Stanley Black & Decker Reports 2Q 2023 Results

Rhea-AI Summary

Stanley Black & Decker announces Q2 2023 financial results, with revenues of $4.2 billion, a 5% decrease from the previous year. The company delivered $230 million of pre-tax run-rate savings in Q2 2023 and is on track to achieve $1 billion in run-rate savings by the end of 2023. Gross margin improved sequentially for the second consecutive quarter. The company also made progress in inventory reduction, with a $375 million reduction in Q2 2023 and a total reduction of $1.4 billion since mid-2022.

Global Cost Reduction Program Delivered $230 Million of Pre-Tax Run-Rate Savings in Second Quarter 2023; On-Track for Expected $1 Billion Run-Rate Savings by End of 2023

Delivered Second Consecutive Quarter of Sequential Gross Margin Improvement

Strong Progress on Inventory Reduction, With Incremental $375 Million Reduction in Second Quarter 2023; Approximately $1.4 Billion Inventory Reduction Since Mid-2022 

NEW BRITAIN, Conn., Aug. 1, 2023 /PRNewswire/ -- Stanley Black & Decker (NYSE: SWK), a worldwide leader in tools and outdoor, today announced second quarter 2023 financial results.  

• Second Quarter Revenues of $4.2 Billion, Down Versus Prior Year Due to Lower Consumer Outdoor and DIY Volume as well as the Oil & Gas Business Divestiture
• Second Quarter Diluted GAAP EPS Was $1.18; Excluding Charges and Timing of Certain Tax Benefits, Second Quarter Adjusted Diluted EPS* Was ($0.11), as the Company Continues Prioritizing Inventory Reduction and Cash Generation
• Free Cash Flow* in the Second Quarter was Approximately $200 Million Primarily Driven by Inventory Reduction
• Narrowing 2023 Guidance Ranges With Full Year Diluted GAAP EPS of ($1.25) to ($0.50) (From ($1.65) to $0.60), Adjusted Diluted EPS* of $0.70 to $1.30 (From $0.00 to $2.00) and Free Cash Flow* to Approximate $0.6 Billion to $0.9 Billion (From $0.5 Billion to $1.0 Billion)

Donald Allan, Jr., Stanley Black & Decker's President & CEO, commented, "We continued to make significant progress against our strategic business transformation in the second quarter highlighted by strong execution against our cost savings program, continued inventory reduction, sequential gross margin improvement and numerous advances in our supply chain optimization initiative. While the operating backdrop remains dynamic with some underlying consumer softness, we continue to see strong demand in the professional construction, automotive and aerospace markets as well as further stabilization across global supply chains. 

"As we've transformed Stanley Black & Decker into a more streamlined business, we are operating with more focus and core market leadership positions in Tools & Outdoor and Industrial, built on the strength of our people and culture. The compelling long-term opportunities in the markets we serve along with the progress we've made transforming our business, including our improved cost position, gives us the confidence to pursue growth investments in the second half of this year. We believe these investments will help capture the market opportunity and accelerate our growth and margin expansion. We are proud of our progress to date, and I am confident that by executing our strategy we are positioning Stanley Black & Decker for strong long-term growth, cash flow generation, profitability, and shareholder return."

*Non-GAAP Financial Measure As Further Defined On Page 6

The Company's primary areas of strategic focus are:

• Advancing innovation, electrification, and global market penetration to achieve organic revenue growth of 2 to 3x the market
• Streamlining and simplifying the organization, and investing in initiatives that more directly impact our customers and end users
• Returning adjusted gross margins* to historical 35%+ levels by accelerating the operations and supply chain transformation to improve fill rates and better match inventory with customer demand
• Prioritizing cash flow generation and inventory optimization

2Q'23 Key Points:

• Net sales for the quarter were $4.2 billion, down 5% versus prior year as price realization (+1%) was more than offset by lower volume (-5%) and the Oil & Gas divestiture (-1%).
  
  
• Inventory at the end of the quarter was $5.3 billion, down approximately $375 million from the prior quarter and $1.4 billion over the last twelve months as the Company continued benefiting from improving supply chain conditions and planned production curtailments.
  
  
• Gross margin for the quarter was 22.4%. Adjusted gross margin* was 23.6%, up 50 basis points sequentially from first quarter 2023. Adjusted gross margin* was down versus the prior year rate of 27.9% as price realization was more than offset by a 4 to 5 point impact from production curtailments, selling through high-cost inventory and lower volumes.
  
  
• SG&A expenses were 20.1% of sales for the quarter. Excluding charges, second quarter adjusted SG&A expenses* were $812 million or 19.5% of sales. Adjusted SG&A expenses* were down on an absolute basis versus the prior year reflecting cost control actions but up versus the prior year rate of 18.7% due to lower sales.

