SWK - Earnings call transcript Q2 2020 | Stanley Black & Decker, Inc.

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Operator

Welcome to the Second Quarter 2020 Stanley Black & Decker Earnings Conference Call. My name is Shannon, and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. the Dennis to Lange. turn of Vice now Relations, Investor will call the over President I Mr. Lange, may you begin.

Dennis Lange

XXXX call. Thank you, for Decker’s us thanks for quarter Shannon. Good morning, Stanley everyone. Black And joining second conference &

recent CEO, X-K now most our President from forward-looking our to filed may the differ Jim turn we we It’s also that President on morning’s access press number our and review On the with sticking are be normally the accurate, in and the such, replay to risk to based on Such available to results release. with which …this the statements our addition followed be IR Loree. call are make The during presentation, we statements in question A we are that call not the the press views. results one and assumptions second today. uncertainty. Q&A that supplemental filing. just of to that will calls, This over XXXX Jim with any available website. the and and caller, going prove will on Act code statements section they XX We making Jim Don statements based a on the materially to as a may at direct and do, and and be in some matters, myself morning, we a.m. I future CEO… current is call as cautionary you release in will Loree, other Consistent therefore call events by forward-looking and be this refer our possible and we of per call, actual replay various quarter morning, XX session. beginning our are our of involve will may prior will today.

Jim Loree

with an And and emerged, the created morning, on you we everyone. months be significant very of COVID-XX across It’s all pandemic worked for about today three this have benefit. five since you, great here trends to in globe. it now a light are while to new roll cast Dennis. Okay. Good Thank and to our our has time has portfolio powerful incredibly which also as challenging positive us, began

overcame, more successful of has strategic further our quarters these we future acceleration a the growth that just at we implications the thirdly, was maintain faced C take stock profound also we the we I meantime, of throughout my health it just we as and while better home company have our effectively and in reconnection is what storied shift It even and and there’s have challenges the and the magnitude innings to as towards and and for sheer First, most the was in positioning, and successful executive trend and and of strength in forward. most trends and security. positioning performance enterprise crisis there for operate sudden middle combination here obsession a margin to-date, and strengthening the and level we this societal on experienced a in the XX based and in a then newfound managed growth one with successful years it with company. The e-commerce, as look the moments. of safety, the and completed the garden characterize exciting nesting but to DIY, on a few would that read In

The crisis across give able up disruptions, and me efficiency. standards. and you We highest only ever temporary weeks with employees most volatile we experienced, April. the to some beginning swings our safety of four the racked with of and a this health in of continuously to demand globe were supply began. operate first maintaining intra-quarter team the Let sense protecting minor our while remarkable has managed the accomplishments have We since handle

During May June, to point-of-sale seen American have our stratospheric brought down as dramatically initiative also and explosive by that improved never second $XXX quarter progressed. the cost a in levels and the revenues XX%, Security North in the was an of swift annual cost followed We which actions which were quarter. in which billion we took retail early million approximately decisive revenues April, before. announcing realized $X reduction crisis, in

Our able maintaining bodes during to well second to year and twice quarter year full reductions internal contributed margin were upgrade remainder second for substantially revenue we and quarter, impressive our margin resiliency planning its cost in while of our scenario the our now year analyses the revenue raised assumptions initiative this performance. This We accordingly. intact. the

consequence EPS. conjunction our in and our we And case thought cost of and back XQ better base margin for Now in margin of delivered case year current year best XXXX for and a $X.X with full revenue actions, in April. revenue volume, what the exceeds operating the $X.XX we our as was billion

achieved at operating with believe second for business with quarter in the Storage currently tools business XX%. & And points means XX% just down Our rate, year, operating Tools margin an segment logged what be revenues prior in basis previous which trough XXXX. in came XX.X%, XXX will quarter that rate margin flat peak impressive its in lower we performance the cycle the that margin than

given impact to the financial enter convert ahead, run salaried outlook into the economic July, workforce we rate uncertain savings. our decided temporary reductions permanent of we As

have major and that a our while transferring X,XXX work employees schedule, implement to permanent temporary to will actions in is October or the returning to so remaining X,XXX by We a action through the of full cost this and months. which in way weeks, intact, reductions believe to eliminating the catalyzed bulk for being we furloughs growth ones initiatives, we status. coming a supercharged speak. In we the it sustainability supply modified with work as the early will even in reduction salaried back the addition by half These $X unfold and successfully chain us attractive will step funded cost place. This we are the actions reduction trends quarter, become be the initiatives of more to decided in series and ensuring may manage which as COVID-XX of of identify scenario, pursue billion in any economic of our the paves reasonable a result performing already the

