2020 Annual Report 2020 WELL POSITIONED to CAPITALIZE on GROWTH TRENDS ACCELERATION of Ecommerce

BUILT FOR PERFORMANCE GUIDED BY PURPOSE 2020 Annual Report 2020 WELL POSITIONED TO CAPITALIZE ON GROWTH TRENDS ACCELERATION OF eCOMMERCE FOCUS ON HEALTH & SAFETY ELECTRIFICATION OF AUTOMOTIVE AND OUTDOOR PRODUCTS CONSUMER RECONNECTION WITH HOME & GARDEN 2 TO OUR STAKEHOLDERS Compassion, empathy and care for all stakeholders — these are terms not typically associated with successful high-performance corporate leadership in the pre-pandemic era. James M. Loree Chief Executive Officer However, all those elements, in conjunction with a norms and assumptions were shattered across the globe recognition that corporations have an inherent ability, as with remarkable speed and force. Agility and resilience well as an important obligation, to be a force for societal became performance differentiators for individuals, teams good, have been critical during the pandemic and, we and organizations. Among other things, this improbable year believe, will continue to rise in importance in the coming opened the aperture into the art of the possible. It is through months and years. It is our view that, to have any chance of that lens that I write this letter, reflective of the relentlessly solving society’s biggest and most pressing sustainability volatile, turbulent, yet positive catalytic year that was 2020, challenges, including climate, inequality, racial justice, as well as the awesome promise of 2021 and beyond. workforce skills, technological governance and others, we Nothing could have fully prepared any of us for what would must collaborate with our peers, the public sector and NGOs follow a calm start to 2020, which abruptly ended on March to drive positive change and to do it resolutely. Stanley 11, 2020, when the WHO declared the onset of a global Black & Decker is all in on this and has been for years. We pandemic. The ensuing scourge reached massive scale with are now going on five years of activating the elevation of our over 2.6 million (and counting) fatalities in 192 countries. This commitment to corporate social responsibility (read ESG) global phenomenon placed new and difficult burdens on and directing our efforts in that vein. people everywhere, wreaked havoc with demand trends and Before I go any further, I must thank our 53,000 employees supply chains and increased business continuity challenges for all their contributions and dedication to the Company to levels never before experienced. The U.S., long a paragon during 2020, the year of the pandemic. Our people, while of stability, descended into political chaos, extremism, dealing with their own, and in some cases staggering, divisiveness and the stark reemergence of deeply rooted personal hardships and challenges, are the reason I can racial justice issues added to the disorderly backdrop. share the story and results that I do in the coming pages. Our purpose, “For Those Who Make the World,” and our This inspired team came together as one and rose to the solid cultural and financial foundation combined to serve occasion, navigating an incredibly challenging backdrop with as a stabilizing guide for us as our leaders and teams confidence, agility and grace to close out 2020 with a strong mobilized effectively across our global enterprise. Starting performance in the areas of financial results, ESG and overall in China, then quickly migrating to Europe and the U.S., the social impact. Moreover, our people and our Company have pandemic roared across the globe with ferocity, exposing never been better positioned for future positive performance, income, healthcare, race and gender inequalities along the the effect of which is already being felt in 2021. At the center way. Stakeholder capitalism suddenly took center stage as of it all is our purpose, “For Those Who Make the World,” as businesses, governments and communities joined forces to well as a humanistic commitment to compassion, empathy face into the exigencies of the crisis. and care for all stakeholders. Our people responded beautifully. At the very onset, we established pandemic-era tactical priorities: (1) protect A WORLD IN TUMULT the health and safety of our employees and supply chain partners; (2) ensure financial stability and business I cannot help but think of this letter as a time capsule of continuity; and (3) do our part to help mitigate the impact of sorts. Many years from now when future generations look the virus in our communities. back at the events of 2020, I believe they will see it as a pivotal year. Comfortable paradigms along with institutional STANLEY BLACK AND DECKER 2020 ANNUAL REPORT 1 Employee Health & Safety • We formed a global, companywide COVID-19 Community Response Task Force to allocate the Company’s time, Nothing is more important to us than ensuring the health talents, innovation capabilities and other expertise to help and safety of our employees. In addition to being a matter mitigate societal COVID-19-related challenges. of life and death during this pandemic, our focus in this area is essential to winning the trust and confidence of our We watched in dismay as the pandemic, with