Black & Decker 2014 Annual Report Download - page 8
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Stanley Black & Decker 2014 Annual Report
JAMES M. LOREE
President &
Chief Operating Ocer
JOHN F. LUNDGREN
Chairman &
Chief Executive Ocer
VISION
%
Organic Growth
>%
Operating Margin
%
Cash Flow Return on Investment
Working Capital Turns
>%
Revenue from Emerging Markets
LONGTERM FINANCIAL
OBJECTIVES/CAPITAL ALLOCATION
Our long-term objective is to supplement
this 4–6% organic performance with
acquisitions yielding approximately 10%
total revenue growth while producing a
double-digit earnings per share CAGR
and a CFROI between 12%–15%. This
formula, coupled with a capital allocation
approach focused on sizable returns
of capital to investors, has resulted
in favorable relative and absolute
long-term shareholder returns and, we
believe, will continue to do so in the future.
Specifically, our capital allocation
approach is to maintain a strong
investment grade credit rating, while
allocating excess capital in approximately
equal proportions to returning it to
shareholders (dividends and repurchases)
and M&A. Our near-term capital
allocation priority is to complete our
previously communicated $1 billion
share repurchase program.
Our expectation is to resume M&A
activity in the latter part of 2015 or in
2016, depending on the availability of
attractive targets at reasonable prices.
During the recent acquisition pause,
we have kept our business development
organizations intact and we are beginning
to warm up the pipeline again. Any
M&A opportunities will be evaluated in
relation to potential share repurchases
and the impact on CFROI. Currently, top
M&A priorities include: 1) tool industry
consolidation, 2) Engineered Fastening
bolt-ons and 3) expanding our industrial
platform. M&A activity in Security is
expected to be minimal until the core
business turnaround is in the late stages.
James M. Loree
President & Chief Operating Ocer
John F. Lundgren
Chairman & Chief Executive Ocer
SUMMARY
2014 was a year of forward progress
for the Company and we find ourselves
operating in an external environment
that is more dynamic than ever. Forces
of rapid and often sudden change
are emanating from many directions,
including geopolitics, digital and other
technologies, emerging and potentially
disruptive competitors, currency
revaluations and economics in general.
These times call for agile leadership
and organizations but they also require
stability and strength. With a solid,
high performing enterprise we are
operating from a position of strength
and competitive advantage. We believe
that we have created a culture and
defined the strategic programs that can
achieve this delicate balance between
agility and stability — the right posture
to keep this over 170-year-old enterprise
strong and vital as we move forward.