Stanley Black & Decker, Inc. (SWK) Earnings Call Transcript & Summary

Great. Excellent. We'll continue here with the next fireside chat. I'm very pleased to have Stanley Black & Decker with us. I'm Markus Mittermaier, multi-industry and electrical equipment analyst here at UBS. And I'm absolutely delighted to have Don Allan with us, President and CFO, soon to be CEO as of July 1. Congratulations.

Thank you very much.

And we have Dennis Lange here with us, VP, Investor Relations; and Cort, Senior Director, Investor Relations, is in the room somewhere here. Hi, Cort. I think, Don, you're going to have some opening remarks for us, and then we go straight into Q&A. The format will be similar for the audience here. You can scan your code on the table, and I see your questions right here if you type them in. So with that, Don, thanks so much.

Thank you, Markus. Good morning, everyone. And so I do have 2 pages I want to walk through as a presentation, then we'll jump into the Q&A. But I think most of you are aware that over the last 6 months, we've become a more streamlined company that now has some amazing franchises. We have a significant Tools & Outdoor business that -- you can see the 2021 revenues on this particular page, quite substantial, making up a large portion of Stanley Black & Decker. We'll be close to $20 billion in 2022. And with the acquisitions of MTD and Excel, about $17 billion to $17.5 billion of that will be our Tools & Outdoor business. Our Industrial business, which is made up of 2 really nice businesses, in particular our Engineered Fastening business and our Attachment Pool business that's within our infrastructure business makes up the majority of that infrastructure business that you see on this particular page. Engineered Fastening continues to be in a bit of a cyclical recovery mode where it serves both the automotive and aerospace industries, and we see that as a nice upside opportunity for our company over the next 3 years as those industries recover. But I would like to spend a fair amount of time talking about Tools & Outdoor because we've put together a really impressive list of brands, businesses that cover power tools, hand tool storage and accessories. And then now a significant portion of that business will be the outdoor products or outdoor power equipment, as we refer to that. You can see that the core capabilities of our company have not changed dramatically. We're very much focused on the iconic brands that we have and continuing to invest in them, making sure the innovation machine is strong, making sure that we really are covering a lot of different categories and channels. I think when you look at these businesses, we have many products that cover many different categories of types of products, but we also serve many different channels because of all the different brands that we have, whether that's a consumer channel with Black & Decker, whether that's a do-it-yourself and tradesman channel with Black & Decker, CRAFTSMAN and STANLEY or whether it's the pro channel with brands -- the biggest brand being DEWALT in the power tools space, but then other channels like IRWIN, in particular, that really serve a niche channel in certain categories and LENOX for that matter. And then last but certainly not the least is how do we really leverage our operating model as a company. And I'd like to spend a little bit of time this morning talking about where we go from here as a company because we -- we, collectively, under Jim Loree's leadership have created a portfolio of businesses that allow us to be very strategically and streamlined and focused on what we need to do next. And we don't necessarily need to do a bunch of acquisitions going forward. What we need to do right now is focus on running the existing businesses that we have, which is Tools, Outdoor and Industrial and running them as effectively and efficiently as we can. I think we now have businesses that have the ability to grow 2 to 3x the market from a revenue perspective on an organic basis. There are also businesses that should be in mid-teens to above mid-teens profitability depending on the business at the operating margin rate level. But there's some shifts that we need to make in our company to ensure that, that happens over the next 3 to 4 years. The first of which is taking some existing investments that are corporate-led investments, corporate centers of excellence and looking at those and making sure they're getting the right payback, the right returns. And if their paybacks are longer periods of time, we're going to take that money and reallocate it and put it into certain key categories that will stimulate growth and profitability rate improvement, such as innovation, more engineers in our power tools business, in our outdoor business and then certain categories of hand tools and storage as well. How do we accelerate the electrification shift that's happening in the world? We know it's going to impact our Outdoor business in a positive way. It's a growth catalyst for us. It's also a growth catalyst for our Engineered Fastening business in the automotive industry as cars shift from gas-powered to EV types of products, and we're well positioned as a company to meet that demand of those customers. E-commerce is a great growth catalyst for us that we continue to leverage across the globe. And then, of course, I mentioned the industrial market recovery is an area that we want to make sure we really maximize the opportunity there. But because of the portfolio transformation of these businesses that we have made over the last -- in particularly the last 6 months, we've been very focused on acquiring some outdoor businesses and selling our security businesses, we now have a focused company with excellent franchises, but yet we can simplify the corporate operations of our company. We used to be a corporate holding company-style organization. We're now going to move to a corporate operating organization that is much closer to the businesses, and the organization is streamlined and the number of layers between us and the customer or the manufacturing plant is dramatically reduced. We also have an opportunity in supply chain. As most companies have struggled with supply chain through the pandemic. As you know, we were working on our supply chain before the pandemic to get much closer to our customers and decide what we were going to make versus what we're going to buy. That was pretty much put on hold because of the significant growth that was experienced over the last 18 months in particular. But now we need to accelerate that supply chain transformation in a very aggressive way. We believe there's $1 billion of P&L efficiencies that can be gained by that acceleration over the next 5 years. And we will continue to focus on what we need to do to get closer to our customers, but also to really look at the number of locations we have that are doing manufacturing and distribution. Our company has over 100 of those locations. We need to be looking at how we cut that in half or even more as we really resize the footprint and look at how we achieve the overall objectives that I described. The last thing I'd say is price realization continues to be an important part of our model. We won 100% price recovery related to commodity inflation and transportation cost inflation that we've experienced. We're going through another round of pricing increases as we speak, and we would expect those to be implemented in the third quarter. That will ensure that we actually get that 100% price recovery because as we've gone through an inflationary period like this, for all of us have been dramatically impacted, we need to make sure that our price model is working the way we want it to. So we're very much focused on that as well. We believe we now have a simpler company that can be more efficient, more effective, drive higher levels of organic revenue growth, substantial increases in profitability from where we are today, demonstrate incredibly strong free cash flow on a consistent basis -- on an annual consistent basis and make sure that we complete our $4 billion share repurchase program that we started this year sometime in 2023. So we're excited about where we go from here, but we are very much focused on what we can do organically, as I described. So that's my comments, and I'll pass it over to you, Markus.