its associates, at a time when uncertainty in their lives is at an disproportionate impact on Black and Hispanic individuals, all-time high and misinformation about the virus is rampant. exposed racial inequities that have existed in the U.S. for From the beginning, we implemented comprehensive safety generations. In the wake of the brutal and senseless measures and informed and guided our employees on how to George Floyd incident, we publicly declared that “We Are keep themselves and their families as safe as possible, both for Those Who Demand Justice, Take a Stand for Equality inside and outside of the workplace. and Commit to Inclusivity for All.” In that connection, we have committed to a 10-point racial justice action plan, developed We formed an Executive Safety Committee to keep the in concert with our African Ancestry Network, to make a organization current with the latest scientific, health and difference for our employees and our communities. The medical information and added a Chief Medical Officer actions are well underway. Throughout this process we have to our team. We mandated mask wearing in our facilities gained new understanding of the power of listening to diverse prior to official health organization guidance, and our safety voices and creating a workplace where all people’s voices are measures have met and often significantly exceeded those heard and all people are valued. required by public health guidelines. Through these measures, including mandatory masks, social distancing, temperature screening and spacing out shifts, as well as testing, tracking BACK FROM THE BRINK and quarantining as required, we have worked tirelessly to keep employees safe. And we provided personal protective Very early on in April, with the pandemic having aggressively equipment (PPE) not only for our employees but also for their spread to most of the world, our revenue temporarily families to use outside of work. collapsed, averaging 40% down for four straight consecutive weeks in the month. In response, we quickly and effectively As a result of these safety efforts and the commitment of all implemented a $1 billion cost reduction program. Our top 50 our employees, our COVID-19 case rates and fatalities have executives voluntarily took temporary 20% base pay cuts and remained well below the regional total population data. our board followed suit with a commensurate reduction in its Maintaining Business Continuity director retainer fees. Over 10,000 salaried employees were placed on furloughs or reduced work schedules. Indirect cost and Serving Customers reductions totaling $500 million annualized were implemented. Our manufacturing plants, distribution centers and overall We took actions to supplement our already strong liquidity supply chain have largely operated continuously with very few position. In short, by mid-May we were hunkered down and interruptions during the course of the pandemic. ready for any scenario which might emerge. Stanley Black & Decker’s products and our customers Suddenly, in the last week of April and on into the summer support, among others, those who make the world, months, an abrupt and very positive phenomenon emerged in including the frontline, essential workers, caregivers and the Tools & Storage vertical that vastly improved the trajectory first responders, manufacturers of medical and other of our 2020 business. critical equipment, maintenance personnel at healthcare Our end users, many of them homebound with more time facilities, construction workers who are maintaining critical on their hands sheltering in place, began to discover and/or infrastructure and workers engaged in natural disaster relief rediscover DIY projects, both indoors and outdoors. activities. Without access to our tools, fasteners, security systems and numerous other products, these essential We enjoyed a surge in North American retail sales of a services providers would face difficulties in doing their jobs. magnitude never experienced before. By May, point-of-sale of our tool products was running Supporting Our Communities 30% to 40% higher than the prior year and eCommerce Generous community support has always been a feature of growth surged at levels even higher than that. Fortunately, the Stanley Black & Decker culture; however in 2020 we took both we and our channel partners had solid inventory it to a new level in the spirit of giving back in a time of crisis: positions at the onset and we ramped up production at our factories to extraordinary levels. By the third quarter, the • We doubled our charitable contributions, donating to favorable demand trend had extended to Europe and other COVID-19 relief funds globally, nationally and locally, with markets around the world, albeit at somewhat lower levels a focus on food scarcity and healthcare services. As part but still in strong double-digit territory. of this program, we matched all employee donations 2-for-1 to amplify our colleagues’ actions in their The second half of 2020 proved to be an all-out test of local communities around the world; our supply chain resiliency and ability to serve the growth.

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