In 2018, we celebrated our 175th anniversary with a nod to the durability and sustainability of our enterprise, which has successfully navigated through three industrial revolutions and is now positioned to do the same as we take on the challenges and opportunities of the fourth.
Tools & Storage led the way with a 7% organic growth rate. Every region and business unit delivered increases, including growth in North America (+8%), Europe (+5%) and emerging markets (+11%).
A powerful set of strategic catalysts, complemented by outstanding commercial execution enabled us to deliver impressive above-market growth, even against difficult comparables. These catalysts include the Craftsman initiative, e-commerce, emerging markets, FLEXVOLT® and revenue synergies from the Irwin/Lenox acquisition. SFS 2.0 and its combination of breakthrough innovation, commercial excellence and digital excellence also helped propel the Tools & Storage growth performance.
In Industrial, we drove 11% total revenue growth, much of that derived from our acquisition of Nelson Fasteners in 2018. Nelson expands our set of product offerings in Engineered Fastening as well as provides us with additional end-market diversification. Amidst a slowing automotive market, Engineered Fastening continued its strong penetration gains, growing the fastener business 630 basis points in excess of global light vehicle production. Hydraulic Tools revenue was up 8% on strong commercial execution and the team also signed an agreement to acquire IES Attachments. IES, when closed, is expected to almost triple Hydraulics in size while adding meaningful scale to this business and opening up a plethora of future growth avenues.
In Security, we have been leading a business transformation to deliver more consistent organic growth and generate margin expansion. The approach utilizes technology to lower the cost to serve and provide differentiated offerings to our small-to-medium enterprise and large customers. Along this line, the business generated operating margin rate and dollar improvements in the second half of the year, and we are looking forward to seeing those trends continue into 2019 and beyond.
Our overall operating margin rate* was 13.6%, an impressive result considering the $370 million of commodity inflation, currency and tariff headwinds we experienced during the year. We continue to leverage productivity, cost control and pricing actions, and are undertaking an extensive array of new margin-focused initiatives to ensure rate expansion in 2019 and beyond.
Free cash flow conversion was approximately 90%* which supported our 51st annual dividend increase, $500 million in share repurchases and a series of strategic acquisitions. Cash flow return on investment remained strong at 12%, which is in line with our long-term targets.
Total revenues were
+8% VERSUS PRIOR YEAR
ORGANIC GROWTH OF
OVERCOMING $370 MILLION IN EXTERNAL HEADWINDS
EARNINGS PER SHARE INCREASED
FREE CASH FLOW
Excluding M&A related charges, and other | Free Cash Flow conversion excludes tax charges related to the implementation of U.S. tax reform
We believe it is evident that the forward progress across the Company is tangible and the Company’s positioning for future growth and success is excellent. We have a clear vision, backed by a strong and meaningful purpose, that is driving our momentum. We are focused on strong cash flow generation and operating margin expansion, and are prepared, as an organization, to tackle whatever external realities come our way. In addition, we have the best growth catalysts in the history of our organization, a strong operating system in SFS 2.0, an integrated innovation ecosystem and a culture of values focused on performance, innovation and social responsibility. It’s within this context that we close out our 175th year anniversary, and look forward to prospering in the years ahead as we navigate through this new age of industrial disruption.
James M. Loree President & Chief Executive Officer