PART I. FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company's unaudited financials show decreased assets due to a portfolio sale but a significant increase in net income [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheet reflects reduced assets and equity, driven by a finance receivable sale and a special dividend Condensed Consolidated Balance Sheet Data (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$285,697** | **$332,235** | | Cash and cash equivalents | $8,006 | $5,927 | | Finance receivables, net | $237,604 | $277,760 | | Assets held for sale, net | $6,488 | $6,398 | | **Total Liabilities** | **$39,228** | **$43,545** | | Revolving credit facility | $294 | $6,233 | | Unsecured senior notes, net | $31,736 | $31,412 | | **Total Stockholders' Equity** | **$246,469** | **$288,690** | [Unaudited Condensed Consolidated Statements of Income](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Income) Six-month net income nearly doubled year-over-year, primarily due to a benefit from credit losses Condensed Consolidated Statements of Income (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $10,052 | $10,847 | $21,884 | $22,207 | | Provision (benefit) for credit losses | $761 | $4,095 | $(704) | $9,392 | | Income from operations | $4,629 | $901 | $12,742 | $1,980 | | **Net income** | **$3,536** | **$3,680** | **$8,075** | **$4,148** | | Diluted EPS | $0.29 | $0.30 | $0.66 | $0.33 | [Unaudited Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Stockholders' equity declined significantly due to a $49.1 million special cash dividend and share repurchases - A special cash dividend of **$4.00 per share**, totaling **$49.1 million**, was paid during the second quarter of 2025[13](index=13&type=chunk) - The company repurchased **58,954 shares** of common stock in the open market during the second quarter of 2025[13](index=13&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash increased by $2.1 million, with strong operating and investing inflows offsetting a large dividend payment Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $16,081 | $9,843 | | Net cash provided by investing activities | $42,841 | $4,813 | | Net cash used in financing activities | $(56,843) | $(14,343) | | **Net increase in cash** | **$2,079** | **$313** | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the two operating segments, a major royalty portfolio sale, and the classification of MOD3 assets as held for sale - The company operates through two reportable segments: **'Finance Receivables'** and **'Pharmaceutical Development'** (MOD3 Pharma)[18](index=18&type=chunk)[21](index=21&type=chunk) - On April 10, 2025, the company sold the majority of its finance receivables royalty portfolio to Soleus Capital for approximately **$34.0 million in cash**, recognizing a **loss of $3.7 million** on the transaction[50](index=50&type=chunk) - The company entered into an agreement with Aptar, granting an exclusive option to acquire assets of its MOD3 (Pharmaceutical Development) business; these assets were classified as **held for sale**[57](index=57&type=chunk)[59](index=59&type=chunk)[61](index=61&type=chunk) - As of June 30, 2025, the company had **$0.3 million outstanding** on its **$60.0 million revolving credit facility** and **$33.0 million** in 9.00% Senior Notes due 2027[68](index=68&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management highlights a positive swing in credit loss provisions as the key driver for improved six-month net income [Results of Operations](index=32&type=section&id=Comparison%20of%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) A $10.1 million favorable change in credit loss provisions drove the six-month net income increase to $8.1 million Comparison of Six Months Ended June 30 (in millions) | Line Item | 2025 | 2024 | Change $ | | :--- | :--- | :--- | :--- | | Revenues | $21.9 | $22.2 | $(0.3) | | Provision (benefit) for credit losses | $(0.7) | $9.4 | $(10.1) | | Other income (expense), net | $(2.4) | $3.4 | $(5.8) | | **Net income** | **$8.1** | **$4.1** | **$4.0** | - The decrease in the provision for credit losses for the six-month period was the **primary driver of increased net income**, mainly due to impairments recognized in the prior year period[129](index=129&type=chunk) - The decrease in 'Other income (expense), net' for the six-month period was primarily due to **net losses on finance receivables** in the current period compared to net gains in the prior year[134](index=134&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity improved with an increase in cash to $8.0 million and significant availability on the revolving credit facility - Cash and cash equivalents increased to **$8.0 million** as of June 30, 2025, from $5.9 million as of December 31, 2024[136](index=136&type=chunk) - The company has a **$60.0 million revolving credit facility** with $0.3 million outstanding as of June 30, 2025, and total availability of **$54.7 million** after considering a liquidity covenant[137](index=137&type=chunk) - As of June 30, 2025, the company had **$7.5 million in unfunded commitments** to its portfolio companies[142](index=142&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate changes, partially mitigated by its floating-rate receivables portfolio - The company's primary market risk is **interest rate risk**, as its net investment income depends on the spread between lending and borrowing rates[145](index=145&type=chunk) - The majority of the finance receivables portfolio pays interest based on **floating rates**, which helps mitigate the risk of rising interest rates on the company's cost of funds[146](index=146&type=chunk)[147](index=147&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were **effective** as of the end of the period[150](index=150&type=chunk) - **No changes** in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[151](index=151&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company is not involved in any legal proceedings expected to have a material impact on the business - As of the reporting date, the company is **not involved in any arbitration or other legal proceeding** that it expects to have a material effect on its business[153](index=153&type=chunk) [Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) No material changes have been identified from the risk factors disclosed in the 2024 Annual Report on Form 10-K - **No material changes** from the risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[154](index=154&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) A new $10.0 million share repurchase program was authorized, with $0.9 million executed in the second quarter - On May 19, 2025, the Board authorized a new share repurchase program to buy back up to **$10.0 million of common stock** through May 19, 2026[156](index=156&type=chunk) Share Repurchases for Q2 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 10,026 | $16.78 | | May 2025 | 23,125 | $14.13 | | June 2025 | 25,803 | $14.52 | | **Total Q2** | **58,954** | **$14.75** | - As of June 30, 2025, approximately **$9.3 million remained available** for purchase under the current repurchase program[157](index=157&type=chunk) [Defaults Upon Senior Securities](index=38&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) None [Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not Applicable [Other Information](index=39&type=section&id=Item%205.%20Other%20Information) None [Exhibits](index=40&type=section&id=Item%206.%20Exhibits) The report includes required CEO/CFO certifications and XBRL data files as filed exhibits

