5
Christopher Horvers, CFA
(1-212) 622-1316
christopher.horvers@jpmorgan.com
Figure 2: HI Supplier Commentary
Company Ticker
Fortune Brands FBHS
• Cabinets sales flat in the quarter and +2% excluding strategic business exits.
• Plumbing sales +4% in the quarter – strong against two years of strong 4Q comps and
a softer market this year.
• Doors & Security + 7%; doors grew +DD again as chain continues to integrate and drive
growth even during lower housing in backhalf of year; combination of wholesale and retail
has offset market headwinds and expect this trend to continue in 2019.
• View of the US Home Products Market in 2019: market growth 2-4% and a slower start
to 1H – slower than predicting LY and incorporates the consumer interactions to the
interest rate environment stabilizing
•
Anticipate repair and remodel will be more resilient but will slow somewhat to roughly 3-
4% vs. 5% in prior years; new construction assumed to grow 2-3% in 2019 with single-
family growing a bit faster than multi-family
• Guidance - based on US housing and global market growth of 2-4% and continued solid
performance by Plumbing & Doors team that continues to outperform the market, expect
organic sales of 3-5%; targeting cabinets growth of 3-4% and think that’s roughly going to
be the dollar growth of the US market over the near-to-medium term.
Masco MAS
• Sales +5% in local currency (vs. +4% in 3Q) with NA +6% excluding acquisitions.
• Plumbing +6% ex FX driven by 8% growth in NA.
• Decorative Architectural Products +8% (excl acquisition) due to growth in paints and
other coating products, partially due to sales pulled-forward from 1Q19.
• Cabinetry Products’ net sales +4% excl the divestiture of Moores with growth in both the
repair and remodel and new construction businesses.
• Windows and Other Specialty Products’ net sales -1% due to softness in the UK,
partially offset by growth in NA (+MSD growth).
• 2019 - repair remodel market to grow +MSD, slower than 2018 consistent with other
forecasters; new construction +LSD due mainly to labor and affordability constraints; drop
in mortgage rates could alleviate some of the pressure in affordability constraints.
• Looking at price point – we had very good growth in the opening price point driven the
way we want + also saw strong growth in our high end brands.
• FY19: expecting total sales of 3-5% ex-FX baking in share gains; Plumbing 3-5%,
Decorative Architectural 4-6% with Pro paint +HSD (similar to 2018), Cabinets 0-3%
driven by lower demand
• $20MM of sales pull-forward from 1Q due to increased year-end customer purchases to
achieve incentives helped 4Q sales by 160 bps.
Stanley Black & Decker SWK
• Revenues +5% with +6% organic growth; Craftsman rollout continues to be well received
by end users and customers
• Tools & Storage +7% organic growth with strength in major geographies and business
units - NA +10% organically with US retail and commercial markets +LDD
• Industrials – 4% organic growth; Engineered Fastening organic growth +1% due to hiring
system shipments and fastener penetration gains in the Automotive business which were
offset by a decline in global light vehicle production
•
Security – 2% decline in organic growth with higher volumes in automatic doors and
healthcare offset by lower installations in commercial electronic security
• Craftsman – on track for $1B in revenue growth by 2021, seven years ahead of schedule;
outstanding in-store execution by both Lowe’s and Ace
• Announced last quarter that HD will now be the exclusive home improvement retailer for
Stanley and Stanley hand tools product portfolios – in store and online beginning this year
• The Tools & Storage organic growth of +MSD is anywhere from 4-6% but probably on
the higher end of the range; within there we see Craftsman performance net of
cannibalization – believe that probably impacts 2-3 points in 2019