Stanley Black & Decker Reports 1Q 2020 Results and Details $1 Billion Cost Reduction and Efficiency Program
NEW BRITAIN, Conn., April 30, 2020 /PRNewswire/ -- Stanley Black & Decker (NYSE: SWK) today announced first quarter 2020 financial results.
-- 1Q'20 Revenues Totaled $3.1 Billion, Down 6% Versus Prior Year, With A
7% Organic Decline Primarily Related To Impacts From COVID-19
-- 1Q'20 Diluted GAAP EPS Was $0.88; Excluding Charges, 1Q'20 Diluted EPS
Was $1.20, Reflecting $60 Million In External Headwinds And Coronavirus
Related Volume Declines Partially Offset By Margin Resiliency Actions
-- Recently Announced Cost Reduction Program Expected To Deliver $1 Billion
In Annualized Savings With $500 Million In 2020
-- Continues Suspension Of Guidance But Currently Expects Second Quarter To
Be The Trough For 2020 Revenue Decline
1Q'20 Key Points:
-- Net sales for the quarter were $3.1 billion, down 6% versus prior year,
as acquisitions (+2%) and price (+1%) were more than offset by volume
(-8%) and currency (-1%).
-- Gross margin rate for the quarter was 32.7%. Excluding charges, the rate
was 33.0%, down 40 basis points from prior year as price, margin
resiliency and other cost controls in late March were more than offset
by lower volumes, higher manufacturing costs related to the virus as
well as currency and tariff headwinds. Higher manufacturing costs
resulted from significant increases in PPE and freight costs.
-- SG&A expenses were 23.9% of sales. Excluding charges, SG&A expenses were
23.0% of sales compared to 22.7% in 1Q'19, reflecting tight cost
management and headcount reductions from 2019 actions partially
offsetting the impact from lower volumes.
-- The tax rate was 8.8%. Excluding charges, the tax rate was 12.5% versus
15.0% in 1Q'19.
-- Working capital turns for the quarter were 6.0, up 0.2 turns from prior
year.
Stanley Black & Decker's President and CEO, James M. Loree, commented, "We have focused our organization around four key priorities: (1) ensuring the health and safety of our employees and supply chain partners; (2) maintaining business continuity and financial strength and stability; (3) serving our customers as they provide essential products and services to the world; and (4) doing our part to mitigate the impact of the virus across the globe.
"In the first quarter, as we navigated through the early stages of one of the more challenging global crises the world has experienced, our team demonstrated great agility and resiliency in tackling the supply chain and initial demand impacts from the global pandemic as well as the carry-over headwinds from tariffs and currency. We are making critical decisions around those priorities every day to protect the company, our employees and all of our stakeholders. We are proud of how quickly and effectively our employees have responded and are confident in our ability to maintain the vitality, strength and sustainability of our 177 year old company."
1Q'20 Segment Results
($ in M)
---
Sales Profit Charges
(1)
Profit Profit Profi
t Rate
Ex
-
Rate Ex
-
Charges Charges
(1) (1)
---
Tools & Storage $2,071 $234.8 $3.1 $237.9 11.3% 11.5%
---
Industrial $591 $67.8 $10.4 $78.2 11.5% 13.2%
---
Security $468 $20.9 $13.9 $34.8 4.5% 7.4%
---
(1) See Merger And Acquisition ("M&A") Related And Other Charges On Page 6
-- Tools & Storage net sales declined 10% versus 1Q'19 from the impacts of
lower volume (-9%) and currency (-2%) partially offset by price (+1%).
Revenue across all regions declined due to the impact from the global
pandemic with North America -8%, Europe -7% and emerging markets -13%.
The North America organic decline was driven by the expected difficult
comparison to the prior year's Craftsman rollout and the unexpected
pandemic-related impacts that emerged during the quarter. Europe and
emerging markets were impacted by customer closures and government
restrictions beginning in late February which continued through the end
of the quarter. Overall Tools & Storage segment profit rate, excluding
charges, was 11.5%, down from the 1Q'19 rate of 12.1%, as the benefits
from cost control, margin resiliency actions and price were slightly
offset by lower volume, tariffs and currency.
