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Stanley Black & Decker Hosts Investor Day - Analyst Blog

By: Zacks.com
Posted: 6/6/2013 1:26:00 PM
Referenced Stocks: ATU;KMT;LECO;SWK

Industrial tool maker, Stanley Black & Decker Inc. ( SWK ) hosted its Investor Day 2013 on June 5, 2013. Discussions on the financial aspects of the company's achievements and goals are briefed below.

The merger of Black & Decker has proved very beneficial for Stanley Black & Decker as it now aims to realize cost synergies of $500 million by the end of 2013 as against its original target of $350 million only. Also, roughly $300 million in revenue synergies have already been achieved compared with a $300-$400 million target by the end of 2013. Since the merger, as many as 1,500+ new products have been introduced by the company.

Stanley Black & Decker also mentioned that it remains focused on expanding its organic growth through strategic initiatives including: 1) Expansion in emerging markets through setting up of SBUs for MPP Hand Tools, Power Tools & Commercial Hardware; 2) expansion through creation of Smart Tools & Storage Market, expansion of MRP vending business; 3) RTLS Penetration Healthcare /Security Verticals; 4) US Government (Healthcare/Security/Industrial); 5) Aiming to tap opportunities in offshore oil and gas pipeline market; and 6) Continuing To Capture BDK Integration Revenue Synergies.

These six initiatives are likely to contribute $850 million of annualized revenue growth and $200 million in operating income in a 3 year-term period with $150 million in 2013 and $350 million each in 2014 and 2015. To achieve this target, the company is intent on investing $100 million as operating expenses (including $20 million of brand development expense for the emerging markets) and $50 million as capital spending.

Besides these strategic initiatives, Stanley Black & Decker has a goal set for 2016-2017 that includes: $15 billion in sales; operating margin greater than 15%; greater than 20% of revenues in emerging markets; 15% return on capital/investment, and 10 working capital turns. Of the total revenue of $15 billion, roughly $3.5-$4 billion are expected from Security, $7-$8 billion from Tools, more than $2 billion from Engineered Fastening and roughly $1-$2 billion from Infrastructure.

For 2013, management reiterated its guidance provided earlier. Earnings per share, excluding one-time charges, are expected to be within the $5.40-$5.65 range on the back of 2%-3% organic net sales growth. GAAP EPS for 2013 is expected to be in the range of $4.46-$4.71 versus $4.62-$4.87 predicted earlier. Free cash flow is projected to be roughly $1.0 billion.

Also on the same day, Stanley Black & Decker announced a New Brand Identity for its STANLEY® branded products, services and businesses.

Stanley Black & Decker currently has a $12.5 billion market capitalization. Stocks that closely compete with Stanley Black & Decker are Lincoln Electric Holdings Inc. ( LECO ), with a Zacks Rank #2 (Buy), Actuant Corporation ( ATU ) and Kennametal Inc. ( KMT ).



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