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STANLEY BLACK & DECKER, INC. (SWK)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered modest top-line and solid margin progress: revenue $3.74B (-3% YoY; +1% organic), adjusted gross margin 30.4% (+140 bps YoY), adjusted EPS $0.75 (+34% YoY). Strength came from DEWALT’s eighth consecutive quarter of growth and supply chain efficiencies, partially offset by freight inflation and initial tariff impacts .
  • Versus estimates, SWK posted a slight beat on revenue and a clear beat on adjusted EPS; EBITDA was ahead of consensus. Management guided Q2 to minimally positive pretax earnings with a heavy LIFO tariff burden; pricing actions and supply chain moves are expected to catch up by early Q3 . Values retrieved from S&P Global.*
  • 2025 planning assumptions were reset on tariffs: GAAP EPS now $3.30 (+/-$0.15) and adjusted EPS ≈ $4.50; free cash flow targeted at ≥$500M, down from the pre-tariff February view (GAAP EPS $4.05 +/-$0.65; adjusted EPS $5.25 +/-$0.50; FCF $750M +/-$100M) .
  • Catalysts: execution on U.S. price increases (high-single-digit in April; second increase targeted for early Q3), accelerated supply chain shifts out of China and into Mexico/USMCA, and clarity on tariff policy path; management expects adjusted EBITDA margin expansion YoY despite near-term tariff/LIFO headwinds .

What Went Well and What Went Wrong

What Went Well

  • Gross margin expanded: GAAP 29.9% (+130 bps YoY); adjusted 30.4% (+140 bps YoY), driven by supply chain transformation and new innovation mix benefits .
  • DEWALT momentum: brand achieved its eighth consecutive quarter of revenue growth; Outdoor posted 6% organic growth on normal seasonal load-ins and retail placements .
  • Management execution and confidence: “our transformation is working… we are focused on seeing it through to completion” and “adjusted EBITDA margin approached 10%” in Q1 (+~80 bps YoY) .

What Went Wrong

  • Top-line pressure: total revenue -3% YoY from currency (-2%) and lapping the Infrastructure divestiture (-2%); Engineered Fastening sales -21% YoY with margin compression on automotive softness .
  • Tariff headwinds: estimated ~$0.75 adjusted EPS drag in 2025 net of mitigation; Q2 expected to be minimally profitable pretax due to LIFO tariff burden .
  • Free cash outflow persisted seasonally: Q1 free cash flow of -$485M (before dividends), albeit similar to prior year and reflecting targeted inventory actions to navigate trade changes .

Financial Results

Year-over-Year (Q1 2024 vs Q1 2025)

MetricQ1 2024Q1 2025
Revenue ($USD Billions)$3.87B $3.74B
GAAP Diluted EPS ($)$0.13 $0.60
Adjusted EPS ($)$0.56 $0.75
Gross Margin (%)28.6% 29.9%
Adjusted Gross Margin (%)29.0% 30.4%
EBITDA ($USD Millions)$276.4 $333.2
EBITDA Margin (%)7.1% 8.9%
Adjusted EBITDA ($USD Millions)$342.6 $361.8
Adjusted EBITDA Margin (%)8.9% 9.7%
Free Cash Flow ($USD Millions, pre-dividends)-$496.7 -$485.0

Sequential (Q4 2024 vs Q1 2025)

MetricQ4 2024Q1 2025
Revenue ($USD Billions)$3.72B $3.74B
GAAP Diluted EPS ($)$1.28 $0.60
Adjusted EPS ($)$1.49 $0.75
Gross Margin (%)30.8% 29.9%
Adjusted Gross Margin (%)31.2% 30.4%
EBITDA ($USD Millions)$339.6 $333.2
EBITDA Margin (%)9.1% 8.9%
Adjusted EBITDA ($USD Millions)$378.3 $361.8
Adjusted EBITDA Margin (%)10.2% 9.7%

Segment Breakdown (Q1 2024 vs Q1 2025)

SegmentSales ($USD Billions)Segment Profit ($USD Millions)Adjusted Segment Profit ($USD Millions)Segment Margin (%)Adjusted Segment Margin (%)
Tools & Outdoor (Q1 2024)$3.28B $255.7 $278.6 7.8% 8.5%
Tools & Outdoor (Q1 2025)$3.28B $289.2 $314.2 8.8% 9.6%
Engineered Fastening (Q1 2024)$0.58B $65.2 $70.9 11.1% 12.1%
Engineered Fastening (Q1 2025)$0.46B $39.0 $46.7 8.4% 10.1%

KPIs and Operating Metrics

KPIQ1 2024Q1 2025
Organic Revenue Growth (%)—1%
SG&A as % of Sales (GAAP)22.0% 23.2%
SG&A as % of Sales (Adjusted)21.5% 22.6%
Global Cost Reduction Program incremental run-rate savings ($USD Millions)—$130
Dividend per share ($)$0.81 $0.82

