Stanley Black & Decker Q2: Earnings Beat, 5% Sales Decline, Narrowed FY23 EPS Outlook & More

Stanley Black & Decker Inc SWK reported a second-quarter FY23 sales decline of 5% year-on-year to $4.20 billion, beating the analyst consensus of $4.12 billion.

The revenue decrease was driven by lower Consumer Outdoor and DIY volume as well as the Oil & Gas Business sale. 

The gross margin contracted 510 basis points to 22.4%, and the gross profit decreased 22.7% to $932.1 million.

The operating income plunged 73.3% to $94.8 million, and the operating margin compressed 580 basis points to 2.3%.

Adjusted EPS of $(0.11) beat the analyst consensus of $(0.38).

The company held $395.9 million in cash and equivalents as of July 1, 2023. The free cash flow was $196.1 million.

“While the operating backdrop remains dynamic with some underlying consumer softness, we continue to see strong demand in the professional construction, automotive and aerospace markets as well as further stabilization across global supply chains,” said President and CEO Donald Allan, Jr.

The company said its cost savings initiatives remain on track to generate run-rate cost savings of approximately $1 billion by the end of 2023, growing to approximately $2 billion by 2025. 

Outlook: Stanley Black & Decker narrowed its FY23 adjusted EPS outlook from $0.00 - $2.00 to $0.70 - $1.30 versus an estimate of $0.96.

It sees FY23 free cash flow of $0.6 billion - $0.9 billion ($0.5 billion - $1.0 billion previous).

Price Action: SWK shares closed higher by 0.25% at $99.27 on Monday.