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Town Hall Jan 2019

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Hello GEM Team. It is my pleasure to address you all from our Miramar headquarters here in Florida. As you are aware at the end of last year, we announced some organizational changes. I am moving back to Miramar to spend more time on running the GEM business. I want to take this time to thank Rodrigo and the whole GEM Team for all of your support in 2018. Today I am going to talk to you about the results of our region last year. Let me start by saying something simple. Thank you. Thank you very much. You did an outstanding job running the business in a very difficult environment. 2018 was possibly one of the toughest years we ever had and not really the whole year We started the year in a very good way. The first half was outstanding we had almost 16 or 17% organic growth in the first half of 2018. But the second half of the year was very difficult. Mainly driven by an FX situation that impacted several markets but especially Argentina and Turkey. Tremendous headwind effecting our business So, our second half last year was very difficult. But the good thing is with the great performance we had in the first half we had enough gas in the tank to offset the headwind we had in the second half of the year. So, our total year was outstanding. We closed 2018 with 11% organic growth in our revenue. That’s the best organic growth across the whole Stanley Black & Decker corporation. I am very proud of what you delivered in 2018. Our profitability was also a good story. We improved our profitability 14% over last year. Given the headwinds let me give you a number. We had $76 million of OM headwinds in 2018. $76 million. We closed the year with $148 million of OM. Just look at the proportion of that number. More that 50% of our profitability is what we had in headwinds from currency. Let me give you some highlights of our performance in 2018. Organic Growth continues delivering outstanding results for us. We grew eCommerce across all the regions. Our pricing initiatives were outstanding. We offset almost 84% of our FX headwinds, $64 million dollars. So, Scott Green, who by the way got another job in corporate, and his team did a great job. Congratulations to Scott, Congratulations to the pricing team. Thank you very much Scott and we wish you the best in your new responsibilities. We grew all of our APU’s, our Stanley MPP products APU’s and power tool grew 22%. 22% that is also an outstanding number. And I can go through a long list of great things we did last year. The bottom line is 2018 was excellent. We now have to prepare for 2019. But, if you stop to think a little bit, about what happened in 2018. The solid performance of this group of each one of the individuals we have across the globe. They were the difference for us in our performance They were the difference for us in the numbers we delivered. I am very proud of this team. The corporation is very proud of this team And we are looking forward to an outstanding 2019. So again, thank you very much. I am looking forward to working with you and the whole team across different markets. Now I am going to turn it over to Alex who is going to talk to you about the specific numbers of our 2018. Thank you very much. Thank you, Jamie. 2018 was a strong year across the emerging markets. We delivered close to 11% organic growth across GEM With positive organic growth in all three of our regions. In Latina America we delivered 15% organic growth. Leading the way across GEM. EMG and Asia also delivered positive growth at 9% and 3% respectively. Across our SBUs we had a strong performance in power tools Our power tool SBU grew 13%. Our accessory SBU was up 12%. It was a challenging year in hand tools and storage which was positive over last year and up 4%. In terms of gross margin, we experienced a lot of headwinds primarily as a result of currency and currency devaluation in many of our key markets. We had over $100 million dollars in currency headwinds in sales verses 2017. And that made our pricing actions and other margin excellences actions imperative as we ran through the year to offset the currency headwinds. We realized over $60 million dollars in positive price over 2017. Which helped us maintain our operating gross margins at 2017 levels. We ended the year at 35% which was in line with last year despite having currency in the numbers In terms of operating margin in combination with our SG&A cost containment actions we did drove a very positive result in terms of OM we expanded OM by 14% or 80 bases points. Which include currency headwinds over 2017. As we look forward to 2019, we will continue to face some of the strong macroeconomic challenges and headwinds we faced in 2018. Amongst those are currency devaluations and currency headwinds the impact of inflation and the impact of tariffs across the Asia and North America region. Making 2019 another challenging year. As we reflect on 2018, I want to thank the teams for their support and continued commitment to our success across the emerging markets. As we face another challenging year And another prosperous year in 2019. Thank you. Thank you, Alex. Here I am again but now I am going to talk to you about 2019. We stated with 2018 it was good now it is history it has passed. Now let me talk you about our priorities of 2019. Our Strategy is the same. We do not have a significant change in our plan for 2019. We will continue the process of turning our business into a digital business. We have a lot of great capabilities that have to evolve. That means we have to move into a digital business from a traditional business. To do that we will continue working our data strategy and working on the use of technology to do things different. We will continue to work on how we use more data to make better business decisions. We will continue to work on our margin excellence initiatives which is by the way a digital initiative. And we will of course continue to work on our organization. As all of you are aware, if not you can ask your bosses, we see the business as an eCosystem. An eCosystem that uses data, technology and digital technology Like our products like our channel like our supply chains to offer the best end to end user and customer experience. We have two critical focus areas. We are going to be very focused on our end users because we need to generate demand. And we are going to very focused on our customer because we want to create value. So, in 2018 on top of dealing with headwinds and being very disciplined from the P&L management perspective. And I want to be very specific on this we are going to need everybody’s help. We need everybody’s support. On having a very disciplined execution where we control our margins, where we manage our expenses. So that we can maximize our profits our operating income. On top of doing this we have to work on the transformation of our business. We need to have common sense to see how we do it. We can’t just go in one direction we have to manage the transformation of our business but at the same time the same time the P&L to deliver the numbers in the short term. In this world we know things are changing and on top of that very very fast. And we as GEM can not deny the impact of technology, the impact of the speed of change in our business. Our challenge is to run this highly volatile business while at the same time transforming the business at the speed of technology at the speed of innovation. As you have heard from our CEO He wants this company to be one of the most innovations companies in the world. And that is one of our responsibilities. So, I am very excited about 2019 we will always face challenges in this business. But I think the opportunities are a lot better than the challenges. I am so proud of all of you. I am so proud of this group. I have a high level of confidence that we have an outstanding team. In fact, we have the best team in the industry. However, a very humble team that will perform. That will deliver. I am convinced one year from now we will be talking about the outstanding 2019 that the GEM team delivered for the corporation. Thank you very much.

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Posted by: moremanrob on Jan 18, 2019

Town Hall Jan 2019

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