Great. Thanks, Don. There's a lot of very interesting stuff in here. So maybe let me start with a follow-up to what you just said, changing from this kind of holding-style structure to a corporate operating model. Like what does that mean in practice? Is that delayering? Is -- what should I think about that?

Yes. I think the biggest thing that you'll see from that is really reducing the number of layers that we have in the organization. So our company, when you look at the number of layers, from the CEO down to point of impact -- point of impact could be the salesperson or it could be a line supervisor in a plant. And on average, the amount of layers we have are low double digits. And so a world-class company has about 5 to 6 layers. I think for a company like us, the right number of layers is probably around 8. So there's probably 3 to 4 layers that really need to be addressed in this organization structure. The other thing that I've been focused on is we, as a corporate team, have really been focused on portfolio management, shifting the portfolio, building through acquisition, through divestiture. And we have a lot of great skill sets that have allowed us to do that. We've also created centers of excellence that really help our businesses achieve certain outcomes. Like data analytics is an example. Industry 4.0 is an example. Those are still important attributes of our company. We're not going to eliminate them. But we're going to embed them more into our businesses and really have them focused on driving specific agendas for each business around value creation. And so it's not necessarily everything being we're going to throw all the center of excellence resources out of the company. It's not necessarily that. It's more about how do you embed them in the businesses and get them more closely tied to the point of impact and drive more value creation as a result of that and then really streamlining the corporate organization down to the business level and ensuring that we, as corporate leaders, now are more active on the day-to-day performance of the business versus in the past, even more empowering our leaders in the businesses. We will empower our leaders for sure. But one thing that I noticed, we function much better as a team when we, as the corporate leadership team, are deeply embedded in what the business leadership team is doing.

Interesting. So I know it's early days, and I'm sure you expect the question around timing. But like broadly speaking, like again, sort of like is that a multiyear process? Like how should we think about that to kind of delayer and...

