As we recently reported, Stanley Black & Decker has acquired Irwin and Lenox tool brands from Newell Rubbermaid, who had recently put the tool brands on sale.
Some more information has come out about why Stanley Black & Decker are buying Irwin and Lenox, and what they plan to do with the brands.
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Bullet Points
Irwin and Lenox are valued as a ~$760M/year (the last 12 months at least) manufacturer of hand tools and power tool accessories.
Together they also have a global footprint, much like many of Stanley Black & Decker’s brands, with a majority of sales in North America.
These brands also have a strong presence in electrical and plumbing trades, areas where brand such as Dewalt have indeed been somewhat absent from.
Interesting, the Irwin and Lenox tool business breakdown is as follows:
- 25% drilling
- 20% linear edge (aka straight saw blades)
- 18% band saw blades
- 18% pliers and holding tools (aka clamps)
- 12% circular saw blades and cutting tools
- 7% other hand tools
Irwin represents 60% of the combined revenue, and Lenox 40%.
Stanley Black & Decker said that Irwin and Lenox are high attractive, due to their strong brands, complementary products, and new channels.
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I still cannot shake the idea that this acquisition might have at least been partially motivated by a desire to deprive other brands, such as Milwaukee and TTI, of the same acquisition opportunity. But I suppose that if this did factor into the decision, it’s not something they can discuss openly.
Brand Summaries & Breakdowns
- Irwin power tool accessories: ~27%
- Irwin hand tools: ~33%
- Lenox power tool accessories: ~35%
- Lenox hand tools: ~5%
I would have guessed Irwin to have the bigger power tool accessory business, but according to these numbers, Lenox’s revenue figures are nearly 30% higher.
Potential Revenue Opportunities
Taken straight from the presentation:
- Geographic Expansion
- Industrial Channel
- Expand Product Distribution Points
- Leverage Irwin®| Lenox® Mobile Conversion Program
- Retail Channel
- Partner Programs & Portfolio Management
- MiUSA Expansion
I’m not sure what that Retail Channel part means, but this deal will give Stanley Black & Decker a further push in Lowes stores, where there seems to be a stronger Irwin tools presence than ever before.
Brand and Product Expansion:
(Keep in mind that these are potential and not definite opportunities.)
- Lenox power tools
- Dewalt and Stanley accessories
- Lenox and Irwin storage
Irwin does make a single construction foam tool box, but sadly that’s the extent of the Irwin storage products that I know of.
Dewalt and Stanley accessories? That makes sense. Bring some Irwin and Lenox accessories to SBD brands’ portfolios.
Lenox power tools? I suppose this could make sense when taking into account different regions or distribution channels. I really can’t imagine it, though. SBD is already juggling enough cordless power tool brands.
One final bullet point is that the acquisition could increase global cross-branding opportunities for tools & storage business. Interesting. So… that means “lick and stick” rebranding depending on the global sales region and local brand preferences?
What kinds of questions do you have about this acquisition?
Source: SBD Investor Relations Presentation
P.S. I know what N. America, EMEA, and APAC are. EMEA = Europe, Middle East, and Africa, and APAC is Asia Pacific. What’s LAG? Latin America and…? What’s the G stand for?
Update: LAG = Latin America Group – thanks Bill, Dan, and Nathan!
Travis
I call it well done business. Secure the market. Mine, mine, and mine.
DanFromMass
Latin America Group.
Stuart
Thank you!!
Nathan
or latin american guam.
I’ve seen it that way as well. why I don’t know.
It could have been a typo also and meant to be LAC as Latin America continent.
Anyway I don’t see lenox power tools unless very specialized – which would make some sense but I doubt it. I do however see lenox blades put with Dewalt tools
or maybe even porter cable ones. I still wonder if they partnered with lenox for some of thier other accessories. IE dewalt’s hole saws – might have very well been made for them by lenox – or parts of them were. etc etc.
either way I think it’s a solid move. provided the products keep being made. I liked lenox blades. didn’t have many irwin tools, or any that I know of off hand. but doesn’t mean they weren’t good. I guess my vice grips were irwin.
