ToughBuilt Industries, Inc. $TBLT Other Considerations
April 2, 2024: Purchase Order Financing for $30M+
ToughBuilt Industries, Inc. announced a strategic alliance with King Trade Capital, securing a line of credit expected to enhance the Company's procurement, direct import, and order fulfillment capabilities. This enables the company to better meet commitments to existing and new retail partners, and strengthen relationships with key retail partners and factories.
In our words, ToughBuilt has obtained 'secured' purchase order financing for a minimum of $30M (or ~33% of 2023 sales) to more affordably finance revenue growth. This should result in more ToughBuilt products being supplied into the retail channel, from StackTech, to Massive Mouth, to ClipTech, from sawhorses to mitre saw stands. Before this financing, growth was limited to cycling gross profits back into new orders, along with any cash raised from equity sales.
ToughBuilt Industries, Inc. announced a strategic alliance with King Trade Capital, securing a line of credit expected to enhance the Company's procurement, direct import, and order fulfillment capabilities. This enables the company to better meet commitments to existing and new retail partners, and strengthen relationships with key retail partners and factories.
In our words, ToughBuilt has obtained 'secured' purchase order financing for a minimum of $30M (or ~33% of 2023 sales) to more affordably finance revenue growth. This should result in more ToughBuilt products being supplied into the retail channel, from StackTech, to Massive Mouth, to ClipTech, from sawhorses to mitre saw stands. Before this financing, growth was limited to cycling gross profits back into new orders, along with any cash raised from equity sales.
March 29, 2024: Still an industry-wide slump, but slight tailwinds
Census Retail Sales for February 2024, advance reading, show Building Material & Garden Equipment & Supplies Dealers retail sales rebounded in January 2024, but are still down significantly from December 2023 and down materially from a year ago. We are still in a slump, but had a good month. Inflation readings are elevated but in control, which should mean lower interest rates moving forward, this would also be good for home sales and price appreciation.
Census Retail Sales for February 2024, advance reading, show Building Material & Garden Equipment & Supplies Dealers retail sales rebounded in January 2024, but are still down significantly from December 2023 and down materially from a year ago. We are still in a slump, but had a good month. Inflation readings are elevated but in control, which should mean lower interest rates moving forward, this would also be good for home sales and price appreciation.
March 29, 2024: Slight tailwind among competitors
Lowe's Q4 earnings, and overall macroeconomic news, has been moderately positive for the industry of DIY and PRO home improvement services. We are seeing the beginning of a recovery. Scroll to the bottom for our commentary on what Lowe's results could mean for ToughBuilt Industries in 2024.
ToughBuilt Industries will be announcing Q4 2023 results in the first half of April 2024. We hope they will comment on their progress in Q1 2024 since that quarter is complete.
Lowe's Q4 earnings, and overall macroeconomic news, has been moderately positive for the industry of DIY and PRO home improvement services. We are seeing the beginning of a recovery. Scroll to the bottom for our commentary on what Lowe's results could mean for ToughBuilt Industries in 2024.
- Home Depot just bought a huge Professional Contracting Services company to increase their PRO business.
- L.S. Starrett Company just went private. They are a smaller competitor.
- Hillman Solutions Corp., a smaller competitor, just reached a 52-week high in their stock price.
- TTNDY, or Techtronic Industries (owner of Milwaukee Tools) rose 30% since early March 2024.
- Lowe's stock rose ~20%, and Home Depot rose ~15% since the beginning of February 2024.
- Even Stanley Black & Decker is up 10% since the beginning of March 2024.
ToughBuilt Industries will be announcing Q4 2023 results in the first half of April 2024. We hope they will comment on their progress in Q1 2024 since that quarter is complete.
Consideration 1: Increasing Global Distribution in 2023
North America seems well covered with Lowe's, Amazon, and a few other retailers offering products online. (As-of March 2024)
North America seems well covered with Lowe's, Amazon, and a few other retailers offering products online. (As-of March 2024)
- In the USA, Lowe's is the showroom for ToughBuilt and is the exclusive retailer for Stack Tech TM mobile storage solutions (full price, beautiful display). They sell the full assortment, although currently we see a clearance and sale effort on many ToughBuilt SKUs to clear space in January and February 2024.
