Why Industrial Tools Maker Stanley Black & Decker's Shares Are Trading Higher Today

Stanley Black & Decker Inc SWK shares are trading higher after the company reported second-quarter FY24 results. Sales declined 3.3% year-on-year to $4.024 billion, beating the analyst consensus estimate of $4.016 billion.

The revenue declined as volume growth (+2%) was offset by the previously announced Infrastructure business divestiture (-3%), currency (-1%) and price (-1%).

Gross profit increased 22.4% to $1.14 billion, and the gross margin expanded 600 basis points to 28.4%.

Operation profit for the quarter jumped 138.5% to $56.3 million, and the operating margin expanded 80 basis points to 1.4%.

Adjusted EPS of $1.09 beat the analyst consensus of $0.84. 

Stanley held $318.5 million in cash and equivalents as of June 29. Operating cash flow for the quarter was $573 million, with a free cash flow of $486 million.

The company said Global Cost Reduction Program remained on-track for expected pre-tax run-rate savings of $1.5 billion by end of 2024 and $2 billion by end of 2025.

Stanley also revealed that strong cash generation and proceeds from Infrastructure divestiture in second quarter supported $1.2 billion debt reduction.

Outlook: Stanley Black revised its FY24 adjusted EPS outlook from $3.50 – $4.50 to $3.70 – $4.50 versus an estimate of $3.98.

SWK expects FY24 free cash flow to be approximately $650 million to $850 million, up from the prior forecast of $600 million to $800 million.

“As we look to the back half of 2024, we expect mixed demand trends across our markets. With that in mind, we remain focused on implementing supply chain improvements designed to reshape our cost structure and expand margins, delivering earnings growth and generating strong cash flow,” said Donald Allan, Jr., President and CEO.

Price Action: SWK shares are trading higher by 5.75% at $101.97 in premarket on the last check Tuesday.