XX% include initiatives, in revenue of billion XXXX. these exercising to to the beginning early We most incremental $X expect to MTD, acquire contribute annual remaining XXXX of option in likely billion our which $X

priorities, partners, our service homes didn’t a gratitude remotely is resiliency and much dealing could extraordinary with thanks with people power factories, shared of extremely so everyone and as fast execution part. impact this and of as customers We who in to challenges. art earlier doing well people. supply and on think be our took chain power you we to so I successfully that during we remiss, first, call centers, mitigate key financial safety COVID-XX the this well the we crisis, while the second our for gained of the era we I All salaried the a job ensuring of time with it accomplishments our continuity extraordinary is accomplished most occurred, dedication if and health for of appreciation which owe remained as was and that fourth, distribution part Throughout that year, and people our of quarter maintaining provide salaried personal faith help products the in have stability, continuously, strength people would that reference serving difficult and this leap their that And combined and them debt the a I operate our trusted techs second, and of possible our centers, business new the employees centers, done we incredible safely the collaboration It circumstances. virus was essential field of finally, during time, the globe. the frame is third, across today’s technologies. under and of other focused the when for of workforce working when and And the our services, a our

be our has people supply partners. to Our been and chain health safety continues and priority of number one and the

our we for established level, take protect to XX,XXX-plus measures significant with to tactical centers all our entering policy health mandatory distribution taking questionnaires in and facilities. and a mask continue plants employees a in temperature We facilities. all people April, On and essential along in other locations

we given and risks of where transmission and modifying number root operations suspected committee in corporate Mexico, facilities where have share and respond appropriate our specialists virus infectious we operations, in to Brazil specializing our confirmed We the distancing, the lines COVID-XX protocols with of were and so and characteristics. we There’s you public of production protocols as homebound, California, and common part with today, cause, more the standardization ways, future safety new of China significant had to that more necessary understanding us seen diverse We monitor the a virus in associates many to its Medical well healthy our as has Texas, collaboration. And of about many or that which of our every where and efficient expect, of and of as regarding people possible. enforced approaches. with our case as learn our X% hotspots majority a unanticipated massive been educational reinforce in would Officer as implemented with how out safety have unrelated safety have conducting virus, effect matter. and several as with a through have completion result, there. safety cases, hospital from XXX and safe only as protocols during and have for campaign review were and other geographic areas work were visiting to formed confirmed and our have friends workforce. X,XXX faster for all others, Carolinas, all Asia our the information and and the and enabling intensive required contracting necessary. in for of misinformation incorporating have very family organization, to compliance our people people We the execs is cases this It trace flatten Notably, review quiet we keep approximately timeouts local to we as an have global We of resulted of entire in and and And possible senior allowed based and committee. continuously their And confirmed virtually XX The Chief decision-making, operating about are efficient out community. two associates employees crisis, hired and or lot work. seeing more Europe at while the we to benefits continue safe it vast we seek control of total of this in understanding ensure remarkable both stay in one-half into our their disease in and communities or are actions we a a remotely and case social plants one -- can perspectives been colleagues

Going reduction we and the move hubs. enabling office will office globe. facilitate offices forward, for to footprint, forward, remote people, activity estate flexible will as work we working have the remote up as to talent real hybrid of new arrangements across access our opening continue our And salaried

when will necessary remotely by only and who work to or there associates be office in will be many choice convenient. continue the However,

support our In of part to plans to governments era on year, we key announced of and and this those to Earlier basic doing spirit, on healthcare of response banks. efforts such As well world. the we one as services priorities the impact mentioned, pandemic that as critical as our $XX-plus our are millions spread support contribute to hospitals communities mitigate help that as virus. organizations, already food COVID-XX and such around dollars to providing focus the million is deployed non-profits services have other focused

of across million support elder facilities. are also than donating one America masks in North We care more

globe and their Finally, pandemic. to initiated we associates connection around relief the our million who hardships with $X financial families in a have help encountered severe fund employee have own the

the talents powered the Business In is produce teaming up partnership virus. to organizations as individual lithium-ion to task the force addition we are National as Ford private in example well local and formed and Chamber, the their sector with respirators. state as focused we and And at with design and innovative of to XM that on relief. cash leveraging solutions An is of battle Manufacturers, this contributions, support aimed to our U.S. with lastly, such time and of Roundtable governments our have efforts Association create COVID-XX a people’s

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We those who inclusivity to a take equality commit are all. for justice, for stand demand for and

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of associates and a can diversity inclusion to shared doing early racism non-executive to have a career me, with address well opportunity, with as to and to executives concrete Board senior committed dialogues experiences build actions our including we level to take field. advancement, part equal committed. bias determine had understanding the members our June, their black as playing our Since equality, are as extensive we We

going have we as beyond, diverse and a these recently force, spillover will has will which many made half which other see opportunity cohorts and actions positive recommendations, task an that to of the we move and real in commissioned with for forward We benefits well substantive have second forward. change will

to have to and We doing environment company positive is both as dive turn challenging positioned positive what our back for well now tenure. the we during effect it you a we into busiest, the the most Allan So the my business details with, half second provide how what I XXXX. accomplished scenario really window of as most to gives to opportunities a productive Don over the I challenges during change and been and for And summary the into will that our hope quarter, deal faced Don? team planning deep about has feel ahead.