 

2Q'23 Segment Results

($ in M)
	Sales	Profit	Charges1	Profit Ex- Charges*	Profit  Rate	Profit Rate Ex- Charges*
Tools & Outdoor	$3,542	$102.0	$55.8	$157.8	2.9 %	4.5 %
Industrial	$617	$71.6	$8.5	$80.1	11.6 %	13.0 %

1 See Acquisition-Related And Other Charges On Page 5

*Non-GAAP Financial Measure As Further Defined On Page 6

• Tools & Outdoor net sales were down 5% versus second quarter 2022 as price realization (+1%) was more than offset by volume (-6%). The overall organic* decline (-5%) was a result of lower consumer outdoor and DIY market demand and modestly reduced channel inventory. Regional year-over-year organic* revenue included: North America (-6%), Europe (-1%) and Emerging markets (-3%). Second quarter U.S. retail point-of-sale demand was above pre-pandemic 2019 levels, supported by strength in professional demand and price. The Tools & Outdoor segment profit rate*, excluding charges, was 4.5%. The segment profit rate*, excluding charges, declined from 10.8% in second quarter 2022 as price realization was more than offset by selling through high-cost inventory, production curtailment costs and lower volume.
  
  
• Industrial net sales were down 5% versus second quarter 2022 as price (+4%) was more than offset by volume (-1%), currency (-1%) and the Oil & Gas divestiture (-7%). Engineered Fastening organic* revenues were up 8%, with double digit growth in aerospace and automotive, which was partially offset by softer industrial markets. Attachment Tools organic* revenues were down 14% due to customer destocking. The Industrial segment profit rate*, excluding charges, was 13.0%, up 370 basis points versus prior year, due to price realization and cost control.

Global Cost Reduction Program Update

The Company continued executing a series of initiatives to generate cost savings and reduce inventory, with the ultimate objective of driving long-term growth, improving profitability, and generating strong cash flow.  The Global Cost Reduction Program is expected to optimize the Company's cost base and generate savings to fund investments that accelerate growth in the core businesses. These initiatives remain on track to generate run-rate cost savings of approximately $1 billion by the end of 2023, growing to approximately $2 billion by 2025. 

Year-to-date, the Company is ahead of plan and achieved $460 million of pre-tax run-rate savings from lower headcount, indirect spend reductions and the supply chain transformation. The Company also reduced inventory by approximately $575 million versus fourth quarter 2022 ending balances and is on track to deliver $700 million to $900 million of inventory reductions in 2023 to support free cash flow generation. Since inception, the Global Cost Reduction Program generated $660 million in pre-tax run-rate savings and the Company has reduced inventory by $1.4 billion.

*Non-GAAP Financial Measure As Further Defined On Page 6

2023 Outlook 

Patrick D. Hallinan, Executive Vice President and CFO, commented, "In the first half, we reduced inventory by $575 million and generated $460 million of pre-tax run rate cost savings, both modestly ahead of our plan. The progress we've made sets the business up for continued gross margin improvement in the second half of 2023.  Looking forward, as we continue to plan around a range of 2023 demand outcomes, we are executing our transformation to deliver the cost savings that are largely within our control and create flexibility to fund growth investments. Cash generation, gross margin improvement and balance sheet strength remain our top priorities as we continue positioning the Company for long-term growth and value creation."

Management is narrowing its guidance ranges and expects 2023 GAAP EPS to be in the range of ($1.25) to ($0.50) (From ($1.65) to $0.60).  Adjusted EPS* is expected to be between $0.70 to $1.30, (From $0.00 to $2.00). Free cash flow* is expected to be approximately $0.6 billion to $0.9 billion (from $0.5 billion to $1.0 billion), significantly ahead of net income, as the Company focuses on serving its customers and executing its transformation while leveraging the SBD Operating Model to drive working capital efficiency. The Company continues to prioritize free cash flow generation and intends to make investments to support faster organic growth. Management's guidance reflects a range of demand for the balance of 2023, that will be discussed in more detail on today's earnings call.

The difference between 2023 GAAP and adjusted EPS* guidance is approximately $1.80 to $1.95, consisting of other charges primarily due to the supply chain transformation under the Global Cost Reduction Program and integration-related charges.

*Non-GAAP Financial Measure As Further Defined On Page 6

Acquisition-Related and Other Charges

Total pre-tax acquisition-related and other charges in the second quarter of 2023 were $71.1 million, primarily related to footprint actions and other costs related to the supply chain transformation. Gross profit included $51.4 million of these charges while SG&A included $25.4 million. Other, net included a net benefit of $10.3 million and Restructuring included $4.6 million of charges.

