Why Stanley Black & Decker Shares Are Diving Today

 Stanley Black & Decker Inc SWK shares are trading lower after the company reported first-quarter FY24 results.

Sales declined 2% Y/Y to $3.870 billion, beating the consensus of $3.823 billion. The revenue decline is primarily due to lower infrastructure volume and muted consumer and DIY demand.

Gross margin expanded by 740 bps Y/Y to 28.6%, and adjusted gross margin was up 590 bps Y/Y to 29.0%.

Adjusted gross margin expansion was driven by lower inventory destocking costs, supply chain transformation benefits, and declining shipping costs. 

Adjusted EBITDA margin was 8.9%, up 440 basis points Y/Y. Adjusted EPS of $0.56 beat the consensus of $0.54.

Cost Savings: The Global Cost Reduction Program generated incremental pre-tax run-rate cost savings of $145 million. Since the program’s inception in mid-2022, the company has generated around $1.2 billion in pre-tax run-rate savings and reduced inventory by $1.9 billion.

Stanley Black & Decker expects to generate $1.5 billion of pre-tax run-rate cost savings by end-2024, growing to $2 billion by the end of 2025.  

The company witnessed a negative operating cash flow of ($431.0 million) in the quarter. Stanley Black & Decker held $481.4 million in cash and equivalents as of March 30.

2024 Outlook Reaffirmed: Stanley Black & Decker expects adjusted EPS of $3.50-$4.50 versus consensus of $4.15. The company sees a free cash flow of $0.6 billion to $0.8 billion. 

Donald Allan, Jr., President & CEO said, “Looking forward, we expect mixed demand trends to persist across our businesses in 2024, and we are driving supply chain cost improvements designed to expand margins, deliver earnings growth and generate strong cash flow.”

“At the same time, the long-term growth and market share gains we are focused on achieving will be driven by introducing exciting new products within our most powerful brands designed to deliver enhanced productivity for end users. We are funding growth investments intended to further accelerate innovation and differentiated market activation to capture these compelling long-term opportunities.”

Investors can gain exposure to the stock via Roundhill ETF Trust Roundhill S&P Dividend Monarchs ETF KNGS and Federated Hermes ETF Trust Federated Hermes U.S. Strategic Dividend ETF FDV.

Price Action: SWK shares are down 9% at $83.58 at the last check Thursday.