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

3Q'17 OVERVIEW

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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

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Participants Jim Loree

President & CEO

Don Allan Jeff Ansell

Executive VP & CFO

Dennis Lange

VP, Investor Relations Executive VP & President, Global Tools & Storage

3Q'17 OVERVIEW

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3Q 2017 Financial Highlights

• 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 Achieved Robust Revenue Growth And EPS Expansion…

* Excludes M&A Related Charges And Gain/Loss On Sales Of Businesses

3Q'17 OVERVIEW

$71 $54 $523 $477 $80 $94 $462 $504

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3Q 2017 Segment Overview

$330 $413 $1,897 $2,318 3Q ‘16 3Q ‘17 3Q ‘16 3Q ‘17

+22%

Revenue Profit* 3Q ‘16 3Q ‘17 3Q ‘16 3Q ‘17

+9%

Revenue Profit

Tools & Storage Industrial

3Q ‘16 3Q ‘17 3Q ‘16 3Q ‘17

• 9%

Revenue Profit

Security

17.4% 17.8%

+25%

17.4% 18.6% 13.7% 11.3%

• +9% Organic Growth
• +9% NA, +5% Europe, +16% EM
• +10% PTE, +7% HTAS
• NA: Share Gains Fueled By New Product

Innovations, Incl. FLEXVOLT, & Strong Commercial Execution

• Europe: Broad-Based Growth Driven By

Innovation & Expanded Retail Footprint

• EM: Growth Across All Regions, Driven By

MPP Products And Commercial Actions (Including E-Commerce And Successful Distribution Model Changes)

OM Rate* +40 Bps | Benefits Of Volume Leverage & Productivity More Than Offset Growth Investments And Commodity Inflation

* 3Q’17 Excludes M&A Related Charges

• 24%

+17%

• Flat Organic Growth
• 1% NA
• +1% Europe
• NA: Growth In Healthcare More Than Offset

By Customer-Directed Project Delays And Hurricane Disruptions Within Commercial Electronic Security

• Europe: Strength In U.K. And The Nordics

Partially Offset By Anticipated Ongoing Weakness In France

• +8% Organic Growth
• +6% Engineered Fastening
• +15% Infrastructure
• Engineered Fastening: Stronger Auto Systems

And Industrial Volumes More Than Offset Electronics Decline

• Infrastructure: Oil & Gas Project Extensions &

Higher Inspection Activity | Hydraulics Growth Driven By Commercial Actions And Improved Market Conditions OM Rate (100 Bps) Reflects Mechanical Sale | Balance Of Decline Due To Customer-Directed Project Delays, Mix & Growth Investments OM Rate +120 Bps | Volume, Productivity And Cost Control Deliver Solid Operating Leverage

3Q'17 OVERVIEW

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

• f Businesses

3 3 (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) $ V$ 3Q'16 3Q'17 V$ YTD'16 YTD'17

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3Q 2017 Free Cash Flow

Increased Working Capital To Support Strong Growth… …Reiterating Free Cash Flow Conversion Rate Of Approximately 100%*

* Excludes Gain/Loss On Sales Of Businesses

6.4 WCT

3Q'17 OVERVIEW

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2017 Outlook

Raising EPS Mid-Point By 10 Cents And Tightening Adjusted Outlook Range* To $7.33 - $7.43… FY2017 Guidance FY2017 Segment Outlook

Item Impact EPS Guidance

• 2017 EPS, GAAP
• 2017 EPS, Adjusted

$8.20 - $8.30 $7.33 - $7.43

EPS Guidance Details

• Stronger Organic Growth

(Approaching 6%) Moderated By Increased “Other, Net” Expenses +$0.10

Org Rev Growth Margin Rate Tools & Storage

High Single Digit Positive Y-O-Y

Security

Low Single Digit Down Y-O-Y

Industrial

Mid Single Digit Positive 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

Other

• Maintaining ~$50M Core Restructuring Estimate

(Includes 1Q’17 ~$13M Pension Curtailment Charge)

APPENDIX

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3Q'17 OVERVIEW

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Summary

• 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

2017 Momentum Continues On Solid 3Q 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

Social Responsibility Continued Top Quartile Performance Known For Innovation

Q&A

THANK YOU

APPENDIX

3Q'17 OVERVIEW

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Global Presence

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

3Q'17 OVERVIEW

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3Q 2017 Regional Revenue Breakout

$504M

N.America 65% Europe 16% Emerging Markets 15% Other 4%

$2,318M

Tools & Storage

$477M

Industrial Security

N.America 55% Europe 40% Emerging Markets 4% Other 1% N.America 39% Europe 28% Emerging Markets 22% Other 11%

3Q'17 OVERVIEW

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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 business 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.