No. Not at all. Not at all. It seems like the one-on-ones are running longer. Good to see you guys. So our next fireside chat, we're really happy to have Stanley Black & Decker here. We have Pat Hallinan, EVP and Chief Financial Officer, as well as Dennis Lange, who runs investor relations. Pat, I think you had some prepared comments. You wanna go through a little bit of a presentation? Yeah. And then we'll get into Q&A? These are the same slides? Same slides. That's good. Like, it's all kind of on the fly, Joe. So, we, you know, we definitely brought three slides. We had an Investor Day right before Thanksgiving, and a big part of Investor Day was two things. One, talking about where we are in our transformation journey, which we expect to be substantively done with by the end of 2025, and what are some of the financial objectives we have beyond 2025 and our pivot to growth. So certainly, as we've gone through the transformation since the latter part of 2022, we've come out a much more focused portfolio. We have a tools business that's a bit more than $13 billion in revenue and a fasteners business that is a bit more than $2 billion in revenue. You know, we've really set the business up for growth from this point, and that's where our investors, i.e., our investments are. We certainly have a bit more work to do on the margin journey, but we feel like we're making the progress we wanna make, especially given the lack of volume we've seen. We think there's a very exciting opportunity as we go forward to combine growth with margin in our business, along with a very disciplined capital deployment. The long-term financial objectives we shared at our Investor Day, and these are beyond 2027, are a return to mid-single-digit growth, which we think is around 200-plus basis points over a low single-digit market. Our kind of underlying market is real GDP, especially real durables GDP, a margin profile that's above 35%, targeting to get back towards 37-plus, but certainly above 35. annual operating leverage, so annual growth of our pre-tax operating income at about 20%-25% of annual net sales gains, and then EBITDA margins in the high teens, CFROI margins mid-teens are better, and cash conversion around 100% of net income, plus or minus 10 percentage points, and then getting our leverage back down to more traditional levels, which are kind of 2.0-2.5 net debt to EBITDA, and, you know, we're excited about where we're going. I mean, obviously, I think, like many of us, we kind of wish the macro environment was a bit more of a speeding elixir, but, you know, we really feel like we're getting the brands well-positioned for growth. While we have work to do on the margin, we know what that work is, and we're excited about combining those two to really generate a lot of value creation and then be very disciplined in how we allocate that capital. But. Excellent. I thought that would be kind of a setup and then turn the Q&A back to you. Yeah. No, I appreciate that. And, we can probably keep it on the long-term, financial framework. But one of the slides that you guys had at your Investor Day was really, like, the path to 2027. Mm-hmm. Basically, the implied EBITDA was about $2.5 billion by 2027. Maybe just talk to us about the levers. Like, how important is getting to, you know, 3% organic growth in terms of being able to achieve those targets and what you think the key levers are to get there? I think, I mean, I think on the gross, you know, 'cause obviously we're making some SG&A investments as we go down that journey, right? So if you're thinking, over that time horizon, you know, $300-plus million of SG&A investments, you're probably talking the gross amount of contribution margin, you know, has to be kind of $1.3 billion, plus or minus $100 million, probably about at least $1.3 billion. And I'd say, it's, you know, half to more than half is gonna be purely gross margin. And then the balance is growth. So growth is a meaningful portion, but it's not predicated solely on growth. That's not like we're sitting here kind of fingers crossed to a market dynamic. You know, I would even say inclusive of that 35%, while volume would certainly be helpful to the 35% journey, we're committed to getting to 35% kind of irrespective of the volume of environment. In fact, what we said at Investor Day was, you know, as long as the volume declines can stop, the 35% journey is something we have a lot of confidence in. That's great to hear. And just to be clear, the path to 35%, the expectation is 35%, you know, exiting next year. Mm-hmm. And as you think about the path, you know, part of it, you guys had also said you're increasing your inventories this year. When you say that you've got a lot of confidence, just talk us through the key levers to get us from, you know, exiting this year at 31 and change to 35. Yeah. 35%, yeah. We're still focused as a team, working towards that 35% by the fourth quarter of next year. We did talk about both at the Investor Day, and the third quarter earnings call. We're probably chasing, you know, somewhere in the $100 million-$150 million of incremental savings, to make that happen just given the lack of volume and the lack of deflation we've seen over the last couple of years. So if it doesn't happen in the fourth quarter of 2025, we would expect it to happen sometime in the early or middle part of 2026. It's still a focus. I'd say, Joe, the main levers are about half incremental strategic sourcing, and the other half is the combination of additional footprint rationalization and in-plant Lean in the facilities that remain. I'd say they each contribute, roughly 50/50. That other 50% is a combination of the footprint rationalization and the Lean. Okay. Great. That's super helpful. And then maybe just going back to the longer-term comments, you know, you're now hoping for 35-37 or greater than 35. Mm-hmm. Talked about network optimization