Stanley Black & Decker First Quarter 2017 Overview April 21, - PowerPoint PPT Presentation

Stanley Black & Decker First Quarter 2017 Overview April 21, 2017

Cautionary Statements Certain Statements Contained In This Presentation Are Forward Looking. These Are Based On Assumptions Of Future Events Which May Not Prove To Be Accurate. They Involve Risk And Uncertainty. Actual Results May Differ Materially From Those Expected Or Implied. We Direct You To The Cautionary Statements Detailed In The Corresponding Press Release And Form 8-K And Our Recent ‘34 Act SEC Filings. 1Q'17 INVESTOR PRESENTATION 2

Participants Jim Loree President & CEO Don Allan Executive VP & CFO Executive VP & Group Executive, Jeff Ansell Global Tools & Storage Greg Waybright VP, Investor Relations 1Q'17 INVESTOR PRESENTATION 3

1Q 2017 Financial Highlights Strong Start To 2017 Highlighted By 5% Organic Growth A nd Record 14.2%* OM Rate… • 1Q ’17 Revenues Of $2.8 Billion (Up 5% Vs. Prior Year) Fueled By 5% Organic Growth ‐ Tools & Storage (+6%), Industrial (+4%) & Security (+1%) • Operating Margin Rate, Excluding M&A Related Charges, Expanded 110 Basis Points To A Record 14.2% • 1Q ‘17 Diluted Adjusted EPS Of $1.29 Reflecting Strong Operational Performance Which More Than Offset Currency, Higher Restructuring, One-Time Environmental Charge And Higher Shares • Closed Previously-Announced Acquisitions Of Newell Tools And The Craftsman Brand As Well As The Divestiture Of The Majority Of Mechanical Security Businesses • Raising 2017 Full-Year Adjusted EPS Guidance Range* To $7.08 - $7.28 From $6.98 - $7.18 …Combined With Closing Of Three Important Portfolio Transactions * Excludes M&A Related Charges And Gain On Sales Of Businesses 1Q'17 INVESTOR PRESENTATION 4

1Q 2017 Portfolio Transactions Update Closed Three Portfolio Transactions In 1Q | Minimal 1Q EPS Impact* Consistent With Expectations… • Closed March 9, 2017 • Dedicated Team In Place Focusing On Supply Chain Execution & Commercial Strategies • Strong Organic Growth Potential | ~$100M Of Avg. Annual Revenue Growth For ~Next 10 Yrs. • Earnings Accretion Of Approx. $0.08 Per Share In 2017, Excluding Charges • Closed March 10, 2017 • Integration Teams Formed And Actions Underway To Deliver Expected Results And Benefits ‐ $80 - $90 Million Of Total Cost Synergies ‐ Significant Potential Revenue Synergy Opportunities • Earnings Accretion Of ~$0.24 Per Share In 2017, Excluding Charges …Newell Tools & Craftsman “Integration” Activities Well Underway * Excludes M&A Related Charges And Gain On Sales Of Businesses 1Q'17 INVESTOR PRESENTATION 5

1Q 2017 Segment Overview Tools & Storage Security Industrial $1,855 $473 $305 $1,707 $86 $461 $504 $262 $478 $76 $60 $51 +16% +3% +9% -5% +14% -15% 15.3% 16.4% 11.9% 10.7% 16.5% 18.3% 1Q ‘16 1Q ’17 1Q ‘16 1 Q ‘17 1 Q ‘16 1 Q ‘17 1 Q ‘16 1 Q ‘17 1 Q ‘16 1 Q ‘17 1 Q ‘16 1 Q ‘17 Revenue Profit* Revenue Profit* Revenue Profit* • • • +6% Organic Growth +1% Organic Growth +4% Organic Growth • • • +8% NA, +6% EUR, +1% EM +2% NA +4% Eng. Fastening • • • +9% PTE, +3% HTAS FLAT EUR +2% Infrastructure • • • NA: Share Gains Fueled By New Product NA: Growth Led By Higher Automatic EF: Strong Auto. System Volumes Offset Innovations, Including FLEXVOLT, And Doors & Healthcare Volumes Electronics Weakness | Fuels Record • Strong Commercial Execution EUR: Strength In Nordics And UK OM Rate • • EUR: Broad-Based Growth Driven By Offset By Weakness In France INFRA: Higher Hydraulic Volumes • Innovation & Expanded Retail Footprint EM: MSD Growth In Latin America And Driven By Commercial Actions And • EM: Growth Led By Latin America & Asia | Southeast Asia Improved Market Conditions; Oil & Gas Driven By MPP Products And Pricing Flat Vs. Prior Year Actions Mechanical Sale Impacts OM Rate By ~70 110 Bps OM Rate Increase Driven By Volume, Volume, Productivity / Cost Actions Drive Bps | Balance Of Rate Decline Due Primarily Productivity / Cost Actions & Mix 180 Bps OM Rate Expansion To Mix & Investments * 1Q’17 Excludes M&A Related Charges & Gain On Sales Of Businesses 1Q'17 INVESTOR PRESENTATION 6