Core Insights - Stanley Black & Decker reported $3.95 billion in revenue for Q2 2025, a 2% decline year-over-year, with an EPS of $1.08 compared to $1.09 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $3.99 billion by 1.12%, while the EPS exceeded the consensus estimate of $0.38 by 184.21% [1] Financial Performance Metrics - Net Sales for Tools & Outdoor segment were $3.46 billion, below the five-analyst average estimate of $3.52 billion, reflecting a year-over-year decline of 1.9% [4] - Net Sales for Engineered Fastening were $483.8 million, slightly above the estimated $477.91 million, but still a 2.4% decrease compared to the previous year [4] - Normalized Operating Profit for Tools & Outdoor was $276.5 million, exceeding the average estimate of $230.46 million [4] - Normalized Operating Profit for Corporate Overhead was reported at -$62.8 million, worse than the estimated -$55.25 million [4] - Normalized Operating Profit for Engineered Fastening was $52.3 million, slightly above the average estimate of $51.98 million [4] Stock Performance - Over the past month, shares of Stanley Black & Decker have returned +9.1%, outperforming the Zacks S&P 500 composite's +3.6% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Company Performance - Stanley Black & Decker reported quarterly earnings of $1.08 per share, exceeding the Zacks Consensus Estimate of $0.38 per share, and compared to earnings of $1.09 per share a year ago, representing an earnings surprise of +184.21% [1] - The company posted revenues of $3.95 billion for the quarter ended June 2025, missing the Zacks Consensus Estimate by 1.12%, and down from $4.02 billion year-over-year [2] - Over the last four quarters, Stanley Black & Decker has surpassed consensus EPS estimates four times and topped consensus revenue estimates two times [2] Stock Performance - Stanley Black & Decker shares have declined approximately 7.9% since the beginning of the year, while the S&P 500 has gained 8.6% [3] - The current status of estimate revisions translates into a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the coming quarter is $1.85 on revenues of $3.9 billion, and for the current fiscal year, it is $4.49 on revenues of $15.53 billion [7] - The outlook for the industry, specifically the Manufacturing - Tools & Related Products sector, is currently in the top 20% of over 250 Zacks industries, suggesting a favorable environment for stock performance [8]

Core Viewpoint - The market anticipates a year-over-year decline in earnings for Stanley Black & Decker due to lower revenues, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - The upcoming earnings report is expected to show earnings of $0.38 per share, reflecting a decline of 65.1% year-over-year, with revenues projected at $3.99 billion, down 0.9% from the previous year [3]. Estimate Revisions - The consensus EPS estimate has been revised 3.5% higher in the last 30 days, indicating a collective reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that the Most Accurate Estimate for Stanley Black & Decker is higher than the consensus estimate, resulting in an Earnings ESP of +18.80%, indicating a likely earnings beat [11]. Historical Performance - In the last reported quarter, Stanley Black & Decker exceeded the expected earnings of $0.68 per share by delivering $0.75, achieving a surprise of +10.29%. The company has beaten consensus EPS estimates in the last four quarters [12][13]. Investment Considerations - While the potential for an earnings beat exists, other factors may influence stock performance, making it essential to consider the broader context beyond just earnings results [14][16].