and operational excellence. Can you just maybe step us through what that actually means in practice? Yeah. I mean, we have three things going on simultaneously. You know, probably the one that requires the most in terms of moving things around is footprint rationalization. So as we've done that, I think there's one on the production side and one on the distribution side. You know, production-wise, it's getting capacity out of the system. And it's also doing some things that, you know, are the result of kind of finally getting to the full integration of the businesses we acquired, which is getting to centers of excellence by product categories. Sometimes one, sometimes two. And that, you know, has been pretty significant. You know, we've been over the period of 2022- 2023, probably in kind of one to three major facility closures a year. We'll probably be at least kind of in the two or three percentile for the next couple of years. Then on the distribution side of things, it's again been about capacity, but it's also been reorienting our hubs and spokes to simultaneously take capacity out but improve service levels. You know, I wanna say this year, just within 2024, for example, there's probably 40-plus rooftops having some type of effect on them. Mm-hmm. You know, whether that's a closure of a production facility, opening a new part of the distribution, or moving a value chain out of one facility or another, so quite a lot of activity. Obviously, because fixed costs aren't our biggest cost, that's why it's not the biggest driver, because materials are about 60% of our cost base, that's why sourcing is the biggest driver, and so these things are all going on simultaneously, so we'll, we'll continue on the path of strategic sourcing. It will continue to be our biggest contributor in the latter innings, just like it was in the early innings because of the composition of materials in our COGS, and then in-plant Lean is kind of getting globally standardized manufacturing processes that are optimized. and that is, working in parallel with whether it's a facility move or an existing facility that just needs to be optimized. So a lot of stuff going on. Yeah. A lot of stuff going on. A lot of stuff going on, and look, arguably, a great time to be doing it just given that the environment has been tepid for your business. Yeah. If things were to turn on a dime, right, and the business would start accelerating, let's say, in the first half of next year, I'm not saying that that's gonna happen, but let's. Let's hope it does. Yeah. Right. So, do you have too much going on, or would you be able to deliver to, you know, a better growth environment if when the environment turns? Yeah. I think we'd welcome growth. I mean, yes, we have a lot going on. But none of it is we being pursued in a way where we kind of tie a hand or two behind our back, if growth were to inflect positively. That growth would help us quite, quite a bit, and we would welcome that quite a bit. Can we talk about the SG&A investments that you're making? So I think you mentioned $300 million earlier. Some of it is putting just, you know, more feet on the street. Mm-hmm. And just maybe how, how are you thinking about, you know, toggling those investments with the fact that you structurally wanna lower your SG&A over time as well? Yeah. I'm, you know, I would say when we talk about, and you're probably referring to the Investor Day, going from kind of 21%-22% more to, like, 20%-21%. And I'd say that's as much about a surge of investment to drive innovation and growth improvement, and then it flattens out a little bit as you start getting that revenue growth, right? It starts to moderate what percentage of sales it is. Two things will be going on. One is, you know, Chris Nelson and his team have really been focused on, you know, putting that incremental investment towards innovation and towards brand building and feet on the street, and, you know, the early innings were a lot around innovation. And as he's gotten that running, increasingly, you've seen this year and in the latter part of last year, increasingly feet on the street and brand building. And I think that will continue to be kind of probably at a higher level than will be the permanent level for a while until we get the organic growth engine back to the market-beating growth of level we perform. But we'll also always be challenging our functional spend, back office. You know, my finance function will have to get more efficient. And I think that's pretty stereotypical for at-scale, branded goods companies where we're gonna be driving efficiency in finance, HR, IT, and legal to continually fuel growth going forward. But I think a little bit what you're seeing in the financial targets, we layered in is eventually, once the growth algorithm is humming, you know, we can kind of moderate that a little bit, and it will look as a percentage of sales to be more like 20%-21%. That's helpful. I wanna, you know, in kind of thinking about your key competitor in the space, like, one of the core tenets to their strategy was a larger field presence. Yep. Right? As you kind of think about your own field presence relative to, you know, Techtronic, you know, how much catch-up do you have to do to have something that is comparable? I think it's a manageable amount of catch-up, you know. We've probably put, I think, in the last 12-15 months, like 400 people in the field. I think it's a manageable amount of catch-up. I think, you know, what we hear loudly from our channel partners is when you're talking about pro-oriented channel partners, you know, they want a manufacturer who's helping them drive sales, and they want a manufacturer who's supporting their product in market, and that's where our resource dollars are going, and, you know, we maybe got a bit behind of where our own history was, but I think the level of catch-up is manageable. And, you