. They don’t see surcharges ahead and everyone understands that when commodities drop significantly then prices will drift down, which will be good for the consumer.
Even though they’ve solved their chip supply problems, there is still a lot to do before the tools actually come out, so they are targeting the third quarter for increased production and supplies.
They believe consumer demand will be more elastic than Pro demand, although serious DIYers love their tools.
James Loree addressed inflation historically by noting that he went to college in the late 70s and graduated in 1980. The mortgage rate on his first home was 12% and his first auto loan was at 14%. He said those rates sound crazy now, but everyone just managed it.
CFO Don Allan will become CEO July 1. He will succeed James Loree, who is leaving the company July 1. Loree joined the company in 1999 as CFO and became CEO in 2016. Allan took on the role of president in addition to CFO in February 2021. The Wall Street Journal reported that Allan will need to get a handle on the company’s supply chain problems and rebuild credibility among investors, particularly in areas such as margin and strategy execution. SB&D stock has underperformed the S&P in recent months.
Despite the fact that Loree moved into the job along the same path, it’s relatively rare for a CFO to become CEO, with just under 8% of the CEOs from companies in the S&P 500 and Fortune 500 coming from the CFO seat. Loree stated that he has worked with Allan for the past 23 years and is pleased and proud to pass the baton to a leader of his extraordinary caliber.
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