Stanley Black & Decker's Jim Loree, as photographed for Forbes magazine in 2018: “When you get to our size you have to find big things that have great potential."
Jamel Toppin for ForbesUnder CEO Jim Loree, the venerable toolmaker Stanley Black & Decker has bet heavily on acquisitions as a way to power up the company’s growth. Last time, we checked in with him (for a 2018 magazine story) it was Craftsman, the tool line once revered by DIY-ers that had collapsed under the Eddie Lampert regime at Sears. Today, it’s MTD Products, a manufacturer of outdoor power and lawn care equipment whose brands include Cub Cadet, Troy-Bilt and Robomow.
The $14.5 billion (revenue) company announced its plans to acquire the 80% of MTD it didn’t already own at the beginning of the year, following a blockbuster second half of 2020 as homeowners and landlords alike focused on renovations. “We are going to pay a little around $2 billion for MTD and will get around $3 billion in revenue,” Loree says. “We negotiated a very good price for it.”
Price and size is one thing, but what MTD really gives Stanley Black & Decker is a giant base of gas-powered mowers, trimmers and the like. Tools that run on batteries are quieter and better for the environment than gas-powered ones, and the shift to them is already underway.
With the addition of MTD, Loree – who notes that he, too, hates the loud leaf blowers when he’s trying to relax at his Florida condo – plans to expand heavily into electric mowers, power washers and other outdoor products. Gas-powered trimmers, after all, aren’t just noisy, they’re also an environmental problem that, unlike automobiles, aren’t regulated. A gas-powered leaf blower, for example, emits as much carbon and other pollutants as driving a 2016 Toyota Camry on an 1,100-mile trip in just one hour, he says.
“When you get to our size you have to find big things that have great potential. This outdoor electrification turned out to be a big thing,” Loree says. “We always had a game plan in place to electrify the outdoor market. Now we’ll have a $3 billion platform of mostly gas-powered that we can convert to electric over the next five years.”
Loree, 63, joined the company as CFO back in 1999, and executed a turnaround since taking the top spot five years ago – in part with dozens of acquisitions. But the MTD deal is his first major acquisition since Craftsman. With that deal, Loree paid $900 million to get the name, a few employees and about $100 million in sales to Ace Hardware. “We bet we could grow it organically at a much faster rate,” Loree says. “This year, we are going to cross the $1 billion threshold for Crafsman….It is the fastest growing tool brand in the world.”
To get enough batteries for its power tools, Stanley Black & Decker CEO Jim Loree traveled to Korea during the pandemic and stayed in a quarantine hotel.
As the company has boomed post-pandemic, Stanley Black & Decker faces the question of how to shore up its supply chain to keep its plants humming. The company diversified its semiconductor suppliers before the pandemic, so the global chip shortage has not been an issue, he says. Instead, the challenge has been getting battery cells.
“The electric vehicle market tends to crowd out our tools,” he says. “I had to go to Korea to secure a supply of batteries.” It was his first international trip during the pandemic, he recalls, and he had to stay in a quarantine hotel. “It was a cross between a dorm room and a prison,” he recalls. “However it was just 15 hours and I got the batteries. I got the goods.”
Stanley Black & Decker's acquisition of MTD gives it a big push in outdoor equipment. Among its offerings: Cub Cadet lawn tractors.
Associated PressCloser to home, Loree is working to revive the Black & Decker brand with a focus on e-commerce and plans to introduce a new brand, called Reviva, made from recycled plastics. And, as always, he’s looking for other, likely smaller, acquisitions. “We have some other ones out there, some outdoor ones and some tool-related ones,” he says. “There’s more to be had in terms of acquisitions.”
The pandemic boom won’t go on forever, and Stanley Black & Decker expects “a modest pullback in sales in the last half of the year,” Loree says. Longer term, Deutsche Bank analysts Nicole DeBlase and Kevin Marek expect MTD to add $1 per share to the company’s earnings in 2022, with earnings per share expanding from an estimated $11 this year to $17 by 2025. Revenue, they forecast, will reach $21 billion in 2025. “We are strong proponents of the outdoor opportunity,” they write in a recent research note.
Shares of Stanley Black & Decker are up more than 45% for the last 12 months at a recent $198.