-- Industrial net sales increased 6% versus 1Q'19 as the IES Attachments
and CAM acquisitions (+15%) were partially offset by volume (-8%) and
currency (-1%). Engineered Fastening organic revenues were down 9% as
share gains were more than offset by lower global automotive light
vehicle and general industrial production. Infrastructure organic
revenues were down 6% as modest growth in Oil & Gas was more than offset
by lower North American Attachment Tools volumes. Overall Industrial
segment profit rate, excluding charges, was 13.2%, down from the 1Q'19
rate of 13.9%, as the negative virus-related volume impacts and currency
were partially offset by cost control and margin resiliency initiatives.
-- Security net sales declined 4% versus 1Q'19 due to divestitures (-2%)
and currency (-2%). North America organic growth was up 2% as higher
volume in automatic doors and healthcare were partially offset by lower
installation and service revenue in commercial electronic security.
Europe was down 1% organically as a decline due to customer restrictions
in France and the UK was partially offset by growth in Sweden. Although
the commercial electronic security organic growth in both regions were
impacted by customer and government restrictions, the installation
orders and backlog (+20% versus prior year) remain in a healthy
position. The overall Security segment profit rate, excluding charges,
was 7.4%, which was down from the 1Q'19 rate of 10.3%, as price and cost
control were more than offset by lower volume in electronic security,
investments to support growth and the impact from the Sargent &
Greenleaf divestiture.
$1 Billion Cost Reduction Program
The Company's cost reduction program, announced on April 2, is currently being implemented and is expected to deliver $1 billion in annualized cost savings with an approximate pre-tax charge of $160 million expected to be primarily recognized during 2Q 2020. Based on the extraordinary sacrifices that our employees are making at this time, Jim Loree and all of the Company's most senior executives, as well as all board members, have elected to forego 20% of their ongoing cash compensation at least for the remainder of the year.
The program's primary focus is to:
-- Adjust the Company's supply chain and manufacturing labor base to match
the current demand environment
-- Substantially reduce indirect spending (currently ~$1.7B annualized)
-- Reduce staffing, compensation & benefits in a manner that ensures the
Company is prepared for a demand recovery at the appropriate time
-- Capture the significant raw material deflation opportunity
Given the unusual breadth of potential forward demand scenarios which may unfold in the coming months, the program has been carefully and thoughtfully designed to preserve the Company's financial strength and execution capability while providing flexibility to modulate costs up or down based on depth and duration of the crisis and the associated demand development.
Liquidity & 2020 Outlook
Stanley Black & Decker believes it is in a strong financial position and has significant flexibility to navigate this volatile period:
-- Maintains strong investment grade credit ratings
-- Possesses approximately $1B of cash on-hand as of quarter end
-- Manages a robust and highly rated commercial paper program ($3B program
with $1.7B outstanding as of quarter end).
-- Carries $3 billion of revolving credit facilities backed by a
well-capitalized, diversified bank group
-- Has the ability to generate additional cash proceeds of $750 million in
the second quarter upon the successful remarketing of its Series C
Convertible Preferred Stock, pursuant to its 2017 Equity Units
Transaction
In addition, the Company plans to reduce capital expenditures and temporarily suspend acquisition-related activity and share repurchases until the demand outlook is clearer. The near term priority for capital deployment will be focused on deleveraging in line with our strong, investment grade credit ratings. From a portfolio perspective, the Company is deferring the Security strategic review until after the environment stabilizes.
On April 2(nd), the Company withdrew its full year guidance as a result of the uncertain macro environment. The Company anticipates COVID-19 driven demand disruptions to negatively impact 2020 results versus prior guidance and will provide context on scenario planning for its businesses on today's earnings call.