Core Insights - The article emphasizes the importance of understanding that past performance does not guarantee future results, highlighting the need for careful analysis before making investment decisions [2][3] Group 1 - The article discusses the role of analysts in providing insights and opinions on various companies and industries, noting that these views may not reflect the overall stance of the publication [3] - It mentions that the information presented is believed to be factual and up-to-date, but does not guarantee accuracy, indicating the necessity for investors to conduct their own research [2][3] - The article clarifies that no specific investment recommendations are being made, and it is not an offer to buy or sell securities [2][3] Group 2 - The disclosure states that the authors have no financial positions in the companies mentioned, which aims to eliminate potential conflicts of interest [1] - It highlights that the opinions expressed are subject to change and may not represent the views of the publication as a whole [3] - The article notes that the authors include both professional and individual investors, some of whom may not be licensed or certified [3]

Core Viewpoint - Stanley Black & Decker has seen a 12.9% increase in share price over the past month, outperforming the S&P 500, but there are concerns about whether this positive trend will continue leading up to the next earnings release [1] Group 1: Earnings and Estimates - Fresh estimates for Stanley Black & Decker have trended downward over the past month, with the consensus estimate shifting by -65.05% [2] - The stock has received a Zacks Rank of 5, indicating a "Strong Sell" recommendation, suggesting expectations of below-average returns in the coming months [4] Group 2: VGM Scores - The company currently holds a subpar Growth Score of D and a Momentum Score of F, indicating poor performance in these areas [3] - The stock has also been assigned a value grade of D, placing it in the bottom 40% for this investment strategy, leading to an overall aggregate VGM Score of F [3]

Company Overview - Building Benjamins is a free stock picking and market commentary investment newsletter published by Tradition Investment Management, LLC, a registered investment adviser [1] - The founder, Benjamin Halliburton, has a notable background in investment management, having founded Tradition Capital Management in 2000 and received multiple accolades for his performance [1] Founder Background - Benjamin Halliburton began his investment career at Merrill Lynch in 1986 and has been continuously involved in investing since then [1] - He earned an MBA with a focus on finance from Duke's Fuqua School of Business in 1990 and was recognized as a Fuqua Scholar [1] - Halliburton holds the Chartered Financial Analyst designation and was the top-performing portfolio manager at Brundage, Story and Rose, where his strategy outperformed the S&P 500 during the 1990s bull market [1] Performance Recognition - Halliburton was named "PSN Manager of the Decade" for All-Cap in the 2000s and for Dividend Value in the 2010s, highlighting his successful investment strategies [1] - He was recognized as the youngest partner at his firm and received high praise from senior managing partners for his investment acumen [1]

Company Performance - Stanley Black & Decker reported positive results in Q1, highlighting organic year-over-year growth and margin expansion [5] - The company achieved above-market growth for DEWALT for another consecutive quarter, indicating strong brand performance [5] - The transformation process is on track for completion by the end of the year, establishing a solid foundation for future growth [5] Conference Context - The discussion took place at the Wolfe Research 18th Annual Global Transportation & Industrials Conference, transitioning from a focus on transportation to industrial topics [1] - Chris Nelson, COO, and Dennis Lange, Head of Investor Relations, represented Stanley Black & Decker during the conference [2]