Yes. I think the delayering and the prioritization, reallocation of dollars will all be done in 6 months. And so we're really trying to get that completed by the end of the year at the latest, so maybe 6 to 9 months. And then there's an investment side of, okay, so we're going to get these savings by making these changes. But let's take those dollars and invest them in these categories you see in the slide here, engineers for innovation, the electrification effort, more feet on the street, digital tools for our commercial organization, but also digital marketing expertise, ramping that up in a more significant way. Certain investments may be in Industrial where we think it can help with the market recovery as that's playing out. As we see that shift from gas engine cars to EV, how do we make sure we really leverage that in a big way. So there's things like that, that we need to really invest in. But it's not just a onetime investment. And one of the things I want to make sure folks understand is that, yes, this is an initial jump-start investment. But as we get our supply chain benefit over the next 5 years, we want to take some of that and reinvest that back into the business, in the areas that I mentioned because innovation requires constant feeding. The tools that commercial leaders need, need to be constantly reinvented and accelerated to improve their performance as they interact with our customers and our end users, for that matter. E-commerce is another area that the more we look at this, the more opportunity we see with the broad brands and the broad product base that we have. These are areas that we want to continue to invest in every single year. And using the supply chain transformation and the value of the creation that comes out of that to partially feed that, I think, is a big opportunity and a big shift in how we think about the business there.

Interesting. Maybe last one and then I go into some of the questions that we got here. But how much sort of like incremental dollar opportunities, that delayering, is there a number that you can already share? Or is it too early?

The savings, you're talking about?

Yes.

Well, the $200 million to $250 million really has that. So we'll basically be removing about $200 million to $250 million of cost, and then we'll be taking that money and investing it in these other areas I mentioned.

Okay. Interesting. Great. Perfect. Now obviously, if I come back to maybe the near-term dynamics in the market, and I'll touch on some of the topics that we just discussed later again. Supply chain, you mentioned it is obviously the topic du jour still, hopefully not -- well, let's see for how much longer. But where are we now in that space? You obviously see it in battery, see it in resins. It kind of obviously keeps shifting. You saw it on the chip side, still probably see it there. Where are we compared to last time kind of we spoke in earnings?

Yes, I would say that the -- we're very close to having the semiconductor challenges behind us. We have probably another 30 to 60 days before that's complete. We feel very good about the supply of semiconductors we've been getting since the beginning of the year, continues to improve month by month. And as we get into the back half of this year, we don't see that as a limitation on demand and volume opportunities, which it has been for the last 3 to 4 quarters. So that is really the last hurdle that we've been trying to overcome from a supply chain point of view. Obviously, we've had cost increases in the supply chain that required us to put forth price increases into the market. That has stabilized the inflation for the most part. We've seen a little bit of improvement in some commodities like steel but hasn't been enough to really move the needle in a substantial way at this stage. But the good news is that for about 6 weeks, we've seen stability in inflation. And so you combine that with the fact that we're solving the semiconductor challenge in the next 30 to 60 days, I think we're positioned well to meet the demand of whatever the market is in the back. I think everybody is wondering, is there going to be a slowdown, is there going to be a recession, those are challenges that we're all trying to navigate at this point. But I feel like our supply chain is positioned to manage through whatever dynamic we're dealing. But the biggest thing we want to accomplish coming out of the supply chain challenge is making sure that we're continuing to gain market share in whatever the market is. And so if the market shrinks for a period of time because of a downturn or recession, we want to make sure that our impact is much less than the impact that others see in the space that we play in. And so making sure that we're continuing to go after share opportunities is a mindset that we've always had. But we're really trying to make sure our internal teams understand. Whatever the market brings in the next 6 to 9 months, we want to be aggressively going at this year. We now have a supply chain that allows us to do that.

Right. I'll come back to the demand environment in a second. One more maybe on price costs. Sort of new price increases now coming, sort of like how should we think about the remainder of the year sort of like if we want to quarterize those, right? How would you guide us there?