Donald Allan Jr., Executive Vice President and CFO, commented, "In an environment that continues to change each day, we are doing everything we can to evaluate and prepare for the wide variety of scenarios that could occur in 2020 and beyond. We are continuing to suspend our guidance for now and are experiencing substantial revenue declines early in the second quarter which we currently expect will represent the trough quarter for the year. We have moved quickly and decisively in the initial steps we have taken so far - including our capital deployment focus and $1 billion cost reduction program - to ensure we maintain a strong operational foundation and balance sheet during this unpredictable period. We are confident that once through this event we will be in a position of strength to benefit from a recovery."
Merger And Acquisition ("M&A") Related And Other Charges
Total pre-tax M&A related and other charges in 1Q'20 were $61.7 million, primarily related to deal costs, Security business transformation and margin resiliency initiatives, and non-cash inventory step-up charges. Gross margin included $9.1 million of these charges while SG&A included $29.8 million. Other, net and Restructuring included $18.9 million and $3.9 million of these charges, respectively.
Share of net earnings of equity method investment included $1.0 million of charges.
The Company will host a conference call with investors today, April 30, 2020, at 8:00 am ET. A slide presentation which will accompany the call will be available at www.stanleyblackanddecker.com and will remain available after the call.
The call will be accessible by telephone within the U.S. at (877) 930-8285, from outside the U.S. at +1 (253) 336-8297, and via the Internet at www.stanleyblackanddecker.com. To participate, please register on the website at least fifteen minutes prior to the call and download and install any necessary audio software. Please use the conference identification number 2168249. A replay will also be available two hours after the call and can be accessed at (855) 859-2056 or +1 (404) 537-3406 using the passcode 2168249. The replay will also be available as a podcast within 24 hours and can be accessed on our website and via iTunes.
Stanley Black & Decker, an S&P 500 company, is a diversified global provider of hand tools, power tools and related accessories, electronic security solutions, healthcare solutions, engineered fastening systems, and more. Learn more at www.stanleyblackanddecker.com.
Investor Contacts:
Dennis Lange
Vice President, Investor Relations
dennis.lange@sbdinc.com
(860) 827-3833
Cort Kaufman
Director, Investor Relations
cort.kaufman@sbdinc.com
(860) 515-2741
Media Contacts:
Shannon Lapierre
Vice President, Communications & Public Relations
shannon.lapierre@sbdinc.com
(860) 827-3575
Organic sales growth is defined as total sales growth less the sales of companies acquired and divested in the past twelve months and any foreign currency impacts. Operating margin is defined as sales less cost of sales and selling, general and administrative expenses. Management uses operating margin and its percentage of net sales as key measures to assess the performance of the Company as a whole, as well as the related measures at the segment level. Free cash flow is defined as cash flow from operations less capital and software expenditures. Management considers free cash flow an important indicator of its liquidity, as well as its ability to fund future growth and to provide a return to the shareowners. Free cash flow does not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company's common stock and business acquisitions, among other items. Free cash flow conversion is defined as free cash flow divided by net income. The normalized statement of operations and business segment information, as reconciled to GAAP on pages 12 and 13, is considered relevant to aid analysis of the Company's margin and earnings results aside from the material impact of the M&A related and other charges.
CAUTIONARY STATEMENTS
Under the Private Securities Litigation Reform Act of 1995
This document contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws, including any projections or guidance of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new products, services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include, among other, the words "may," "will," "estimate," "intend," "continue," "believe," "expect," "anticipate" or any other similar words.
Although the Company believes that the expectations reflected in any of its forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of its forward-looking statements. The Company's future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, such as those disclosed or incorporated by reference in the Company's filings with the Securities and Exchange Commission.
