Stanley Black & Decker (SWK) Q2 2017

posted in: Earnings Call, Notes | 0

James Loree – President and Chief Executive Officer

On price vs margins

“When we are pulling those levers on price promotion and margin optimization, trying to figure out where the sweet spot is, I would say, we tend to go in cycles sometimes. The needle will move from one side of the spectrum to the other a little bit. And I would say in the second quarter, in particular, we probably were a little bit more aggressive on price than normal, and so you saw the negative 1% price for the tools segment.”

The future seems to be omni-channel

“…you think about omni-channel and the advantages that brings, and you look at the recent purchase of Whole Foods, and you scratch your head and say why did that happen, I think if you start to envision how omni-channel could play an important role in e-commerce. You could see an unfolding scenario that says there can be successful pure players and successful omni-channel players. And maybe it all gravitates towards omni-channel at some point.”

Donald Allan, Jr. – EVP and Chief Financial Officer

E-commerce driving growth in emerging markets

“…we have seen the e-commerce channel increase its share of the market and become a larger contributor to our growth within emerging markets. As you know, we have what we believe to be leading positions in e-commerce and in developed markets and we are leveraging that know-how as our emerging markets teams work to develop this critical channel for the times.”

Project lower activity in oil and gas in H2

“oil and gas also generated 19% organic growth in the quarter, well ahead of expectations as the industry benefits from an acceleration of onshore pipeline construction activity within North America in the first half of this year. This is being offset by continued low offshore project activity. While the results of the oil and gas business are encouraging, our expectation is that without resumption of approvals by the Federal Energy Regulatory Commission, also known as FERC, we will see a return to lower level of project activity in the second half of this year.”

Some pressures expected in H2

“…there are market-related pressures which are expected to emerge in the second half. These pressures fall into three areas. One, North America light vehicle production is expected to soften; two, automotive systems which support customer new model rollouts will be lower in the second half of 2017; and three, expected lower project activity in North America for oil and gas, as I discussed earlier.”