Earnings Webcast

The Company will host a webcast with investors today, August 1, 2023, at 8:00 am ET.  A slide presentation, which will accompany the call, will be available on the "Investors" section of Stanley Black & Decker's website at www.stanleyblackanddecker.com/investors and will remain available after the call.

The call will be available through a live, listen-only webcast or teleconference.  Links to access the webcast, register for the teleconference, and view the accompanying slide presentation will be available on the "Investors" section of Stanley Black & Decker's website, www.stanleyblackanddecker.com/investors under the subheading "News & Events."  A replay will also be available two hours after the call and can be accessed on the "Investors" section of Stanley Black & Decker's website.

About Stanley Black & Decker 

Headquartered in the USA, Stanley Black & Decker (NYSE: SWK) is a worldwide leader in tools and outdoor operating manufacturing facilities worldwide. Guided by its purpose – for those who make the world – the Company's more than 50,000 diverse and high-performing employees produce innovative, award-winning power tools, hand tools, storage, digital tool solutions, lifestyle products, outdoor products, engineered fasteners and other industrial equipment to support the world's makers, creators, tradespeople and builders. The Company's iconic brands include DEWALT®, BLACK+DECKER®, CRAFTSMAN®, STANLEY®, CUB CADET®, HUSTLER® and TROY-BILT®. Recognized for its leadership in environmental, social and governance (ESG), Stanley Black & Decker strives to be a force for good in support of its communities, employees, customers and other stakeholders. To learn more visit: www.stanleyblackanddecker.com.

Investor Contacts:
Dennis Lange
Vice President, Investor Relations
dennis.lange@sbdinc.com
(860) 827-3833

Cort Kaufman
Senior Director, Investor Relations
cort.kaufman@sbdinc.com
(860) 515-2741

Christina Francis
Director, Investor Relations
christina.francis@sbdinc.com
(860) 438-3470

Media Contacts:
Debora Raymond
Vice President, Public Relations
debora.raymond@sbdinc.com 
(203) 640-8054

Non-GAAP Financial Measures
Organic sales growth, or organic growth, is defined as the difference between total current and prior year sales less the impact of companies acquired and divested in the past twelve months and any foreign currency impacts divided by prior year sales. Operating profit is defined as sales less cost of sales and selling, general and administrative expenses. Operating margin is operating profit as a percentage of sales. Operating profit and operating margin are shown both inclusive and exclusive of acquisition-related and other charges. Management uses operating profit and operating margin as key measures to assess the performance of the Company as a whole, as well as the related measures at the segment level. Diluted EPS, excluding charges, or adjusted EPS, is diluted GAAP EPS excluding the impacts of acquisition-related and other charges. Free cash flow is defined as cash flow from operations less capital and software expenditures. Management considers free cash flow an important indicator of its liquidity, as well as its ability to fund future growth and to provide a return to the shareowners and is useful information for investors. Free cash flow does not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company's common and preferred stock and business acquisitions, among other items.  Free cash flow conversion is defined as free cash flow divided by net income. The Non-GAAP statement of operations and business segment information is reconciled to GAAP on pages 12 through 15 and in the appendix to the earnings conference call slides available at http://www.stanleyblackanddecker.com/investors. The Company considers the use of the Non-GAAP financial measures above relevant to aid analysis and understanding of the Company's results, business trends and outlook measures aside from the material impact of acquisition-related and other charges and ensures appropriate comparability to operating results of prior periods.

The Company also provides expectations for the non-GAAP financial measures of adjusted EPS, presented on a basis excluding acquisition-related and other charges, as well as free cash flow. Forecasted adjusted EPS is reconciled to GAAP on page 4. Due to high variability and difficulty in predicting items that impact cash flow from operations, a reconciliation of forecasted free cash flow to its most directly comparable GAAP estimate has been omitted. The Company believes such a reconciliation would also imply a degree of precision that is inappropriate for this forward-looking measure.

CAUTIONARY STATEMENTS
Under the Private Securities Litigation Reform Act of 1995

This document contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws, including, but not limited to, any projections or guidance of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new products, services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include, among others, the words "may," "will," "estimate," "intend," "could," "project," "plan," "continue," "believe," "expect," "anticipate", "run-rate", "annualized" or any other similar words.

Although the Company believes that the expectations reflected in any of its forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of its forward-looking statements. The Company's future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, such as those disclosed or incorporated by reference in the Company's filings with the Securities and Exchange Commission.  