Insider
Lenox didn’t and don’t make blades or holesaws for anyone else, but previous generation Lenox was handed down to Irwin and marketed as Irwin.
Lenox jigsaw blades are made by Bosch 😉
fred
The pundits on this morning’s CBS Radio news are saying that SBD must be thinking that the worldwide construction business will remain strong over the next several years. I’m sure that they did their due diligence – did a sinking fund calculation etc. – but $760 million in annual revenues (if it remains steady) – once expenses are deducted – has to net out at a number that adds up to a present worth of $1.95 billion. I’m not sure what their opportunity cost of capital is – or for that matter if the deals is cash or stock or a combination – but the deal seems like a bit speculative to me. The comment on the news was that they may have paid twice what the market had thought the deal was worth. Time will tell – and we’ll see if they end up doing well with the deal or need to write down or sell off some of the acquired assets.
Cr8ondt
To add, I saw SBD stock bump 4.5%…. That also helps justify the buy.
fred
CBS news reporting this morning that SBD wants to sell off its lock business to pay for the deal
Satch
The only thing I hope SBD does NOT do is turn Lennox into an el cheapo brand like they did B&D. Lennox has some very good hacksaw blades and carbide hole cutters for the trades and if they bollocks those, the name will be tainted but good.
fred
Your point is well taken – but remember that B&D did it to themselves long before the 2010 merger with Stanley. When the DIY craze hit back in the 1960’s they traded on their good name, from a long history of making professional quality tools and started selling lots of orange plastic cased tools at the sometimes cheesy regional home centers and discount department stores that were predecessors of Home Depot and Lowes. When B&D acquired Dewalt in 1960 from AMF, then Porter Cable in 2004 from Pentair, they had brands that still had a decent reputation for making professional tools. I guess they had used the Dewalt brand as their flagship – so when the Porter-Cable acquisition was completed they decided to position that brand down – as a mid-level maker – with the B&D brand at the low end.
Of course they were still putting the B&D name on small appliances – a business that they had purchased from GEin 1984.
BonPacific
I love my Black and Decker Toaster Oven… But I’ll neer buy a B&D cordless tool.
Satch
Right you are Fred. And guys need to remember that B&D had several lines of power tools right up to their industrial line which eventually shed its black and grey colours to magically become bright yellow and black Dewalt power tools.
When the portable power tools bearing that name started appearing back in the late 80s, a lot of guys thought it was all new. Not realizing the first generation of tools were just re-badged Industrial models. A pretty successful business plan I would say.
It is a shame many guys will grow old never realising that both Stanley and B&D made some really nice tools at one time. Just the other day I was at gents house and he had one of those old all metal B&D jigsaws from the 60s. Built like a tank and still going strong.
Josh
The majority of Irwin tool accessories I’m familiar with are smaller items – screwdriver bits, spade bits, and the like. Lenox sells quite a few high ticket items, and their bandsaw blades have an excellent reputation; making up 18% of the total tool business as you can see above.
Mike
Believe it or not in some countries Black And Decker is professional tool brand they have 12 in slide miter saws three speed drills rotary hammer drills and a host other professional tools some might be rebadged dewalt but the 12 in miter saw isn’t it looks totally different
Nathan
I could see that because of american name recognition in places where DeWalt makes no sense, doesn’t translate or unheard of.
fred
B&D was a professional tool brand in the USA once upon a time.
In a somewhat analogous situation, Buick had their best sales year ever in 2015 – but not in the USA.
Reportedly 80% of all Buick sales were in China.
Go figure
Jared
“girls” It stands for Latin American….Girls!
Jim Felt
The Chinese market just loves them a Buick. But not Buick’s home market. Not at all.
I guess each to his own. And DIY and midrange priced tools are no different.
Odd about human nature. Where even the packaging color means different things to different consumers.
And I too have fully functioning US made corded Skil Saws, Hole Hawgs and Porter Cable drills from the seventies/eighties. Just can’t part with them. Regardless of their technological antiquity.
fred
I too have lots of vintage Rockwell-Porter-Cable, Milwaukee, and Skil power tools from the 60’s and 70’s that continue to perform. My B&D Super Sawcat with electronic brake – maybe the best sidewinder saw of its age – sits in its metal case. They still command pretty good prices when they come up for sale on eBay.
