Total Revenue (SWK)

-2% " " "

The 2% decline in total revenue ($3,945.2 million vs. $4,024.4 million) appears to reflect challenges that have persisted from previous periods, including currency headwinds and the effects of prior divestitures which were seen in earlier quarters. " " These factors, compounded by muted consumer demand and lower infrastructure volume observed in prior periods, likely contributed to the current revenue pressure. " "

Tools & Outdoor Segment

-2% " " "

The 2% YoY decrease in Tools & Outdoor sales ($3,461.4 million vs. $3,528.7 million) continues trends seen in prior periods where volume declines and adverse foreign currency impacts offset underlying organic growth, despite cost efficiencies and innovation initiatives reported earlier. " " This suggests that market headwinds and regional demand challenges remain a consistent factor affecting performance.

GAAP EPS

FY 2025

$3.30 ± $0.15 "

$3.45 ± $0.10 "

raised

Adjusted EPS

FY 2025

$4.50 "

$4.65 "

raised

Free Cash Flow

FY 2025

$500 million "

$600 million "

raised

Total Company Sales

FY 2025

Increase, low single digits "

Retract slightly "

lowered

Organic Revenue

FY 2025

Low to mid-single-digit expansion "

Flat year-over-year "

lowered

Global Tools & Outdoor Revenue

FY 2025

Expand, low to mid-single digits "

Decline approximately 1% "

lowered

Engineered Fastening Revenue

FY 2025

Low single-digit organic growth "

1% organic growth "

no change

Adjusted EBITDA Margins

FY 2025

Expected to expand "

Expected to expand "

no change

Adjusted Gross Margin

FY 2025

no prior guidance

Back-half expansion; target ≥35% "

no prior guidance

Pretax Non-GAAP Adjustments

FY 2025

no prior guidance

Estimated $205M–$250M "

no prior guidance

Deleveraging Goals

FY 2025

no prior guidance

Net debt/adjusted EBITDA ≤2.5x "

no prior guidance

Gross Tariff Cost

FY 2025

$1.7 billion "

Approximately $800 million "

lowered

Tariff Headwinds and Trade Uncertainty

In Q1 2025, tariffs were described with high gross annualized impacts (up to $1.7B) with detailed percentage tariffs from China, Mexico and others. " " In Q4 2024, the discussion focused on a smaller scenario with 10% tariffs and an unmitigated impact of about $90–$100M. " "

In Q2 2025, the company presented updated figures with an $800M annualized gross tariff cost (with multiple tariff rates including 30% on China and non‐USMCA goods) and a net P&L impact of approximately $65M, along with detailed mitigation strategies. " "

Consistent concern but evolving estimates and focus on mitigation; the narrative has shifted toward refined cost assessments and proactive supply chain and pricing actions.

Pricing Strategy and Price-Volume Tradeoffs

In Q1 2025, a high single-digit price increase was implemented with plans for a second increase in Q3, emphasizing the company’s pricing power amid tariff pressures. " " " In Q4 2024, pricing actions and promotional decisions were used to mitigate tariff impacts while balancing margin challenges. " " "

In Q2 2025, the company again emphasized pricing measures with a planned modest second price increase in Q4, noting a one-for-one offset between price increases and volume declines and confirming stable pricing power. " "

The focus on timely price adjustments remains steady with an enduring reliance on pricing to offset tariff pressure and preserve margins.

Supply Chain Transformation and Component Sourcing/USMCA Compliance

In Q1 2025, the transformation was discussed in terms of reducing China exposure (15% currently) and moving dual-sourced SKUs to Mexico while addressing USMCA compliance challenges. " " " In Q4 2024, progress was noted with significant cost savings (approximately $1.5B accumulated) though USMCA issues were less detailed. " "

In Q2 2025, the company detailed the final stages of its multi‐year supply chain transformation, highlighting $1.8B in run‐rate savings so far and a strategic plan to reduce Chinese production to less than 5% by 2026 with explicit mention of component sourcing challenges and USMCA compliance. " "

An ongoing and accelerated transformation program with increased specificity on compliance metrics and sourcing adjustments.

Margin Management: Expansion Potential vs. Gross Margin Headwinds

In Q1 2025, margins benefited from a 140‐bps improvement and focused on cost savings and tariff mitigation, while anticipating pressure from new tariff costs. " " " " In Q4 2024, Q4 margins reached 31.2% (a 140-basis point improvement) but were offset by currency, promotions, and tariff uncertainties. " " "

In Q2 2025, the company projected year‐over‐year margin expansion in H2 along with headwinds from tariff costs, volume declines and rare earth supply issues – aiming for mid-30% range in late 2026. "

While the pursuit of a 35%+ margin target continues, the narrative reflects a balanced view of expansion potential amid persistent tariff and volume pressures.

SG&A Expense and Operating Cost Management

Q1 2025 highlighted a disciplined SG&A savings plan with roughly flat savings across quarters and $1.7B in cost savings to date, focusing on protecting growth investments. " " In Q4 2024, SG&A was targeted at about 22% of net sales with significant cost savings achieved (around $500M in 2024) and continued strategic investments in operations. " "

In Q2 2025, the company reported $150M in pretax run‐rate cost savings (bringing total to $1.8B) and noted that incremental mitigation expenses in SG&A partly offset FX benefits, reaffirming ongoing operational excellence. " "

A consistent emphasis on operational discipline and cost transformation, with incremental savings being realized even as mitigation efforts add short-term expense pressures.

Organic Revenue Performance and Core Brand Growth

In Q1 2025, organic revenue was modest (around 1% growth) with contrasts among segments – DIY softness offset by DEWALT’s mid-single-digit gains, while some segments experienced declines. " " " In Q4 2024, organic revenue grew 3% driven by strong holiday performance and DEWALT momentum despite weak consumer/DIY trends. " " "

In Q2 2025, organic revenue fell by 2% overall and 3% organically, with DEWALT showing strength but declines in hand tools (due to tariff shipment disruptions) and outdoor products (due to a slow buying season " " ).

The mixed organic performance continues with DEWALT as a consistent bright spot; however, overall growth remains challenged by market volatility and tariff-induced disruptions.

Strategic Investments in Innovation and Market Activation

Q1 2025 underscored significant investments in innovation and market activation, including new product launches (like DEWALT Tough wire) and focused initiatives in underpenetrated markets like Saudi Arabia. " " In Q4 2024, emphasis was placed on core brand focus, increased field personnel (about 400 new resources), and a $100M pipeline investment. " "

In Q2 2025, the innovation narrative expanded with the launch of initiatives like M Suite, alongside a reinvestment of over $100M in 2025 targeting market activation, brand strengthening (DEWALT, Stanley, Craftsman), and further innovation investments. " " " "

Ongoing robust commitment to innovation and market activation, with Q2 introducing new digital/management innovations while sustaining traditional brand investments.

Inventory Accounting and LIFO Adjustment Pressures

In Q1 2025, LIFO adjustments were highlighted as causing a significant Q2 cost pressure (estimated $200–$250M impact) due to tariff variances that roll off the balance sheet. " " In Q4 2024, management warned of potential LIFO adjustment pressures caused by a lag in tariff mitigation, projecting headwinds in early 2025. "

In Q2 2025, the discussion noted that timing differences (such as a $0.10 per unit operational upside) were due to less tariff expense recognized in the quarter, with the anticipation that early 2026 may be “a bit noisy” as tariff charges roll off. "

Inventory accounting remains a persistent challenge; while some timing benefits were seen in Q2, future periods are expected to experience continued adjustment pressures as mitigation actions take effect.