Stanley Black & Decker : Q2 2020 Stanley Black & Decker, Inc. Earnings Conference Call Slides

Second Quarter 2020 Overview

July 30, 2020

Participants

Jim Loree

President & CEO

Don Allan	Executive VP & CFO

Dennis Lange

VP, Investor Relations

2Q'20 OVERVIEW	2

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.

2Q'20 OVERVIEW	3

Navigating The COVID-19 Pandemic

Aligning The Organization Around Key Priorities…

#1

#2

#3

#4

ENSURE THE HEALTH	MAINTAIN BUSINESS	SERVING OUR	DOING OUR PART TO
AND SAFETY OF OUR	CONTINUITY AND	CUSTOMERS AS THEY	HELP MITIGATE THE
EMPLOYEES &	FINANCIAL STRENGTH	PROVIDE ESSENTIAL	IMPACT OF THE VIRUS
SUPPLY CHAIN	AND STABILITY	PRODUCTS AND	ACROSS THE GLOBE
PARTNERS		SERVICES TO THE
		WORLD

…Taking Actions To Protect Our Employees & The Business While Positioning The Company To Thrive

2Q'20 OVERVIEW	5

2Q'20 Segment Overview

Tools & Storage

Industrial

Security

$2,626
	$2,197
(16%)
2Q '19	2Q '20
Revenue

$448
	$373
(17%)
17.0%	17.0%
2Q '19	2Q '20

Profit*

$650		$106
$518
			(57%)		$46
(20%)
			16.4%			8.8%
2Q '19 2Q '20				2Q' 19	2Q '20
Revenue				Profit*

$485	$433
(11%)
2Q '19	2Q '20
Revenue

$54	$42
(23%)
11.2%	9.6%
2Q '19	2Q '20

Profit*

• (15%) Organic Growth
• • (10%) NA, (21%) Europe, (29%) EM
  • (9%) PTE, (23%) HTAS
• All Regions Were Impacted By Reduced Business Activity Related To COVID-19
• N.A.: Inventory Reductions & Reduced Construction Activity | Strong DIY Demand In E- Commerce & US Retail | Record Retail POS & Historically Low Inventory Levels Exiting The Qtr
• Europe & E.M.: Rolling Geographic Lockdowns, Customer Closures | Improved Demand In Europe | EM Remains Choppy

OM Rate* Flat | Benefits From Productivity, Swift & Effective Cost Control & Price Offset The Impacts From Lower Volume, Tariffs & Currency

• (29%) Organic Growth
• • (35%) Engineered Fastening
  • (19%) Infrastructure
• The Trough Of Organic Volume Decline Occurred In April With Modest Sequential Improvement Each Month
• Engineered Fastening: Lower Global Automotive Light Vehicle & General Industrial Production
• Infrastructure: Lower Volumes In Attachment Tools And Oil & Gas

OM Rate* (760 Bps) | Significant Impact From Volume Declines Was Partially Mitigated By Cost Actions

• (8%) Organic Growth
• • (7%) NA
  • (10%) Europe
• All Businesses Were Impacted By Customer Restrictions Which Were Most Pronounced Early In The Qtr
• Electronic Security Backlog Remains In A Healthy Position Up 16% Supporting An Anticipated Improvement In Installation Revenues In The Second Half

OM Rate* (160 Bps) | Price & Cost Control Were

More Than Offset By Lower Volume

*Excludes M&A Related & Other Charges	2Q'20 OVERVIEW	6

Free Cash Flow & Liquidity

2020 YTD Free Cash Flow

Liquidity Key Points

					YTD
		2Q'19		2Q'20		V$
Net Income		$	528	$	372	$ (156)
Deprec / Amort			280			286	6
Working Capital			(581)			(719)	(138)
Pre-tax Gain On Sale
Of Business			(17)			-	17
Other			(140)			(16)		124
Operating CF			70			(77)	(147)
CapEx			(187)			(147)		40
Free Cash Flow		$	(117)	$	(224)	(107)

• Free Cash Flow: Lower Earnings & Working Capital Investment Partially Offset By Lower Capital Spending
• Inventory Levels To Support Potential 2H Demand Improvement & Strong NA Tools Retail Trends

• Maintain Strong, Investment Grade Credit Ratings
• $3B Revolving Credit Facilities Backed By A Well Capitalized, Diversified Bank Group
• No Term Debt Maturities Until 4Q 2021 | Next Maturity 4Q 2022
• Capital Deployment Priority Is Debt Repayment | Initiated Capital Conservation Actions
• • Capital Expenditure Reduction
  • Temporarily Suspend M&A And Share Repurchase
  • Priority To Achieve Leverage Targets

Liquidity Sources As Of 6/27/20

Cash On Hand	$0.9B
Addl. Commercial Paper Capacity ($3B Max)	$2.3B
Total Additional Liquidity	$3.2B

