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Jun 30, 2023
Stanley Black & Decker Q2 2023 Earnings Report
Stanley Black & Decker reported a decrease in revenue due to lower consumer outdoor and DIY volume and the Oil & Gas business divestiture, but made progress on cost savings, inventory reduction, and gross margin improvement.
Key Takeaways
Stanley Black & Decker's Q2 2023 results showed a revenue decrease but significant progress in strategic business transformation, including cost savings, inventory reduction, and gross margin improvements. The company is narrowing its 2023 guidance ranges and remains focused on cash flow generation and long-term growth.
Second quarter revenues were $4.2 billion, down versus prior year due to lower consumer outdoor and DIY volume as well as the Oil & Gas business divestiture.
Second quarter diluted GAAP EPS was $1.18; excluding charges and timing of certain tax benefits, second quarter adjusted diluted EPS was ($0.11).
Free cash flow in the second quarter was approximately $200 million, primarily driven by inventory reduction.
Global Cost Reduction Program delivered $230 million of pre-tax run-rate savings in the second quarter and is on-track for $1 billion run-rate savings by the end of 2023.
Stanley Black & Decker
Stanley Black & Decker
Stanley Black & Decker Revenue by Segment
Revenue by Segment
Tools & Outdoor Revenue
CapyFin.com Forward Guidance
Management is narrowing its guidance ranges and expects 2023 GAAP EPS to be in the range of ($1.25) to ($0.50). Adjusted EPS is expected to be between $0.70 to $1.30, and Free cash flow is expected to be approximately $0.6 billion to $0.9 billion.
Positive Outlook
- The progress we’ve made sets the business up for continued gross margin improvement in the second half of 2023.
- Executing our transformation to deliver the cost savings that are largely within our control and create flexibility to fund growth investments.
- Cash generation, gross margin improvement and balance sheet strength remain our top priorities.
- Continuing to plan around a range of 2023 demand outcomes.
- Leveraging the SBD Operating Model to drive working capital efficiency.
Challenges Ahead
- Guidance reflects a range of demand for the balance of 2023.
- Difference between 2023 GAAP and adjusted EPS guidance is approximately $1.80 to $1.95, consisting of other charges primarily due to the supply chain transformation under the Global Cost Reduction Program and integration-related charges.
- Operating backdrop remains dynamic with some underlying consumer softness.
- Adjusted gross margin was down versus the prior year rate of 27.9% as price realization was more than offset by a 4 to 5 point impact from production curtailments, selling through high-cost inventory and lower volumes.
- Tools & Outdoor net sales were down 5% versus second quarter 2022 as price realization (+1%) was more than offset by volume (-6%).