Stanley Black & Decker (SWK) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $4.0–$4.02 billion, down 3% year-over-year, with 1% organic growth led by DEWALT, outdoor products, and Engineered Fastening, offset by the Infrastructure divestiture and currency headwinds.

• Gross margin expanded to 28.4% (GAAP) and 29.2% (adjusted), up 560–600 basis points year-over-year, driven by supply chain transformation, lower inventory destocking, and reduced shipping costs.

• Adjusted EPS was $1.09; GAAP EPS was ($0.13) for Q2 2024.

• Free cash flow reached $486 million, supporting $1.2 billion in debt reduction during the quarter.

• Cost reduction initiatives have generated $1.3 billion in run-rate savings to date, with a target of $1.5 billion by end of 2024 and $2 billion by end of 2025.

Financial highlights

• Adjusted gross margin: 29.2% in Q2 2024, up 560 bps year-over-year; adjusted EBITDA margin: 10.7%, up 500 bps.

• Q2 2024 net loss was $11.2 million; adjusted EPS was $1.09.

• Free cash flow was $486 million in Q2 2024; cash from operating activities was $573 million.

• Debt reduced by $1.2 billion in Q2 2024; liquidity of $3.3 billion at quarter end.

• Net interest expense decreased to $78.4 million in Q2 2024.

Outlook and guidance

• 2024 GAAP EPS guidance revised to $0.90–$2.00; adjusted EPS raised to $3.70–$4.50; free cash flow guidance increased to $650–$850 million.

• Full-year organic revenue expected to be down 0.5% at midpoint; Tools & Outdoor segment to be flat to down 1% organically.

• Adjusted gross margin expected to reach ~31% in Q3 and exit 2024 in the low 30s, with a long-term target of 35%+.

• SG&A as a percentage of sales expected in the mid-21% range for 2024.

• Second half free cash flow expected to fund dividends and reduce short-term debt by $400–$500 million.