NEW BRITAIN, Conn. - Stanley Black & Decker (NYSE: NYSE:SWK) has reported a second-quarter adjusted EPS of $1.09, surpassing analyst expectations of $0.84. The tool and outdoor equipment manufacturer announced revenues of $4.02 billion, aligning with the consensus estimate.
The company's stock price climbed 2.7% following the earnings release, indicating investor optimism spurred by the earnings beat and an upward revision in future guidance.
The company's revenue for the quarter marked a 3% decline from the previous year, despite a 1% organic growth led by strong performances in DEWALT, outdoor products, and engineered fastening. This decrease was attributed to the impact of a previously announced infrastructure divestiture and currency fluctuations.
However, gross margin expanded to 28.4%, a significant improvement from the previous year's 22.4%, driven by lower inventory destocking costs, supply chain transformation benefits, and reduced shipping costs.
President & CEO Donald Allan, Jr. highlighted the company's solid execution on operational priorities, which contributed to the gross margin improvement and strong cash generation.
"We extended our trajectory of solid execution on our operational priorities, which drove gross margin improvement versus the prior year and strong cash generation in the second quarter," Allan said. He also noted the organic growth achieved amidst a weak consumer backdrop.
Looking ahead, Stanley Black & Decker has revised its full-year 2024 GAAP EPS guidance to $0.90-$2.00, down from the previous range of $1.60-$2.85, primarily due to environmental reserve adjustments.
However, the company raised its adjusted EPS forecast to $3.70-$4.50, from an earlier range of $3.50-$4.50, and increased its free cash flow projection to $650 million-$850 million, up from $600 million-$800 million. The midpoint of the new adjusted EPS guidance range, $4.10, is above the analyst consensus of $3.98, suggesting a positive outlook for the company's earnings.
The company's global cost reduction program is on track, with expectations to achieve pre-tax run-rate savings of $1.5 billion by the end of 2024 and $2 billion by the end of 2025. These savings are anticipated to return adjusted gross margins to historical levels above 35% and fund investments to accelerate growth in core businesses.
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