Industrial tools, hardware and security products maker Stanley Black & Decker reported its 2020 third quarter financial results on Tuesday, showing a major rebound to growth after a downtrodden Q2.
The New Britain, CT-based company posted total Q3 sales of $3.85 billion, up 6.0 percent year-over-year (YoY) as volume (+3 percent), acquisitions (+2 percent) and price (+1 percent) powered the growth. The company’s Q3 gross margin grew 160 basis points (YoY) to 35.7 percent, while operating margin grew 320 basis points to 16.6 percent. Operating profit of $520 million dwarfed the $354 million it had a year earlier, while net profit of $395 million also over the $230.5 million it had a year earlier.
Those figures compare with SBD’s Q2 in which sales of $3.1 billion were down 16 percent YoY, operating profit was $166 million and total profit was $238 million.
“The third quarter was one of the most remarkable and memorable quarters in my 20+ years with the company,” said James Loree, SBD president and CEO. “In the third quarter we successfully pivoted to organic growth, capturing the strong demand trends in Tools & Storage while leveraging our swift and effective cost actions to deliver record operating margins and earnings per share as well as impressive free cash flow.”
Organic sales improved 4 percent YoY in the United States, improved 18 percent in Canada, improved 2 percent in Europe, improved 5 percent in Emerging Markets and improved 23 percent in Australia, while organic sales fell 15 percent in Japan.
By business segment in Q3:
Tools & Storage sales of $2.8 billion jumped 11 percent YoY, buoyed by a 10-point gain from volume and a 1-point gain from price. The company noted that about $100 million-$125 million of promotional shipments in Tools & Storage shifted into October from September, raising sales growth expectations for the segment by 4-5 points from what was communicated in late August. Organic sales also improved 11 percent YoY, including 11 percent in North America, 12 percent in Europe. The company said North America saw strong DIY and Pro demand in retail and e-commerce, partially offset by declines in industrial-focused customers. Segment profit rate jumped 21.5 percent YoY, or 490 basis points.
Industrial sales of $587 million fell 7 percent YoY despite the company’s recent CAM acquisition that added 10 percentage points of growth, as volume and organic sales fell 18 percent YoY. Organic sales fell 14 percent in Engineered Fastening, while Infrastructure fell 25 percent. The company said it’s seeing gradual market recoveries across much of the business, with automotive showing the largest sequential improvement. Segment profit fell 24 percent YoY to a rate of 12.3 percent, though it improved 350 basis points sequentially.
Security sales of $460 million declined 1 percent YoY, as currency (+2 percent) and price (+1) were offset by volume (-4 percent). Organic sales fell 3 percent, with North America down 3 percent and Europe down 2 percent.
SBD said it’s expecting Q4 organic growth ranges of +8 to 10 percent for Tools & Storage, -15 to -10 percent for Industrial and -4 to flat for Security. The company expects total 2021 organic growth in the range of 3 to 5 percent.
SBD said it achieved $350 million of benefit from its previously announced cost reduction program, with about $150 million of savings expected in Q4. It expects to save another $125 million from the program in 2021.