Guidance Changes

MetricPeriodPrevious Guidance (Feb 5, 2025)Current Guidance (Apr 30, 2025)Change
GAAP EPSFY 2025$4.05 (+/- $0.65) $3.30 (+/- $0.15) Lowered
Adjusted EPSFY 2025$5.25 (+/- $0.50) ≈$4.50 Lowered
Free Cash FlowFY 2025$750M (+/- $100M) ≥$500M Lowered
Adjusted EBITDA MarginFY 2025Expansion implied Expansion YoY expected Maintained (framework)
Q2 Organic RevenueQ2 2025—Flat to low single-digit decline; positive adjusted pretax earnings New detail
Tariff EPS Impact (net of mitigation)FY 2025—≈ -$0.75 New headwind
U.S. Price Actions2025—High-single-digit in April; second increase targeted early Q3 New actions
DividendQ2 2025—$0.82 per share declared Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Supply chain transformationOngoing program driving margin; ~$1.4B run-rate savings by Q3; targeting 35%+ adjusted GM ~$130M incremental run-rate savings in Q1; cumulative ~$1.7B; continued margin support Continuing progress
Tariffs/macro and pricingPre-tariff planning; prepared countermeasures High-single-digit U.S. price increase in April; second increase targeted early Q3; net -$0.75 EPS headwind; heavy Q2 LIFO burden New headwind; mitigation accelerating
Product performance (DEWALT, Outdoor)DEWALT 6th–7th consecutive growth; Outdoor strong Q4 DEWALT 8th consecutive growth; Outdoor +6% organic Positive momentum sustained
Regional trendsQ3 NA organic -4% on DIY; Europe +1%, RoW +6% Tools & Outdoor organic: NA +2%, Europe flat, RoW -3%; total revenue NA +2% Mixed; NA steady, RoW softer
Regulatory/legalEnvironmental charges in 2024 impacted results Focus shifts to trade policy impact and engagement with U.S. administration Policy risk elevated
R&D/innovationInnovation supporting margins New innovation launches cited as margin/mix tailwind; examples like DEWALT Toughwire Ongoing emphasis

Management Commentary

  • “Our transformation is working… we are focused on seeing it through to completion to drive sustainable market share gains.” – Don Allan, CEO .
  • “Adjusted EBITDA margin approached 10%, an increase of approximately 80 basis points versus the prior year… adjusted gross margin continued to improve.” – Don Allan .
  • “We successfully implemented a high single-digit average price increase across our United States retail partners… actively engaged about a second price increase targeting implementation at the beginning of the third quarter.” – Chris Nelson, COO .
  • “Our 2025 GAAP EPS planning scenario is $3.30 +/- $0.15, which translates to adjusted EPS of approximately $4.50… free cash flow to meet or exceed $500 million.” – Pat Hallinan, CFO .

Q&A Highlights

  • LIFO tariff burden sizing: Q2 pretax impact estimated at $200–$250M, driving minimally positive pretax/after-tax earnings in Q2; pricing catches up by early Q3 .
  • USMCA compliance: Mexico supply currently “a little bit below 1/3” USMCA compliant; plans underway to raise compliance and pivot dual-sourced SKUs out of China to Mexico/USMCA .
  • Pricing cadence: April high-single-digit increase in place; second increase likely higher than the first, targeted for early Q3 (exact magnitude TBD with customers) .
  • Volume elasticity and cost levers: planning assumes ~4–5% U.S. volume hit in H2; ~$125M incremental SG&A containment to offset volume pressure; sensitivity ~ $0.13 EPS per 1pt U.S. volume change .
  • Retail inventory: broadly normalized entering 2025; potential focused inventory resets at DIY-heavy retailers; March strength may reflect tariff pre-buying .

Estimates Context

MetricPeriodConsensusActual/ReportedBeat/Miss
Primary EPS (Adjusted) ($)Q1 20250.66*0.75 Beat
Revenue ($USD Billions)Q1 2025$3.72B*$3.74B Beat
EBITDA ($USD Millions, Adjusted)Q1 2025$359.5M*$361.8M Beat
Primary EPS (Adjusted) ($)Q4 20241.27*1.49 Beat
Revenue ($USD Billions)Q4 2024$3.58B*$3.72B Beat
EBITDA ($USD Millions, Adjusted)Q4 2024$370.9M*$378.3M Beat
Primary EPS (Adjusted) ($)FY 20254.54*Scenario ≈4.50 In line
Revenue ($USD Billions)FY 2025$15.23B*——

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Pricing is the fastest mitigation lever; April high-single-digit U.S. increase is in market, with a second increase targeted for early Q3 to offset tariff costs while supply chain shifts roll in over 12–24 months .
  • Expect Q2 to be the trough on profitability due to LIFO; management guides to minimally positive pretax earnings with stronger EPS and cash in Q4 as price fully offsets tariffs .
  • 2025 EPS/FCF reset reflects tariff headwinds: GAAP EPS $3.30 (+/-$0.15), adjusted ≈$4.50, FCF ≥$500M; track scenario updates and sensitivities (~$0.13 EPS per 1pt U.S. volume change) .
  • Segment focus: Tools & Outdoor margins improved (adjusted 9.6%); Engineered Fastening saw margin pressure on automotive softness despite aerospace strength—monitor auto production trends and backlog conversion in aerospace .
  • DEWALT and Outdoor momentum remains a bright spot; continued innovation and market activation support share gains amid cautious DIY demand .
  • Balance sheet/cash priorities intact: transformation-driven margin expansion, disciplined SG&A, and inventory management underpin deleveraging and dividend continuity ($0.82 declared for Q2) .
  • Watch policy developments: any tariff relief timing could change the cadence of mitigation vs. price; management is engaging with the U.S. administration and leveraging a flexible North American footprint (~60% of U.S. cost of sales) .