know, we're just being thoughtful as we layer the investments in that we're tracking them against specific objectives and that we're making the progress that we expected and the progress that's reasonable to the rate of investments. And we're not just throwing it out there kind of willy-nilly. So when you talk about the field resources, you're talking about very specific geographies and very specific channel partnering. Just contextualizing that number, the 400, like, how does that compare to, you know, what the field organization was about a year ago? You know, Joe, I think it's a pretty significant increase if you think about geographies, and to Pat's point, what we've tried to do is be really thoughtful about where are the priority markets, how do you do it with people, but how do you also wrap around the other initiatives that we've talked about, be it Grow the Trades, flowing more marketing behind our brands, and really kind of having a holistic approach as you go into regions or if you go into other geographies around the world. That's helpful, and then, you know, Pat, you mentioned earlier, sourcing being the biggest opportunity. Mm-hmm. You guys have made a lot of progress on your cost reduction program, still heading towards, like, roughly $1.5 billion by the end of this year with an extra $500 million coming next year. When you mentioned earlier that you were still needed to chase roughly $100-$150 million, is that all in the context of what the $2 billion expectation is? It's probably gonna push us beyond that. Okay. You know, we can't have it, like, announced a new goal 'cause we wanna confuse people, but you know, we expected certain volume and deflationary dynamics over these last three years that haven't played out. They haven't been growth years, and there hasn't been substantive deflation, and so we're probably gonna have to get closer to 1.6 or 1.7 to get to the 35% in a reasonable timeframe, and that's, you know, as a leadership team and as an operating team, that's what we're focused on is accelerating some additional savings, in the absence of volume and in the absence of deflation get to the same gross margin outlook. I'm gonna turn it to the audience in a second, see if there's any questions. But one of the things that you guys talked a lot about at the Investor Day was around platforming. Mm-hmm. Seems like a big fundamental change to how you guys operate. So maybe just discuss what's happening, on that front. Yeah. I think innovation broadly and platforming is part of that. One of the things Chris Nelson did, or I'd say two very important things that he did in strategic and organizational change of the business was go to a brand-led structure, where you know brands you know have equal, if not greater billing than sales. There are always an important mix of marketing and sales, but we kind of had a sales-dominated structure for a long time, and then the second was to centralize all the engineering resources under a Chief Technology Officer, and the reason why those things are really critical is we wanted to drive innovation really backwards, not just from we were always very good at driving innovation backwards from user dynamics, but the combination of where do we see opportunity to innovate for users, but also against the biggest growth vectors. So we're being really focused on the innovation is towards the biggest growth opportunities. And then how do you centralize the way you do innovation? So you're creating product libraries around engines and transmissions and electronics and batteries so that every product developer, 'cause we had a highly decentralized product development approach, it doesn't feel like they have a degree of freedom to just go out and create a lot of uniqueness that maybe isn't adding value to the end user. It might be interesting, and it might be on the margin, something that's new but isn't particularly impactful and really hone in the degree of differentiation in components and subassemblies. And that's already been underway. Ricardo Muñoz, who's our Chief Technology Officer in our Tools & Outdoor business, has been starting this journey. It'll take us at least, you know, two to four years 'cause this is kind of a meaningful chunk of the SKU base just 'cause it takes time to roll it out. But he is already going through each of these component categories and creating standardized libraries. And given his ability to manage the innovation process and the engineering base, keep people disciplined around that library. That's helpful. I'll go to the audience, see if there's any questions. Can you just wait for the mic real quick? Thank you. Hey, could you talk about the innovation pipeline that can drive 2025 organic growth? Yeah. I think there's a number of things in the innovation pipeline, in particular DeWalt around concrete, and plumbing and electrical. But I, you know, what Chris and team have been focused on is innovation across all three of the big brands. In DeWalt, you're talking about four to five really targeted areas of trade groups globally. In Stanley Black & Decker, they're really focused on both productivity enhancing and industrial design enhancing performance in Stanley. And then in Craftsman, it's around getting that COGS base dialed in for the DIY price points. And so all that's going on. I'd say for 2025, it's mostly going to be around the concrete stuff and plumbing and electrical for DeWalt. You have things like the construction jack for Stanley and some other like items. Like, there's a heavy lifter device called Grabo for Stanley that helps construction workers grab heavy items on their own and be more productive as individuals. And then in Craftsman, it's mostly around outdoor products. Helpful. Any other questions from the audience? I'm surprised that that first question wasn't on tariffs, so I'll ask you on tariffs. Okay. So you laid out at a conference