- Home Depot has 31 products for sale online, and only saw horses that used to be available in stores. Now, customers are redirected to Home Depot's Husky brand of saw horse (we called, and this is what they did).
- Canada has Rona Canada, which bought Lowe's Canada stores and operations as of December 2023. Rona Canada carries 33 products from ToughBuilt, but only saw horses and knife blade refills were available in stores. The rest were available online for delivery to store, or home. Those 33 products included Massive Mouth bags, knee pads, Clip Tech pouches and belts, and hand tools.
- Canada also has Home Depot Canada, which carries the saw horses in store, and everything else was available via shipping to the store, or delivery home. There were 16 knee pads, and a total of 41 products available.
2023 Announcements:
Latin and South America: starting in early 2023, Sodimac Homecenter will carry 15 SKUs in-store, and 23 SKUs in the Sodimac Homecenter online marketplace.
We checked and found many products listed on the Falabella.com online store, that are priced and sold in US Dollars.Some are sold by the 'hardware store' and others by the 'equipment rental' business. We looked in one hardware store in Brazil, but that is not an easy search in Portuguese. ToughBuilt products include bags, ClipTech belts, many pouches and clips / accessories, also steel saw horses (steel stands), aviation snips (scissors), knee pads (4 SKUs), levels, brackets, a titanium coated knife with sheath, saws, a tool tote bag, Massive Mouth tool bags, and the products look great. Prices are higher than Chicago, but that is likely due to import tariffs, free shipping, and the like.
Latin and South America: starting in early 2023, Sodimac Homecenter will carry 15 SKUs in-store, and 23 SKUs in the Sodimac Homecenter online marketplace.
We checked and found many products listed on the Falabella.com online store, that are priced and sold in US Dollars.Some are sold by the 'hardware store' and others by the 'equipment rental' business. We looked in one hardware store in Brazil, but that is not an easy search in Portuguese. ToughBuilt products include bags, ClipTech belts, many pouches and clips / accessories, also steel saw horses (steel stands), aviation snips (scissors), knee pads (4 SKUs), levels, brackets, a titanium coated knife with sheath, saws, a tool tote bag, Massive Mouth tool bags, and the products look great. Prices are higher than Chicago, but that is likely due to import tariffs, free shipping, and the like.
United Kingdom has a regional sales manager who is calling on stores in the U.K. and European Union. However, we are not seeing much in our February 2024 due diligence, at least not on the Howdens and CEF websites.
In August 2023, ToughBuilt announced agreements to distribute products through both Howdens UK and City Electrical Factors UK, which combined includes 1200 locations. Those companies are UK joinery, kitchen, hardware, and electrical suppliers.
Howdens in the UK has three ToughBuilt products on sale online. They offer the 7" Scraper Utility Knife, and the 7" Reload Utility Knife, and straight blade refills (pack of 30). This is similar to the coverage at Ace Hardware near me, and this is a very small revenue product mix.
We picked a flagship store in Kings Cross, and did some looking at their products. They have one set of metal and plastic saw horses from Stanley, limited to no protective gear, and really could benefit from ToughBuilt. Same with Hammers and Saws. Good saws from Irwin, but no ToughBuilt, and we think they would benefit from the ToughBuilt line in their UK stores.
In August 2023, ToughBuilt announced agreements to distribute products through both Howdens UK and City Electrical Factors UK, which combined includes 1200 locations. Those companies are UK joinery, kitchen, hardware, and electrical suppliers.
Howdens in the UK has three ToughBuilt products on sale online. They offer the 7" Scraper Utility Knife, and the 7" Reload Utility Knife, and straight blade refills (pack of 30). This is similar to the coverage at Ace Hardware near me, and this is a very small revenue product mix.
We picked a flagship store in Kings Cross, and did some looking at their products. They have one set of metal and plastic saw horses from Stanley, limited to no protective gear, and really could benefit from ToughBuilt. Same with Hammers and Saws. Good saws from Irwin, but no ToughBuilt, and we think they would benefit from the ToughBuilt line in their UK stores.
