Summary of Stanley Black & Decker Conference Call Company Overview - **Company**: Stanley Black & Decker (NYSE: SWK) - **Date of Conference**: December 04, 2025 Key Industry Insights - The manufacturing sector, particularly those with long supply chains extending to Asia, has faced significant challenges in 2025 due to tariffs and inflationary pressures [1][2] - The company remains confident in its long-term growth trajectory despite these challenges [1] Core Financial Targets - The company aims for mid-single-digit top-line growth, gross margins exceeding 35%, and EBITDA margins in the high teens [1] - Tariffs have delayed achieving these targets by approximately 12 months, with expectations to reach a 35% gross margin by Q4 2026 [5][6] Strategic Focus - The new CEO, Chris Nelson, emphasizes an evolutionary approach to strategy, focusing on organic growth and margin expansion rather than mergers and acquisitions [3][4] - The company plans to tighten its portfolio modestly while maintaining focus on key brands: DeWalt, Stanley, and Craftsman [3] Gross Margin and Cost Management - The company finished 2025 with an estimated gross margin of 31% for the full year and 33% for Q4 [5][6] - Expected gross margin improvement for 2026 is projected to be achieved through approximately $350-$375 million in cost of goods sold (COGS) improvements and over $200 million in tariff mitigation [6][7] - The company has reduced its sourcing from China to less than 5% of COGS, down from 15% at the beginning of the year [20][21] Market Conditions and Growth Outlook - The company anticipates a "noisy, flattish" macroeconomic environment for the upcoming year, which may impact growth [9] - The professional (pro) segment has shown stronger performance compared to the DIY segment, with both facing price and inflation pressures [10][11] SG&A Investments - The company is restructuring its SG&A expenses, aiming to reduce back-office costs by $100 million while investing the same amount into front-office resources [12][13] - The SG&A as a percentage of net sales is expected to remain in the 21%-22% range [13][26] Brand Strategy - The company is shifting to a brand-led strategy, focusing on its three major brands (DeWalt, Stanley, Craftsman) to drive growth and product development [31][32] - Other brands will be maintained with limited resources, focusing on core strengths rather than broadening their product lines [35][36] Free Cash Flow Expectations - The company is targeting approximately $600 million in free cash flow for the year, with a significant portion expected in Q4 due to seasonal trends [40][41] Conclusion - Stanley Black & Decker is navigating a challenging environment with a clear focus on long-term growth, cost management, and brand strategy, while adapting to market conditions and tariff impacts [1][2][5][9]