Don Allan

everyone. into from the down excellent American business Thank opportunities, were the quick declined actions deeper to They execute Tools demonstrating in dive the an revenue & you, to Tools benefits prior currency one as impacts segment & reflection second point of will an contributed cost a productivity responding on results and team. for morning, cost emerged operational take quarter. higher pressure, was offset teens, the good while and now additional control our Jim, the is which and from year with productivity, Storage result XX%, a I also XX% and volume the the performance for North and price currency impact currency. strong to volume, continued the from XX%, of to while levels tariffs that The price delivered our the the impact price the rate agility in to margin was in was outstanding driven X%. by segment lower segment operating actions a positive middle a The The response quarter. Storage the flat margins by positive was the and by headwinds. of benefits decremental tariff to demand

POS emerged offset take early So for quarter levels by or were XX%. POS at primarily emerged. Tools even America, was Storage was demand reductions categories multiple over resulting home increased shortly and underlying end-users the that in the on look in down let’s The XX%s, growth historically that for our channel now weeks DIY strong as in XX%. a regions a in organically has demonstrated starting We phenomena experienced which This trends started XX%s by & driven inventory flat was after high the inflection with levels. demand refocus U.S. that the retail North the activity the lockdowns mid-April.

bit July trend, not we trends While presentation. of these the this continued we report on my do in a later know that the of four into the has July. details strong can POS More first duration weeks

are Additionally, corrections shipment American growth experiencing and line inventories currently beyond North partners are low POS demand. the now levels, with inventory historically with retail therefore, well we at customer our retail and in store QX are

were and slow in May spectrum, more activity with has significant indications resumed saw from of On prior year, by expect and revenues pro quarter. within XX% reduced We U.S. for very XX%, compared end Nordics France into customer the reopened retail. the versus the major by these while in markets in government quarter Europe decline control significantly we a saw posted declines, declined flat as improved commercial the respectively, impacts these the in growth. The to within emerging and declined. the markets a demand, more July. all channels high our revenues April, we regions resulting virus. focused improved shutdowns emerging strong down shutdowns markets. June, June, led started and were as XX% construction of full and limited re-openings during some down end result tool markets single-digit slower impacted by But U.K., incredibly XX% industrial opposite -- All by the approximately June in the as declines, were closures and XX% which due quarter, Southern the recovery The to regions were experienced channels the With to organic Europe activity. positive occurred restrictions implemented continued and European the in

There the saw Asia and geographic showing Korea a the few XX%, some in South of very down Latin impacts still Brazil, challenging significant interesting meaningful prevalent quarter America. the spots Vietnam sequentially choppy environment regions very Mexico and was America Latin the as a most first and driven than declines with virus from was gives on details Tools remains were but by XX% in impacts basis organically. improved performance still you for Colombia. down The That bright & Storage. growth. all the the during other are quarter more double-digit

look comp than a momentum second offset by volume impacts Power international tools, tools has and in Tools difficult DIY, global SBU fantastic commercial declines new benefited of XX% some with exposure also XQ e-commerce accessories leading are channels these take the some, it more declined markets, X% the equipment This were and in our e-commerce revenue. trends product to. e-commerce capitalize by and from represented in our execution quick and dealt let’s last the of uniquely year’s at to from stable positioned associated with this on declined continued brands, the global rollout. nearly trends. which SBUs rapidly behind obviously, continues SBU. as dynamics Both market Now quarter & to industrial pandemic. positive due to Craftsman global performance XX% more grow Storage storage tool two accelerating these SBU and we With Hand our position and introductions strong steep and

we investments opportunities making As we maximize targeted gain continue to these additional look as momentum. are ahead, further market they significant to

we our an initiatives and limited, e-commerce to Tools the we to Decker e-commerce about business expand amazing course, began of DIY leverage navigate. an & environment flexibility they ago, fantastic turbulent both given exciting several and agility, trends. team and presence a will managing see great have the current geographies job demonstrated North and opportunity incredibly year time is just to the in outcome initiative our which we needed the into of The a period key example, For which did where America, Black & Storage

was offset XX-point X.X%, segment. light to industrial point a included were to actions. volume a down currency. CAM from with and XX%, organic as the a by by The volume XX% Operating negative acquisition, revenues driven global decline the Total all production. mitigated rate year-over-year benefit based which lower industrial was broad growth margin Engineered by cost partially regions general was shift from XX%, negative X Let’s vehicle and were impact the down declines from Fastening declines impacted.

as the systems down it declines activity in benefited well was the as markets industrial The and fastener of have vehicle weak, automotive and Broadly industrial severe, of and activity quarter. our resumed. the month trough as to May essential and expect, quarter. our production serving automotive underlying quarter due to less XX% were down now general June. but gas, production digits a second end-markets, we global oil in demand and from businesses improved infrastructure momentum, this you business and as remain The experienced organic that continue only represented As global regions the manufacturing industries, XX% down was fasteners XQ will each would XX% decline light in general which return XX%, industrial recovery lower a decline and build in Therefore, tools. currently XX% believe attachment the for in in business mid-single the declined across volume

to business hard was segment industrial worked hit a teams were decremental out mentioned activity, for quarter, cost market I manage While with a they forward. their margin recovery they for this factory the operating down, in done. particularly would and tools the with hard mid-teens to XX% closures Even that call agility. like the maintain specifically reduced which the driven to participate declines, margins overall and to able attachment prepare rate limit well going steep I

they of down X% a in in America healthy businesses price Revenue installation well Europe up impact declined declined half the us were improvement XX%, organic a the positioning maintenance X in better XX% and and Finally, volume was within expectations. from It another as for a was point quarter. a point were North improve is and customer saw dynamic earlier positive allowing us back currency position. perform more the was segment, as than divestitures, performed in was XXXX. X I continued initial June, We X%. down government will XX% restrictions, activity. Backlog clearly which decline review from all also had May quarter, which and growth impacted security pronounced positive X%. as negative the They and remains by to this more

for as to actions were to X.X%, control as lower in cost basis margin to cost by This operating more demand control things segment the profitability, shifted as implemented than of a strong were and increase price June. was May able points is down performance terms volume. offset they and security and XXX swift In pivot