CEF UK: Your Electrical Experts, does not carry any ToughBuilt products on their online web site. We see Klein and other brands. They sure could use the Clip Tech TM soft goods product line, in our opinion.
European Union: the French retailer, La Plateforme Du Batiment (67 depots) and French and Spanish retailer Prolians (290 storefronts) announced they will carry ToughBuilt products in August 2023. These two retailers serve the professional trades, with a combined 600,000 customers.
At La Plateforme Du Batiment, in the first location we checked Nanterre A86, in Paris, we noticed six products in stock, including two knee pads, two knives and two levels, and two products available for delivery (the C6500 1300 lbs capacity saw horses and 30 blade refill pack).
At Prolians, there are 23 products available online. It is a pretty good assortment of soft goods like tool belts and pouches with Clip Tech TM, rolling tool bags and tool bags Massive Mouth TM, saw horses, cutters, and knee pads. We do not see any hand tools other than the cutters.
The CEO's quote was informative at the end of the UK and European Union announcements:
Michael Panosian, Chief Executive Officer of ToughBuilt, commented, “We are thrilled to build relationships with these highly regarded and retail distributors in the United Kingdom, and further expand our network into new professional-focused storefronts in the United Kingdom. We continue to grow our distribution worldwide, accessing additional new revenue streams with careful steps to build greater shareholder value.”
Michael Panosian, Chief Executive Officer of ToughBuilt, commented, “We are thrilled to build relationships with these highly regarded and retail distributors in the United Kingdom, and further expand our network into new professional-focused storefronts in the United Kingdom. We continue to grow our distribution worldwide, accessing additional new revenue streams with careful steps to build greater shareholder value.”
The top 10 DIY retailers in Europe are:
Unfortunately, there are no ToughBuilt Industries press releases naming these specific retailers. We checked OBI for ToughBuilt products but none came up as available for sale. IMO: Selling ToughBuilt products into the European Tool & Accessory market is a significant growth opportunity.
- Groupe Adeo (formerly Leroy Merlin Group) (Fr)
- Kingfisher (owns B&Q, Screwfix, & Brico) (UK)
- Obi (Ger)
- Bauhaus (Ger)
- Hornbach (Ger)
- Stark Group (Den)
- Groupe Les Mousquetaires (Fr)
- Kesko (K-Group) (Fin)
- XL-Byg(g) Nordic (Scandanavia)
- Hagebau (Ger)
Unfortunately, there are no ToughBuilt Industries press releases naming these specific retailers. We checked OBI for ToughBuilt products but none came up as available for sale. IMO: Selling ToughBuilt products into the European Tool & Accessory market is a significant growth opportunity.
We went back to prior announcements, and other current announcements, and found these European and U.K. retailers, and buyer groups listed. We will share any due diligence on ToughBuilt products sold through these channels here.
French Retailers:
Toolstation, a multinational home improvement chain
Setin Group, a specialized hardware and tool chain
Gedimat, a major national group of independent home improvement retailers
Buyer Group:
EURO CRAFT SAS is pleased to announce ToughBuilt Europe as a new Euro Craft supplier.
Source: LinkedIn sometime in January 2024
Euro Craft SAS is the leading B2B marketing and purchase group for construction & industry in Europe. Paris, France
Our cooperation comprises five European partners: besides Groupe SOCODA (France), these are Zevij-Necomij (Netherlands and Belgium), Troy (UK & Ireland) and Cecofersa (Spain and Portugal) and 3e (Austria and 10 CEE countries). In their home markets the partners are considered the most important purchasing groups within the professional sector with more than 1100 associated dealers and more than 2450 outlets. Our partners are active in 17 countries in Europe.
German Retailers:
Specialty Retailer: Western Pacific. We read a few years ago that ToughBuilt products are sold in the professional trade through Western Pacific, a high quality moulding, doors and windows provider to the construction industry.
French Retailers:
Toolstation, a multinational home improvement chain
Setin Group, a specialized hardware and tool chain
Gedimat, a major national group of independent home improvement retailers
Buyer Group:
EURO CRAFT SAS is pleased to announce ToughBuilt Europe as a new Euro Craft supplier.
