Power Tool Industry November 2019
Bosch is systematically preparing for connected manufacturing and logistics. Sven Hamann is the new head of the Bosch Connected Industry business unit and Dr. Heiner Lang joined the executive board and will assume responsibility for engineering and the Factory Automation business field that will impact both Bosch customers and 280 Bosch plants worldwide. The former head of the Connected Industry business unit, Dr. Stefan Assmann, will now assume the position of business chief digital officer in the Industrial Technology business sector and act as a link between the various business units and divisions. Bosch research shows that connected solutions can boost productivity at individual sites by up to 25% and reduce inventories by as much as 30%.
Stanley Black & Decker
Q3 revenue rose 4% to $3.6 billion. Contributions from volume (+3%), acquisitions (+3%) and price (+1%) offset currency and divestitures, which each declined (-1%.)
Tools & Storage net sales increased 4% versus 3Q'18 as volume (+4%) and price (+1%) were partially offset by –1% from currency. The 5% organic growth for the quarter was led by North America (+7%) and Europe (+4%), more than offsetting a modest decline in emerging markets (-1%). North American organic growth was driven by the rollout of the Craftsman brand and new product innovations, including DeWalt FlexVolt, Atomic and Xtreme. The North American retail segment delivered low double-digit growth for the quarter and commercial channels grew in the low single-digits. Gains were partially offset by continued declines in industrial-focused businesses.
In response to a decline in earnings, they have begun implementing new cost and pricing actions and are accelerating their $300 to $500 million multi-year margin resiliency initiative, according to CEO Jim Loree.
SB&D plans to cut staff as part of their goal to cut $200 million in annual costs. The cuts will come from reductions in headcount across the company as well as some manufacturing consolidation.
SB&D lowered their profit forecast for the year and dropped expected earnings from $7.50 to $7.70 per share to somewhere between $6.50 and $6.60. They now expect 3.5% to 4% organic growth for 2019 and anticipate having to overcome $445 million in commodity, currency and tariff-related headwinds.
Q3 Conference Call with Analysts:
Within the Tools & Storage segment, power tools and equipment delivered 6% organic growth. Hand tools, accessories and storage grew 5% organically.
Their investments in digital talent and ability to rapidly commercialize new technology-based solutions are paying off and their activities in the small and medium-sized business segments are starting to gain momentum.
Over the past three years they have achieved impressive growth while simultaneously absorbing $900 million in commodity, tariff and currency-related costs. The Tools & Storage segment absorbed 95% of the impact.
The Craftsman program is outperforming expectations and they forecast that by the end of 2020 they will have more than 10,000 retail outlets with $1 billion in revenue, six years ahead of the original plan. They’ve added $500 million of organic growth since acquiring the Craftsman brand.
FlexVolt is nearing $400 million in annual revenue and continues to grow in double-digits.
DeWalt Atomic and Xtreme power tools are quickly adding hundreds of millions of dollars in growth and getting very positive end user reception.
They are well on their way to broadening the distribution of the Irwin and Lenox brands around the world; by next year they expect to generate a cumulative $100 to $150 million in revenue synergies.
Their margin resiliency program will be “transformative” and will provide $300 million to $500 million of cumulative operating margin benefit by 2022.
Lowe’s is now fully set with Craftsman across all locations and has successfully launched 1,200 new Craftsman products. The broader rollout for ecommerce and other retail partners is well underway. They have more than 2,500 Craftsman products globally across all segments.
Their expansion of Stanley and Stanley FatMax will exceed 100 products this year.
Emerging markets have become more volatile and offer lower growth potential overall.
The tariff headwinds that are in place today are due to list 1 through 3 and list 4A, with a carryover effect of about $100 million. If the second list of tariffs (4B) goes into effect in December that will have another $25 million in carryover impact. If tariffs on the first lists increase from 25% to 30%, which has been discussed, that would add another $55 million in headwinds.
In the past they’ve averaged about 40% price recovery on tariffs; the various actions they are taking would cover 100% of the tariff exposure. They anticipate that if the tariffs are rolled back, customers will want some money back and they plan to give back “at least some of it” but in reality there is a significant chunk that would not be given back and that they would like to see drop to the bottom line.