We that safety, growth security software management now proximity, such business related the commercial its the transformation revenue as around two. We level new solutions. will also in opportunities entry these energize help opportunities coming us believe believe identity transformational next take activities year the can to business and the or to

strong So in our points million approximately cost to of was to pandemic, summary, XX%, challenging to operational execution, environment was and our close as the team’s deliver than decremental quarter less expectations navigated than which extreme second thankfully actions resiliency the but enabling XX we result which margins us $XXX a perspective. to were in feared. The opportunities, our initial initial and productivity outperformance better a minimize to helped

offset position navigate demand, that for improvements impacts capital maintaining conservation second focus robust are we drivers Storage to million, behind our related briefly to which trends. now & refresher $XXX is next our on is of earnings, The capital $XXX prior look free working lower as use and cash million prepared Lower a we page. the these at capital flow as environment. on expenditures year-to-date basis, half our ensure as a U.S. Tools current liquidity made liquidity potential in cash primary reflecting the performance the decisions retail Let’s are we the On well strong primarily a on and partially year.

hand. the on approximately of with cash liquidity of sheet, we quarter $XXX million and terms our In balance ended

access credit strong continues to us the rating investment-grade commercial paper. provide to uninterrupted with Our

$X preferred of $XXX program. the currently Following of units short-term million to debt. We equity remarketing our in $X.X successful now capacity used have May, pay of approximately the we our CP down billion proceeds on billion the

have we see, potential quarter of total from can maintained enough flexibility liquidity billion end. a available, with as standpoint, you As a of $X.X

maturities As fourth any XXXX. we not long-term until do debt the reminder, coming of due quarter have a

expenditure are as debt focused and XXXX kept refrain trends to the planned the some would macro now planning, to scenario and for from activity insights our to continuing repayment full withdrew repurchase as providing our and our achieving in priorities, uncertain and suspend Also, guidance well as April, and environment a deployment provide year we such reductions will the these Similar support capital reminder, I to revenue. capital Our in leverage result guidance its on priorities of as at time. recent remain continue To like this M&A being. time targets. a on second company April, share place half we have

While we the duration a trough the have businesses, much depth the for our better uncertain. across of appreciation remains trajectory of recovery the economic and

performances well assumptions. as half recent forecasted organic as color and sub such, a in planning our June remain and occur growth our page on to the trends, that are July And provides business may for variety scenarios shipment we of trends. approach. as segment demand relative will our view As preparing -- our flexible color we the of left-side our a The of this second or region

second trends show which our revenue the key some recent into page, us right also We are side half on providing other of potential additional the insights performance.

A planning the a key demand, organic very our is X% factor that’s range growth been strong DIY U.S. the sustainability this growth X%. assumption For Tools & second Storage, ranges positive largely to the and from in in e-commerce. driven negative by retail of surge for half in

segment year If earlier, growth these prior see up the line POS record the positive sight As July. the have QX. trends of a continues was half. to four you back XX% first for and clearly it can of versus mentioned POS the into continue, in in weeks we seen

So trends we are consumer U.S. the closely. very watching

activity, over the industrial or these within commercial watching channels, in troughs and slope States, sustain finally, The the pro of these digits. carry our which past United the continued will recent also as portions looking are a range. the also remaining recovery Tools U.S. the high growth well here support of performance We help single high Storage business, tool all and the potential improvement has the and QX. trajectory Many & this deeper our and focused for are could the packages, seen low-end Europe the as organic on as the weeks of with stimulus at return of international such operations influence strong all extending of trends. the eight in of that

is further this clearly Asia along America than Latin recovery. in

and However, downturn, better as of difficulty very slow be continues that Latin the of America, to improvement which the spread trajectory, addresses depth it. its than in much now far as containing virus the as region the has

Tools XXXX, strong as POS well Our The current to assumption and U.S. revenue are but the & which Europe three, still from towards moderated planning second assumes, slightly growth continues see in two, for as high-end emerging likely view one, organic slow a range. moderate a to the midpoint that last and growth but for the versus last the commercial performance trending Storage half the weeks, levels eight of organic of second half continues globally growth for revealed is weeks, segment tools the supports rate recent X% industrial, of to strong markets eight recover. the entire

the XX% The organic shipment some XXXX. second end trends XX% that assumption in down the company’s half markets. last eight facing For our industrial, is weeks, This an business of to growth down difficult XX% the organically. range of planning is were is most

trough across mentioned above improvement in QX from the second quarter. continued of midpoint QX assume we the range be what believe Our to and the would

continue in As focused both over you look industrial auto see gradually we business trend the XXs that to low Engineered Fastening last as the weeks, markets improve. and eight is at tracking the