Financial Data and Key Metrics Changes - SWK Holdings reported a GAAP pretax net income of $5.8 million or $0.48 per diluted share for Q1 2025, with a net income of $4.5 million after tax expenses [12] - The non-GAAP tangible book value per share increased to $21.73, a 10.5% rise from $19.66 in Q1 2024 [13] - Overall operating expenses decreased to $3.7 million in Q1 2025 from $10.3 million in Q1 2024, primarily due to a significant reduction in provisions for credit losses [13][14] Business Line Data and Key Metrics Changes - The finance segment adjusted non-GAAP net income for Q1 2025 was $8.6 million, contributing to a trailing twelve-month total of $26 million [5] - The Mod three CDMO division reported segment revenue of $1 million with an EBITDA loss of $0.5 million for Q1 2025 [10] - The finance receivables segment experienced a $300,000 decrease in revenue year-over-year, primarily due to a $2.4 million decrease in interest and fees earned [12] Market Data and Key Metrics Changes - As of March 31, 2025, the gross finance receivables portfolio consisted of approximately $220 million in performing first lien loans and $13 million in non-accruals [6] - The effective yield on the finance receivable portfolio was 14.5%, expected to generate approximately $32 million in annual interest income if repayments occur as modeled [7][9] Company Strategy and Development Direction - The company aims to maintain a high-quality portfolio that can earn mid-teens returns while pursuing additional financing opportunities [8] - Management is focused on simplifying the business and ensuring appropriate returns on equity capital, with plans for a new share repurchase program [5][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio's strength and noted that ongoing healthcare and economic regulatory changes do not pose significant risks [9] - The current pipeline for loans is considered neutral, with modest opportunities available, particularly for smaller companies struggling to secure capital [48] Other Important Information - The company repurchased approximately 52,000 shares at a total cost of $900,000 during the quarter, with additional repurchases post-quarter [15] - The company holds $5 million in public equities and warrants, as well as private warrants and contingent economic interests carried at zero on the books [6][31] Q&A Session Summary Question: Inquiry about the two loans rated number two on credit - Management confirmed that both are first lien term loans, while three non-accruals are defined as post-reorganization royalties [20][22] Question: Discussion on competition in the private credit space - Management acknowledged increased competition but emphasized the importance of being proactive and creative in proposals to maintain a high-quality portfolio [25][27] Question: Best use of capital at this point - Management indicated that buying back stock is a great use of capital, alongside paying special dividends and selectively pursuing additional loans [44][46] Question: Current pipeline of possible loans compared to previous quarters - Management described the current loan pipeline as neutral, with modestly worse opportunities sequentially compared to the previous year [48]

Financial Data and Key Metrics Changes - SWK Holdings reported a GAAP pretax net income of $5.8 million or $0.48 per diluted share for Q1 2025, with a net income of $4.5 million after tax expenses [12] - The non-GAAP tangible book value per share increased to $21.73, reflecting a 10.5% year-over-year growth [13] - Overall operating expenses decreased to $3.7 million in Q1 2025 from $10.3 million in Q1 2024, primarily due to a significant reduction in provision for credit losses [13][14] Business Line Data and Key Metrics Changes - The finance segment adjusted non-GAAP net income for Q1 2025 was $8.6 million, contributing to a trailing twelve-month total of $26 million [5] - The Mod three CDMO division reported segment revenue of $1 million with an EBITDA loss of $0.5 million [10] - The finance receivables portfolio had an effective yield of 14.5%, expected to generate approximately $32 million in annual interest income if repayments occur as modeled [6][9] Market Data and Key Metrics Changes - The gross finance receivables portfolio consisted of approximately $220 million in performing first lien loans and $13 million in non-accruals, with a CECL reserve of $9 million [6] - The company continues to monitor healthcare and economic regulatory changes, currently assessing that these do not pose significant risks to the portfolio [9] Company Strategy and Development Direction - The company aims to simplify its business and focus on generating appropriate returns on equity capital, with plans for a new share repurchase program due to excess capital [5][16] - Management is pursuing additional financing opportunities while maintaining a high-quality portfolio that can yield mid-teens returns [7][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning for a successful 2025, emphasizing the importance of proactive partnerships and customer service in a competitive market [16] - The current pipeline for loans is considered neutral, with modest opportunities available, particularly for smaller companies struggling to secure capital [46][48] Other Important Information - The company repurchased approximately 52,000 shares at a total cost of $900,000 during the quarter, with additional repurchases post-quarter [15] - The company holds $5 million in public equities and warrants, as well as private warrants and contingent economic interests carried at zero on the books [6][31] Q&A Session Summary Question: Inquiry about credit scoring and loan types - Management clarified that the two loans mentioned are first lien term loans, while the three non-accruals are defined as post-reorganization royalties [19][20] Question: Discussion on competition in the private credit space - Management acknowledged increased competition but emphasized the need for creativity and excellent customer service to secure loans in a crowded market [23][25] Question: Best use of capital at this point - Management indicated that buying back stock is a strong option, alongside paying dividends and selectively pursuing additional loans [42][44] Question: Current pipeline of possible loans compared to previous quarters - Management noted that the current loan pipeline is neutral, with modestly worse opportunities sequentially compared to the previous year [46][48]