Stanley Black & Decker (SWK) Q2 2026 earnings summary

Executive summary

• Net sales for Q2 were $4.0B, flat year-over-year, with 3% organic growth led by strong U.S. retail and commercial/industrial channels in Tools & Outdoor, while Engineered Fastening declined 18% due to the CAM divestiture.

• Adjusted gross margin rose to 33.7%, up 620 basis points year-over-year, aided by productivity, product mix, and net tariff refunds; GAAP gross margin was 33.0%.

• Adjusted EPS was $1.57, $0.37 above guidance midpoint, with $0.17 per share from tariff refunds; GAAP EPS was $2.33, benefiting from the CAM divestiture.

• Proceeds from the CAM divestiture and operating cash flow were used to pay down $1.7B in debt and repurchase $250M in shares.

• Full-year 2026 EPS and free cash flow guidance were raised, reflecting strong margin expansion and capital returns.

Financial highlights

• Adjusted gross margin: 33.7% (up 620 bps YoY); GAAP gross margin: 33.0% (up 600 bps YoY).

• Adjusted EBITDA margin: 11.3% (up 320 bps YoY); GAAP EBITDA margin: 17.4% (up 1140 bps YoY).

• Free cash flow for Q2 was $698M, up significantly year-over-year.

• Tools & Outdoor Q2 revenue was $3.56B, up 3% organically; Engineered Fastening revenue was $396M, down 18% due to CAM divestiture but up 3% organically.

• Adjusted segment margins: Tools & Outdoor 11.8% (up 380 bps), Engineered Fastening 13.0% (up 220 bps).

Outlook and guidance

• 2026 adjusted EPS guidance raised to $5.20–$5.80 (prior: $4.90–$5.70); GAAP EPS guidance raised to $4.60–$5.45.

• Free cash flow guidance increased to $600M–$800M (prior: $500M–$700M), or $800M–$1B excluding divestiture taxes/fees.

• Organic revenue expected to grow low single digits year-over-year, with total revenue flat.

• Q3 net sales expected at $3.7B, with organic growth of 3%–4%; adjusted EPS $1.50–$1.60.

• Guidance excludes further CAM results and potential future tariff refunds due to uncertainty.