1. SWK's Q2 revenue fell 2% to $3.9 billion. 2. Gross margin decreased to 27.0%, primarily impacted by tariffs. 3. Adjusted EPS was $1.08, benefiting from tax rate adjustments. 4. Free cash flow improved to $135 million amidst operational pressures. 5. Management plans cost adjustments to support long-term profitability.
SWK's revenue decline reflects ongoing challenges, but cost-saving measures show promise. Historical context suggests turbulent markets can stabilize long-term through strategic initiatives.
The article outlines critical financial performance and strategic directions, relevant for current and future stock evaluations.
Strategic planning for cost adjustments and supply chain optimization indicates gradual recovery, similar to past performance post-restructuring efforts.
Continued Cost Discipline and Price Measures Partially Mitigated External Pressures and Helped Protect Profitability
Expect Incremental Tariff Countermeasures in the Second Half of 2025 to Support Gross Margin Accretion
NEW BRITAIN, Conn., July 29, 2025 /PRNewswire/ -- Stanley Black & Decker (NYSE: SWK), a worldwide leader in tools and outdoor, today announced second quarter 2025 financial results.
Donald Allan, Jr., Stanley Black & Decker's President & CEO, commented, "We delivered a solid second quarter amid the dynamic operating environment with the continued growth of our professional DEWALT brand. With our supply chain transformation on track to completion in 2025, we are positioning the Company to embark on the next chapter of delivering sustainable growth and long term shareholder returns. Stanley Black & Decker is built on the strength of our people, iconic brands and a powerful innovation engine – attributes that transcend external market conditions."
Christopher J. Nelson, Chief Operating Officer and Executive Vice President and President of Tools & Outdoor added, "The organization is executing a robust plan designed to mitigate tariffs and is prioritizing adjustments to its supply chain that leverage the strength of our North American footprint while optimizing our overseas supply chain inputs for the U.S. market.
"We are focused on consistent execution of our strategy and our top priorities remain clear: accelerating our growth culture, generating cash and strengthening our balance sheet, and completing our transformation to drive long term margin expansion. As I prepare to step into my new role as CEO, I am energized by the opportunity to partner with our customers to serve our end users, and to achieve the amazing potential for our brands and innovation in the marketplace."
*Non-GAAP Financial Measure As Further Defined On Page 6
| Segment | Sales ($ in M) | Segment Profit | Charges1 | Adjusted Segment Profit* | Segment Margin | Adjusted Segment Margin* |
|---|---|---|---|---|---|---|
| Tools & Outdoor | $3,461 | $238.1 | $38.4 | $276.5 | 6.9 % | 8.0 % |
| Engineered Fastening2 | $484 | $35.0 | $17.3 | $52.3 | 7.2 % | 10.8 % |
1 See Non-GAAP Adjustments On Page 4
2 Formerly known as "Industrial." Refer to page 12 for further information.
*Non-GAAP Financial Measure As Further Defined On Page 6
Global Cost Reduction Program Supporting Gross Margin Expansion
The Company continued executing a series of initiatives that are expected to generate $2 billion of pre-tax run-rate cost savings by the end of 2025 and support its 35%+ long-term adjusted gross margin target. The Global Cost Reduction Program generated approximately $150 million of incremental pre-tax run-rate cost savings in the second quarter 2025. Since the inception of the program in mid-2022, it has generated approximately $1.8 billion in pre-tax run-rate cost savings.
*Non-GAAP Financial Measure As Further Defined On Page 6
Patrick D. Hallinan, Executive Vice President and CFO, commented, "In the first half of 2025 we remained focused on meeting the needs of our end users, while responding decisively to external forces with operational and supply chain adjustments. We are planning for a range of possible outcomes in 2025 and remaining nimble as we closely monitor the demand environment and judiciously pursue tariff mitigation actions to deliver progress on our long-term margin journey. We expect to continue strategically adjusting our costs and inventory to protect earnings power and cash flow while preserving our innovation and brand activation focused growth investments.
"Our financial focus is to generate cash, strengthen our balance sheet and expand margins, all supporting the Company's focus on long-term growth and value creation."
