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Stanley Black & Decker CFO Hints at Sale of Aerospace Unit

Nov. 13, 2024

The holding company’s leaders are looking to lower their debt ratio and their industrials portfolio is likely to be trimmed.

Geert De Lombaerde

The leaders of Stanley Black & Decker Inc. are looking to sell parts of their business that would fetch between $500 million and $1 billion as they aim to lower the holding company’s debt ratios. Speaking to a conference Nov. 12, CFO Pat Hallinan said the most likely candidate to be divested is Stanley Black & Decker’s aerospace fasteners group.

Addressing the Baird Global Industrial Conference being held this week in Chicago, Hallinan said the team led by President and CEO Don Allan is looking to lower Stanley Black & Decker’s ratio of debt to earnings before interest, taxes and depreciation to about 2.5 times from its roughly 3 today. “That probably means divesting one asset of size,” he added, and be more likely to come from the company’s industrials group rather than its tools businesses, into which executives have been investing more this year.

Stanley Black & Decker’s industrials portfolio brings in about $2 billion in sales annually and supplies parts for customers in the automotive, aerospace and general industrial markets as well as some tools to insert those fasteners, which Hallinan told Baird analyst Tim Wojs is “a bit of a razor-razor blade model.” The auto sector accounts for roughly $1 billion of revenues each year while aerospace customers spend about $300 million annually with Stanley Black & Decker—and thus be a good candidate for divestiture.

“You’re a small aerospace business in a world of giants,” Hallinan said. “Is that the one that maybe you either have to get a lot bigger or maybe it will be more valuable to somebody else other than you?”

Hallinan’s comments about divesting parts of Stanley Black & Decker’s portfolio didn’t come out of left field. The company has in recent years sold its security and attachment and handheld hydraulic tools businesses for about $4 billion and Allan earlier this year said more pruning was likely as his team focused more of its attention and capital on its core DeWalt, Craftsman and Stanley tool brands.

The push to streamline also has some macro tailwinds. A number of other industrial conglomerates—General Electric Co. and Honeywell International Inc. among them—have split up or are spinning out units to focus their structure and their story for investors. The leaders of others such as 3M Co. have indicated they, too, will pursue that strategy. More broadly, Donald Trump’s election victory has added to optimism among those in the mergers-and-acquisitions market because his administration is expected to be much more amenable to consolidation in particular and deal-making generally.

Shares of Stanley Black & Decker (Ticker: SWK) were changing hands around $86.38 in midday trading Nov. 13, down about 1% from their previous close. They are down about 5% from six months ago, which has cut the company’s market capitalization to about $13.3 billion.

About the Author

Geert De Lombaerde | Senior Editor

A native of Belgium, Geert De Lombaerde has been in business journalism since the mid-1990s and writes about public companies, markets and economic trends for Endeavor Business Media publications, focusing on IndustryWeek, FleetOwner, Oil & Gas Journal, T&D World and Healthcare Innovation. He also curates the twice-monthly Market Moves Strategy newsletter that showcases Endeavor stories on strategy, leadership and investment and contributes to other Market Moves newsletters.

With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati in 1997, initially covering retail and the courts before shifting to banking, insurance and investing. He later was managing editor and editor of the Nashville Business Journal before being named editor of the Nashville Post in early 2008. He led a team that helped grow the Post's online traffic more than fivefold before joining Endeavor in September 2021.