Significant Financial Flexibility To Navigate This Environment

2Q'20 OVERVIEW	7

2H Scenario Planning

2H Planning Assumption Range For Organic Growth

			Organic Growth	Organic Growth Trend
			2H'20 Range	June + July MTD1 VPY
Tools &		-3% To +4%	+8%	NA:	EU:
Storage		LA:	Asia:
Industrial		-25% To -15%	-23%	EF:	CAM*:
	Attach:	O&G:
Security		-8% To Flat	-4%	NA:	EU:
		Below Segment	Flat To Segment	Above Segment

Recent Key Trends

• U.S. T&S Retail → POS Growth Currently At ~35% Versus Prior Year For Last 4 Weeks
• European T&S → Organic Growth ↑ High- Single Digits For Past 8 Weeks
• SEF → Light Vehicle Production Down ~17% For Past 8 Weeks
• Security → Organic Growth ↓ Mid-Single Digits For Past 8 Weeks

Total Company Organic 2H Growth -Scenarios

Choppy Case	Base Case	Improved Case
-7.5%	-3.75%	Flat

Supply Chain Ready If Recent Trends Continue, But Preparing Cost Structure For A Variety Of Outcomes

1 Through First 4 Weeks	2Q'20 OVERVIEW	8

*Pro Forma Organic Growth

Cost Reduction Program

Cost Actions

~$1B Total Savings | ~$500M 2020

2Q Update

Cost Action Sustainability

Indirect Cost

Prof Services, MRO, IT, Marketing, T&E, Etc.

Deflation

Fin. Goods, Components, Commodities & Transport

• Organization Working To Improve The Sustainability Of Cost Program Heading Into 2021
• Converting A Majority Of Temporary Compensation Savings To Permanent
• Goal For Indirect Spend: 50% - 75% Permanent
• Positive 2021 Carryover Currently ~$150M

Compensation

Furloughs, Reductions In

Force & Salary Red.

Benefits

Temporary Reductions

Implemented

Decremental Margins

•	Targeting 2020 Decremental Margins, Net Of Cost
	Savings, Mid-To-High Teens Dependent On Volume
•	Stronger Peak-To-Trough Decrementals Possible

~$175M Benefit Achieved In 2Q Expecting ~$325M 2H Benefit

Through The Downturn

• '01 & '08/'09 Recessions - Peak-To-Trough

Decrementals Averaged Mid-To-High Teens

Maintaining Strong Operational Foundation With Flexible Approach To Cost Actions

2Q'20 OVERVIEW	9

Summary - FY 2020 Financials

• Revenues: Given The Uncertainties In The Global Economic Outlook, Multiple Scenarios Contemplated

Organic Growth Planning Range: 2H (-7.5% To Flat) | FY (-10% To -5%)

• Cost Structure Considerations: $180M In Cost Savings (Announced Oct'19) & $500M (Announced Apr'20). Tariff & FX Headwinds Currently $180M, With $115M Realized In 1H'20

P&L	• Decremental Margins: Targeting FY Mid-To-High Teens Net Of Cost Reduction
	• Other Items: Other, Net: ~$240M | Interest ~$210M | Tax 17% - 18% | Shares 155.5M | M&A And
	Other Pretax Charges $345M - $370M
	• Priority: Achieving Leverage Targets
	• CapEx: Planning Significant Reduction Versus Plan
FCF	• Working Capital: Supply Chain Prepared For Recent Trends | Flexible Based On Recovery Trajectory
	• Share Repurchase & M&A: Remain Temporarily Suspended
	2Q'20 OVERVIEW 10

Summary - Strong 2Q Performance

New Market Trends Are Emerging…

eCommerce	Reconnecting With	Health & Safety
The Home & Garden

Security

Re-Imagined

Global

eCommerce

Core & Breakthrough

Innovation

…Positioned To Benefit From Improved Demand & Capitalize On Growth Opportunities

2Q'20 OVERVIEW	11

Q&A

THANK YOU

APPENDIX

Global Presence

	Canada	2Q'20	YTD
	Organic	(13%)	(5%)
	% SWK	4%	5%
			Europe	2Q'20	YTD
						Organic	(23%)	(15%)
							Japan	2Q'20	YTD
	US	2Q'20	YTD			% SWK	18%	20%		Organic	(14%)	(11%)
Organic	(12%)	(10%)							% SWK	3%	3%
% SWK	64%	61%

Emg Mkt	2Q'20	YTD
	Australia	2Q'20	YTD
Organic	(27%)	(21%)
	Organic	(11%)	(7%)
% SWK	10%	10%
	% SWK	1%	1%

2Q'20 OVERVIEW	14

2Q 2020 Regional Revenue Breakout

Tools & StorageIndustrialSecurity

$2,197M	$518M		$433M
Other	Emerging		Emerging
Markets
Emerging 4%	Europe 15%	Other	Markets
Markets	15%	8%	2%
10%
Europe	N.America
15%		Europe
	71%	N.America	39%
		62%

N.America

59%

2Q'20 OVERVIEW	15

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 and preferred stock and business acquisitions, among other items. Free cash flow conversion is defined as free cash flow divided by net income. The normalized statement of operations and business segment information, as reconciled to GAAP on pages 12 through 15 of the press release, is considered relevant to aid analysis of the Company's margin and earnings results aside from the material impact of the M&A related and other charges.

2Q'20 OVERVIEW	16