Important factors that could cause the Company's actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in its forward-looking statements include, among others, the following: (i) successfully developing, marketing and achieving sales from new products and services and the continued acceptance of current products and services; (ii) macroeconomic factors, including global and regional business conditions , commodity prices, inflation and deflation, interest rate volatility, currency exchange rates, and uncertainties in the global financial markets related to the recent failures of several financial institutions; (iii) laws, regulations and governmental policies affecting the Company's activities in the countries where it does business, including those related to tariffs, taxation, data privacy, anti-bribery, anti-corruption, government contracts and trade controls such as section 301 tariffs and section 232 steel and aluminum tariffs; (iv) the economic, political, cultural and legal environment in Europe and the emerging markets in which the Company generates sales, particularly Latin America, Russia, China and Turkey; (v) realizing the anticipated benefits of mergers, acquisitions, joint ventures, strategic alliances or divestitures, including the divestitures of the Security and Oil & Gas businesses; (vi) pricing pressure and other changes within competitive markets; (vii) availability and price of raw materials, component parts, freight, energy, labor and sourced finished goods; (viii) the impact that the tightened credit markets and any discontinuation, reform or replacement of LIBOR and other benchmark rates may have on the Company or its customers or suppliers; (ix) the extent to which the Company has to write off accounts receivable, inventory or other assets or experiences supply chain disruptions in connection with bankruptcy filings by customers or suppliers; (x) the Company's ability to identify and effectively execute productivity improvements and cost reductions; (xi) potential business and distribution disruptions, including those related to physical security threats, information technology or cyber-attacks, epidemics, pandemics, sanctions, political unrest, war, including the Russia/Ukraine conflict, terrorism or natural disasters, as well the continuing impact from the COVID-19 pandemic; (xii) the continued consolidation of customers, particularly in consumer channels, and the Company's continued reliance on significant customers; (xiii) managing franchisee relationships; (xiv) the impact of poor weather conditions and climate change and risks related to the transition to a lower-carbon economy, such as the Company's ability to successfully adopt new technology, meet market-driven demands for carbon neutral and renewable energy technology, or to comply with more stringent and increasingly complex environmental regulations or requirements for its manufacturing facilities and business operations; (xv) failure to meet environmental, social and governance (ESG) expectations or standards, or achieve our ESG goals; (xvi) maintaining or improving production rates in the Company's manufacturing facilities, responding to significant changes in customer preferences, product demand and fulfilling demand for new and existing products, and learning, adapting and integrating new technologies into products, services and processes; (xvii) changes in the competitive landscape in the Company's markets; (xviii) the Company's non-U.S. operations, including sales to non-U.S. customers; (xix) the impact from demand changes within world-wide markets associated with homebuilding and remodeling; (xx) potential adverse developments in new or pending litigation and/or government investigations; (xxi) the incurrence of debt and changes in the Company's ability to obtain debt on commercially reasonable terms and at competitive rates; (xxii) substantial pension and other postretirement benefit obligations; (xxiii) potential regulatory liabilities, including environmental, privacy, data breach, workers compensation and product liabilities; (xxiv) attracting, developing and retaining senior management and other key employees, managing a workforce in many jurisdictions, labor shortages, work stoppages or other labor disruptions; (xxv) the Company's ability to keep abreast with the pace of technological change; (xxvi) changes in accounting estimates; (xxvii) the Company's ability to protect its intellectual property rights and to maintain its public reputation and the strength of its brands;  and (xxviii) the Company's ability to implement, and achieve the expected benefits (including cost savings and reduction in working capital) from, its Global Cost Reduction Program including: continuing to advance innovation, electrification and global market penetration to achieve organic revenue growth of 2-3 times the market; streamlining and simplifying the organization, as well as shifting resources to prioritize investments believed to have a positive and more direct impact to customers; accelerating the operations and supply chain transformation to improve fill rates and better match the needs of its customers while improving adjusted gross margins back to historical 35%+ levels; prioritizing cash flow generation and inventory optimization; leveraging strategic sourcing and contract manufacturing; consolidating facilities and optimizing the distribution network; executing the SBD Operating Model to deliver operational excellence through efficiency, simplified organizational design and inventory optimization; and platforming products and implementing initiatives to drive a SKU reduction.

Additional factors that could cause actual results to differ materially from forward-looking statements are set forth in the Annual Report on Form 10-K and in the Quarterly Report on Form 10-Q, including under the heading "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in the Condensed Consolidated Financial Statements and the related Notes.

Forward-looking statements in this press release speak only as of the date hereof, and forward-looking statements in documents that are incorporated by reference herein speak only as of the date of those documents. The Company does not undertake any obligation or intention to update or revise any forward-looking statements, whether as a result of future events or circumstances, new information or otherwise, except as required by law.

