The Company's business transformation is intended to drive strong financial performance over the long term, including:
•Organic revenue growth at 2 to 3 times the market; •35%+ adjusted gross margins; •Free cash flow equal to, or exceeding, net income; and •Cash Flow Return On Investment ("CFROI") between 12-15%.
Share Repurchases And Other Securities
Refer to Note J, Capital Stock, for further discussion.
On August 19, 2022, the Company sold its Oil & Gas business comprised of the pipeline services and equipment businesses to Pipeline Technique Limited.
On July 22, 2022, the Company sold its Convergent Security Solutions ("CSS") business comprised of the commercial electronic security and healthcare businesses to Securitas AB for net proceeds of $3.1 billion.
On July 5, 2022, the Company sold its Mechanical Access Solutions ("MAS") business comprised of the automatic doors business to Allegion plc for net proceeds of $922.2 million.
The Company has also divested several smaller businesses in recent years that allowed the Company to invest in other areas that fit into its long-term strategy.
Refer to Note T, Divestitures, for further discussion of the Company's divestitures.
Refer to Note E, Acquisitions and Investments, for further discussion.
The supply chain transformation consists of:
Driving Further Profitable Growth by Fully Leveraging the Company's Core Franchises
•The Engineered Fastening business within the Industrial segment is a highly profitable, GDP+ growth business offering highly engineered, value-added innovative solutions with recurring revenue attributes and global scale.
Continuing to Invest in the Stanley Black & Decker Brands
The Company's operations are classified into two reportable business segments: Tools & Outdoor and Industrial.
The Industrial segment is comprised of the Engineered Fastening and Infrastructure businesses.
The Infrastructure business sells hydraulic tools and high quality, performance-driven heavy equipment attachment tools for off-highway applications.
Certain Items Impacting Earnings and Non-GAAP Financial Measures
The Company's operating results at the consolidated level as discussed below include and exclude acquisition-related and other charges impacting gross profit, SG&A, and Other, net. The Company's business segment results as discussed below include and exclude acquisition-related and other charges impacting gross profit and SG&A. The acquisition-related and other charges amounts for the year-to-date periods of 2022, 2021 and 2020 are as follows:
Earnings from continuing operations before income taxes
Net Earnings from Continuing Operations Attributable to
Diluted earnings per share of common stock - Continuing
1 Includes provision for credit losses
The Acquisition-Related Charges and Other in the table above relate to the following:
Earnings from continuing operations before income taxes
Diluted earnings per share of common stock - Continuing
1 Includes provision for credit losses
The Acquisition-Related Charges and Other in the table above relate to the following:
Earnings from continuing operations before income taxes
Diluted earnings per share of common stock - Continuing
1 Includes provision for credit losses
The Acquisition-Related Charges and Other in the table above relate to the following:
Loss on Debt Extinguishment: During the fourth quarter of 2020, the Company extinguished $1.154 billion of its notes payable and recognized a $46.9 million loss primarily due to a make-whole premium payment.
The Company's reportable segments represent businesses that have similar products, services and end markets, among other factors. The Company utilizes segment profit which is defined as net sales minus cost of sales and SG&A inclusive of the provision for credit losses (aside from corporate overhead expense), and segment profit as a percentage of net sales to assess the profitability of each segment.
The Company's operations are classified into two reportable business segments: Tools & Outdoor and Industrial.
A summary of the restructuring reserve activity from January 1, 2022 to December 31, 2022 is as follows:
The anticipated annual net cost savings of approximately $300 million related to the 2022 restructuring actions include: $184 million in the Tools & Outdoor segment; $36 million in the Industrial segment; and $80 million in Corporate.
Liquidity, Sources and Uses of Capital: The Company's primary sources of liquidity are cash flows generated from operations and available lines of credit under various credit facilities.
Net cash (used in) provided by operating activities $ (1,460) $ 663
Refer to Note H, Long-Term Debt and Financing Arrangements, and Note J, Capital Stock, for further discussion regarding the Company's debt and equity arrangements.
of funds, liquidity and access to capital markets, but would not have an adverse effect on the Company's ability to access its existing committed credit facilities.
The Company has a $3.5 billion commercial paper program which includes Euro denominated borrowings in addition to U.S. Dollars. As of December 31, 2022 and January 1, 2022, the Company had commercial paper borrowings outstanding of $2.1 billion and $2.2 billion, respectively.
Refer to Note H, Long-Term Debt and Financing Arrangements, and Note J, Capital Stock, for further discussion regarding the Company's debt and equity arrangements.
Contractual Obligations: The following table summarizes the Company's significant contractual and other obligations that impact its liquidity:
(Millions of Dollars) Total 2023 2024-2025 2026-2027 Thereafter U.S. lines of credit $ 4,500 $ 2,000 $ - $ 2,500 $ -
Short-term borrowings, long-term debt and lines of credit are explained in detail within Note H, Long-Term Debt and Financing Arrangements.
The Company has $95.6 million of liabilities as of December 31, 2022 pertaining to unfunded defined contribution plans for certain U.S. employees for which there is mark-to-market exposure.
The Company has access to financial resources and borrowing capabilities around the world. There are no instruments within the debt structure that would accelerate payment requirements solely due to a change in credit rating.
claims for recoveries from insurance or third parties. As assessments and remediation progress at individual sites, the amounts recorded are reviewed periodically and adjusted to reflect additional technical and legal information that becomes available.
Additional information regarding income taxes is available in Note Q, Income Taxes.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company incorporates by reference the material captioned "Market Risk" in Item 7 and in Note I, Financial Instruments, of the Notes to Consolidated Financial Statements in Item 8.
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