Thir hird d Quar Quarter ter 20 2017 17 Ov Over erview view - PowerPoint PPT Presentation

Thir hird d Quar Quarter ter 20 2017 17 Ov Over erview view October 24, 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. 3Q'17 OVERVIEW 2

Participants Jim Loree President & CEO Don Allan Executive VP & CFO Executive VP & President, Jeff Ansell Global Tools & Storage VP, Investor Relations Dennis Lange 3Q'17 OVERVIEW 3

3Q 2017 Financial Highlights Achieved Robust R evenue Growth And EPS Expansion… • Revenues Of $3.3 Billion (Up 14% Vs. Prior Year) Fueled By 7% Organic Growth ‐ Organic Growth: Tools & Storage (+9%), Industrial (+8%) & Security (Flat) • Gross Margin Rate Expands 60 Bps To 38.2%* While Operating Margin Rate Remains Strong At 15.3%* • Diluted Adjusted EPS Of $1.95*, Up 16% Versus Prior Year, Reflecting Strong Operational Performance • Raising Mid-Point Of And Tightening 2017 Full-Year Adjusted EPS Guidance Range* To $7.33 - $7.43 From $7.18 - $7.38 Due To Higher Organic Growth Expectations • Acquisition Integrations Progressing At Or Ahead Of Plan • Exciting News Related To Craftsman …On The Strength Of Above Market Organic Growth Supplemented By Acquisitions * Excludes M&A Related Charges And Gain/Loss On Sales Of Businesses 3Q'17 OVERVIEW 4

3Q 2017 Segment Overview Tools & Storage Industrial Security $2,318 $413 $504 $1,897 $94 $330 $523 $462 $477 $80 $71 $54 +22% +25% +9% +17% -9% -24% 17.4% 17.8% 17.4% 18.6% 13.7% 11.3% 3 Q ‘16 3 Q ‘17 3 Q ‘16 3 Q ‘17 3 Q ‘16 3 Q ‘17 3 Q ‘16 3 Q ‘17 3 Q ‘16 3 Q ‘17 3 Q ‘16 3 Q ‘17 Revenue Profit* Revenue Profit Revenue Profit • • • +9% Organic Growth +8% Organic Growth Flat Organic Growth • • • +9% NA, +5% Europe, +16% EM +6% Engineered Fastening -1% NA • • • +10% PTE, +7% HTAS +15% Infrastructure +1% Europe • • • NA: Share Gains Fueled By New Product Engineered Fastening: Stronger Auto Systems NA: Growth In Healthcare More Than Offset Innovations, Incl. FLEXVOLT, & Strong And Industrial Volumes More Than Offset By Customer-Directed Project Delays And Commercial Execution Electronics Decline Hurricane Disruptions Within Commercial • • Europe: Broad-Based Growth Driven By Infrastructure: Oil & Gas Project Extensions & Electronic Security • Innovation & Expanded Retail Footprint Higher Inspection Activity | Hydraulics Growth Europe: Strength In U.K. And The Nordics • EM: Growth Across All Regions, Driven By Driven By Commercial Actions And Improved Partially Offset By Anticipated Ongoing MPP Products And Commercial Actions Market Conditions Weakness In France (Including E-Commerce And Successful Distribution Model Changes) OM Rate +120 Bps | Volume, Productivity OM Rate (100 Bps) Reflects Mechanical Sale | OM Rate* +40 Bps | Benefits Of Volume Leverage & Productivity More Than Offset And Cost Control Deliver Solid Balance Of Decline Due To Customer-Directed Growth Investments And Commodity Inflation Operating Leverage Project Delays, Mix & Growth Investments * 3Q’17 Excludes M&A Related Charges 3Q'17 OVERVIEW 5