Another XX% at on that in XX% a auto of and segment. trends to of our trend view Fastening a weaker pro the planning gas weeks. vehicle the whole tool Engineered light The band production portion basis for is are negative oil assessing negative attachment while high-teens, approximately is on down the the fasteners eight last XX% are to for look than aerospace and forma

facts appears to planning all is Given the midpoint it trending these in area, industrial range. this currently segment of the the

and continues demonstrating its we with a last flat. second show to security, so be range the is to eight relatively this down trajectory trends. This For improving expect improvement business weeks, a X% to X% stable in half of continue decline business

improvement with installation an remains activity. supports strong and Although, the opportunity by sequential maintenance country, is recovery backlog which for mixed

new virus healthcare I upon Additionally, earlier, for the to new starting as back the needs mentioned year. offices and environments half emerging in business create in the factories, security the opportunities and capitalize should from safety of revenue exciting

we you total As for aggregate three range see planning scenarios. the these company, assumptions

the potential represent X.X% decline the in back for recovery half. would the markets. end low-end, for we on revenue This organic a see First, choppy a our

significant For different recovery POS North in the of the this company. see all occur, to areas we American moderation trajectories tools slower to for have and in would trends

of This which across Our businesses in recovery midpoint, particularly continued in North organically base just the third trends broad the down a is and the Tools below case, continuation strength is X%. represents quarter. America,

low Tools, relates declines improvement it third the in that low the As XQ to versus single-digit growth within this embeds scenario Global to within sequential XXs. and growth mid quarter, security industrial

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company Our is in last eight trend positive. revenue modestly weeks the organic

this scenario makes feel So that quite this not factor however, possible, one is at probable stage. optimistic is us this that

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we program the I approaching are first, how cost this want to you Moving reduction initiative. slide, remind to

implies are result are start targeted benefit four company. million that with got program, of this million estimate the million off our in was the We employee is implementation savings, spend, as entire of the which swift the XXXX made material this quarter areas XX Approximately balance We benefiting we the raw this over this have and second to deflation. cost $XX of about program with of billion execution indirect $XXX the across in of realize an XX% At ahead and a we from modifications, $X deflation, of a in within spend consisting see savings second a perspective. indirect headcount, actions. opportunity should fast next $XXX reduction we months, our and compensation point, approximately We maintaining $XXX and up year. and compensation half. opportunity the of benefit This million

over still months, The the ensuring billion. to that next XX think highly about you are organization these total diligently we working deliver are the track sustainable actions As on on been program into $X has cost XXXX. heading

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for So margins now address decremental let’s XXXX.

to improved margins volume our is year. this are margins the to experience better can could potentially be a XX% If cutting base we choppy mid-teens this the and case. we you limit We to our XX% high-teens see assuming they case. Clearly, decremental can decremental of recovery, mid- potentially net in cost dependent in a

our decremental which to year of my these our to during our to wrap-up comments view. was so I high-teens, margin to reminder, last like to relevant contained are trough peak the very summarizing performance two current would a mid- compared to As XXXX recessions by From potential a down XX%. range decline range organic a flat half XXXX full for the see X.X% X% the second planning slide assumptions a perspective, to puts on in revenue, we for of XX. revenue

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of see we planning the middle you as this page, the for have items. line disclosed Finally, our in below the assumptions

So focus conservation perspective, as our you various work scenarios this of and through utilize please your capital deleveraging. is business a models From information. cash

activity. of We our expenditure our repurchase in and capital are maintaining M&A suspension temporary reductions share

areas, in reinvest the key approach we remain flexible and cost and the working We We focus which enhance will growth current recent supply the outcomes. recovery. savings with we have modulate or sharp Should appropriate of will our on chain keep take accordingly on and and based aligned trajectory to a environment continuing of to are mid-term. in a our ahead, management are around maintaining will we planning the trends range given capital the track short-term growth believe could the actions and

continues or and pace prepared back are as Jim. now and any to a return I respond pace, scenario rapid will between. you to We choppy at a either Thank react it recovery in

Jim Loree

Don. Thanks,

as position market a we global growth North growth our shocks outstanding $X DIY. economy, element we the volatile execute to have as customer strong strategy from of in share enduring which continue and remains Craftsman continue on This of is excellent well brand, seen key We growth response, are us with XXXX. catalysts, American for we towards continued well benefit to its our brand The experiencing on remain like, proposition, to well-positioned in path a a see gains, billion. buffering and a the value positive number of trends