Yes. I would say that we're going through a fourth round of price increases that we are trying to have implemented in Q3. It will vary depending on the customer and depending on the region. Some will be earlier in Q3, some will be in the later stages of Q3. So it will be ramping up throughout the third quarter. You'll get a full quarter impact in the fourth quarter from that. And that's probably the right way to think about the cadence associated with the price increases. We've done a lot of work to prepare for those conversations to make sure we can support it with data and facts. And just like we've done with the previous 3 price increases, we're going through a very similar process and we are beginning to have all those conversations right now with our customers.

Got it. And in terms of the full year sort of like impact on price cost, is it recovered? Or have we recovered plus a little bit?

For this year, when you look at it, yes, we will get to very close to 100% price recovery in '22. And then if inflation continues to be stable or tick down modestly going into next year, then you start to see a positive flip.

Okay. Great. On demand, sort of like it sounds like from everything I've heard, no sort of like demand elasticity to speak of in terms of this price increase, at least so far, right? So where are we, say, on point of sale and sort of like inventory in the channel? Like what's the latest there?

Sure. It's a bit of a mixed story. I mean we will start with Tools and then we'll go to Outdoor. With Tools, I would say inventory levels overall and our customers are kind of either in the range they want it to be or slightly above the range they want it to be, depending on which customer and which region. I would say the European channels seem to have a little more inventory than the North American channels right now. That's Tools that I'm referring to specifically. The Outdoor side, I would say that the inventory levels are pretty much in line with expectations in North America. The season has been very, very slow, though. As you've heard from our customers and from us in various communications, the season started very late because of the weather in the Northern part of the United States. And it really wasn't until mid-May that the weather got to a point where it was -- the grass are starting to grow on a regular basis and people round about starting to do projects in their yards. And so we'll see how that plays out. We're watching to see how the month of June is, but we're definitely behind. We were behind in the first quarter, as you saw our results. Outdoor was probably off about $100 million to $150 million in revenue because of the slower start to the season. That's probably a good way to think about it at this stage. We're still kind of lagging behind of that magnitude. And so when I look at demand, the price increases don't seem to be impacting demand. Where you see a little bit of slowing, like in the European marketplace right now, it's kind of across the board. It's not unique to our products or any price actions that we've taken. So you have some slowing in Europe. The North American market is still pretty strong. You look at the absolute POS in North America with our customers, it's healthy. And then you have this weather dynamic on the Outdoor side of things.

Okay. And is there any sort of marked difference that you see between DIY versus pro?

Yes. I would say the pro market is still strong. And so -- which is why -- which makes sense because if you think about the area that we've been short products, which is our professional power tools, that demand is still very high, the inventory levels in the channel are very low. And so it makes sense that, that demand continues to be at a very high level. The DIY side has been slowing gradually as people have been doing other things beyond their home, traveling or vacations or whatever. You've seen a gradual slowing of that over the last 6 to 9 months. But I think there's a much bigger positive impact on the pro side that we're seeing that's more than offsetting that right now.

Okay. Got it. Maybe on the near term, so like there was obviously some working capital builds recently with a lot of stuff on boats. How should we think about that sort of like into the second half? At some point, I guess, the cash drag should revert. And I think that's a key differentiator to one of your competitors, sort of like at what point sort of like inventory or how that gets recognized. Any update there sort of like on how that might look like into the second half?

So we expect that in the second quarter, we'll have maybe relatively neutral free cash flow to modestly positive free cash flow. We're striving towards maybe $200 million to $300 million positive free cash flow in Q2. The back half will obviously be a substantial positive to get to our $1 billion, $1.5 billion free cash flow for the full year. Now we've made some nice progress so far this year and in transit because we've been working on this since the beginning of the year. And so the amount of inventory we have in transit has gone down almost $150 million. And so we continue to navigate through that. We have been cutting back production for 2 or 3 months in certain categories, where we feel like we have enough inventory or more than enough to meet the market needs for the next 6 months or so. It also allows us to bring our inventory levels down to help us achieve that free cash flow number for the back half of the year. We continue to monitor that and look at that. But I feel like we're making the right manufacturing production decisions aligned with where the market is because you've got high demand in the DEWALT professional power tools that you don't want to cut back on any of that production. And then you've got other areas where you've got relatively healthy, stable demand that you want to make sure you have enough inventory, in our case, we do in several categories. And then you have a European market that might appear to be slowing down a little bit. And how do you make sure that you have the right levels of inventory to meet the need there as well.