1Q 2017 Free Cash Flow Strong Working Capital Execution Led To +0.9 Turns, Excluding Acquisitions And Divestitures… 6.7 WCT 1Q'16 1Q'17 V$ Net Income $ 189 $ 393 $ 204 Deprec / Amort 100 102 2 Pre-Tax Gain On Sales Of Businesses - (269) (269) Working Capital (268) (410) (142) Other (114) 39 153 Operating CF (93) (145) (52) CapEx (65) (65) 0 Free Cash Flow $ (158) $ (210) $ (52) …On Track To Achieve Full -Year Commitment Of 100% FCF Conversion* * Excludes Gain On Sales Of Businesses 1Q'17 INVESTOR PRESENTATION 7

2017 Outlook Raising Adjusted EPS Outlook* To $7.08 - $7.28 From $6.98 - $7.18, Up ~9% - 12% Versus Prior Year… FY2017 Guidance FY2017 Segment Outlook Item Impact Org Rev Growth Margin Rate • 2017 EPS, GAAP $7.95 - $8.15 EPS Guidance Tools & Mid Single Positive • 2017 EPS, Adjusted $7.08 - $7.28 Digit Y-O-Y Storage • Modest Increase To Organic Growth ~$0.08 Outlook (~4%+) EPS Guidance • Higher One- Time 1Q’17 Environmental (~$0.08) Low Single Down*** Details Charge (~$17M)** Security Digit Y-O-Y • ~$0.10 Incremental Cost & Productivity Actions • Reiterating Gross FX & Commodity HWs (~$100 - $105M) • Maintaining ~$50M Core Restructuring Estimate Positive Other Industrial Relatively Flat (Includes ~$12M Pension Curtailment Charge) Y-O-Y • 2Q- 17 EPS To Be ~27% Of FY’17 Earnings …Reiterating Free Cash Flow Conversion Rate Of Approximately 100%* * Excludes M&A Related Charges And Gain On Sales Of Businesses | FCF Conversion Excludes Gain On Sales 1Q'17 INVESTOR PRESENTATION 8 ** Reported In “Other, Net” *** Flat To Modestly Positive Excluding Mechanical Security Sale

Summary Overall Outlook For 2017 Remains Positive, Although Macro & Geopolitical Challenges Remain… • Generated 5% Organic Growth With Record 1Q OM Rate Of 14.2%* • Raised 2017 Adjusted EPS Guidance Range* To $7.08 - $7.28 (From $6.98 - $7.18) | ~10% Increase At Mid-Point Versus Prior Year On ~4%+ Organic Growth • Closed Three Important Portfolio Transactions | Newell Tools & Craftsman “Integration” Activities Well Underway With Energetic And Positive Responses From Employees, Customers And Suppliers • SWK Investor Day To Be Held Morning Of May 16, 2017 In NYC …Focus On Solid Execution & SFS 2.0 Position SWK To Deliver On Updated 2017 Financial Outlook * Excludes M&A Related Charges And Gain On Sales Of Businesses 1Q'17 INVESTOR PRESENTATION 9

Appendix

Global Presence 4Q’16 Canada 1Q'17 Organic +6% +8% % SWK 4% 5% 4Q’16 Europe 1Q'17 Organic +1% +3% 4Q’16 Japan 1Q'17 4Q’16 US 1Q'17 % SWK 22% 23% Organic +18% +19% Organic +5% +6% % SWK 3% 3% % SWK 52% 54% 4Q’16 1Q’17 Emg Mkt 4Q’16 Australia 1Q'17 Organic +4% -1% Organic -3% -3% % SWK 17% 14% % SWK 2% 1% 1Q'17 INVESTOR PRESENTATION 11

Regional Revenue Breakout 1Q 2017 Tools & Storage Security Industrial $1,855M $478M $473M Emerging Other Emerging Other Other Markets 1% 3% Markets 11% Emerging 4% 24% Markets N.America 14% 58% N.America Europe 65% Europe N.America 37% Europe 18% 36% 29% 1Q'17 INVESTOR PRESENTATION 12

Organic sales growth is defined as total sales growth less the sales of companies acquired in the past twelve months and any foreign currency impacts. Operating margin is defined as sales less cost of sales and selling, general and administrative expenses. Management uses operating margin and its percentage of net sales as key measures to assess the performance of the Company as a whole, as well as the related measures at the segment level. Free cash flow is defined as cash flow from operations less capital and software expenditures. Management considers free cash flow an important indicator of its liquidity, as well as its ability to fund future growth and to provide a return to the shareowners. Free cash flow does not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company’s common stock and business acquisit ions, among other items. Free cash flow conversion is defined as free cash flow divided by net income. The normalized statement of operations and business segment information, as reconciled to GAAP on pages 13 and 14 of the press release for 2017, is considered relevant to aid analysis of the Company’s margin and earnings results aside from the material impact of the acquisition-related charges and gain on sales of businesses. 1Q'17 INVESTOR PRESENTATION 13