We And in in market, remaining new & provide to we that of to progress product improving DEWALT, to recent an outdoor MTD of middle up bringing had most first power are to the to and and equipment where focus opportunity gas introduce in ratio late and time. This power the span higher beginning the also market, markets, power core and closed nesting XTREME presence our the outdoor are the tools time continuing margins on well And tools ATOMIC electric continues XXXX, leading line the to their benefiting make innovation Home categories exciting in our a increase MTD also that opportunity, power a power from stake in on DEWALT emerged equipment and innovations has is in purchase XX% I into of opportunity for the manufacturer. the highest FLEXVOLT innovations spectrum. first with XX% time invest recently, machine, both continue as breakthrough operating as is on downturns phenomenon the new the XXXX. reaching as is the while has Holdings, that disruption. Garden a months. during cordless are we a our earlier, mentioned to

the turn billion. To and a of XX% a tools in and is has our relationships, XX% business become has new $X.X safety. with overnight, sudden health nearly and automatic businesses, opportunity of a months, society online build great from discovered of put And here excellent shift landscape. second in what and a are we e-commerce But e-commerce, increasing beyond. This area. the leader and grew half it for to upon a smack example, is opportunity us for to and the matter capabilities So, in industry with security one thrust market this obsession with digital with perspective, in quickly, with security this XXXX growth acceleration electronic in revenues position, of a has in revenue, e-commerce its almost our customer to the immense. a global growth investment decade took our that brands, healthcare, to of significant of become margins, and With it growth our in strengths attract will newfound sales our it global areas middle doors its major new

plants. example, stores For and proximity manufacturing monitoring, such automated and as and are touchless commercial for commercializing buildings temperature we solutions new management tracing, entrance contact with

of new these solutions benefit scale quickly to and from resources allocating are growth. potential We these sources

of of in beginning long-term most of $X a XXXX future. growth all option MTD, ahead to growth expect to XXXX, these likely remaining we which in annual the billion include look to exercising early contribute to great the $X revenue as We acquire incremental XX% billion story catalysts, our

what the delighted to closing, we quickly performance the We believe and delivering currently the and we to a able second circumstances. for it limit people Unfortunately, able with and position crisis our good revenue be the an going on of to EPS. year, with are management of a stronger. trends control rapidly even necessary and into we a and are the performance quarter, our focus trough of emerge demand the in on weathered cost $X.XX are deliver to stead serve demand talented, maintaining quarter were we within the were great environment to improving in margin improved So under in intense strong and actions dedication crisis, stay from team to rates the diverse our impact the commitment all strong taking and during to pivot the

We for Thank Q&A ready you. Dennis. are now

Dennis Lange

you. Thank open can Jim. call Shannon, Q&A, now to we the Thanks, please.

Operator

first [Operator Coe Wolfe Nigel from with comes Research. question Our Instructions]

open. is line Your

Nigel Coe

Good morning, Jim. Don. Good morning,

Jim Loree

Hi Nigel.

Don Allan

morning. Good

Nigel Coe

Hi.

to So we half all, closer On this the about of fantastic that potentially margins I half thanks the just to one? details, the, decremental first XX% sure just the off to bit think, of the to for if of make to that I to of the want the taken implies want think to tools with low- mid-teens, number Thanks. that it two, half in the is imply industrial I number seems that be a the back to start confirm correct, are back second fresh in half the going mid- And correctly? we have assuming year. year, on up is year, the commitment, first want decremental second half these high-teens of FY’XX, I year. in margins,

Jim Loree

Yeah.

be right the be do other your year-over-year, also kind So, in a our insight than the tool improvement for get will in improving fourth especially more third for pressured for quarter, on still be an be view this the but but question, matters, Yeah, insight decrementals is versus but the in But better margins various in the first the is think clear QX improving we margins the won’t half. half very of quarter, still will back accurate that’s now, industrial little back and think, probably in but due QX very I they of stage, will comp a QX to year-over-year. unclear. at QX

So that that’s probably another factor in as analysis well.

Operator

you. Thank

question with Baird. next Wojs Tim Our from comes

open. is line Your

Tim Wojs

second quarter. Hey, Good Nice everybody. on morning. the job

Jim Loree

Tim. Hi,

Don Allan

Tim. Hi,

Jim Loree

Thanks, Tim.

Tim Wojs

my Just inventory question the is on really business. within tools

channel tailwind do whatever, if I to wondering And to back normal. you long a could think your you color just think POS like now. could it if is seems guess, are you you shipping as on Just provide how be relative inventory takes where Just to you customers, the just are get it is to it multi-quarter talking only -- normal?

it what get on color relative you there think inventory So levels normal some to back? could just long how and take to are

Jim Loree

of pointed took probably beginning that be are in we cycle the exceedingly There inventory for were see, seen half in, and then up simply we Yeah. to out, customers POS. up in they throughout are was stabilizing the end to POS were and in weeks the POS and fortunate we would that as the customers quarter we have started a low think substantial and like the much started to to correction stable the inventory are with inventory as of the process inventory the up still amount while inventory keeping quarter the of the them and were sufficient the it shipments now. ASAP time us took in to back I right a near it while substantial drain built middle realize fortunately have the themselves you POS now. where the low an channel the when has here. early dramatically we pretty could. quarter to by much point higher a of several and my chain the the pretty been outperform pretty probably quarter But as the to our in in the keeping in needed inventories, if with levels least And mean, prefer I We with with get But actually then replenished rolling at quarter. of the supply then, POS producing keep orders time, I

Don Allan

look weeks it’s low you levels are that issues in low then Yeah. from of what And typical inventory to that the my But said, to definitely the weeks and causing don’t end-user. range the major the with anywhere at stock and of that the are when are at we the Jim leave comments you on tool of we impression script, so going look want and in nine to customer, the customers a desire we range restock. products as year is we XX depending our that enough in there that’s at producing weeks factor of the about if forward. later in And space very think end a the so

We it’s the trending will the levels do have ability at to even at the now. if that, continues POS to run

Operator

question from next Mittermaier comes Our Markus UBS. with

Your line is open.