Important factors that could cause the Company's actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in its forward-looking statements include, among others, the following: (i) successfully developing, marketing and achieving sales from new products and services and the continued acceptance of current products and services; (ii) macroeconomic factors, including global and regional business conditions (such as Brexit), commodity prices, inflation, and currency exchange rates; (iii) laws, regulations and governmental policies affecting the Company's activities in the countries where it does business, including those related to tariffs, taxation, and trade controls; (iv) the economic environment of emerging markets, particularly Latin America, Russia, China and Turkey; (v) realizing the anticipated benefits of mergers, acquisitions, joint ventures, strategic alliances or divestitures, including the successful integration of the CAM acquisition into the Company and the return to production of the Boeing 737 MAX; (vi) pricing pressure and other changes within competitive markets; (vii) availability and price of raw materials, component parts, freight, energy, labor and sourced finished goods; (viii) the impact the tightened credit markets may have on the Company or its customers or suppliers; (ix) the extent to which the Company has to write off accounts receivable or assets or experiences supply chain disruptions in connection with bankruptcy filings by customers or suppliers; (x) the Company's ability to identify and effectively execute productivity improvements and cost reductions; (xi) potential business and distribution disruptions, including those related to physical security threats, information technology or cyber-attacks, epidemics, sanctions or natural disasters; (xii) the effects of COVID-19 and the related impact on the Company's liquidity and operations, including demand for its products, as well as the effectiveness of the Company's associated cost-saving measures; (xiii) the continued consolidation of customers, particularly in consumer channels; (xiv) managing franchisee relationships; (xv) the impact of poor weather conditions; (xvi) maintaining or improving production rates in the Company's manufacturing facilities, responding to significant changes in product demand and fulfilling demand for new and existing products; (xvii) changes in the competitive landscape in the Company's markets; (xviii) the Company's non-U.S. operations, including sales to non-U.S. customers; (xix) the impact from demand changes within world-wide markets associated with homebuilding and remodeling; (xx) potential adverse developments in new or pending litigation and/or government investigations; (xxi) changes in the Company's ability to obtain debt on commercially reasonable terms and at competitive rates; (xxii) substantial pension and other postretirement benefit obligations; (xxiii) potential environmental liabilities; (xxiv) work stoppages or other labor disruptions; (xxv) changes in accounting estimates and (xxvi) the Company's ability to successfully complete the remarketing of the Series C Cumulative Perpetual Convertible Preferred Stock within the time period or on the terms currently contemplated, if at all.
Additional factors that could cause actual results to differ materially from forward-looking statements are set forth in the Annual Report on Form 10-K and in the Quarterly Report on Form 10-Q, including under the heading "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in the Consolidated Financial Statements and the related Notes.
Forward-looking statements in this press release speak only as of the date hereof, and forward-looking statements in documents attached that are incorporated by reference speak only as of the date of those documents. The Company does not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, Millions of Dollars Except Per Share Amounts)
FIRST QUARTER
2020 2019
NET SALES $3,129.4 $3,333.6
COSTS AND EXPENSES
Cost of sales 2,106.3 2,228.0
