ToughBuilt Industries: Gathering Momentum After Positive Developments

A $22.7 million contact from Lowe's and a good performance on the Amazon Storefront are strong catalysts

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Ishan Majumdar
Apr 15, 2020
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While construction and home improvement activity may have come to a standstill given the lockdown situation, the demand curve for safety equipment within this space has always had an upward slope. While giants like DeWalt and Milwaukee Tool dominate the space, a smaller player by the name of Toughbuilt Industries (

TBLT, Financial) has managed to crawl its way up through its innovative safety products. The company is gradually widening its distribution and growing its top-line, and it has had some very promising developments in the past few weeks.

What does ToughBuilt Industries do?

ToughBuilt Industries is a manufacturer of home improvement and construction products based in Lake Forest, California. The company designs, develops, manufactures and distributes a number of innovative products for the construction industry in the United States and across the globe. Its core products include tool pouches, tool rigs, tool belts and accessories, tools bags, totes, office organizers, laptop bags and kneepads, which are all marketed under the ToughBuilt brand. Its distribution takes place through retail outlets, big box stores, professional outlets, e-commerce platforms and direct marketing to construction companies. It falls in the same bracket as companies like DeWalt, Milwaukee Tool and Hilti.

The Lowes contract and other positives

The ToughBuilt management recently announced that it was awarded a $22.7 million contract by Lowe’s (

LOWE, Financial). The products to be supplied by ToughBuilt will include about 30 different types and are expected to be launched at the Lowe’s nationwide stores and on their website starting in October 2020. The categories that will be launched include new innovative bags, Cliptech™ pouches and a new line of knee protection products. About 18 of these product units will be under the ToughBuilt® brand, and the remaining 12 shall be under Lowe’s renowned in-house brand called Kobalt®. This is a big breakthrough for ToughBuilt, as it is now becoming a supplier to one of the most highly trusted purveyors in the $460 billion home improvement market. Lowe’s is nearly a century old, with over 2,200 locations across the United States and Canada. ToughBuilt’s partnership with Lowe’s is expected to significantly build its brand value and also widen its reach to customers in North America.

In addition to the Lowe’s partnership, ToughBuilt is also launching its products with Lowe's main competitor, Home Depot (

HD, Financial). It also announced some key distribution partnerships, such as the one with Haspaka Group, an Israel-based store and distributor of professional tools that serves both large factories and professionals. The company also has distribution agreements with some key names, such as the PRO Group, which represents more than $5 billion in annual buying power through brands like PRO Hardware and Garden Master, and Distribution America, a hardware store retailers' cooperative with about 15,000 affiliated retail locations.

Strengthening outlook for 2020

The 2020 outlook for ToughBuilt’s top-line is strengthening with every passing day. Over and above the $22.7 million Lowe’s contract, the company also delivered decent numbers for its quarter ended March 31, 2020. The company’s gross sales through the Amazon (

AMZN, Financial) U.S. storefront were about $1.2 million for the quarter, a strong jump given the fact that its sales through this channel for the entire period of 2019 were $2.5 million. It must be highlighted that 2019 was also a good year for the company, as its revenues showed a 25% increase and its gross margins also grew. The Amazon Storefront progress is definitely encouraging, as the impact of Covid-19 so far seems very limited on the company’s business.

Key takeaways

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Despite such strong positive developments, the stock price of ToughBuilt has not appreciated much. It currently trades at a price-sales ratio of 0.18 and an enterprise value to revenue multiple of 1.51 times, which are both below the industry average. At its current valuation, I believe it definitely looks ripe for investment from long-term microcap investors.

Disclosure: No positions

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