Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - STANLEY BLACK & DECKER, INC. | craftsmanbrandpressrelease.htm |
| 8-K - 8-K - STANLEY BLACK & DECKER, INC. | craftsmanbrand8-kdocument.htm |
Purchase Of
Craftsman Brand
January 5, 2017
2
Cautionary Statements
Stanley Black & Decker makes forward-looking statements in this presentation which represent its expectations or beliefs about future events and
financial performance. Forward-looking statements are identifiable by words such as "believe," "anticipate," "expect," "intend," "plan," "will,"
"may" and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events
or circumstances are forward-looking statements. Forward looking statements made in this presentation, include, but are not limited to,
statements concerning: the consummation of the purchase; investment in, and rapid increase in sales and innovation of products carrying the
Craftsman brand; significantly increasing sales of Craftsman-branded products in untapped channels; expanding U.S. manufacturing footprint and
adding jobs in the U.S.; the Craftsman brand complementing and expanding Stanley Black & Decker’s existing operations; revenue opportunities;
and organic revenue growth and accretion to earnings per share.
You are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements are not guarantees of
future events and involve risks, uncertainties and other known and unknown factors that may cause actual results and performance to be
materially different from any future results or performance expressed or implied by such forward-looking statements, including, but not limited to,
the failure to consummate, or a delay in the consummation of, the transaction for various reasons; failure to successfully integrate the Craftsman
brand and achieve expected revenue opportunities; the seller becoming insolvent or entering bankruptcy proceedings; or the transaction-related
costs and charges being greater than anticipated.
Forward-looking statements made herein are also subject to risks and uncertainties, described in: Stanley Black & Decker's 2015 Annual Report on
Form 10-K, its subsequently filed Quarterly Reports on Form 10-Q; and other filings Stanley Black & Decker makes with the Securities and Exchange
Commission. In addition, actual results could differ materially from those suggested by the forward-looking statements, and therefore you should
not place undue reliance on the forward-looking statements. Stanley Black & Decker makes no commitment to revise or update any forward-
looking statements to reflect events or circumstances occurring or existing after the date of any forward-looking statement.
3
An Investment In Organic Growth
Stanley Black & Decker To Purchase Craftsman Brand From Sears Holdings…
…Enhances Company’s Rich Brand Portfolio With Addition Of Iconic Craftsman Brand
• Obtaining Rights To Develop, Manufacture And Sell Craftsman Brand In Non-Sears Retail, Industrial & Online Channels
• Sears To Continue Developing, Sourcing & Selling Craftsman In All Sears Retail Channels Under Perpetual License Agreement
• SBD To Significantly Increase Availability And Innovation Of Craftsman Products And Add Manufacturing In the U.S. To
Support Growth
• Strong Organic Revenue Growth Potential – To Contribute ~$100M Of Average Annual Revenue Growth Per Year For
Approximately Next Ten Years
• Agreement Consists Of $525M Cash Payment At Closing, $250M At End Of Year 3, & Annual Payments Of Between 2.5% And
3.5% On New SBD Craftsman Sales Through Year 15
• EPS Accretion, Excluding Charges – Year 1 ~$0.10-$0.15, Increasing To ~$0.35-$0.45 By Year 5 & ~$0.70-$0.80 By Year 10
• Transaction Structured To Minimize On-Going Risks Associated With Sears:
• SBD Assuming No Contractual Credit Risk From Sears Relative To Transaction
• No Tie To Sears Organic Growth Trajectory
• No Incremental Obligation To Supply Sears
Commercial Expansion & U.S. Manufacturing Base
11 U.S. Tools & Storage Manufacturing Facilities
Allentown, PA | Charlotte, NC | Cheraw, SC | Dallas, TX | Georgetown, OH |
Greenfield, IN | Hampstead, MD | Holliston, MA | Jackson, TN |
New Britain, CT | Shelbyville, KY
Accelerating Innovation, Channel Expansion & Expanding MIUSA Footprint To Drive Significant Revenue Growth
2013
~2,200
Total Employees In U.S.
Manufacturing Facilities
2016
~3,000
Total Employees In U.S.