Gross margin 1,023.1 1,105.6
% of Net Sales 32.7% 33.2%
Selling, general and administrative 748.5 778.9
% of Net Sales 23.9% 23.4%
Operating margin 274.6 326.7
% of Net Sales 8.8% 9.8%
Other - net 74.9 65.4
Restructuring charges 3.9 8.7
Income from operations 195.8 252.6
Interest - net 49.6 57.8
EARNINGS BEFORE INCOME TAXES AND EQUITY INTEREST 146.2 194.8
Income taxes 12.9 24.7
NET EARNINGS BEFORE EQUITY INTEREST 133.3 170.1
Share of net (losses) earnings of equity method
investment (0.2) 0.3
NET EARNINGS 133.1 170.4
Less: net (losses) earnings attributable to non-
controlling interests (0.1) 0.5
NET EARNINGS ATTRIBUTABLE TO COMMON SHAREOWNERS $133.2 $169.9
EARNINGS PER SHARE OF COMMON STOCK
Basic $0.89 $1.15
Diluted $0.88 $1.13
DIVIDENDS PER SHARE $0.69 $0.66
WEIGHTED-AVERAGE SHARES OUTSTANDING (in thousands)
Basic 150,330 147,863
Diluted 151,903 149,908
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
March 28,
December 28,
2020 2019
ASSETS
Cash and cash equivalents $987.1 $297.7
Accounts and notes receivable, net 1,681.5 1,454.6
Inventories, net 2,532.4 2,255.0
Other current assets 491.9 449.3
Total current assets 5,692.9 4,456.6
Property, plant and equipment, net 2,036.7 1,959.5
Goodwill and other intangibles, net 13,877.4 12,859.5
Other assets 1,298.0 1,321.0
Total assets $22,905.0 $20,596.6
LIABILITIES AND SHAREOWNERS' EQUITY
Short-term borrowings $1,674.0 $337.3
Current maturities of long-term debt 3.1 3.1
Accounts payable 2,029.2 2,087.8
Accrued expenses 1,664.0 1,977.5
Total current liabilities 5,370.3 4,405.7
Long-term debt 4,662.6 3,176.4
Other long-term liabilities 3,912.9 3,872.3
Stanley Black & Decker, Inc. shareowners'
equity 8,953.4 9,136.3
Non-controlling interests' equity 5.8 5.9
Total liabilities and shareowners' equity $22,905.0 $20,596.6
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
SUMMARY OF CASH FLOW ACTIVITY
(Unaudited, Millions of Dollars)
FIRST QUARTER
2020 2019
OPERATING ACTIVITIES
Net earnings $133.1 $170.4
Depreciation and amortization 141.1 137.8
Share of net losses (earnings) of equity method
investment 0.2 (0.3)
Changes in working capital(1) (512.7) (616.8)
Other (166.9) (122.4)
Net cash used in operating activities (405.2) (431.3)
INVESTING AND FINANCING ACTIVITIES
Capital and software expenditures (82.9) (89.6)
Business acquisitions, net of cash acquired (1,302.4) (676.2)
Purchases of investments (6.5) (245.4)
Payments on long-term debt (400.0)
Proceeds from debt issuances, net of fees 1,486.4 496.9
Stock purchase contract fees (20.1) (10.1)
Net short-term borrowings 1,351.9 1,419.9
Proceeds from issuances of common stock 44.6 10.2
Craftsman deferred purchase price (250.0)
Cash dividends on common stock (105.6) (97.6)
Effect of exchange rate changes on cash (22.6) 4.8
Other (3.9) (7.2)
Net cash provided by investing and financing
activities 1,088.9 405.7
Increase (decrease) in cash, cash equivalents and
restricted cash 683.7 (25.6)
Cash, cash equivalents and restricted cash, beginning of
period 314.6 311.4
Cash, cash equivalents and restricted cash, end of
period $998.3 $285.8
Free Cash Flow Computation(2)
Operating cash flow $(405.2) $(431.3)
Less: capital and software expenditures (82.9) (89.6)
Free cash flow (before dividends) $(488.1) $(520.9)
Reconciliation of Cash, Cash Equivalents and Restricted
Cash
March 28, 2020
December 28, 2019
Cash and cash equivalents $987.1 $297.7
Restricted cash included in Other current assets 11.2 16.9
Cash, cash equivalents and restricted cash $998.3 $314.6
(1) Working capital is comprised of accounts receivable, inventory, accounts payable and deferred revenue.
(2) Free cash flow is defined as cash flow from operations less capital and software expenditures. Management
considers free cash flow an important measure of its liquidity, as well as its ability to fund future
growth and to provide a return to the shareowners. Free cash flow does not include deductions for
mandatory debt service, other borrowing activity, discretionary dividends on the Company's common stock
and business acquisitions, among other items.
