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Sep 30, 2023
Stanley Black & Decker Q3 2023 Earnings Report
Stanley Black & Decker reported third quarter 2023 financial results, with revenue down versus prior year but gross margin and operating margin improved.
Key Takeaways
Stanley Black & Decker's third quarter 2023 results showed a decrease in revenue compared to the previous year, primarily due to lower volume in the Outdoor and DIY sectors. However, the company's gross margin and operating margin improved year-over-year. The company also generated cash from operating activities and free cash flow driven by inventory reductions.
Third quarter revenues were $4.0 billion, down versus prior year.
Third quarter gross margin was 26.8%, with adjusted gross margin at 27.6%, up 290 basis points versus prior year.
Third quarter operating margin was 6.7%, with adjusted operating margin at 8.3%, up 210 basis points versus prior year.
Third quarter GAAP EPS was $0.03, and adjusted EPS was $1.05.
Stanley Black & Decker
Stanley Black & Decker
Stanley Black & Decker Revenue by Segment
Revenue by Segment
Tools & Outdoor Revenue
CapyFin.com Forward Guidance
Stanley Black & Decker is updating its 2023 EPS guidance ranges and maintaining its free cash flow range.
Positive Outlook
- Raising adjusted EPS to $1.10 to $1.40 (From $0.70 to $1.30)
- Maintaining Free Cash Flow range of $0.6 Billion to $0.9 Billion
- The Global Cost Reduction Program is expected to optimize the Company’s cost base and generate savings to fund investments that accelerate growth in the core businesses.
- The Global Cost Reduction Program is positioned to modestly exceed the initial 2023 pre-tax run-rate cost savings target of $1 billion by the end of 2023 and is on-track to grow to approximately $2 billion by year-end 2025.
- The Company also reduced inventory by approximately $880 million versus fourth quarter 2022 ending balance and is on track to deliver approximately $1 billion of inventory reduction in 2023 to support free cash flow generation.
Challenges Ahead
- Full Year GAAP EPS Now Expected to be ($1.45) to ($1.00) (From ($1.25) to ($0.50))
- Incorporating a third quarter $124 million pre-tax non-cash impairment charge related to the Irwin and Troy-Bilt trade names.
- The difference between 2023 GAAP and adjusted EPS guidance is approximately $2.40 to $2.55, consisting of charges primarily due to the supply chain transformation under the Global Cost Reduction Program, non-cash asset impairment charges and integration-related charges.
- Net sales for the quarter were down 4% versus prior year due to lower volume (-3%), price (-1%) and the Oil & Gas divestiture (-1%), moderately offset by currency (+1%).
- Tools & Outdoor net sales were down 4% versus third quarter 2022 as volume (-3%) and price to support regained margin accretive cordless promotions (-2%) were moderately offset by currency (+1%).