Industrial tools, hardware and security products maker Stanley Black & Decker reported its 2021 third quarter financial results on Oct. 28, showing continued double-digit year-over-year growth powered largely by the company's Tools & Storage business unit.
The New Britain, CT-based company posted total Q3 sales of $4.26 billion, up 11 percent year-over-year on the strength of volume (+8 percent), price (+2) and currency (+1). SBD's gross margin for the July-September quarter was 32.6 percent, well below the 35.7 percent of a year earlier and 35.9 percent in Q2. The company said the difference was driven by accelerated commodity, transportation and labor inflation required to meet strong demand, which offset benefits from volume, price, productivity and product mix.
SBD's Q3 organic sales improved 10 percent year-over-year.
The company's Q3 operating profit of $493 million trailed the $637 million it had a year earlier and $642 million in Q2, with Q3 operation margin of 11.6 percent likewise down from the 16.6 percent of a year earlier and 15.5 percent in Q2.
SBD's Q3 net profit of $414 million topped the $395 million of a year earlier and trailed the $460 million of Q2.
"We are prioritizing meeting demand in a universally difficult supply chain environment and are actively addressing the inflationary trends impacting the business with new targeted pricing actions and increased productivity measures," said James Loree, SBD chief executive.
In its Q3 investor presentation, the company noted that it is adding capacity in accordance with its "Make Where We Sell Strategy," led by the opening of two new power tool plants and one new hand tool plant — all in North America.
SBD added that it had communicated a 5 percent surcharge in its North America Tools & Storage segment that is effective Nov. 8, as well as global price increases across the business that will take effect during Q4. Those pricing/margin actions are sized to exceed SBD's 2022 headwinds. Those headwinds include spot container prices that have jumped approximately 6 to 7 times and transit times that have ballooned from about 40 days to 85 days — resulting in higher costs to meet demand.
By SBD business segment in Q3:
- Tools & Storage sales of $3.19 billion increased 14 percent year-over-year, with organic sales up 13 percent (+9 percent in NA, +20 percent in Europe, +28 percent in EM). By product category, organic sales were up 11 percent in power tools, up 16 percent in hand tools & accessories, and up 11 percent in Outdoor Product Group. Segment profit of $486 million trailed the $597 million of a year earlier, with Q3 margin of 15.2 percent likewise down from the 21.3 percent of a year earlier.
- Industrial sales of $594 million grew 1.2 percent year-over-year, with organic sales up about 1 percent (-1 percent in Engineered Fastening, +7 percent in infrastructure). The company said in Engineered Fastening, strong general industrial growth was offset by market-driven aerospace declines & lower automotive OEM production resulting from the global semiconductor shortage. In Infrastructure, 16 percent organic growth in attachment tools was partially offset by lower pipeline project activity in oil & gas. Segment profit of $47 million trailed the $72 million it had a year earlier, with margin of 7.9 percent likewise trailing 12.3 percent of a year earlier.
- Security sales of $484 million grew 5.3 percent year-over-year, with organic sales up 8 percent (+12 percent in NA, modestly positive in Europe). Segment profit of $45 million trailed the $50 million of a year earlier, while margin of 9.2 percent trailed the 11.0 percent of a year earlier.
Updating its full-year 2021 guidance, SBD is now expecting 2021 full-year organic growth of 16 to 17 percent, slightly more narrow than the 16 to 18 percent provided in its Q2 report, but a significant increase from the 11 to 13 percent forecasted in its Q1 report.
By segment, SBD provided the following full-year outlook:
- Tools & Storage: Organic sales up in the low 20's, with margin down year-over-year
- Industrial: Organic sales low single digit, with margin down year-over-year
- Security: Organic sales up high single digits, with margin down year-over-year