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STANLEY BLACK & DECKER, INC. (SWK)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered steady top line with operating leverage: revenue was $3.72B (flat y/y, +3% organic), GAAP diluted EPS from continuing ops was $1.28 and adjusted EPS was $1.49; gross margin expanded 120 bps y/y (adjusted +140 bps) to 30.8% (31.2% adj.) on supply chain transformation savings .
  • Cash execution remained strong: cash from operations was $679M and free cash flow was $565M in Q4, supporting capital allocation (dividends) and $1.1B of debt reduction in 2024; cost-savings program reached ~$1.5B run-rate since inception with $110M incremental in Q4 .
  • Segment mix was mixed: Tools & Outdoor organic +3% with broad product growth (power tools +5%, outdoor +3%, hand tools +2%); Industrial declined due to Infrastructure divestiture and auto softness, though aerospace fasteners remained a bright spot .
  • 2025 planning assumptions (pre-tariff): adjusted EPS $5.25 ± $0.50; GAAP EPS $4.05 ± $0.65; FCF $750M ± $100M; SG&A ~22% of sales; capex $350–$400M; tariff scenario planning implies ~+$10–$20M net headwind in 2025 if incremental 10% China tariffs persist (unmitigated ~$90–$100M) .
  • Stock narrative catalyst: continued gross margin expansion towards 35%+ long-term target, resilient pro/DEWALT momentum, visible FCF and deleveraging, with tariff mitigation plan and currency headwinds near term .

What Went Well and What Went Wrong

What Went Well

  • Supply chain transformation drove margin expansion: “adjusted gross margin exceeding 31% in the fourth quarter along with strong cash generation,” as management emphasized the program’s operating leverage .
  • Tools & Outdoor growth breadth: organic +3% with power tools +5%, outdoor +3%, hand tools +2%; DEWALT delivered its seventh consecutive quarter of organic growth, aided by solid holiday promotions and pro momentum .
  • Strong cash generation and balance sheet progress: Q4 free cash flow of $565M, full-year CFO $1.107B and FCF ~$753M supported $1.1B of debt reduction; management reiterated deleveraging priority .

What Went Wrong

  • SG&A deleverage from growth investments: SG&A rose to 23.0% of sales (adj. 22.5%) vs 22.3% (adj. 21.7%) y/y as the company funded market activation and field resources .
  • Industrial softness tied to auto: Industrial sales -15% y/y (organic flat), with adjusted margin 10.7% vs 11.1% last year, as automotive volumes weakened; Infrastructure divestiture was a material drag .
  • External headwinds: management flagged ~$100M 2025 profit headwind from currency (with ~$40M transactional to be offset by price) and tariff uncertainty; promotional cadence was a slight gross margin headwind in Q4 .

Financial Results

Consolidated P&L and Cash Metrics

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Billions)$4.02B $3.75B $3.72B
Gross Margin % (GAAP)28.4% 29.9% 30.8%
Adjusted Gross Margin %29.2% 30.5% 31.2%
GAAP Diluted EPS – Continuing Ops$(0.13) $0.60 $1.28
Adjusted EPS$1.09 $1.22 $1.49
Cash from Operations ($M)$573 $286 $679
Free Cash Flow ($M)$486 ~$200 $565
Adjusted EBITDA Margin %10.7% 10.8% 10.2%

Notes: Q4 y/y organic growth +3%; price (-1%), FX (-1%), Infrastructure divestiture (-2%) .

Segment Performance (Q4 2024 vs Q4 2023)

SegmentNet Sales Q4’23 ($M)Net Sales Q4’24 ($M)Adjusted Segment Margin Q4’23Adjusted Segment Margin Q4’24
Tools & Outdoor3,154.2 3,227.6 10.0% 10.2%
Industrial582.3 492.9 11.1% 10.7%
Total3,736.5 3,720.5 10.2% (Total adj. segment) 10.3% (Total adj. segment)

KPIs and Operating Drivers (Q4 2024)

KPIQ4 2024
Company Organic Revenue Growth+3%
Tools & Outdoor Organic Growth+3%
Tools & Outdoor – Regional Organic GrowthNA +2%, Europe +4%, RoW +8%
Power Tools Organic Growth+5%
Hand Tools Organic Growth+2%
Outdoor Organic Growth+3%
Adjusted EBITDA Margin10.2%

Guidance Changes

(Management provided 2025 planning assumptions, pre-tariff; no prior 2025 guidance to compare. Where possible we show latest assumptions and note change status.)

MetricPeriodPrevious GuidanceCurrent Guidance/AssumptionChange
Adjusted EPSFY 2025N/A$5.25 ± $0.50 N/A
GAAP EPSFY 2025N/A$4.05 ± $0.65 N/A
Free Cash FlowFY 2025N/A$750M ± $100M N/A
Adjusted Tax RateFY 2025N/A~15% (1H quarters ~30%) N/A
SG&A as % of SalesFY 2025N/A~22% N/A
CapexFY 2025N/A$350–$400M N/A
Currency Profit HeadwindFY 2025N/A~$100M; ~$40M transactional to be offset by price N/A
Tools & Outdoor Organic GrowthFY 2025N/ALow single digit (midpoint) N/A
Industrial Organic GrowthFY 2025N/ALow single digit; auto negative N/A
1Q Adjusted EPS SeasonalityQ1 2025N/A~12–13% of $5.25 base N/A
Tariff Scenario – China +10%FY 2025N/AUnmitigated ~$90–$100M; net 2025 ~$10–$20M after actions N/A
Dividend per ShareQ1 2025$0.82 (Q4’24 run-rate) $0.82 declared (Q1’25) Maintained

