Tools and outdoor products manufacturer Stanley Black & Decker Inc. is likely to divest more of its holdings, its president and CEO told analysts last week.
Speaking after Connecticut-based Stanley Black & Decker reported its first-quarter results, Don Allan said the work his team has done in recent years to slim down—highlighted recently by the sale its attachment and handheld hydraulic tools business to Sweden’s Epiroc AB for $760 million—hasn’t necessarily been concluded. There’s no financial urgency to do more, Allan said, but some of the company’s smaller brands could be next to go the sale block.
That could include parts of Stanley Black & Decker’s tools-and-outdoor-gear group, which accounted for 85% of the company’s Q1 sales. It is anchored by well-known brands such as DeWalt, Craftsman and Stanley, which are receiving the lion’s share of 2024 growth investments.
The division’s smaller brands—they include Lenox, Troy-Bilt and Irwin—could eventually be brought to market, though. And some parts of the company’s engineered fasteners business also are possibly in line for what Allan called “a little pruning.”
“We will continue to be active,” he said. “I think we’ve demonstrated over the years that pruning the portfolio is something that is important to do. But you need to do it in a way that creates value for your shareholders.”
Allan’s comments and any future deals by Stanley Black & Decker are best placed in the context of the company’s broad cost-saving plan, launched in mid-2022, that is seeking to generate a run rate of $2 billion annually in cost cuts by the end of 2025. That initiative has, among other things, focused on more efficiently working with suppliers and closing handfuls of plants around the world.
Portfolio culling of the kind Allan and his team have been doing—they also sold most of Stanley Black & Decker’s security businesses nearly two years ago for $3.2 billion—has been a driver of industrial M&A activity in recent quarters, experts from PricewaterhouseCoopers said earlier this year. The need to devote cash to automation and other technology priorities is helping spur a rise in divestitures.
“Corporates are expected to continue to be advantaged due to their ability to use higher levels of equity and pay for to-be-realized synergies,” the PwC team wrote. “Corporate divestitures are expected to accelerate as corporates seek to raise capital to fund growth.”
Stanley Black & Decker produced a net profit of $19.5 million in the first quarter, reversing a large year-ago loss thanks to a jump of more than seven percentage points in the tools and outdoor group’s segment margin. Net sales slipped slightly to $3.87 billion.
Shares of Stanley Black & Decker (Ticker: SWK) were changing hands around $87.80 on the afternoon of May 7, up about 1% on the day. They also have risen slightly over the past six months, growing the company’s market capitalization to about $13.5 billion.