3Q 2017 Free Cash Flow Increased Working Capital To Support Strong Growth… 6.4 WCT 3Q'16 3Q'17 V$ YTD'16 YTD'17 V$ Net Income $ 249 $ 274 $ 25 $ 709 $ 945 $ 236 Deprec / Amort 103 121 18 305 338 33 Working Capital (183) (215) (32) (393) (784) (391) Loss (Gain) on Sales of Businesses 0 3 3 0 (265) (265) Other 78 174 96 29 234 205 Operating CF 247 357 110 650 468 (182) CapEx (78) (91) (13) (222) (278) (56) Free Cash Flow $ 169 $ 266 $ 97 $ 428 $ 190 $ (238) … Reiterating Free Cash Flow Conversion Rate Of Approximately 100%* * Excludes Gain/Loss On Sales Of Businesses 3Q'17 OVERVIEW 6

2017 Outlook Raising EPS Mid-Point By 10 Cents And Tightening Adjusted Outlook Range* To $7.33 - $ 7.43… FY2017 Segment Outlook FY2017 Guidance Item Impact Org Rev Growth Margin Rate • 2017 EPS, GAAP $8.20 - $8.30 Tools & High Single Positive EPS Guidance Digit Y-O-Y Storage • 2017 EPS, Adjusted $7.33 - $7.43 • Stronger Organic Growth EPS Guidance Low Single Down Security (Approaching 6%) Moderated By +$0.10 Digit Y-O-Y Details Increased “Other, Net” Expenses • Maintaining ~$50M Core Restructuring Estimate Mid Single Positive Other Industrial (Includes 1Q’17 ~$13M Pension Curtailment Charge) Digit Y-O-Y …Reflecting Higher Organic Growth Expectations, Up 13% - 14%* Versus Prior Year * Excludes M&A Related Charges And Gain/Loss On Sales Of Businesses 3Q'17 OVERVIEW 7

APPENDIX 8

Summary 2017 Momentum Continues On Solid 3Q Performance… • Strong 3Q Results*: 7% Organic Growth | OM Rate Of 15.3% | EPS Up 16% Vs. Prior Year • Raising 2017 Adjusted EPS Guidance Range | Up 13% - 14% Vs. Prior Year* • Newell And Craftsman Integrations Progressing Well • 4Q Focus: FCF Generation | Organic Growth W/ Operating Leverage | Acquisition Integration Continued Known For Social Top Quartile Innovation Responsibility Performance …Focus On Closing 2017 Strong While Positioning The Company For Sustained Growth And Margin Expansion * Excludes M&A Related Charges And Gain/Loss On Sales Of Businesses 3Q'17 OVERVIEW 9

Q&A THANK YOU

APPENDIX

Global Presence 3Q’17 YTD’17 Canada Organic +10% +9% % SWK 4% 4% 3Q’17 YTD’17 Europe Organic +5% +4% 3Q’17 YTD’17 Japan 3Q’17 YTD’17 US % SWK 21% 22% Organic +20% +13% Organic +8% +8% % SWK 3% 3% % SWK 55% 55% 3Q’17 YTD’17 Emg Mkt 3Q’17 YTD’17 Australia Organic +7% +3% Organic +7% +2% % SWK 15% 14% % SWK 2% 2% 3Q'17 OVERVIEW 12

3Q 2017 Regional Revenue Breakout Tools & Storage Industrial Security $2,318M $504M $477M Emerging Other Emerging Other Other Markets 1% Markets 11% 4% 4% Emerging 22% N.America Markets 55% 15% N.America 65% Europe Europe Europe N.America 40% 28% 16% 39% 3Q'17 OVERVIEW 13

Organic sales growth is defined as total sales growth less the sales of companies acquired and divested 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 bu siness acquisitions, among other items. Free cash flow conversion is defined as free cash flow divided by net income, excluding the gain/loss on the sales of businesses. The normalized statement of operations and business segment information, as reconciled to GAAP on pages 12 and 13 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/loss on the sales of businesses. 3Q'17 OVERVIEW 14