Source: LinkedIn sometime in January 2024
Euro Craft SAS is the leading B2B marketing and purchase group for construction & industry in Europe. Paris, France
Our cooperation comprises five European partners: besides Groupe SOCODA (France), these are Zevij-Necomij (Netherlands and Belgium), Troy (UK & Ireland) and Cecofersa (Spain and Portugal) and 3e (Austria and 10 CEE countries). In their home markets the partners are considered the most important purchasing groups within the professional sector with more than 1100 associated dealers and more than 2450 outlets. Our partners are active in 17 countries in Europe.
German Retailers:
- V-Toolstore. We notice V-Toolstore is an authorized reseller of ToughBuilt. They are a German reseller. https://www.v-toolstore.com/en/toughbuilt/?p=1. Their brand is Das Richter Gude[werk] Zeug. Their tagline: In tools we trust, and ToughBuilt is listed as a premium brand on their homepage. https://www.v-toolstore.com/en/
- Friedrich Delker GmbH & Co. KG (“Delker”). Delker is one of the largest privately owned hardware suppliers in Germany. With three general headquarters across Germany and Poland and a strong e-commerce presence, Delker is a professional wholesale group selling power tools, warehouse and factory equipment, machine tools, and occupational safety products from globally recognized brands.
- Witte Metallwaren GmbH & Co.KG (“Witte”). Witte supplies flooring, interior specialists, painters, and floor covering wholesalers and continues to be under family ownership today. All new additions to its portfolio of brands are subjected to a stringent round of quality testing to ensure they meet Witte’s exacting standards.
- Vageler & Christiansen GmbH (“Vageler & Christiansen”). A major online retailer, Vageler & Christiansen distributes tools, machines, protective clothing, and accessories to professional consumers across Europe. The business ships over 2,500 orders monthly to over 30,000 end users.
- Bernd Ulbricht Nachf, A supplier of professional customers with tools and consumables (such as fixings and fastenings), building chemicals, and workshop supplies from its headquarters in Großolbersdorf, is an established source of quality for the Saxon community.
Specialty Retailer: Western Pacific. We read a few years ago that ToughBuilt products are sold in the professional trade through Western Pacific, a high quality moulding, doors and windows provider to the construction industry.
Consideration 2: European trade show participation could lead to new retailers carrying ToughBuilt products in their stores and online.
As of March 5, 2024, we are noticing that ToughBuilt Industries in Europe is participating in key trade shows. We have gathered some open source information and will be adding that information here.
European Trade Shows:
Hardware Show 2024 (Dublin, Ireland).
TOUGHBUILT will be proud to welcome you at The Hardware Show, in Dublin this Sunday and Monday 18th-19th of February at booth K10
ToughBuilt Industries welcomes you to join us for the International Hardware Fair (Eisenwarenmesse) in Cologne, DE from 3rd-6th, March! Contact marketing-uk@toughbuilt.com for passes and more information!
Silverstone, Troy (Northamptonshire, United Kingdom.). ToughBuilt’s ground-breaking booth was onsite today for
(Troy Means Business 2023) at Silverstone, fully equipped with disruptive innovation for your toughest jobs.
I assume they will be at BouwBeurs event: February 03, 2025 until February 07, 2025 since they were there in 2023.
As of March 5, 2024, we are noticing that ToughBuilt Industries in Europe is participating in key trade shows. We have gathered some open source information and will be adding that information here.
European Trade Shows:
Hardware Show 2024 (Dublin, Ireland).
TOUGHBUILT will be proud to welcome you at The Hardware Show, in Dublin this Sunday and Monday 18th-19th of February at booth K10
ToughBuilt Industries welcomes you to join us for the International Hardware Fair (Eisenwarenmesse) in Cologne, DE from 3rd-6th, March! Contact marketing-uk@toughbuilt.com for passes and more information!
Silverstone, Troy (Northamptonshire, United Kingdom.). ToughBuilt’s ground-breaking booth was onsite today for
(Troy Means Business 2023) at Silverstone, fully equipped with disruptive innovation for your toughest jobs.