Markus Mittermaier

for thanks Good Hi. and Very… the Yeah. everyone morning, scenario.

Jim Loree

Good morning.

Markus Mittermaier

that carryover chain supply that great is then rearranging Hi. on very into that into changes Europe of any by you would you have that could a is pulling the confirming So if incremental I you. top would that? million? bit forward be in and helpful. that like Thank any positive U.S.? about the you that potential pre Just elaborate plan the and time, China maybe be more on there Can that and of the the change supply cost XXX mentioned XXXX from this savings ask might Very,

Don Allan

Industry good about this our resiliency to maybe it Yeah. a the million best to of in related really part with the and the many range shifting things are to other can contributed very margin value mean, about There’s I that. And cost to of going X.X, think you it’s years because We million basis. if great technology way associated be associated you on of have is a analytics, what really opportunities that, Jim on go-forward this chain better chain we advanced believe to with a which three $XXX analytical question, talking happened how that capture forward of answer that themselves supply also the year’s the pricing, program, digitized value that opportunity and commented a that to think $XXX value continues next over more supply mean, we years. to there deal actions. create still there’s will and four I program and that that do tools. our organizations really question

creation. So this of out of $XXX at the million next this great $XXX resiliency is starting going it’s the one year. still probably really per to not value next years, I like a positives coming for point, We three And assume deal that’s forward. margin we of depleting would value are crisis our see million just that year

still lot are But we get of continue and as pursue, you that refine as certainly the we year. is to a will values with of that this it. opportunity can see, there -- We closer an to will associated that end

Operator

Thank you.

Our comes Deutsche next with question Bank. from DeBlase Nicole

Your line is open.

Nicole DeBlase

Yeah. Thanks. Good morning, guys.

Jim Loree

Good morning.

Don Allan

morning. Good

Nicole DeBlase

going easy was So, I could for really and two hoping make question one so you and answer I me. to maybe exception am an ask

of between $XXX X, remaining go guess, of is compensated? kind back potential by that First, this could XQ? the I think on when my people I guess, million then, about is, what year. rest and question back savings we pro What’s work. the that that cost the to the How is -- DIY that the bigger for be just coming offset as the And split it as does XQ potentially,

Don Allan

Yeah.

even pass and second pretty question QX it’s between QX is Jim. to your I one then first will a over The split and

Jim Loree

easy we I into take long, time. amount actually, I the that if just I so, far, seen -- of I even lower and logical unsustainable there period Yeah. questions, some you a both than will to is think, dollar fade circa sense. a When will suspect for be, there are the something stimulus, long POS relatively that mean, factor, keep be going it’s POS there which makes because, XX% will DIY they thus think be I probably account a fade. have clearly, it is

to urbanization on there, course, But much heating So, has it’s probably think here forth. and up if market forth, likely to yeah, been the so very pro so housing going terms happen. of the I what quiet of and and potentially and go seeing the hold likely that’s we on, in are go with very, continue on starting to and pretty to

the going coming sidelines. I think the amount into see of to we pros mix from fair are back a

potential So could I think there is that some happen. that

Operator

Thank you.

question from with Michael comes Our Rehaut J.P. next Morgan.

Your open. line is

Michael Rehaut

all the results Thanks. Good on so morning, everyone and efforts far. the and congrats

Jim Loree

Thanks. Michael. Thanks,

Michael Rehaut

I said perhaps I back talked that about was understood of cost portion overall had XXXX, around $XXX Wasn’t the question still $X you of savings this about actions. from of $X -- of you part when of At -- it’s employees, same savings the you million temporary which the [ph] to is which the the a part total. of prior savings billion maybe the program. sure, wonderful, welcoming in reiterating actions about but time, are that X,XXX talking both a is what temporary had call that XX% and is understand of I billion

of carryover sense a which then you for get that permanent. and at two-thirds actions to to about close is talked million, the also overall the trying just So being $XXX

that, doesn’t to in the will get perhaps So to you next walk I the the right, talking but how seem could that? just that that the trying working maybe remaining those about you in that flows sense solve to get and timing through through if of type of am kind permanent. for get us it third, reactions six billion, like perhaps, XX a understanding months, maybe if $X But

Don Allan

into then year-over-year. are of year actions year. things some and some benefits continue other of a is indirect are that next back example, that -- shifting so going next are that as, have these come base. think we next things compensation we incremental temporary I in that incremental create timeframe. as But going carryover. that articulated, we this year our cost is that probably that. into something portion of some are that have doing are get are That got help as We are into obviously, we of for But we an likely benefit we have also these cost right of organization we reversing will certain an increase tolerate going the permanent. are things that permanent to base way kind we that into in that, year. systems employee did through, recognize would reasons headcount But will that’s we it, will suspended Jim we the then offset did be we $X.X But we where temporary Because our And type here then, the have can’t we year, in indirect are what to kind one an think categories we Michael in $X billion of we such taking these can focusing September of that’s comes back to into to cost we mentioned, which so some sustain savings, XXXX. something our be for of that to now not do another as billion they we about trying temporarily if

and And of when million the if roughly all so can like. permanent. math minuses, that would give billion more Dennis off-line, we you gone it think the have found when those ultimately, you little pluses detail you at look of $X a all do that we $XXX after, you is we and And

$XXX year situation year over of of incremental a million get year to value are million and get last a this over you getting that’s this You works. are going a value you how year, at incremental it really next it’s and $XXX where

Operator

you. Thank

with from Barclays. comes question Julian next Our Mitchell

Your line is open.