 

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, Millions of Dollars Except Per Share Amounts)
				SECOND QUARTER				YEAR-TO-DATE
				2023		2022		2023		2022
	NET SALES			$     4,158.9		$       4,393.0		$     8,090.7		$       8,841.0
	COSTS AND EXPENSES
		Cost of sales		3,226.8		3,185.9		6,323.1		6,328.5
		Gross profit		932.1		1,207.1		1,767.6		2,512.5
		% of Net Sales		22.4 %		27.5 %		21.8 %		28.4 %
		Selling, general and administrative		837.3		852.7		1,662.4		1,813.0
		% of Net Sales		20.1 %		19.4 %		20.5 %		20.5 %
		Operating profit		94.8		354.4		105.2		699.5
		% of Net Sales		2.3 %		8.1 %		1.3 %		7.9 %
		Other - net		66.6		79.1		130.3		141.1
		(Gain) loss on sales of businesses		-		(0.2)		7.6		(0.2)
		Asset impairment charge		-		168.4		-		168.4
		Restructuring charges		4.6		19.5		16.7		72.2
		Income (loss) from operations		23.6		87.6		(49.4)		318.0
		Interest - net		99.4		71.7		190.5		123.6
	(LOSS) EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			(75.8)		15.9		(239.9)		194.4
		Income taxes on continuing operations		(253.3)		(62.8)		(229.6)		(39.9)
	NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS			177.5		78.7		(10.3)		234.3
		Less: Net earnings attributable to non-controlling interests		-		0.1		-		0.2
	NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREOWNERS			$        177.5		$            78.6		$         (10.3)		$          234.1
		Add: Contract adjustment payments accretion		-		0.4		-		0.7
	NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREOWNERS - DILUTED			$        177.5		$            79.0		$         (10.3)		$          234.8
		(Loss) earnings from discontinued operations before income taxes (including 2023 pre-tax loss on Security sale of $0.8 million)		(0.8)		6.4		(0.8)		28.6
		Income taxes on discontinued operations		(0.3)		(2.6)		(0.3)		(0.2)
	NET (LOSS) EARNINGS FROM DISCONTINUED OPERATIONS			$           (0.5)		$              9.0		$           (0.5)		$            28.8
	NET EARNINGS (LOSS) ATTRIBUTABLE TO COMMON SHAREOWNERS - DILUTED			$        177.0		$            88.0		$         (10.8)		$          263.6
	NET EARNINGS (LOSS) ATTRIBUTABLE TO STANLEY BLACK & DECKER, INC.			$        177.0		$            87.6		$         (10.8)		$          262.9
	BASIC EARNINGS (LOSS) PER SHARE OF COMMON STOCK
		Continuing operations		$           1.19		$            0.54		$         (0.07)		$            1.56
		Discontinued operations		$                 -		$            0.06		$                -		$            0.19
		Total basic earnings (loss) per share of common stock		$           1.18		$            0.60		$         (0.07)		$            1.75
	DILUTED EARNINGS (LOSS) PER SHARE OF COMMON STOCK
		Continuing operations		$           1.18		$            0.51		$         (0.07)		$            1.47
		Discontinued operations		$                 -		$            0.06		$                -		$            0.18
		Total diluted earnings (loss) per share of common stock		$           1.18		$            0.57		$         (0.07)		$            1.65
	DIVIDENDS PER SHARE OF COMMON STOCK			$           0.80		$            0.79		$           1.60		$            1.58
	WEIGHTED-AVERAGE SHARES OUTSTANDING (in thousands)
		Basic		149,687		145,353		149,631		150,385
		Diluted		150,227		154,814		149,631		160,127

 

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
			July 1,		December 31,
			2023		2022
ASSETS
	Cash and cash equivalents		$                     391.4		$                       395.6
	Accounts and notes receivable, net		1,706.7		1,231.0
	Inventories, net		5,282.9		5,861.1
	Other current assets		458.7		487.0
	Total current assets		7,839.7		7,974.7
	Property, plant and equipment, net		2,245.7		2,353.1
	Goodwill and other intangibles, net		12,890.3		12,977.5
	Other assets		1,957.5		1,658.0
	Total assets		$                24,933.2		$                  24,963.3
LIABILITIES AND SHAREOWNERS' EQUITY
	Short-term borrowings		$                  1,784.0		$                    2,102.9
	Current maturities of long-term debt		1.1		1.2
	Accounts payable		2,413.9		2,344.4
	Accrued expenses		1,940.6		2,120.7
	Total current liabilities		6,139.6		6,569.2
	Long-term debt		6,099.9		5,352.9
	Other long-term liabilities		3,157.8		3,327.0
	Stanley Black & Decker, Inc. shareowners' equity		9,533.8		9,712.1
	Non-controlling interests' equity		2.1		2.1
	Total liabilities and shareowners' equity		$                24,933.2		$                  24,963.3

 

