Industrial tools, hardware and security products maker Stanley Black & Decker (SBD) reported its 2020 fourth quarter and full-year financial results on Thursday, showing considerably accelerated growth figures that far outpaced the company's Q3, led by major growth in its Tools & Storage segment.
The New Britain, CT-based company posted total Q4 sales of $4.41 billion, up 18.7 percent year-over-year (YoY) and up 14.5 percent sequentially from Q3. The fourth quarter was led by 16 percent organic sales growth, while the nearly 19 percent overall figure was driven by 15 percentage points growth from volume, 1 point from price, 2 points from acquisitions and 1 point from currency impacts.
Geographically, Q4 YoY organic sales improved 17 percent in the United States; jumped 44 percent in Canada; improved 10 percent in Europe; improved 26 percent in Japan; improved 27 percent in Australia; and improved 14 percent in emerging markets.
SBD's Q4 had a gross margin rate of 35.3 percent, up 390 basis points YoY when excluding charges. Q4 operating margin of was 15.6 percent, while adjusted operating margin of 16.5 percent was up 290 basis points YoY.
SBD's Q4 operating profit of $590 million dominated the $289 million of a year earlier, while its Q4 total profit of $467 million more than doubling the $199 million of a year earlier.
By SBD business segment in Q4:
Tools & Storage sales of $3.26 billion jumped 24.8 percent YoY, while segment profit of $665 million surged 59.2 percent as margin of 20.4 percent grew 440 basis points. The 25 percent organic sales gain was driven by a 23-percentage point gain from volume and a 2-point gain from price. SBD said organic sales across all regions benefited from "the consumer reconnection with the home and garden, positive e-commerce trends, a strong holiday season and robust lineup of new and innovative products," adding that exceptionally strong point-of-sale demand in US retail continued through the end of 2020.
Industrial sales of $658 million increased 10.2 percent YoY, while segment profit of $89 million increased 14.4 percent as profit margin improved 50 basis points to 13.5 percent. The sales growth was almost entirely due to SBD's recent acquisition of CAM Aerospace, which drove 11 percentage points of growth. Currency added another 2 points of growth, while lower volume negatively impacted growth by 2 points and a divestiture of an oil & gas product line had a -1 point impact. SBD said fastening organic revenues were down 2 percent as strong automotive fastener growth was offset by an improved, but still declining general industrial market and lower systems volumes. Infrastructure organic revenues were down 5 percent.
Security sales of $492 million were down 3.0 percent YoY, while both segment profit of $39 million and profit margin of 8.0 percent more than doubled ($16 million, 3.2 percent). Security sales benefited from a 3-point impact from currency and 1-point each from price and acquisitions, while divestitures and volume had negative impacts of 3 and 5 points, respectively.
For the full year 2020, SBD had total sales of $14.53 billion, up .6 percent from 2019. Operating margin of 12.9 percent was up from 12.2 percent in 2019
"In 2020, we were proactive in preparing our cost base for the pandemic and the organization remained agile to capture revenue opportunities resulting from quickly improving markets which resulted in a historic financial performance," said Donald Allan Jr., SBD chief financial officer.
SBD expects the strong performance it had in Q4 to continue, forecasting Q1 2021 organic sales growth of 21 to 26 percent year-over-year. That includes 30 to 40 percent growth in Tools & Storage, -5 percent to flat in Industrial, and flat to 3 percent in Security. For the full year, SBD is expecting 2021 organic growth of 4 to 8 percent, including 4 to 8 percent in Tools & Storage, 2 to 6 percent in Industrial, and 4 to 6 percent in SEcurity.