Stanley Black & Decker (SWK) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $3.8 billion, down 5% year-over-year, with DEWALT growth offset by weak consumer and automotive demand and a 2% impact from the Infrastructure divestiture.

• Gross margin improved to 29.9% (up 310 bps), with adjusted gross margin at 30.5%, driven by supply chain transformation.

• GAAP EPS was $0.60; adjusted EPS was $1.22 for the quarter.

• Free cash flow reached approximately $200 million, supporting debt reduction and dividends.

• Ongoing cost reduction program has achieved $1.4 billion in savings to date, targeting $2 billion by end of 2025.

Financial highlights

• Net sales declined 5% year-over-year, with organic revenue down 2% and price up 1%.

• Adjusted gross margin was 30.5% (up 290 bps); adjusted EBITDA margin was 10.8% (up 140 bps).

• Net earnings from continuing operations were $91 million, up from a net loss in the prior year.

• Free cash flow for Q3 was about $200 million; year-to-date $188 million.

• Tools & Outdoor and Industrial segment margins improved, with Tools & Outdoor at 11.1% and Industrial at 13.9% (adjusted).

Outlook and guidance

• 2024 GAAP EPS guidance narrowed to $1.15–$1.75; adjusted EPS guidance narrowed to $3.90–$4.30.

• Free cash flow guidance reiterated at $650–$850 million for 2024.

• Management targets 30% adjusted gross margin for 2024 and 35%+ longer term.

• 2024 capex outlook reduced to $325–$375 million.

• Expecting flat to down sales in early 2025, with margin expansion weighted to the second half.