The Company will review its planning scenario, including the current estimated tariff impact net of price and supply chain adjustments, on today's earnings call. The 2025 EPS for management's base planning scenario is $3.45 (+/- $0.10) on a GAAP basis and approximately $4.65 on an adjusted basis. The Company is targeting annual free cash flow to approximate $600 million. The gross annualized tariff impact is currently estimated to be approximately $800 million, which carries an assumption for country tariffs that includes July policy changes. Net of price adjustments and supply shifts, the negative 2025 EPS impact is expected to be approximately $0.65 reflecting the timing and costs required to implement mitigation countermeasures. Management will review these planning assumptions in more detail during the earnings call this morning and provide context on scenario planning.
The difference between the 2025 GAAP and the adjusted EPS planning assumption range is approximately $1.10 to $1.30, consisting primarily of charges related to the supply chain transformation under the Global Cost Reduction Program and cost actions.
*Non-GAAP Financial Measure As Further Defined On Page 6
Total pre-tax non-GAAP adjustments in the second quarter of 2025 were $83.0 million, primarily related to a voluntary retirement program and footprint actions and other costs related to the supply chain transformation. Gross profit included $20.0 million of charges, while SG&A included $52.6 million. Other, net included a net benefit of $8.4 million, and Restructuring included $18.8 million of charges.
Stanley Black & Decker will host a webcast with investors today, July 29, 2025, at 8:00 am ET. A slide presentation, which will accompany the call, will be available on the "Investors" section of the Company'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 the Company'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.
Founded in 1843 and headquartered in the USA, Stanley Black & Decker (NYSE: SWK) is a worldwide leader in Tools and Outdoor, operating manufacturing facilities globally. The Company's approximately 48,000 employees produce innovative end-user inspired power tools, hand tools, storage, digital jobsite solutions, outdoor and lifestyle products, and engineered fasteners to support the world's builders, tradespeople and DIYers. The Company's world-class portfolio of trusted brands includes DEWALT®, CRAFTSMAN®, STANLEY®, BLACK+DECKER®, and Cub Cadet®. To learn more visit: www.stanleyblackanddecker.com or follow Stanley Black & Decker on Facebook, Instagram, LinkedIn and X.
Dennis Lange
Vice President, Investor Relations
[email protected]
(860) 827-3833
Christina Francis
Director, Investor Relations
[email protected]
(860) 438-3470
Debora Raymond
Vice President, Public Relations
[email protected]
(203) 640-8054
Organic revenue or organic sales 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, foreign currency fluctuations, and transfers of product lines between segments. Organic revenue growth, organic sales growth or organic growth is organic revenue or organic sales divided by prior year sales. Gross profit is defined as sales less cost of sales. Gross margin is gross profit as a percent of sales. Segment profit is defined as sales less cost of sales and selling, general and administrative ("SG&A") expenses (aside from corporate overhead expense). Segment margin is segment profit as a percent of sales. EBITDA is earnings before interest, taxes, depreciation and amortization. EBITDA margin is EBITDA as a percent of sales. Gross profit, gross margin, SG&A, segment profit, segment margin, earnings, EBITDA and EBITDA margin are adjusted for certain gains and charges, such as environmental charges, supply chain transformation costs, voluntary retirement program costs, acquisition and divestiture-related items, asset impairments, restructuring, and other adjusting items. Management uses these metrics as key measures to assess the performance of the Company as a whole, as well as the related measures at the segment level. Adjusted earnings per share or adjusted EPS is diluted GAAP EPS excluding certain gains and 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 stock and business acquisitions, among other items. Free cash flow conversion is defined as free cash flow divided by net income. The Non-GAAP financial measures are reconciled to GAAP on pages 13 through 18 and in the appendix to the earnings conference call slides available at 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 certain gains and charges and ensures appropriate comparability to operating results of prior periods.
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 goals, projections, guidance or planning assumptions or scenarios regarding earnings, EPS, income, revenue, margins or margin expansion, costs and cost savings, sales, sales growth, profitability, cash flow or other financial items; any statements of the plans, strategies and objectives of management for future operations, including expectations around our ongoing transformation; future market share gain, shareholder returns, any statements concerning proposed new products, services or developments; any statements regarding future economic conditions or performance; any statements of beliefs, plans, intentions or expectations; any statements and assumptions or scenarios regarding possible tariff and tariff impact projections and related mitigation plans (including price actions, supply chain adjustments and timing expectations related to such plans); 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", "forecast", "commit", "goal", "target", "design", "on track", "position or positioning", "guidance," "aim," "looking forward," "multi-year" 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...
(1) successfully developing, marketing and achieving sales from new products and services and the continued acceptance of current products and services; (2) macroeconomic factors, including global and regional business conditions;...
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.