Manufacturing Facilities
~40% Increase In HC Over The Last 3 Years In U.S. Plants
4
Supply Chain Agility | Lower Distribution Costs |
Improved Quality Control | Risk Mitigation |
Reduced Carbon Footprint
Retail Channel
• Expand Distribution To
New And Existing Non-
Sears Retail & E-
Commerce Channels
• Leverage MIUSA
Expansion
Industrial Channel
• Expand Product Distribution
Points
• Leverage MAC Tools Mobile
Conversion Program
Lawn & Garden
• Potential To License Brand To Outdoor Manufacturers
• Sell Through Dealer Networks
Channel Expansion/Revenue Opportunities Expanding U.S. Manufacturing Base
MIUSA
Benefits
Existing Sales NetworkBrand Overview
• Iconic Brand Within U.S. In Power & Hand Tools And
Storage Products
• High Brand Awareness
• Strong Presence In Lawn & Garden
• External Sears Sales – Predominantly Through Ace
Hardware
• Diverse & Complementary Product Lines
The Craftsman Brand Today: Overview
5
Strong Brand With High Retail / Industrial Channel Customer Interest
Sears And Sears-Related Channels
~90% of Retail Sales
Sears
Sears
Hometown*
Kmart
~65%
Of Retail Sales
~20%
Of Retail Sales
~5%
Of Retail Sales
External Accounts
~10% of Retail Sales
Examples:
*Sears Hometown Is A Separate Publically Traded Company (NASDAQ: SHOS) That Sells Sears Merchandise
Tractors &
Mowers
L&G
Equipment
~25%
Of Retail
~15%
Of Retail
Craftsman Today: ~$1.9B At Retail
6
Tools (~35%) Lawn & Garden (~40%) Storage / Other (~25%)
Hand Tools Power Tools
~25%
Of Retail
~10%
Of Retail
Storage &
Garage
Related &
Other
~20%
Of Retail
~5%
Of Retail
Transaction Summary
7
Transaction Details Financial Information
EPS Accretion (Ex. 1-Time Charges) & CFROI
• EPS Accretion, Ex- Charges – Yr. 1 ~$0.10-$0.15, Increasing To ~$0.35-$0.45 By Yr. 5 & ~$0.70-$0.80 By Yr. 10
• CFROI: Mid-Teens By Year 10
Timing
• Subject To Customary Closing
Conditions, Including Regulatory
Approval – Expected To Close During
2017
• No Breakup Fees
Transaction Related Charges
• ~$20M In One-Time Charges, Primarily Incurred In Year One | ~$80M Of Capex
• ~$7M Of Annual Intangible Asset Amortization
Deal Structure & Purchase Price For Craftsman Brand
• $525M Cash Paid At Closing And $250M At End Of Year 3 | W/C Adjustment @ Closing TBD
• Annual Cash Payments Of Between 2.5% - 3.5% On New SBD Craftsman Sales Through Year 15 (2.5% Through
2020, 3% Through January 2023, And 3.5% Thereafter)
• NPV Of Cash Payments Totals ~$900M
• Perpetual License Allowing Sears To Continue Selling In Sears-Related Channels (Royalty-Free For 15 Years,
3% Thereafter)
• Assuming No Contractual Credit Risk From Sears Relative To This Transaction
Strategic Rationale
• Iconic Craftsman Brand Complements
SWK’s Portfolio Of Global Tools &
Storage Brands
• Accelerate Innovation And Expand
Distribution Channels To Generate
Growth Through External Non-Sears
Retailers, Both Existing and New (Only
~10% Of Craftsman-Branded Products
Currently Sold Outside Of Sears-
Related Channels)
Significant Organic Revenue Growth Potential
• To Contribute ~$100M Of Revenue Growth Per Year For Approximately Next Ten Years
Value Creation Model | Capital Allocation
Strong, Innovation-
Driven Businesses
In Diverse, Global
Markets
• Outsized, Capital-Efficient Organic Growth
• Attractive, Expandable OM Rate
• Outstanding FCF conversion
Powered By:
Investor-friendly Capital Allocation
~1/2 Return Cash To
Shareholders
~1/2 M&A
World Class Brands
Attractive Growth Platforms
Scalable, Defensible Franchises
Differentiable Through Innovation
Transaction Aligns With Our
Value Creation Model &
Reflects Effective Allocation
Of Capital When Taken In
Context With The Recent
Sale Of Mechanical Security:
Freeing Up Trapped Capital
From A Low-Growth Business
To Invest In Future Organic
Growth & EPS Accretion
8
Summary
Enhances Existing T&S Brand Portfolio With Addition Of Iconic Craftsman Brand
Presents Significant Organic Growth Opportunity – Increases Availability Of
Craftsman-Branded Products To Consumers In The U.S.
EPS Accretion, Ex-Charges – Year 1 ~$0.10-$0.15, Increasing To ~$0.35-$0.45 By
Year 5 & ~$0.70-$0.80 By Year 10
9
Effective Capital Allocation When Taken In Context With Recent Sale Of Mechanical
Security To Enhance T&S Franchise & Drive Organic Growth Within SWK
THANK YOU!