If your family includes the moniker “handy” when describing you, it’s quite likely you received a gift this holiday season with the name “Black and Decker”, “Craftsman”, or “DeWalt” tattooed in large letters on your new drill, electric saw, or leaf blower.
While you may have been happy with your gift, you probably also noticed something not quite ideal about that drill. It’s heavier than a corded drill because of the weight of the rechargeable and interchangeable battery.
Just before Christmas, Stanley Black and Decker (SWK), which owns all of these brands, and is the world’s largest tool manufacturer, announced a deal to address just this problem.
Stanley inked a licensing agreement with Amionx, owner of the Safecore patented lithium-ion battery safety technology. It turns out that much of the weight associated with lithium-ion batteries is due to safety features that prevent the batteries from catching fire or exploding while you’re building that treehouse.
The Amionx Safecore technology remedies this issue: producing a battery that is far lighter than current lithium-ion models that often add substantially to the weight of cordless tools.
And, there is an additional benefit to Safecore that would make Stanley Black and Decker products even more competitive, and perhaps bump the company’s earnings forecasts higher. Safecore batteries are not only lighter, but also hold a charge longer.
Much of the weight of a battery management system (BMS), which keeps lithium-ion batteries safe, can be made of chemical fire retardants. These retardants not only often weigh more than the battery itself, but they also impede the battery’s efficiency.
The announced deal with Amionx has the potential to eventually lead to not only lighter Stanley Black and Decker products. But due to the technology used in the Safecore BMS products which hold their charge longer, making them more competitive with corded models produced by other companies.
In addition to a reduced weight, and increased charge capacity, Safecore lithium-ion technology touts the benefits of a minimal increase in material costs to produce the batteries, and an increase in the overall life cycle of the battery.
In essence, this should allow Stanley Black and Decker to produce a lighter, longer charged, longer lasting product, with manufacturing costs similar to those it experiences now.
This news has the potential to move the stock price higher, as SWK introduces a superior product with minimal additional costs. The Amionx licensing deal may be a game changer for Stanley Black and Decker, and for shareholders as well.
Steven Adams’s Personal Positon in SWK: None
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