I assume they will be at BouwBeurs event: February 03, 2025 until February 07, 2025 since they were there in 2023.
Consideration 3: ToughBuilt makes great product demonstration videos with solid branding.
This one, TOUGHBUILT StackTech® Mobile Organization System, is on the ToughBuilt YouTube channel. There are so many others, and now ToughBuilt is making YouTube shorts, and they are on Facebook, Instagram, TikTok.
This one, TOUGHBUILT StackTech® Mobile Organization System, is on the ToughBuilt YouTube channel. There are so many others, and now ToughBuilt is making YouTube shorts, and they are on Facebook, Instagram, TikTok.
Consideration 4: Announced new product lines that we cannot find in stores
Product 1: Wrenches
We read that in January 2023 ToughBuilt rolled out a new line of Handheld Wrenches, including adjustable wrenches, construction wrenches, and pipe wrenches. In total, there are 20 SKUs. We have not seen any wrenches in our due diligence. Same thing with Pliers and Clamps, which were announced by ToughBuilt in February, 2023.
Product 1: Wrenches
We read that in January 2023 ToughBuilt rolled out a new line of Handheld Wrenches, including adjustable wrenches, construction wrenches, and pipe wrenches. In total, there are 20 SKUs. We have not seen any wrenches in our due diligence. Same thing with Pliers and Clamps, which were announced by ToughBuilt in February, 2023.
Consideration 5: Accounting System
ToughBuilt Industries has some issues with the speed of their accounting processes. They installed Acumatica, possibly around the 2019 or 2020 timeframe, as we learned in the Acumatica case study here. That was their first level of automation and integration with suppliers and customers, moving them away from QuickBooks and manual data entry of orders.
Given the non-timely SEC filings, we wonder what type of ERP system comes next and at what cost, to help eliminate weaknesses in their financial reporting and internal controls.
ToughBuilt Industries has some issues with the speed of their accounting processes. They installed Acumatica, possibly around the 2019 or 2020 timeframe, as we learned in the Acumatica case study here. That was their first level of automation and integration with suppliers and customers, moving them away from QuickBooks and manual data entry of orders.
Given the non-timely SEC filings, we wonder what type of ERP system comes next and at what cost, to help eliminate weaknesses in their financial reporting and internal controls.
Consideration 6: Possibly moving some manufacturing to Vietnam to lower COGS
According to Trademo dot com, ToughBuilt may be moving some of their manufacturing from China to a split of India (soft goods) and Vietnam (metal goods) in addition to buying primarily from China. There is no other evidence of this shift, and the company states in their ToughBuilt registration statement dated February 15, 2024, "All of our products are designed and engineered in the United States and manufactured in China, India and the Philippines under our quality control supervision." There is no mention of Vietnam by the company.
According to Trademo dot com, ToughBuilt may be moving some of their manufacturing from China to a split of India (soft goods) and Vietnam (metal goods) in addition to buying primarily from China. There is no other evidence of this shift, and the company states in their ToughBuilt registration statement dated February 15, 2024, "All of our products are designed and engineered in the United States and manufactured in China, India and the Philippines under our quality control supervision." There is no mention of Vietnam by the company.
In this article, there are eight reasons given for a move to Vietnam from China.
In this article, Cosmosourcing dot com explores in detail why 'now is the time' for small and medium sized U.S. manufacturers to explore moving their manufacturing from China to Vietnam. Here is another related link to similar information from Cosmo Sourcing.
Statistica gives the average hourly wage in China, Mexico and Vietnam from 2016 to 2020. All are growing, but Vietnam is by far the least expensive option of the three countries.
In this 2022 article, we learn that Vietnam's government is supporting the growth in manufacturing with incentives.
In this September 2023 article, McKinsey & Company (we are alumni) discusses how Vietnam can accelerate its already rapid manufacturing growth rate. We learn that Vietnam earns 20% of its GDP from manufacturing.
East West Manufacturing, a consultancy, wrote this in 2022 to help firms understand some key metrics about rapid manufacturing growth rates and relative literacy and education in Vietnam when compared to China. They specifically discuss public investments in public education (K-12) to help their factory labor do greater things.