Don Allen stated that they believe that SB&D was unfairly hit with tariffs on componentry for products that they make in the US and that their competitors are not feeling the same impact, and therefore have not taken as significant pricing actions as they have. Nevertheless, their volume is holding up well.
The double-digit POS has been positive all year and has accelerated over the past 22 weeks but has been in balance with inventory, and they don’t see any excess inventory across the home center channel.
They had not really looked at layers across the organization for a long time. When they did, they discovered that there were pockets within the organization that had more layers than necessary. Reducing them streamlines the organization and makes them more agile.
SB&D kicked off their second annual Maker Month, a celebration of the makers and creators sharing the world around us, according to the company. Throughout the month of October SB&D encouraged students, parents, educators and makers of all ages to participate in activities and challenges that spark curiosity and build excitement for the power of making.
According to Contify Retail News, there are about 10 million manufacturing jobs around the world that remain unfilled due to the skills gap. Last year SB&D engaged more than 17,000 students and 3,000 schools from more than 40 countries through STEAM projects. This year they are hoping to reach 45,000 creators and makers. In the US, SB&D invited aspiring makers to participate in the Making for Good Challenge. The top team will receive $15,000 and a virtual mentorship from SB&D. Additionally, the DeWalt Trades Scholarship program will award five students $10,000 scholarships to pursue secondary or post-secondary education at a trade school, vocational school or career center in the US. Throughout the month SB&D employees around the world will partner with local schools and organizations.
Milwaukee Tool introduced MX Fuel, labeled the first battery-powered cordless machinery and tools for light construction needs. Milwaukee unveiled plans for MX Fuel in June at their annual New Products Symposium for the media. They insisted attendees disconnect all streaming services and promise that there would be no leaks until Milwaukee was ready to unveil the system, which happened some five months later on the last day of October.
The MX Fuel system targets light equipment, a category that has primarily been occupied by gas powered and corded tools with few battery-operated options. Their system will use two batteries: the compact CP battery pack, weighing in at 5.9 pounds, and a larger XC pack, weighing in at 10.6 pounds, both much larger in size and weight than anything Milwaukee has previously offered. The battery will operate at 72V, but Milwaukee stated that voltage was only part of the story, and that while the construction industry has traditionally used voltage to communicate power and capability, voltage alone is not a good indicator for light equipment. MX Fuel will launch with six products. Reporters note that as of now run time is largely unknown.
Milwaukee Tool is building a new $86 million factory in Torreon, Mexico. They plan to start operations in April 2020 and have promised the new factory will employ 2,600 people. Torreon is in the state of Coahuila, about two hundred miles east of Monterrey, Mexico.
Makita USA is extending their national “Rule the Outdoors” campaign and will introduce new commercials this fall that promote the benefits of battery-powered outdoor power equipment. Makita noted that response to the campaign has exceeded their expectations.
Q3 revenue dropped 1% to $783.9 million. Building and Infrastructure revenue rose 5% to $309.8 million. Geospatial revenue fell sharply, dropping 16% to $155.1 million. CEO Steven Berglund noted that the disappointing revenue reflected prevailing market uncertainties which they expect to persist for the remainder of the year. Nevertheless, he stated they’ve shown an ability to control costs while continuing to transform their business model toward recurring revenue.
Robert G. Painter will succeed Steven W. Berglund as president and CEO of Trimble effective January 4, 2020, the first day of Trimble’s 2020 fiscal year. Berglund, who has been president and CEO since 1999, will become executive chairman of the Board of Directors. Painter joined Trimble in 2006 and has been CFO since 2016. Current chairman Ulf Johansson will retire in January.
Trimble beefed up their Visibility platform with two enhancements that expand supply chain connectivity by allowing carriers to track and update loads directly into their shippers’ network. Carriers will also be able to track and manage the status of their loads directly. Shippers will be able to review performance indicators and identify areas that could be improved, made more efficient or where costs could be reduced.
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