Stanley Black & Decker, Inc. (SWK - Free Report) reported impressive fourth-quarter 2022 results. SWK’s earnings beat the Zacks Consensus Estimate by 69.7% and sales beat the same by 3.3%.
In the reported quarter, SWK incurred a loss of 10 cents per share, narrower than the Zacks Consensus Estimate of 33 cents. However, the bottom line decreased 104.7% from the year-ago quarter’s $2.14.
Revenue Details
In the quarter under review, Stanley Black’s net sales were $3,986.8 million, reflecting year-over-year growth of 0.1%. The results benefited 7% from acquired assets and 7% from favorable pricing. Foreign currency translation had an adverse impact of 3%, divestitures had a negative impact of 1% and lower volume affected sales 10%.
SWK’s top line beat the Zacks Consensus Estimate of $3,860 million. Our estimate for net sales in the reported quarter was $4,243.9 million.
Stanley Black reports net sales under two segments, namely Tools & Outdoor and Industrial. The segmental information is briefly discussed below:
Revenues from Tools & Outdoor totaled $3,382.9 million, almost flat year over year. Our estimate for segmental revenues was $3,609.0 million. Acquisitions (Excel and MTD) contributed 8% and pricing added 7% to sales growth, while adverse foreign-currency translations lowered sales 3%. Lower volumes affected 12%.
Revenues from Industrial grossed $603.9 million, decreasing 1% year over year. Our estimate for segmental revenues was $634.9 million. The segment gained 1% from higher volumes and 9% from effective pricing. Forex woes had a negative impact of 5% and the Oil & Gas divestiture had a negative effect of 6%.
Margin Profile
In the reported quarter, Stanley Black’s cost of sales increased 13.3% year over year to $3,233.3 million. The metric represented 81.1% of the quarter’s net sales compared with 71.7% in the year-ago quarter. The gross profit decreased 33.1% to $753.5 million. The gross margin decreased 940 basis points (bps) to 18.9%.
Selling, general and administrative expenses decreased 18.9% year over year to $757.2 million. The metric represented 19% of net sales in the reported quarter compared with 23.4% in the year-ago period. Operating loss was $3.7 million in the quarter against $193.6 million reported in the year-ago quarter. The margin declined 500 bps to -0.1%.
Balance Sheet and Cash Flow
While exiting the fourth quarter, Stanley Black had cash and cash equivalents of $395.6 million, up 178.4% from $142.1 million reported at the end of fourth-quarter 2021. The long-term debt balance increased 23% to $5,352.9 million from $4,353.6 million reported at the end of fourth-quarter 2021.
In 2022, net cash used in operating activities was $1,459.5 million against $663.1 million generated in the year-ago period. Capital and software expenditures totaled $530.4 million, up from $519.1 million reported in the year-ago period. Free cash outflow (before dividends) in the year was $1,989.9 million against $144.0 million free cash flow a year ago.
During the same time period, Stanley Black spent $71.9 million net of cash acquired on business buyouts. SWK paid out dividends worth $465.8 million to its shareholders, down 1.9% from the year-ago period. Purchases of common stock for treasury were $2,323.0 compared with $34.3 million in the year-ago period.
Outlook
Stanley Black anticipates adjusted earnings per share of $0.00-$2.00 in 2023. Earnings are predicted to be a loss of $1.65 to earnings of 85 cents per share.
Free cash flow is expected to be $0.5 to $1.0 billion for 2023.
Zacks Rank & Stocks to Consider
SWK currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked companies from the Industrial Products sector are discussed below:
Applied Industrial Technologies, Inc. (AIT - Free Report) presently sports a Zacks Rank #1 (Strong Buy) and a trailing four-quarter earnings surprise of 20.1%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks.
AIT’s earnings estimates have increased 6.5% for fiscal 2023 (ending June 2023) in the past 60 days. Shares of Applied Industrial have risen 42.1% in the past six months.
Allegion plc (ALLE - Free Report) presently carries a Zacks Rank of 2 (Buy). ALLE’s earnings surprise in the last four quarters was 8.8%, on average.
In the past 60 days, Allegion’s earnings estimates have remained steady for 2022. The stock has gained 16% in the past six months.
Valmont Industries, Inc. (VMI - Free Report) presently has a Zacks Rank of 2. VMI’s earnings surprise in the last four quarters was 12.5%, on average.
In the past 60 days, Valmont’s earnings estimates have increased by a penny. The stock has rallied 22.4% in the past six months.
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Stanley Black & Decker, Inc. (SWK - Free Report) reported impressive fourth-quarter 2022 results. SWK’s earnings beat the Zacks Consensus Estimate by 69.7% and sales beat the same by 3.3%.