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
FIRST QUARTER
2020 2019
NET SALES
Tools & Storage $2,070.8 $2,292.3
Industrial 590.7 555.0
Security 467.9 486.3
Total $3,129.4 $3,333.6
SEGMENT PROFIT
Tools & Storage $234.8 $265.8
Industrial 67.8 71.0
Security 20.9 39.5
Segment Profit 323.5 376.3
Corporate Overhead (48.9) (49.6)
Total $274.6 $326.7
Segment Profit as a Percentage of Net Sales
Tools & Storage 11.3% 11.6%
Industrial 11.5% 12.8%
Security 4.5% 8.1%
Segment Profit 10.3% 11.3%
Corporate Overhead
(1.6%)
(1.5%)
Total 8.8% 9.8%
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars Except Per Share Amounts)
FIRST QUARTER 2020
Reported
Acquisition-
Normalized(3)
Related
Charges &
Other(1)
Gross margin $1,023.1 $9.1 $1,032.2
% of Net Sales 32.7% 33.0%
Selling, general and administrative 748.5 $(29.8) 718.7
% of Net Sales 23.9% 23.0%
Operating margin 274.6 38.9 313.5
% of Net Sales 8.8% 10.0%
Earnings before income taxes and equity interest 146.2 61.7 207.9
Income taxes 12.9 13.1 26.0
Share of net (losses) earnings of equity method
investment (0.2) 1.0 0.8
Net earnings attributable to common shareowners 133.2 49.6 182.8
Diluted earnings per share of common stock $0.88 $0.32 $1.20
(1) Acquisition-related charges and other relates primarily to inventory step-up, deal costs, Security business
transformation and margin resiliency initiatives.
FIRST QUARTER 2019
Reported
Acquisition-
Normalized(3)
Related
Charges &
Other(2)
Gross margin $1,105.6 $6.4 $1,112.0
% of Net Sales 33.2% 33.4%
Selling, general and administrative 778.9 (23.0) 755.9
% of Net Sales 23.4% 22.7%
Operating margin 326.7 29.4 356.1
% of Net Sales 9.8% 10.7%
Earnings before income taxes and equity interest 194.8 52.6 247.4
Income taxes 24.7 12.4 37.1
Share of net earnings of equity method investment 0.3 3.4 3.7
Net earnings attributable to common shareowners 169.9 43.6 213.5
Diluted earnings per share of common stock $1.13 $0.29 $1.42
(2) Acquisition-related charges and other relates primarily to restructuring, deal and integration costs, Security
business transformation and
margin resiliency initiatives, and inventory step-up charges.
(3) The normalized 2020 and 2019 information, as reconciled to GAAP above, is considered relevant to aid analysis of the
Company's margin and earnings results aside from the material impact of the acquisition-related and other charges.
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP SEGMENT PROFIT FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars)
FIRST QUARTER 2020
Reported
Acquisition-
Normalized(3)
Related and Other
Charges(1)
SEGMENT PROFIT
Tools & Storage $234.8 $3.1 $237.9
Industrial 67.8 10.4 78.2
Security 20.9 13.9 34.8
Segment Profit 323.5 27.4 350.9
Corporate Overhead (48.9) 11.5 (37.4)
Total $274.6 $38.9 $313.5
Segment Profit as a Percentage of Net
Sales
Tools & Storage 11.3% 11.5%
Industrial 11.5% 13.2%
Security 4.5% 7.4%
Segment Profit 10.3% 11.2%
Corporate Overhead
(1.6%)
(1.2%)
Total 8.8% 10.0%
(1) Acquisition-related and other charges relate primarily to inventory step-up, Security business
transformation and margin resiliency initiatives.
FIRST QUARTER 2019
Reported
Acquisition-
Normalized(3)
Related and Other
Charges(2)
SEGMENT PROFIT
Tools & Storage $265.8 $12.6 $278.4
Industrial 71.0 6.0 77.0
Security 39.5 10.8 50.3
Segment Profit 376.3 29.4 405.7
Corporate Overhead (49.6) (49.6)
Total $326.7 $29.4 $356.1
Segment Profit as a Percentage of Net
Sales
Tools & Storage 11.6% 12.1%
Industrial 12.8% 13.9%
Security 8.1% 10.3%
Segment Profit 11.3% 12.2%
Corporate Overhead
(1.5%)
(1.5%)
Total 9.8% 10.7%
(2) Acquisition-related and other charges relate primarily to inventory step-up, integration costs, and
Security business transformation and margin resiliency initiatives.
(3) The normalized 2020 and 2019 business segment information, as reconciled to GAAP above, is considered
relevant to aid analysis of the Company's segment profit results aside from the material impact of the
acquisition-related and other charges.
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