in November, what your expectations would be, a potential additional $200 million, you know, tariff expectations. Mm-hmm. If we did see tariffs go up to 60%, help us understand how that actually works mathematically, right? Because I think you've got a COGS base that's like roughly $6 billion. You know, 20%-25% of your COGS, I believe, is in China. Like, so how does that mathematically only result in a $200 million impact? Yeah. Yeah. So you're speaking, and Joe's speaking to some information we put out before Investor Day and then reiterated on Investor Day so you could see it online. Our US T&O COGS base is about $6 billion. Our global COGS base is about double that, but that's the US COGS base. And there's a pie chart that kind of illustrates that US COGS base, where's the predominant geographic origin of the COGS base. And it's about 20%-25% China. So first of all, it's we, you know, we already have 25% tariffs on stuff from China. And so the list, the 301 tariffs, List 1, 2, 3, and 4A, that were enacted over the period of mostly 2017 and 2018, and most of those, not all of them, but most of them in simplifying terms are at 25%. Those tariffs still exist today. When they originally came out, they resulted in more than $300 million of exposure to our business through supply chain moves. You know, we've gotten that exposure down below $100 million. So what we were pointing to is if on those same items, things went up an incremental 35 points, roughly speaking, that's where that $200 million comes from, and you know, if that were a scenario that played out, you know, we would start with pricing actions, and then we'd be quickly bringing in supply chain actions to attack it similarly. The reason we pointed to that scenario, 'cause we would acknowledge, like, one, we don't have any specific information. We don't know what will happen any more so than anybody else does, and you can come up with many different permutations. It's twofold. One is that's a pretty expedient action for the administration to take. They already have a framework out there. It's been legally challenged. They could do it and sustain it. The second thing is, I think just geopolitically, we're going to have to continue reducing our US market exposure to the China market. And so kind of irrespective of what administration came in, we were gonna be on this journey. You could have this administration might accelerate the pace, but reducing US market exposure to China was probably gonna be on the long-term strategy road. It certainly was on our long-term strategy roadmap no matter what. And so that's why we pointed to that strategy. We also, you know, illustrated our other sources of COGS, 40 to 45%- 50% of which is US, and the balance is rest of world. If people wanna kind of run their own permutations, they can. Yeah. Helpful. When you talked about all the footprint, the rooftop reductions that you were doing and the footprint changes that you're making, is that already contemplating less in China? Yeah. You know, our global supply chain team, and we kind of have a strategy part of our global supply chain team was, okay, we wanna take out at least $1.5 billion of COGS, and part of that's gonna be footprint oriented. We want it to be going directed to a long-term supply chain vision. And so, where do we feel like it's going to be most likely to be, geopolitically safe to operate? Where do you have a supplier universe? Where can you build both, an engineering workforce and a production workforce? And so they were all swimming towards these objectives. You know, absent a government intervention, you kind of get it, it gets paced by the rate at which you can develop suppliers or get your suppliers to move with you and build your engineering base. You know, if you end up having the effects of tariffs, you end up just having to kind of accelerate those dynamics as best you can is really what you end up doing. Yeah. That makes sense and then just from a. I know it's still early stages and I think we're still trying to figure out how this is all gonna shake out. But have you started having conversations with your channel partners regarding you know pricing and how do those dynamics work? And. Yeah. I feel we, you know, we definitely are on a very important margin journey, and we're very committed to that margin journey. Supply chain moves tend to take 10 to 12, 12 to 24 months. So, you know, the lever to pull before the supply chain is priced. As soon as the election result was known, we started to have conversations with major channel partners about, you know, hey, we don't know what's going to happen, but we wanna communicate to you our approach, should some things that seem reasonable happen, which, you know, it does seem like there's likely to be tariffs, and it does seem likely to be some of them will be China, and those might be the more enduring. So we started those conversations. Obviously, we haven't given out a specific, like, here's the list price change on this date 'cause we don't know yet. And, you know, we'll enact it when there's better and more information. But we certainly wanted to be working in a very proactive and, transparent and forthright, manner with our channel partners. We wanted, we felt like maybe the last time, as I said, the supply chain, we were very effective, with moving pretty quickly. We went from 40%-45% China down to 20%-25%. But we probably could have been more proactive with price, and we wanna be more proactive with price this time. You know, unlike last time, this isn't the first tariff rodeo. So. Yeah. You know, what I'm hearing from you is it seems like there's a playbook to have those pricing discussions, maybe pricing happens quicker. That's our objective, and that's what we're working with our channel partners on. And we've already gotten to the point where our teams are, you know, probably four plus months into where the