Stanley Black & Decker Q3 Earnings: Revenue Misses, Cost Savings Drive Margin Gains, Narrows 2024 EPS Guidance & More

Stanley Black & Decker Inc SWK shares are trading lower after the company reported mixed third-quarter results and narrowed its 2024 guidance.

SWK reported a third-quarter sales decline of 5.2% year over year to $3.751 billion, missing the consensus estimate of $3.804 billion.

Revenue declined as DEWALT growth was offset by mixed-end market demand; infrastructure divestiture impacted revenue growth by -2%.

Gross profit increased 5.7% to $1.12 billion, and the gross margin expanded by 310 basis points to 29.9%. The adjusted gross margin was 30.5%, up 290 bps YoY.

Profit from operations for the quarter jumped to $168.1 million compared to $37.4 million a year ago, and the operating margin expanded by 354 basis points to 4.5%.

Adjusted EPS of $1.22 beat the analyst consensus of $1.05.

Cash from operating activities for the quarter was $285.8 million, compared to $443.9 million a year ago. Free cash flow was ~$199.3 million.

Stanley held $298.7 million in cash and equivalents as of September 28.

Stanley Black & Decker’s President and CEO, Donald Allan, Jr., stated that the third quarter saw continued improvements in gross margin and strong cash generation, driven by the effective execution of the company’s operational priorities. Despite challenges from a subdued consumer environment and a dip in automotive production affecting organic revenue, the company achieved growth in key areas.

In the third quarter, Stanley Black & Decker’s Global Cost Reduction Program generated $105 million in additional pre-tax savings, contributing to total savings of approximately $1.4 billion since mid-2022.

2024 Outlook narrowed: Stanley Black revised its adjusted EPS outlook to $3.90 – $4.30 (from $3.70 – $4.50) versus the $4.20 Estimate.

The company reaffirmed its free cash flow guidance of $650 million to $850 million.

Price Action: SWK shares are trading lower by 6.83% at $95.89 premarket at the last check Tuesday.