I think that the modern marketplace has pushed us to accept less tool longevity in favor of a constantly changing set of features. I read comments from folks that are looking to sell off functional tools in favor of the latest and greatest. I have to admit that I have been guilty of the same practice from time to time. Buying for a business – where increased productivity and enhanced safety were always in my thoughts – we often tried out new tools – but not always at the expense of abandoning older solid performers.
Toolfreak
All I wanna know is, what, if any, Lenox and Irwin products will they make in the USA.
Eric
Lenox has a factory in Massachusetts and Irwin has one in Maine. Not sure of future plans for either.
Mark
Both are remaining in New England and will definitely get busier
Saw Guy
How does Lenox’s strong showing in the industrial metal cutting band saw business play into this. These are a large line with Fastenal, Grainger, MSC, How do you see this impacting their US competitors such as Starrett?
Stuart
I think that SBD has the potential to effectively grow the market share, with sales flyer promos, bundling with Dewalt tools, and aggressive marketing if they choose, at least once integration is complete.
I haven’t seen a lot of push from Starrett in some time, so if they take this sitting down, they definitely stand a chance to lose market share.
Dewalt has not been very aggressive with their accessories lineups, but things seem to be different with their FlexVolt accessories lines.
By itself, the acquisition should do little to change anything. What happens or doesn’t happen fully depends on how SBD approaches this strategically.
I think that there will definitely be activity on the homecenter front, potentially at Lowe’s, Home Depot, or both. That might have a greater or at least faster impact on things. There, Diablo and Milwaukee are the largest competitors, I believe.
fred
Lenox, Morse and Starrett also are players in the industrial blade market. I’m not sure what percentage of Lenox revenues comes from this. I recall us buying bandsaw blades from all 3 of these companies – but you will not see the big (one saw took a 174 inch blade) bandsaw blades we used at Lowes or HD
John
Over the last decade (give or take a year) the Irwin brand has produced some crappy tools…..so it will be more of the same under Stanley Black & Decker. Not that I hold Stanley or B&D tools in any high standing.
biff
Agreed. Irwin vise-grip branded tools are of middling to low quality. In my experience the metal they use is not hard enough and they wear out quickly.
Ben
In the grand scheme of things, all I can see in this transaction is much less choice and competition playing in favor of the customers. In the end, some major portions of tool manufacturing (both hand tools and power tools) will end up in the hands of 2 or 3 major corporations. It might be very good for them, but it’s not good for the future of this business.
paul
Not sure that brands mean very much anymore… These days, I really don”t care about the brand and focus mostly on CoO because that’s the best indicator of quality per dollar. In my opinion CA, JP, EU and USA are best; CN, IN are unreliable and inconsistent at best. Other CoOs fall somewhere between, but I’ve had good experiences with TW and KR. In my mind, brand shifts just dilute any reputation the brands may have ever had anyway, usually with poorer quality production and elimination of quality product lines. OTOH, the best quality brands produce in their original home countries, keep their good name and don’t tend to get shifted around. Of course this is only a first approximation, and I can think of several exceptions. It’s just my own perception of things that gives me a starting point fwiw (and in case any marketing people are reading and care).
Ben
Unfortunately, this is not true. In fact, CoO doesn’t mean anything at all. Chinese can make very high quality products if they are paid to do so, and USA, EU, CA can make crappy products if this is their intention.
Regardless of the country where products are manufactured, when a corporate decision is made to reduce cost in the sole interest of increasing profits, or to switch the market segment of a well established brand (Porter Cable being a great example of that), then you end up with those problems.
All I can say though, is there’s a lot more money to be made with crappy tools, than with high end stuff. The DIY market is so huge compared to the workers in the trades, that the temptation for high quality tools manufacturers to bring in some cheaper versions of their higher end tools is very high. Makita and Dewalt have been both guilty of this tactic in the late 90s, and 2000s. Even Milwaukee made a few low end Sawzall and drills to still have something to offer to the hobbyist crowd.