competitive dynamics and the elasticities by SKU and product family, you know, are more conducive to pricing, and where they are less conducive. And how do you get across a portfolio of thousands of SKUs the right price coverage to deal with the tariff burden, but also acknowledging elasticities, in as reasonable a way as you can? Makes sense. I wanna, I wanna turn it over to the portfolio. At the Investor Day, you highlighted divesting a business for roughly about $500 million in proceeds, non-core assets. Seems like you were targeting the Aero business. I'm just curious, like, have you already seen interest from prospective buyers? You know, I'd say Aero is among. I'd say we have a small number in each side of our house, which the tools and outdoor and the industrial side that could be candidates. I'd say we haven't started a process. I'd say any process would be, you know, we'd have to see is the business ready? Is, you know, what, where's the M&A interest? But yes, I mean, we have, you know, not just in that business, but in some of our other businesses, people, you know, coming to talk with us. You know, I certainly it feels like the M&A markets are getting on the margin healthier, the back part of this year. You know, we're doing certain things to position assets to be ready. You know, we'll see kind of what, if any, kind of tariff scenario comes out of the front half of next year. And given that knowledge, our business readiness, and the particular strength of any one part of the M&A market versus another will make a call on what that asset is. You guys have done a lot from a portfolio perspective over the past decade. You really have grown your Tools & Outdoor business. You've divested, you know, some non-core assets with the security business. Now, like divesting potentially the Aero business. Why not more holistically look at the Engineered Fastening assets as a potential divestiture candidate and just become a standalone pure play focus tools company? Yeah. I think, you know, our first and foremost objective to all of our stakeholders is to maximize value creation. And if that was ever kind of the thing to maximize value creation, you know, we'd have to consider that as stewards of financial returns. Right now, you know, we feel like there's opportunity to get the fastener business to a different performance level. And the way we see the way the market is, is valuing that, at this moment in time, as best we can kind of decipher from the dialogues we have and the strategic work we do, is we do better for our stakeholders driving the growth and performance of most of that business. Even if part of it, something like Aero were to go away, creates more value for our shareholders. If that dynamic changed, then, you know, then we would consider something different. There are some synergies between these businesses and that, some of our fastener product lines use tools that are driven by our platform, the product platforms we have in the T&O business. But we always challenge ourselves on that. You know, if we felt like that was the value maximizing thing at this point in time, we'd be considering it. We don't think it is. And it's not, we don't need something of that order of magnitude to really kind of navigate our balance sheet dynamics. Let's talk about free cash flow. So, you know, you've given us targets to 2027. You've given us longer-term targets beyond that. How do you think about normalized free cash flow? 'Cause we're going through this, like. Yeah. We're. Strange period, right? Yeah. It's very strange. You know, with the combination of spending a lot of cash on transformation, but then taking a lot of cash off the balance sheet from working capital, there's some very sizable, you know, last year was about $1 billion of inventory reduction and $200 million of transformation cash. This year we'll have kind of $400-ish million or so of inventory reduction, but still another $200 million of transformation cash. Yeah. I'd say the longer-term objective is to be about 100% cash conversion of net income plus or minus 10 percentage points depending where we are in a PP&E cycle, and we're probably two to three years away from that. You know, I'd say two and a half plus or minus a half year away from that. That's fair. Last question for me. You know, we talked a little bit about the 2025, you know, framework, at least the 35% gross margins. You're really not banking on a lot of growth, at least in the first half of the year. Is there any other parts of the framework you wanna highlight or elaborate on at this point? No. I think next year, you know, we are working to make it a growth year. I think the markets will tell us that. I think if there's not some kind of macro shock from geopolitics, it has a very good chance to be a growth year. I don't think it'll be a lights out kind of growth year. That would be a pleasant surprise if it happened. But I think it, you know, if it's a growth year, it's kind of a low single-digit growth year. We're working hard to get to that 35%. I'd say again, absent a big tariff shot, we certainly expect to finish the year somewhere in the 32%-33%-ish% gross margin range, and we're still gonna be, you know, prioritizing transformation, sustaining the dividend and deleverage for our capital deployment. And we'll probably be, again, not knowing any tariff scenario, you know, $300 million-$500 million of working capital reduction, mostly around inventory. You know, I don't, I don't wanna give specific 2025 guidance, not with those kind of broad strokes. Those are consistent with what we need to be true to kind of deliver on our multi-year framework. And I, I think that those are again, absent an unpredictable dynamic from an administration that's kind of what we're focused on. Perfect. Pat, Dennis, really good to see you. Thank you for. Thank you for having us, and thank you for the interest. Thank you.