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
SUMMARY OF CASH FLOW ACTIVITY
(Unaudited, Millions of Dollars)
						SECOND QUARTER				YEAR-TO-DATE
						2023		2022		2023		2022
	OPERATING ACTIVITIES
		Net earnings (loss) from continuing operations				$                      177.5		$                        78.7		$                  (10.3)		$                   234.3
		Net (loss) earnings from discontinued operations				(0.5)		9.0		(0.5)		28.8
		Depreciation and amortization				164.4		143.4		325.6		287.1
		(Gain) loss on sales of businesses				-		(0.2)		7.6		(0.2)
		Loss on sale of discontinued operations				0.8		-		0.8		-
		Asset impairment charge				-		168.4		-		168.4
		Changes in working capital1				278.9		(568.0)		97.7		(1,904.1)
		Other				(356.7)		(275.2)		(442.8)		(499.3)
		Net cash provided by (used in) operating activities				264.4		(443.9)		(21.9)		(1,685.0)
	INVESTING AND FINANCING ACTIVITIES
		Capital and software expenditures				(68.3)		(145.7)		(136.5)		(285.5)
		Business acquisitions, net of cash acquired				-		(9.1)		-		(45.6)
		Proceeds from debt issuances, net of fees				(1.3)		(2.2)		745.9		992.6
		Stock purchase contract fees				-		(9.8)		-		(19.6)
		Credit facility borrowings				-		-		-		2,250.0
		Net short-term commercial paper (repayments) borrowings				(42.0)		746.6		(327.9)		1,341.4
		Proceeds from issuances of common stock				4.0		5.9		7.1		19.6
		Purchases of common stock for treasury				(0.8)		(1.1)		(5.6)		(2,314.1)
		Craftsman contingent consideration				(8.9)		(11.3)		(18.0)		(21.1)
		Termination of interest rate swaps				-		-		-		22.7
		Cash dividends on common stock				(119.7)		(114.0)		(239.5)		(230.3)
		Effect of exchange rate changes on cash				(14.2)		(22.4)		(5.1)		(17.6)
		Other				(8.0)		(5.4)		(7.5)		5.8
		Net cash (used in) provided by investing and financing activities				(259.2)		431.5		12.9		1,698.3
	Increase (decrease) in cash, cash equivalents and restricted cash					5.2		(12.4)		(9.0)		13.3
	Cash, cash equivalents and restricted cash, beginning of period					390.7		320.5		404.9		294.8
	Cash, cash equivalents and restricted cash, end of period					$                      395.9		$                      308.1		$                  395.9		$                   308.1
	Free Cash Flow Computation2
	Net cash provided by (used in) operating activities					$                      264.4		$                    (443.9)		$                  (21.9)		$               (1,685.0)
	Less: capital and software expenditures					(68.3)		(145.7)		(136.5)		(285.5)
	Free cash flow (before dividends)					$                      196.1		$                    (589.6)		$                (158.4)		$               (1,970.5)
	Reconciliation of Cash, Cash Equivalents and Restricted Cash
						July 1, 2023		December 31, 2022
	Cash and cash equivalents					$                      391.4		$                      395.6
	Restricted cash included in Other current assets					4.5		9.3
	Cash, cash equivalents and restricted cash					$                      395.9		$                      404.9
1	Working capital is comprised of accounts receivable, inventory, accounts payable and deferred revenue.
2	Free cash flow is defined as cash flow from operations less capital and software expenditures. Management considers free cash flow an important measure of its liquidity, as well as its ability to fund future growth and to provide a return to the shareowners, and is useful information for investors. Free cash flow does not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company's common stock and business acquisitions, among other items.

 

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
			SECOND QUARTER				YEAR-TO-DATE
			2023		2022		2023		2022
NET SALES
	Tools & Outdoor		$              3,542.2		$                3,744.9		$              6,857.6		$                7,546.1
	Industrial		616.7		648.1		1,233.1		1,294.7
	Segment Net Sales		4,158.9		4,393.0		8,090.7		8,840.8
	Corporate Overhead		-		-		-		0.2
	Total		$              4,158.9		$                4,393.0		$              8,090.7		$                8,841.0
SEGMENT PROFIT
	Tools & Outdoor		$                 102.0		$                   361.6		$                 120.7		$                   740.1
	Industrial		71.6		58.3		139.0		99.6
	Segment Profit		173.6		419.9		259.7		839.7
	Corporate Overhead		(78.8)		(65.5)		(154.5)		(140.2)
	Total		$                   94.8		$                   354.4		$                 105.2		$                   699.5
Segment Profit as a Percentage of Net Sales
	Tools & Outdoor		2.9 %		9.7 %		1.8 %		9.8 %
	Industrial		11.6 %		9.0 %		11.3 %		7.7 %
	Segment Profit		4.2 %		9.6 %		3.2 %		9.5 %

 