Earnings Call Themes & Trends

TopicQ2 2024 (7/30)Q3 2024 (10/29)Q4 2024 (2/5)Trend
Supply chain/cost reductionGlobal program on track; adj. GM 29.2% (+560 bps y/y) ; run-rate savings ~$1.3B to date Adj. GM 30.5% (+290 bps y/y); run-rate savings ~$1.4B Adj. GM 31.2% (+140 bps y/y); +$110M Q4 run-rate, ~$1.5B to date, target $2B by 2025 Positive, consistent improvement
DEWALT/pro momentumGrowth led by DEWALT; outdoor, fasteners strong 6th consecutive DEWALT growth 7th consecutive DEWALT growth; power tools +5% Building momentum
Macro/tariffsNo tariff specifics; environmental charges noted Demand mixed; margin focus reiterated Pre-tariff 2025 plan; tariff mitigation via price/supply chain; net $10–$20M impact if 10% persists New headwind with mitigation plan
Automotive vs AerospaceAuto softness emerging; aerospace growth Auto softness continues; aerospace growth Auto remains soft (negative 2025); aerospace mid-teens growth; industrial fasteners up high single digits Mixed: auto weak, aero strong
Regional trends (Tools & Outdoor)NA +1%, EU -3%, RoW +5% NA -4%, EU +1%, RoW +6% NA +2%, EU +4%, RoW +8% Improving breadth ex-NA
Pricing/currencyPricing -1%; FX headwinds Pricing +1%; FX -1% Price -1%; 2025 FX headwind $100M with price offset FX headwind persists, offset by pricing
Promotions/inventory/channelWorking capital progress; promotions recaptured Channel inventory reductions impacted growth “Solid holiday promotional season”; promotions slight GM headwind; inventory rightsized Normalized cadence, targeted

Management Commentary

  • “We are proud to have delivered on key financial milestones, including adjusted gross margin exceeding 31% in the fourth quarter along with strong cash generation.” – Donald Allan, Jr., CEO .
  • “We plan to deliver EBITDA expansion in 2025… and expect to respond with supply chain and price actions designed to mitigate the impact from such tariffs to maintain our margin objectives.” – Patrick Hallinan, CFO .
  • “Our base case pre-tariff planning assumption for 2025 is adjusted EPS of $5.25 ± $0.50 with $650–$850 million of free cash flow.” – Donald Allan, Jr. .
  • “We continue to target $2 billion of pre-tax run rate cost savings by the end of 2025 as we complete the transformation… we remain confident in our ability to achieve our target of 35%+ adjusted gross margin.” – Patrick Hallinan .
  • “We believe we can mitigate tariffs with supply chain repositioning and price… and do not believe it will throw us off our long-term growth and EBITDA aspirations.” – Donald Allan, Jr. .

Q&A Highlights

  • SG&A investments and run-rate: Management expects SG&A around ~22% of sales through 2025 with quarterly seasonality; investments focused on pro innovation, field market activation (~400 incremental field resources), and brand health .
  • Share gains and growth drivers: 2025 low-single-digit organic growth in Tools to be driven by continued DEWALT acceleration plus stabilization and modest share gains in Stanley and CRAFTSMAN .
  • Tariff mitigation mix: Offsets will combine price and supply chain reconfiguration; near-term P&L headwind largely timing/LIFO, aiming to limit 2025 net impact to $10–$20M if 10% persists .
  • Regional/segment color: NA strength linked to pro and improved fill rates; EMEA benefiting from targeted investments; auto remains soft while aerospace continues to grow .
  • Promotions: Holiday promotions were effective and slightly dilutive to GM but accretive product placement helps; promotional cadence normalized in 2024 .

Estimates Context

  • S&P Global consensus (EPS and revenue) for Q4 2024 was unavailable at time of analysis due to data access limits; therefore, we cannot present vs-consensus comparisons for Q4 2024, Q3 2024, or Q2 2024. Values would be retrieved from S&P Global if accessible.

Key Takeaways for Investors

  • Margin expansion on track: sequential and y/y gross margin gains signal durable benefits from supply chain transformation, supporting the long-term 35%+ adjusted GM target .
  • Pro-led growth and brand momentum: DEWALT continues to outgrow with broad-based category strength; targeted market activation and platformed innovation should support share gains despite muted aggregate demand .
  • Cash and deleveraging remain catalysts: repeatable FCF (Q4 $565M; FY ~$753M) and disciplined capex/SG&A support continued debt paydown and dividend stability ($0.82 declared for Q1 2025) .
  • External headwinds manageable: currency (~$100M profit headwind) to be offset with price; tariff risk mitigated via price and sourcing shifts (net $10–$20M 2025 scenario for incremental 10% China tariffs) .
  • Mixed end-market exposure: aerospace and industrial fasteners constructive; automotive remains a drag; consumer/DIY relatively soft; set-up suggests flattish market in 1H with potential inflection later in 2025 not embedded in base case .
  • Near-term modeling: expect 1Q to be seasonally light (~12–13% of FY adjusted EPS), free cash outflow typical, and price actions to catch up to FX/tariffs into mid-year .
  • Monitoring list: tariff policy evolution and timing; Tools & Outdoor price realization vs FX; Industrial auto pace vs aero strength; SG&A investment ROI (sell-through, listings) and the cadence of margin gains .

Sources: Q4 2024 press release and exhibits ; 8‑K with financial statements and exhibits ; Q4 2024 earnings call transcript ; Prior quarters Q3 and Q2 press releases for trend analysis and ; Dividend press release (Q1 2025) .