The real problem starts when manufacturers put the bean counters, the tool designers, and the shareholders together with the common goal of designing a new product that will generate a lot more profit. In the past, you could achieve that goal by bringing innovative tools to the market, patent them, and reap the rewards for a few decades (Fein Multimaster being a good example of that). Today, it’s very hard to invent a new tool that doesn’t exist yet, but that everyone wants to buy today. So, the easiest way to make a lot of profit is to reduce costs by cutting corners, offshore manufacturing, making knock-offs, etc…
By the way, pretty much all the Milwaukee M12 and M18 tools are made in China since many years, minus a few exceptions, and as far as I know, they are quite decent…
paul
Ben,
As I said, this is a rule of thumb and not a law. And admittedly, applies more consistently to hand tools than power tools in my application of it. That said, while I completely agree that any country is *theoretically* capable of producing either good or bad quality tools, in practice there is a pattern along the lines of this guideline that is easily observed. When I see EU or JP quality and consistency come out of CN and IN, I’ll agree with you that CoO means nothing.
JoeM
I would say, optimistically, that this was a good move. Let’s drop the financials and the paranoid conspiracy theories for a moment.
They just bought two brands with known quality production lines for making hand tools and power tool blades. Change the paint schemes on the lines, and there is a very, very good chance that the DeWALT, Porter Cable, and other Not-Stanley-Or-B’n’D subsidiaries could be coming out with better made Hand Tools and Tool Blades.
Next-Gen DeWALT hand tools with a more reliable, tried-and-true design to them without having to develop them all from scratch. Porter Cable and MAC branded tool blades, like reciprocating, jig, oscillating, and circular saw blades, that you don’t have to question whether or not they’re a gimmick to use. “I’ve seen a Lennox blade just like this. Should work on my Porter Cable/DeWALT/MAC tools just fine. Whatever crazy new version they were making before was garbage. Let’s try this thing I know works.”
Buying the companies means they’re buying some patents and some production lines as well. So… With a little hiatus between new releases, we’re looking at what the next-gen Stanley-Black-and-Decker Pro Tool lines are going to be putting out, and it won’t be all themed after some new metal they found to work 5% better, it’ll be longer lasting versions of what they skipped over when producing their new pro lines.
Or, that’s my take on it. I don’t think “THIS IS FANTASTIC!” rather I see this as “Oh Good, they’re going to fix something they should’ve done a long time ago, before they started releasing all this nonsense cloned Stanley and B’n’D stuff for DeWALT. Poor Porter Cable and MAC suffered so badly when they did that, all to make DeWALT look better. Here’s hoping the quality rises as a whole, and we can get back to something sensible again.”
fred
The tools that we are most often talking about here are produced by or for (by other OEM’s) by publicly-traded corporations – where one might argue the stockholders own the companies. In big corporations it may get to be a bit complicated balancing the interests of the various stakeholders (stockholder owners, Board of Directors representing the owners, Management, the customers, nation-states and regulators, the public, the environment etc.). Worse yet, stock price, short-term profits, quarterly earnings, ability to grow etc. may not be things completely within the control of management – considering other forces at play in the world marketplace. There are some who argue that many corporations put quarterly earnings ahead of everything else – and there have certainly been examples of companies who have failed to look at their long-term profitability or even sustainability. If management is in a position that it feels compelled to report ever increasing and an unbroken string of quarterly earnings and profits – maybe they like lemmings don’t see the cliff that they may be rushing towards. One only needs to look at a recent mess created at a large US bank – with their CEO getting the gate – to see how this can happen if you put some metrics ahead of ethical behavior. Back to tools, I think there is room in the marketplace for different levels of quality – and the big DIY market may not need the best and most innovative. But if we make everything a race to the bottom – and worse make it hard to tell by brand, manufacturer or even price – what’s likely to meet our needs – then we have arrived at a truly sad state of affairs.
Will - Tile Guy
100% agree, it scares me to think how this business model will affect our country in the future.
Jim Felt
It’s hard to battle human nature. I like to think of the best option as being enlightened self interest. As a opposed to unfettered capitalism and/or cronyism.
A historic prospective always helps too. Especially as it applies to the last 50+ years of world economic interdependence and upheaval. Two nearly oxymoronic ideas.
Ain’t life grand?