Stanley Black & Decker
From the Morgan Stanley Laguna Conference, where
SB&D was represented by CEO James Loree:
Both CEO James Loree and CFO Don Allen joined Stanley Works in 1999, as did the current head of the Tools business and their Chief Human Resources Officer.
One of their goals is to become known as one of the world’s most innovative companies.
They return about half of their excess capital to their shareholders through dividends and stock repurchases and reinvest the rest in their businesses.
Their FlexVolt 60-volt system operates tools that in the past have been corded, such as angle grinders and miter saws, but is compatible with all their 20-volt tools.
They are expecting a gross sales benefit of $300 million from FlexVolt this year, which includes about $100 million of cannibalization of corded tools, so a total of about $200 million in incremental revenue.
They currently have 10 to 12 serious projects in the innovation pipeline that each have more than $100 million in annual revenue potential. They are learning that some of the skills required to commercialize them and the business models and types of people that are required in other areas demand a different approach. Loree predicted that by the next analysts meeting there would be a major move by SB&D to liberate some of these innovations and put them in what he called more of an exponential organization as opposed to a traditional organization with a traditional P&L. Or, as he later explained, more like an incubator that would have a different culture than SB&D corporate.
Their goal of reaching $22 billion in revenue by 2022 will mean doubling the size of the company in six years, which will require a significant increase in mergers and acquisitions (M&A). However, they are very disciplined in their approach to acquisitions, and in the past three months have walked away from three they were seriously considering. They also want to produce significant organic growth.
When they acquired Craftsman they only got about $100 million of revenue, as they did not take any Sears revenue, which would have been more than $1 billion. They didn’t want it, and could not have taken it anyway because of antitrust issues.
They view the Craftsman acquisition as an offensive weapon because there is such high customer interest in Craftsman being available outside of the Sears channels.
They have completely redesigned the entire Craftsman line to incorporate the best value elements of all their different products from around the world. They will be rolling out the new Craftsman line in mid-fall of next year.
They would not discuss which customers would be getting Craftsman and which would not, but did indicate that the big box store not getting the line would be getting something of their own which will impact them in a very positive way.
Loree talked about the impact of the storms, and said that at first disasters affect the big box stores in a negative way, as they have to close stores, but then when they open again, the effect is very positive. The first traffic allowed on I-95 after Hurricane Irma was a convoy of Home Depot trucks. Both Home Depot and Lowes have hurricane response centers that mobilize before the storm strikes. Texas and Florida are big enough to have an impact on the entire country’s construction market. All in all they think the impact will be neutral over the short term and slightly positive over the mid-term.
SB&D is dealing with an anti-dumping investigation by the Department of Commerce for supposedly selling certain steel nails with shaft lengths up to 12 inches at prices below value between August 1, 2015 and July 31, 2016. If they are found guilty, Customs will assess them anti-dumping duties.
Stanley Ventures, a division of SB&D, is the lead investor for FreeWire Technologies Series A financing bonds. FreeWire is a tech company specializing in mobile and networked energy storage and offers solutions for electric vehicle charging and mobile distributed power through the Mobi product line. FreeWire commented that the mobile energy market is rapidly evolving and SB&D is not only a leader but a pioneer of innovation and development.
Trimble acquired privately-held 10-4 Systems for an undisclosed amount. 10-4 Systems is a provider of advanced multimodal shipment visibility solutions and related technologies for shippers and transportation providers. The acquisition expands Trimble’s portfolio of transportation management systems (TMS) to include an established cloud-based solution for small carriers as well as a shipper RFP platform. 10-4 Systems helps Global 500 companies understand, embrace and benefit from a comprehensive supply chain technology experience.
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