Okay. Maybe bubbling up again to -- in a 30,000-foot view. Dennis was kind enough a few months ago to kind of show me around your Charlotte plant on the DEWALT tools. And what I saw that was interesting in the sense that there was one part where the production was relatively -- or very automated, right? Sort of like we went from the old cells, if you will, or the current cells to a highly automated part. How much of that -- and I know that you've been kind of in charge of that initiative in recent years. So how should we think about that opportunity of basically increased automation as you adjust the footprint, what you mentioned in your kind of introductory remarks. I suppose those 2 are interlinked, right? Like how do you cut back 50% of your sites while still maintaining or supporting growth, right?

Yes. So I think that is going to be a big part of what we need to do in this transformation of supply chain. So what you saw is a great example where -- if you go to Mexico for a power tool assembly plant or China, for that matter, you would see these long tables of maybe 30 people on each side, and they're each doing a specific task in the assembly of a certain power tool. And at the end, you have the quality check and the packaging and everything that happens. With these automated lines, we've had a couple of different versions of it. We've kind of had the 1.0 version and then the 2.0 version that we're working on. The 1.0 version went from having about 60 people working on a power tool assembly line down to about 10 and having these automated cells that can be popped in and out of the line depending on the type of product or the brand that you're manufacturing. The 2.0 version is taking from down about 10 people to more like 2 people and only having 2 people oversee the data and the information and the changing out of the cells as they happen. Obviously, the benefit is that you don't need as much labor. But the other benefit is you can run these lines if you want to run them 24 hours a day, you can run them 24 hours a day and you can replicate them as well, but I would say with a relatively reasonable investment. And so it doesn't require you to put -- for every line you put in place, you don't have to put $30 million. It's a reasonable level of investment. We have a couple of partners that we've worked with to really develop these technologies. It also has the digital capabilities of tracking the data and the information as things are being assembled to make sure that if you see anything going off course, you can quickly rectify that. It is an important part as we move our manufacturing footprint closer to the mature markets because what it does is it does dramatically reduce the labor while you're also dramatically reducing the freight cost. And you do have some, obviously, higher level offsetting costs a little bit related to the automation piece. But at this point, the impact is relatively neutral. And as you leverage up the volume, you're going to start to see that you're actually producing on a per unit level at a lower cost than you would in some of the other markets.

So as we think about sort of like the longer-term margin picture or medium-term margin picture, right? What I have is what you mentioned sort of like in your opening remarks around sort of like reduction of footprint. And then in each footprint, I guess, you have a different unit economics, if you will, of every factory. Where does that get us ultimately in terms of potential improvements? Or is there...

Margins, you mean?

Yes.

Yes, I would say that when you think about the model I described in the presentation, there's a $1 billion of efficiencies you're going to get. There's also the need -- the desire to want to keep investing in innovation, feet on the street, digital tools, et cetera, for the front end of the business, accelerating electrification. So I think that our margins for Tools will probably be somewhere between 15%, 16% when we get to where we want to be. Outdoor will be mid-teens as well, and our Industrial footprint will be anywhere from mid to high teens. And so I look at the business as a mid-teens business overall, all 3 of these put together, is where we want to end up. Five years down the road, could it be a little bit better than that? Possibly. But I really believe that this reinvestment model is a success for higher levels of organic growth. And therefore, I want to make sure that we strike the right balance between organic growth and profitability.

Interesting. Okay. So would it be -- so I think you said in your opening remarks, 2 to 3x sort of like market growth, right? So where does that get us? Is that sort of like the environment we've had pre-COVID for the -- 5 years pre-COVID, kind of 6%, 7% organic?

