Stanley Black&Decker Inc.

Overview Key strengths Key risks Solid brands like Stanley, Black&Decker, DeWalt, and Craftsman support leading market positions in hand and power tools. Increasing supply chain risk owing, in part, to the recent geopolitical tensions. Strong relationship with some of the largest home improvement retailers.Good geographic and product diversity relative to other building products companies.Acquisition of MTD enabled the company to penetrate the attractive outdoor living products markets. Competitive cost structure results in higher margins compared to peers. Share repurchases and debt-funded acquisitions have resulted in elevated debt leverage levels.We expect some inflationary headwinds to persist through most of 2022, but they have thus far been offset by incremental price increases.Cyclical consumer and industrial demand. We expect Stanley Black

...Recent growth investments and heightened inflation could pressure results in 2022. We expect Stanley Black & Decker Inc.'s debt leverage to be about 2.5x for most of 2022 following the close of the MTD acquisition in December 2021. Stanley could also sustain margin pressure because of potentially lower product demand from weaker macroeconomic and inflationary conditions. However, we expect improved volumes and full-year contributions from the Excel and MTD acquisitions could still result in strong earnings and cashflow generation over the next 12 months, which could result in leverage near 2x for year-end 2022. In December 2021, Stanley acquired the remaining 80% stake of MTD, which inflated its year-end debt leverage to more than 2.5x. The company's net debt rose to $8 billion as of fiscal year-end 2021 from about $5 billion at the end of the three previous years. Stanley typically consumes cash for working capital early in the calendar year and generates strong cash flow later in the...

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