In the reported quarter, SWK incurred a loss of 10 cents per share, narrower than the Zacks Consensus Estimate of 33 cents. However, the bottom line decreased 104.7% from the year-ago quarter’s $2.14.
Revenue Details
In the quarter under review, Stanley Black’s net sales were $3,986.8 million, reflecting year-over-year growth of 0.1%. The results benefited 7% from acquired assets and 7% from favorable pricing. Foreign currency translation had an adverse impact of 3%, divestitures had a negative impact of 1% and lower volume affected sales 10%.
SWK’s top line beat the Zacks Consensus Estimate of $3,860 million. Our estimate for net sales in the reported quarter was $4,243.9 million.
Stanley Black reports net sales under two segments, namely Tools & Outdoor and Industrial. The segmental information is briefly discussed below:
Revenues from Tools & Outdoor totaled $3,382.9 million, almost flat year over year. Our estimate for segmental revenues was $3,609.0 million. Acquisitions (Excel and MTD) contributed 8% and pricing added 7% to sales growth, while adverse foreign-currency translations lowered sales 3%. Lower volumes affected 12%.
Revenues from Industrial grossed $603.9 million, decreasing 1% year over year. Our estimate for segmental revenues was $634.9 million. The segment gained 1% from higher volumes and 9% from effective pricing. Forex woes had a negative impact of 5% and the Oil & Gas divestiture had a negative effect of 6%.
Margin Profile
In the reported quarter, Stanley Black’s cost of sales increased 13.3% year over year to $3,233.3 million. The metric represented 81.1% of the quarter’s net sales compared with 71.7% in the year-ago quarter. The gross profit decreased 33.1% to $753.5 million. The gross margin decreased 940 basis points (bps) to 18.9%.
Selling, general and administrative expenses decreased 18.9% year over year to $757.2 million. The metric represented 19% of net sales in the reported quarter compared with 23.4% in the year-ago period. Operating loss was $3.7 million in the quarter against $193.6 million reported in the year-ago quarter. The margin declined 500 bps to -0.1%.
Balance Sheet and Cash Flow
While exiting the fourth quarter, Stanley Black had cash and cash equivalents of $395.6 million, up 178.4% from $142.1 million reported at the end of fourth-quarter 2021. The long-term debt balance increased 23% to $5,352.9 million from $4,353.6 million reported at the end of fourth-quarter 2021.
In 2022, net cash used in operating activities was $1,459.5 million against $663.1 million generated in the year-ago period. Capital and software expenditures totaled $530.4 million, up from $519.1 million reported in the year-ago period. Free cash outflow (before dividends) in the year was $1,989.9 million against $144.0 million free cash flow a year ago.
During the same time period, Stanley Black spent $71.9 million net of cash acquired on business buyouts. SWK paid out dividends worth $465.8 million to its shareholders, down 1.9% from the year-ago period. Purchases of common stock for treasury were $2,323.0 compared with $34.3 million in the year-ago period.
Outlook
Stanley Black anticipates adjusted earnings per share of $0.00-$2.00 in 2023. Earnings are predicted to be a loss of $1.65 to earnings of 85 cents per share.
Free cash flow is expected to be $0.5 to $1.0 billion for 2023.
Zacks Rank & Stocks to Consider
SWK currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked companies from the Industrial Products sector are discussed below:
Applied Industrial Technologies, Inc. (AIT - Free Report) presently sports a Zacks Rank #1 (Strong Buy) and a trailing four-quarter earnings surprise of 20.1%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks.
AIT’s earnings estimates have increased 6.5% for fiscal 2023 (ending June 2023) in the past 60 days. Shares of Applied Industrial have risen 42.1% in the past six months.
Allegion plc (ALLE - Free Report) presently carries a Zacks Rank of 2 (Buy). ALLE’s earnings surprise in the last four quarters was 8.8%, on average.
In the past 60 days, Allegion’s earnings estimates have remained steady for 2022. The stock has gained 16% in the past six months.
Valmont Industries, Inc. (VMI - Free Report) presently has a Zacks Rank of 2. VMI’s earnings surprise in the last four quarters was 12.5%, on average.
In the past 60 days, Valmont’s earnings estimates have increased by a penny. The stock has rallied 22.4% in the past six months.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s an American AI company that’s riding low right now, but it has rounded up clients like BMW, GE, Dell Computer, and Bosch. It has prospects for not just doubling but quadrupling in the year to come. Of course, all our picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock And 4 Runners Up
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