If you assume 3% GDP, it's 6% to 9%. And I think we have businesses -- all 3 of these businesses, frankly, that have characteristics between brands, innovation track record and innovation capabilities going forward, the people we have and the technology that we're investing in to make us more efficient and effective, I really think it does create the opportunity to continue to gain share in a very significant way. Sometimes people look at the Tools business and say, "Well, yes, it's such a mature market." Well, yes, it is mature in the United States and certain parts of Europe, for sure. But when you look at emerging markets, there's still a huge growth opportunity there. You look at e-commerce, there's a big opportunity for growth there as well. You look at the transition that's going to happen in our Engineered Fastening business for the automotive industry. It's a great growth opportunity as more EV cars roll out. Aerospace is going to bounce back over some period of time, whatever that period of time is. But eventually, plane manufacturing will get back to fairly substantial levels, and our business is positioned well for that growth, too. So I look at all the opportunities -- and we've been talking about growth catalysts for a while as a company, maybe 2 years now. They're just -- they're continuing to come to fruition. And I think they do support the type of multiple of growth that I just described on an organic basis.

Interesting. Okay. So let me double click on this because there's sort of like this pushback out there that we hear a lot around, okay, who is actually gaining share in this market, right? And is STANLEY a net loser, a net gainer, like -- and sort of like that debate is obviously keeping us busy, which is great. But like how do you think about like who is gaining share? I mean you have basically a market that, call it, the top 10 players are, what is it, 60% of the market. So is it a consolidation at the top? Is it sort of like gaining from the long tail? Like who is gaining share from whom?

Yes, we're definitely gaining share. We gained a substantial amount of share last year in the power tools space. One other competitor gained a lot of share, too. Then 2 other major competitors either maintained or slightly share decline a little bit for them. And then a lot of the smaller players lost a lot of share. And so when you look at the power tools space, what happened in the last 2 years is ourselves and 1 other company gained a lot of share, and then 2 other major players kind of maintained or slightly less share. And then all the other small players, which can be anything from private label to regional players, whatever the case may be, they lost a fair amount of share, which actually makes sense that the smaller companies probably struggled more with supply chain issues than bigger companies like ours. Even though we had our challenges, they probably were not of the magnitude of what some of those smaller companies dealt with. So I -- there's a lot of chatter out there about who's gaining share in power tools and whether Stanley Black & Decker is losing share. We know for a fact that we gained a substantial amount of share last year.

Got it. Okay. And it's interesting that you mentioned that sort of like the smaller ones losing. I was wondering if that's supply chain and access to supply chain and/or at some point, network effects around batteries. Is that something that you hear already? Or are we too far -- or too early in that sort of like network effect cycle, if you will, if I have 3 STANLEY tools at home or 3...

Yes, well, there's definitely a system perspective. Like if you get into the DEWALTs and you have the FLEXVOLT technology, you have the 20-volt battery packs, 60 volts, now we got POWERSTACK, if you want ATOMIC and XTREME, which are smaller, more powerful tools, you have this system that you're investing in and that you have the charging capabilities around that with a lot of different variations. And I think our company has done a really focused effort to make sure that you keep building out that system. So when you get in the system, you want to keep building upon it. You don't want to necessarily go buy a competitive product. Now the thing that we need to make sure that we continue to do is we keep building that system out, so there's more tools, more capabilities so people want to make sure they stay in the system and build out that over time. But I think you get to a point as a professional where if you can get all the tools you need in that system, you're going to stick with that system. And that's really what we've been trying to do for, I don't know, a decade now in this particular space. And so that does make it harder on the smaller, midsized players because they tend to be trying to sell niche tools. And if those niche tools don't have some unique differentiation to it, then the big system players aren't interested in buying those tools.

Interesting. Maybe -- I know we only have like 5, 6 minutes left here, but what I wanted to touch upon is coming back to what you said at the outset that the focus , if I understood you right, sort of like in changing the structure of STANLEY as is, right? Maybe less of a focus on sort of bigger M&A, is that a fair point? Okay. So does that mean that you don't see sort of like particular white spaces in the portfolio that you have at the moment, right?