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars Except Per Share Amounts)
			SECOND QUARTER 2023
			GAAP		Acquisition- Related Charges & Other1		Non-GAAP3
	Gross profit		$                 932.1		$                   51.4		$                 983.5
	% of Net Sales		22.4 %				23.6 %
	Selling, general and administrative		837.3		(25.4)		811.9
	% of Net Sales		20.1 %				19.5 %
	Operating profit		94.8		76.8		171.6
	% of Net Sales		2.3 %				4.1 %
	Loss from continuing operations before income taxes		(75.8)		71.1		(4.7)
	Income taxes on continuing operations		(253.3)		265.5		12.2
	Net earnings (loss) from continuing operations attributable to common shareowners - Diluted		177.5		(194.4)		(16.9)
	Diluted earnings (loss) per share of common stock - Continuing operations		$                   1.18		$                  (1.29)		$                  (0.11)
1	Acquisition-related charges and other relate primarily to footprint actions and other costs associated with the supply chain transformation.
			SECOND QUARTER 2022
			GAAP		Acquisition- Related Charges & Other2		Non-GAAP3
	Gross profit		$                1,207.1		$                     16.6		$                1,223.7
	% of Net Sales		27.5 %				27.9 %
	Selling, general and administrative		852.7		(32.9)		819.8
	% of Net Sales		19.4 %				18.7 %
	Operating profit		354.4		49.5		403.9
	% of Net Sales		8.1 %				9.2 %
	Earnings from continuing operations before income taxes		15.9		248.1		264.0
	Income taxes on continuing operations		(62.8)		52.5		(10.3)
	Net earnings from continuing operations attributable to common shareowners - Diluted		79.0		195.6		274.6
	Diluted earnings per share of common stock - Continuing operations		$                     0.51		$                     1.26		$                     1.77
2	Acquisition-related charges and other relate primarily to a non-cash asset impairment charge related to the Oil & Gas business, integration-related costs, non-cash inventory step-up charges and restructuring.
3	The non-GAAP 2023 and 2022 information, as reconciled to GAAP above, is considered relevant to aid analysis and understanding of the Company's results, business trends and outlook measures aside from the material impact of acquisition-related and other charges and ensures appropriate comparability to operating results of prior periods.

 

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars Except Per Share Amounts)
			YEAR-TO-DATE 2023
			GAAP		Acquisition- Related Charges & Other1		Non-GAAP3
	Gross profit		$              1,767.6		$                  124.8		$              1,892.4
	% of Net Sales		21.8 %				23.4 %
	Selling, general and administrative		1,662.4		(46.1)		1,616.3
	% of Net Sales		20.5 %				20.0 %
	Operating profit		105.2		170.9		276.1
	% of Net Sales		1.3 %				3.4 %
	Loss from continuing operations before income taxes		(239.9)		177.9		(62.0)
	Income taxes on continuing operations		(229.6)		245.1		15.5
	Net loss from continuing operations attributable to common shareowners - Diluted		(10.3)		(67.2)		(77.5)
	Diluted loss per share of common stock - Continuing operations		$                  (0.07)		$                  (0.45)		$                  (0.52)
1	Acquisition-related charges and other relate primarily to footprint actions and other costs associated with the supply chain transformation, restructuring and integration-related costs.
			YEAR-TO-DATE 2022
			GAAP		Acquisition- Related Charges & Other2		Non-GAAP3
	Gross profit		$                2,512.5		$                   105.4		$                2,617.9
	% of Net Sales		28.4 %				29.6 %
	Selling, general and administrative		1,813.0		(111.8)		1,701.2
	% of Net Sales		20.5 %				19.2 %
	Operating profit		699.5		217.2		916.7
	% of Net Sales		7.9 %				10.4 %
	Earnings from continuing operations before income taxes		194.4		469.5		663.9
	Income taxes on continuing operations		(39.9)		82.3		42.4
	Net earnings from continuing operations attributable to common shareowners - Diluted		234.8		387.2		622.0
	Diluted earnings per share of common stock - Continuing operations		$                     1.47		$                     2.41		$                     3.88
2	Acquisition-related charges and other relate primarily to a non-cash asset impairment charge related to the Oil & Gas business, non-cash inventory step-up charges, restructuring, integration-related costs, a voluntary retirement program and the Russia business closure.
3	The non-GAAP 2023 and 2022 information, as reconciled to GAAP above, is considered relevant to aid analysis and understanding of the Company's results, business trends and outlook measures aside from the material impact of acquisition-related and other charges and ensures appropriate comparability to operating results of prior periods.

