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Stanley Black (SWK) Beats on Q2 Earnings, Narrows '23 Guidance

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Stanley Black & Decker, Inc. (SWK - Free Report) reported second-quarter 2023 adjusted loss of 11 cents per share, narrower than the Zacks Consensus Estimate of a loss of 38 cents per share. The bottom line decreased 106.2% year over year from the year-ago quarter’s figure of $1.77 per share due to lower sales.

Revenue Details

In the quarter under review, Stanley Black’s net sales were $4,158.9 million, reflecting a year-over-year decline of 5.3%. The Oil & Gas divestiture had a negative impact of 1% and lower volume affected sales 5%. However, the results benefited 1% from favorable pricing.

SWK’s top line outperformed the Zacks Consensus Estimate of $4,122 million.

Stanley Black reports net sales under two segments, namely Tools & Outdoor and Industrial. The segmental information is briefly discussed below:

Revenues from the Tools & Outdoor segment totaled $3,542.2 million, decreasing 5.4% year over year. Our estimate for segmental revenues was $3,465.4 million. Lower volumes affected sales 13% while pricing added 1% to sales growth.

Revenues from the Industrial segment grossed $616.7 million, decreasing 4.8% year over year. Our estimate for segmental revenues was $631.4 million. Forex woes had a negative impact of 1%, the Oil & Gas divestiture had an adverse impact of 7% and lower volumes had a negative effect of 1%. However, the segment gained 4% from effective pricing.

Stanley Black & Decker, Inc. Price, Consensus and EPS Surprise

 

Stanley Black & Decker, Inc. Price, Consensus and EPS Surprise

Stanley Black & Decker, Inc. price-consensus-eps-surprise-chart | Stanley Black & Decker, Inc. Quote

 

Margin Profile

In the reported quarter, Stanley Black’s cost of sales increased 1.3% year over year to $3,226.8 million. The gross profit decreased 22.8% to $932.1 million. The gross margin decreased 510 basis points (bps) to 22.4%.

Selling, general and administrative expenses decreased 1.8% year over year to $837.3 million. Operating profit was $94.8 million in the quarter, compared with $354.4 million reported in the year-ago quarter. The margin declined 580 bps to 2.3%.

Balance Sheet and Cash Flow

While exiting the second quarter, Stanley Black had cash and cash equivalents of $391.4 million, compared with $395.6 million reported at the end of fourth-quarter 2022. The long-term debt balance was $6,099.9 million, higher than $5,352.9 million reported at the end of fourth-quarter 2022.

In the first six months of 2023, net cash used in operating activities was $21.9 million, compared with $1,685.0 million cash used in the year-ago period. Capital and software expenditures totaled $136.5 million, down from $285.5 million reported in the year-ago period. Free cash outflow (before dividends) in the year was $158.4 million, compared with $1,970.5 million free cash outflow a year ago.

SWK paid out dividends worth $239.5 million to its shareholders, up 4% from the year-ago period. Purchases of common stock for treasury were $5.6 million, compared with $2,314.1 million in the year-ago period.

2023 Guidance Narrowed

Stanley Black anticipates earnings in the range of a loss of $1.25 per share to a loss of 50 cents per share for 2023, compared with a loss of $1.65 per share to earnings of 60 cents per share predicted earlier. Adjusted earnings are expected to be 70 cents-$1.30 per share, compared with the prior guidance of $0.00- $2.00 per share. The midpoint of the guided range — $1.00 — lies above the Zacks Consensus Estimate of adjusted earnings of 87 cents per share.

Free cash flow is expected to be $0.6 billion to $0.9 billion for 2023, compared with $0.5 billion to $1.0 billion predicted earlier.

Zacks Rank & Stocks to Consider

SWK currently carries a Zacks Rank #3 (Hold). Some better-ranked companies from the Industrial Products sector are discussed below:

Greif, Inc. (GEF - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks.

GEF delivered a trailing four-quarter earnings surprise of 7.7%, on average. GEF’s earnings estimates have increased 13.4% for fiscal 2023 in the past 60 days. Its shares have risen 5.6% in the past year.

Caterpillar Inc. (CAT - Free Report) presently carries a Zacks Rank #2 (Buy). CAT’s earnings surprise in the last four quarters was 14.3%, on average.

In the past 60 days, estimates for Caterpillar’s earnings have increased 1.4% for 2023. The stock has gained 44.5% in the past year.


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