I think there's opportunities for acquisitions in the future, but I don't see that on the horizon for the next at least couple of years. And I think there's enough things that we need to do internally that will create a lot of value for our shareholders, along the lines that I described in my presentation. The other thing is we want to return value back to our shareholders. So we did a substantial amount of that in the first -- in the beginning parts of the second quarter this year. We still have about $1.7 billion of a share repurchase we want to complete in 2023 to get to the $4 billion of return of capital. We think that's the best investment we can make right now given where our stock price is. And if that changes for some reason in 2023 and our stock is over $200, we might reevaluate that. But at this stage, we think that's the best thing to invest in. And so if you follow that path, and we have proceeds coming in this year from the sale of the 2 security businesses that we should have closed in the third quarter, we want to get to $1 billion, $1.5 billion of free cash flow this year. That will get our kind of debt metrics where we want them to be at the end of next year. And then we're going to want to do $1.7 billion of repurchase next year. We're going to need about $1.5 billion, $1.7 billion of free cash flow to fund that, and then our metrics end up where we want them to be at the end of next year. So there's not a lot of financial capacity to do an acquisition even if we wanted to in the next couple of years. There's obviously equity, but you wouldn't necessarily issue equity unless your stock price was much higher. And so the good news is I don't see a lot of big deals that are out there on the horizon in the short term. But there are gaps in our portfolio that I would say as we get into 2024 and beyond, we would want to evaluate and think about that would be nice additions to Stanley Black & Decker. But they're probably going to be plug-in and plays here and there versus really, really big transformational transactions.

Got it. In the last few minutes I have left, I want to make sure that we touch a bit on the electrification theme that you've outlined as well. Because again, one of the things that kept us busy was sort of like the debate around MTD and sort of like the gas versus electric. So -- and Dennis will laugh because he knows this, I was in the market for an electric lawnmower. And the pushback obviously has been like, I can't buy that from STANLEY. Well, what if I can, right? So like there was this Cub Cadet offering, I didn't go for that, but it's there. But how do you kind of see that market shift from kind of dominantly gasoline mostly on the pro market to electric? Like -- and what's the positioning that you have in terms of capabilities maybe in Cub Cadet that you can leverage? How should we think about that?

Yes. I'm really impressed with the amount of progress that MTD has made in the last 2 years around innovation in this space. So they've created some really impressive products, you're referring to one, the Cub Cadet products, electric ride-on mower. They also have a zero turn mower that will be introduced to the market early next year that's electrified. That's just really high-performance, outstanding product. And then the last horizon would be kind of the big broad pro landscaper platforms that need to be electrified in the future, and they will be. But I see the walk behind space moving very fast right now. The ride-on space is going to start moving quickly over the next 2 to 3 years to electrification. Zero-turn mowers are going to begin to move quickly as well. The bigger platforms might take longer. But if you can electrify a car, you can electrify a big lawn mower. So that will happen at some point in time. The good news is that MTD has been investing in this space for many years. We -- through the joint venture that we had with them or the minority stake that we had with them, we created a kind of investment council that was focused on this technology together with our expertise in basically battery technology. And so I feel like this is an important area to accelerate innovation and investment because I really believe when we look back at this space 5, 6, 7 years from now, we're going to see that a radical shift has happened, and it's time to really make sure that we're the leader that comes out of that.

Interesting. Great. In the last minute we have, anything that I should have asked you anything you want to leave us with and parting thoughts?

I'll ask Dennis. Is there anything we didn't talk about?

I think we covered a lot of ground.

I think so too. Great. And I just -- my closing comments would be, Markus, that we really look at this next phase for Stanley Black & Decker as really leveraging the amazing assets that have been created by the company over the last decade-plus. And the organic story and opportunity in front of us, we think is quite significant. It's about organic growth, it's about profitability improvement and consistent annual strong free cash flow, which will ultimately allow us to continue to return significant value to our shareholders.

Great. On that note, thank you very much for joining us.

Thank you.

I appreciate the time.

Thanks. Good to see you.

Likewise.

Good to see you.