 

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP SEGMENT PROFIT FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars)
				SECOND QUARTER 2023
				GAAP		Acquisition- Related Charges and Other1		Non-GAAP3
	SEGMENT PROFIT
		Tools & Outdoor		$                   102.0		$                     55.8		$                   157.8
		Industrial		71.6		8.5		80.1
		Segment Profit		173.6		64.3		237.9
		Corporate Overhead		(78.8)		12.5		(66.3)
		Total		$                     94.8		$                     76.8		$                   171.6
	Segment Profit as a Percentage of Net Sales
		Tools & Outdoor		2.9 %				4.5 %
		Industrial		11.6 %				13.0 %
		Segment Profit		4.2 %				5.7 %
1	Acquisition-related charges and other relate primarily to footprint actions and other costs associated with the supply chain transformation.
				SECOND QUARTER 2022
				GAAP		Acquisition- Related Charges and Other2		Non-GAAP3
	SEGMENT PROFIT
		Tools & Outdoor		$                    361.6		$                      41.3		$                    402.9
		Industrial		58.3		1.9		60.2
		Segment Profit		419.9		43.2		463.1
		Corporate Overhead		(65.5)		6.3		(59.2)
		Total		$                    354.4		$                      49.5		$                    403.9
	Segment Profit as a Percentage of Net Sales
		Tools & Outdoor		9.7 %				10.8 %
		Industrial		9.0 %				9.3 %
		Segment Profit		9.6 %				10.5 %
2	Acquisition-related charges and other relate primarily to integration-related costs and non-cash inventory step-up charges.
3	The non-GAAP 2023 and 2022 business segment information, as reconciled to GAAP above, is considered relevant to aid analysis and understanding of the Company's results, business trends and outlook measures aside from the material impact of acquisition-related and other charges and ensures appropriate comparability to operating results of prior periods.

 

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP SEGMENT PROFIT FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars)
				YEAR-TO-DATE 2023
				GAAP		Acquisition- Related Charges and Other1		Non-GAAP3
	SEGMENT PROFIT
		Tools & Outdoor		$               120.7		$               135.0		$               255.7
		Industrial		139.0		8.8		147.8
		Segment Profit		259.7		143.8		403.5
		Corporate Overhead		(154.5)		27.1		(127.4)
		Total		$               105.2		$               170.9		$               276.1
	Segment Profit as a Percentage of Net Sales
		Tools & Outdoor		1.8 %				3.7 %
		Industrial		11.3 %				12.0 %
		Segment Profit		3.2 %				5.0 %
1	Acquisition-related charges and other relate primarily to footprint actions and other costs associated with the supply chain transformation and integration-related costs.
				YEAR-TO-DATE 2022
				GAAP		Acquisition- Related Charges and Other2		Non-GAAP3
	SEGMENT PROFIT
		Tools & Outdoor		$                 740.1		$                 195.0		$                 935.1
		Industrial		99.6		5.4		105.0
		Segment Profit		839.7		200.4		1,040.1
		Corporate Overhead		(140.2)		16.8		(123.4)
		Total		$                 699.5		$                 217.2		$                 916.7
	Segment Profit as a Percentage of Net Sales
		Tools & Outdoor		9.8 %				12.4 %
		Industrial		7.7 %				8.1 %
		Segment Profit		9.5 %				11.8 %
2	Acquisition-related charges and other relate primarily to integration-related costs, non-cash inventory step-up charges, a voluntary retirement program and the Russia business closure.
3	The non-GAAP 2023 and 2022 business segment information, as reconciled to GAAP above, is considered relevant to aid analysis and understanding of the Company's results, business trends and outlook measures aside from the material impact of acquisition-related and other charges and ensures appropriate comparability to operating results of prior periods.

 

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SOURCE Stanley Black & Decker

FAQ

What were Stanley Black & Decker's Q2 2023 revenues?

Stanley Black & Decker's Q2 2023 revenues were $4.2 billion, a decrease of 5% compared to the previous year.

How much pre-tax run-rate savings did Stanley Black & Decker achieve in Q2 2023?

Stanley Black & Decker achieved $230 million of pre-tax run-rate savings in Q2 2023.

What is Stanley Black & Decker's target for run-rate savings by the end of 2023?

Stanley Black & Decker is on track to achieve $1 billion in run-rate savings by the end of 2023.

Did Stanley Black & Decker make progress in inventory reduction?

Yes, Stanley Black & Decker made progress in inventory reduction, with a $375 million reduction in Q2 2023 and a total reduction of $1.4 billion since mid-2022.

What was Stanley Black & Decker's gross margin in Q2 2023?

Stanley Black & Decker's gross margin in Q2 2023 was 22.4%. The adjusted gross margin was 23.6%, a 50 basis point improvement from Q1 2023.

What is Stanley Black & Decker's outlook for 2023?

Stanley Black & Decker expects a GAAP EPS in the range of ($1.25) to ($0.50) and an adjusted EPS between $0.70 to $1.30. Free cash flow is expected to be approximately $0.6 billion to $0.9 billion.