May 16, 2017

Stanley Black & Decker CEO Expects Company To Double Sales In Six Year

Source: Hartford Courant

James Loree, president and CEO, said at the company's annual investor day that it has set an "aggressive growth goal," seeking to post $22 billion in sales by 2022. Stanley posted revenue of $11.4 billion in 2016.

"You'll see we have a clear vision for where to take this company even as we face times that will undoubtedly be characterized by volatility and exponential technological change," he said.

The tools and storage, commercial electronic security and engineered fastening systems manufacturer will achieve growth by boosting sales by 4 percent to 6 percent and adding acquisitions of between $6 billion and $8 billion, he said.

Mergers and acquisitions "will be pursued across the segments" as part of Stanley's approach, Loree said.

Analyst Jeffrey T. Sprague of Vertical Research Partners said in a note to investors that Stanley's long-term plan is credible. Stanley has 15 percent global share in markets it serves, "creating meaningful opportunity for share gains to continue," he said.

The drive by Stanley to double its size should not come as a surprise. Last October, it agreed to buy Newell Brands Inc.'s tools business for $1.95 billion. The purchase helped push it deeper into consumer and industrial equipment.

In January, Stanley announced it's buying the Craftsman line of tools from Sears and extending its reach into retail markets with a household name brand. The purchase price was $525 million initially and $250 million after three years.

Once known as the Stanley Works, the company merged in 2010 with Black & Decker. At the time, Black & Decker's sales outpaced Stanley's by about $1 billion, but Stanley bought its former rival because its stock market value was higher due to its growing security business.

Stanley, which was founded in 1843, took 158 years to ring up sales of $2 billion in revenue, Loree said. In the most recent 16 years, it grew by an additional $9 billion.

Shareholders have been rewarded by Stanley's strong growth, with share price rising more than 20 percent since May 2016.

Stanley posted $2.81 billion in revenue in the first quarter, up 5 percent from the same period in 2016. Earnings more than doubled, to $393.1 million, or $2.59 per share.

Stanley raised its 2017 profit outlook in April, to between $7.08 and $7.28 per share on an improved outlook for its industrial businesses that include equipment for manufacturers, oil and gas pipeline construction and heavy construction and demolition. It backed its guidance Tuesday.

Shares closed lower by a fraction of 1 percent, to $136.94.

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