Stanley Black & Decker Plans To Double In Size By 2022

Diversified industrial manufacturer Stanley Black & Decker reported its 2016 fourth quarter and full year fiscal results on Thursday, in which president and CEO James Loree unveiled an ambitious company goal and how it will be achieved.

Id 27046 Stanley Building

Diversified industrial manufacturer Stanley Black & Decker reported its 2016 fourth quarter and full year fiscal results on Thursday, in which president and CEO James Loree unveiled an ambitious company goal.

In the company's earnings release, Loree stated that Stanley B&D plans to double in size by 2022 by a combination of mergers & acquisitions and strong organic growth.

The company's latest figures showed the organic part of that goal is on track. Stanley B&D posted year-over-year organic sales growth of 4 percent in Q4, the same amount organic sales grew by for the full year 2016. Q4 profit of $255.2 million beat analysts' forecasts by 1.8 percent.

Stanley B&D said it expects another 4 percent organic growth throughout 2017.

Meanwhile, Stanley B&D's M&A activity has led headlines on ID several times over the past 4 months. In October, it announced it will acquire the tools business of Newell Brands — which includes the industrial cutting, hand tool and power tool accessory brands Irwin, Lenox and Hilmor brands — for $1.95 billion. In December, Stanley B&D announced that it will sell the majority of its Mechanical Security business to Switzerlald-based Dormakaba AG for $725 million. In early January, the company said it will purchase the Craftsman brand from Sears in a deal valued at around $900 million, and followed up one day later saying it will build a Craftsman factory in the U.S. And less than two weeks ago, TestEquity — a distributor of electronic test & measurement equipment and MRO tools and supply — announced that it has acquired Massachusetts-based JENSEN Tools + Supply, a Stanley B&D subsidiary based in Moorpark, CA. The company said Thursday that the Newell Brands and Mechanical Security items are expected to close during Q1 2017, while it didn't give a specific closing period for Craftsman.

James M. Lorree, Stanley Black & Decker President and CEOJames M. Lorree, Stanley Black & Decker President and CEO

"I'm also pleased with the actions we have recently taken in the M&A space to shape our portfolio and further our goal of building a powerful, diversified industrial growth company," Loree said in Thursday's earnings release, following a statement regarding the company's solid organic growth. "M&A, combined with strong organic growth performance, will help enable us to reach our objective of doubling the size of the company by 2022 while expanding our margin rate.

"Adding notable and iconic brands, such as Lenox and Irwin, and now Craftsman, uniquely complements our existing, strong portfolio of world-class brands and franchises. The sale of the majority of our Mechanical Security businesses will allow us to redeploy that capital from a low-growth business and invest it in more robust growth opportunities."

In an October blog, ID contributing editor Jack Keough discussed Stanley B&D's renewed aggressiveness on M&A activity, based on commentary the company gave in its post Q3 2016 earnings call with analysts. In that call, Lorree said the company planned to continue to funnel about 50 percent of excess capital into M&A. The company has followed suit with the divestments of its Mechanical Security business and JENSEN Tools & Supply subsidiary.

We can likely see Stanley B&D continue on this string of activity, using profits and funds gained from divestments to put towards future acquisitions in more attractive growth areas.

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