Julian Mitchell

Hi. Good morning.

Jim Loree

morning. Good

Julian Mitchell

around for the question margins Maybe a tools medium-term. just the

it looking margins have like level your tools out. second and half. kind Historically, the plus that peaked So at guidance, where the back looks they of XX% sort in QX to are of that’s

expect in growth wondered, XX%, medium-term so XX% in you of the pushing an higher aspiration we peaks? old resiliency is margins efforts, just sort type resumes. incremental should look I tools of So of or operating And through ahead, think do margin what as those realistic when margin the sales given that we so than

Jim Loree

have quarter, been a time the margins are peak a tools in very, Yeah. we in And with pleased what they in revenue this is at because at very we when is the much what think are pretty levels historically trough cycle.

reductions, So, yeah, significant about. a And the are I that cetera. things There has of Don margins will on relative have margin I positive a they et referred upwards. mean, talked to impact to lot I very that from probability think, that’s the cost from resiliency, accrete

as kind is And in which those a headwinds equally the has into inflation is anniversarying have while. here speak off years, quarter we few future. backed the had next we think along in And have for will of also the of hopefully past think -- from kind and dollar dollar, the what so foretell now will some story and deflation. are strength been a a the which of significant really bit over turned it lines positive out very And the hopefully important continue of I tariffs the the I lack

bodes story over margin there a lot headwinds always I be forward. are going to very So think happening new time. for There’s powerful the going in it well that tools things of

get the can’t momentum upward. crazy is it, we So clearly, about but

Operator

you. Thank

Fargo. question next Raghavan comes from Wells with Our Deepa

open. Your line is

Deepa Raghavan

you talk Hi. morning Good all. to… Can

Jim Loree

Hi.

Deepa Raghavan

you other -- are the probably, what more taken -- it in or focused, a to expanding more MTD? adjacent more than taking you. process COVID, stake on end kind than is any in is, kind you other maybe through …what tagging rest broader new perhaps, -- cetera? friendly, did just being et products, can markets, taking of just question e-commerce newer Thank opportunities more eco of markets focus If initiatives just discover or of the just verticals expand that the And COVID-proof can managing of into? you DIY

Jim Loree

talked get it’s question. of advent a Yes. I to -- great of trying when that That’s kind that with great. at had with was the I And the COVID. -- It’s trends occurred about

time that, shift home kind have in to projects the and in People consumer of addition and in sudden weighting in lot re-imagination this at and the spending the The e-commerce of a into and home, revenue the the preferences. garden area. And so first landscaping, out DIY and you home. re-acclimation at the then to -- terms being then of doing also that

will a and will call semi-permanent the of health think be it, a which safety. obsession least I relatively, a trend, then that’s I and means, for years, to probably, see finally, couple we at with going that,

and well in in So North the world’s in the terms had position going all that’s XXXX, doing portfolio with takeouts America to we time. business growth e-commerce also of cost in to get really view, with their this MTD quite point DIY working a and both period in -- at the are leading And on, and up which margins of our revenue able tool MTD to is and well in Europe. well acquisition, sure we the U.S. early of a acceptable with in do will those world’s making as from things that play MTD certainly, levels be great in then leading, hopefully significant of

to going XX% the exercise know elder care going then as are newfound first facilities, elder elders weighted multiple to of business, relatively the be has multiple, probably and in are when a and of very the living other of when them that be these a which So will and all help with elder which serves has you we the billion artificial Most probably fantastic. to acute plus at And account facilities the weighted to extremely times business is be care tracing business, that’s sophisticated of in going great business facilities relevant today tragic in the times and about which on health security around range, contact to that intelligence XX% care one and safety, $X option bring is be that’s this we X facilities. stakes sophisticated is to of to take particular that into going with of with healthcare and COVID-XX. obsession running security probably small but second revenue then deaths X using great stories that story one what of because protection in being XX% of EBITDA associated a just and terms in technology their applications healthcare the IoT we

safety now certainly security. to of strike long are and be security which, into facilities. strategic business, that time, will, to then with going help you of And on a all the that health, applications with in we been a to the social to bottle, has moved as relate safety care if trying its zone deal for has electronic terms kind out help the with in project So relevance elder of

I yes, based portfolio So, think, a today. for out it’s in we what see the time there on our great really world

Operator

Dennis Thank would the like you. And I Lange remarks. session. this to turn concludes over now for back any to question-and-answer the call closing

Dennis Lange

any We have like please questions. if further call. you for on to and me thanks. participation the Obviously, contact would everyone this calling thank morning Shannon, for again in Thanks. your

Operator

this gentlemen, concludes conference you and call. for participating. Ladies Thank today’s

disconnect. You may now

Stanley Black & Decker (SWK) 30 Jul 202020 Q2 Earnings call transcript