Financial Data and Key Metrics Changes - Total revenue for the third quarter was $3.8 billion, flat compared to the prior year, with a 1% organic decline driven by a 5% increase in pricing and a 6% decrease in volume [16][18] - Adjusted gross margin rate was 31.6%, up 110 basis points year over year, primarily due to pricing strategies and supply chain efficiencies [17][25] - Adjusted EBITDA margin was 12.3%, reflecting a 150 basis point improvement year over year [17] Business Line Data and Key Metrics Changes - Tools and outdoor segment revenue was approximately $3.3 billion, flat year over year, with a 2% organic revenue decline due to a 5% pricing benefit offset by a 7% volume decrease [18][20] - Engineered fastening segment revenue grew 3% on a reported basis and 5% organically, driven by a 4% volume increase and a 1% price benefit [22] - DEWALT brand maintained strong momentum with revenue expansion across all product lines and regions, reflecting targeted investments in innovation [20] Market Data and Key Metrics Changes - North America organic revenue for tools and outdoor declined 2%, with end user demand starting strong but moderating later in the quarter [21] - In Europe, organic revenue was flat, with growth in the U.K. offset by softer conditions in France and Germany [22] - The rest of the world saw a 1% organic revenue decline, primarily due to market softness in Asia [22] Company Strategy and Development Direction - The company aims to achieve a 35% adjusted gross margin while strengthening its balance sheet, focusing on activating brands, driving operational excellence, and accelerating innovation [7][15] - A strategic transformation program is on track to deliver $2 billion in cost reductions by year-end 2025, with $120 million in incremental pre-tax run rate cost savings achieved in the third quarter [28][30] - The company is reducing reliance on Chinese imports, targeting less than 10% of U.S. supply from China by mid-2026 [29] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a challenging macroeconomic environment but remains confident in achieving long-term financial goals through disciplined execution [16][40] - The outlook for 2025 anticipates total company sales to be flat to down 1%, with adjusted earnings per share expected to be approximately $4.55 [30][33] - Management emphasizes the importance of maintaining operational resilience and adapting to evolving market conditions [40] Other Important Information - The company recorded a $169 million pre-tax non-cash asset impairment charge in the third quarter, primarily related to brand prioritization strategy adjustments [31] - Free cash flow for the third quarter was $155 million, contributing to a full-year target of $600 million [36][37] Q&A Session Summary Question: How did volumes perform relative to expectations? - Management indicated that volumes were in line with expectations, starting strong but tapering towards the end of the quarter due to a non-standard promotional window [44][46] Question: What are the profit levers for the fourth quarter? - Operating profit is expected to expand due to gross margin improvements and SG&A expense reductions, with a target gross margin around 33% [49][50] Question: What is the impact of tariff inflation on pricing? - The second price increase is expected to be in the low single-digit range, with minimal impact from recent tariff changes [56][58] Question: How does the company view its position in the housing market? - Management believes the company is well-positioned to benefit from any future housing market recovery, focusing on building relationships and innovation during the current market retrenchment [80][84] Question: What progress has been made on USMCA compliance? - Significant progress has been made towards USMCA compliance, with no structural roadblocks anticipated [86][88]

Company Overview - Stanley Black & Decker, Inc. (SWK) has a market cap of $10.5 billion and is a leading global manufacturer of industrial tools, household hardware, and security products, with brands like DeWalt, Stanley, Craftsman, and Black+Decker [1] - The company operates through two main segments: Tools & Outdoor and Industrial, with a strong presence in North America and international markets [1] Earnings Expectations - SWK is set to report its fiscal 2025 Q3 earnings on November 4, with analysts expecting a profit of $1.19 per share, a decrease of 2.5% from $1.22 per share in the same quarter last year [2] - For the current fiscal year, analysts project an EPS of $4.56, which is an increase of 4.6% from $4.36 in fiscal 2024 [3] - Looking ahead, earnings are expected to surge 21.7% year-over-year to $5.55 per share in fiscal 2026 [3] Stock Performance - Over the past year, SWK shares have declined by 36.2%, underperforming the S&P 500 Index's gains of 13.5% and the Industrial Select Sector SPDR Fund's increase of 8.9% [4] - On October 7, SWK shares fell by 1.6% after Wells Fargo analyst Joe O'Dea reaffirmed a "Hold" rating and set a price target of $80 [5] Analyst Ratings - Analysts maintain a moderately bullish outlook on SWK, with an overall "Moderate Buy" rating; among 16 analysts, six recommend a "Strong Buy," nine suggest a "Hold," and one recommends a "Strong Sell" [6] - The mean price target for SWK is $83.75, indicating a potential premium of 23.3% from its current price level [6]

Company Overview - Stanley Black & Decker, Inc. (NYSE:SWK) is a well-known name in tools and hardware, with a history exceeding a century and a portfolio that includes brands like Stanley, Black+Decker, and Craftsman [2] Recent Performance - The company experienced a surge in demand for home improvement and DIY projects during the pandemic, leading to significant sales growth. However, this demand was largely temporary, resulting in a decline in sales as conditions normalized. The stock has lost over 50% of its value in the past five years, contrasting sharply with its pandemic-era highs [3] - In 2024, the company's revenue was approximately $15.4 billion, remaining flat compared to the previous year when excluding the impacts of acquisitions, divestitures, and currency fluctuations [4] Dividend Status - Stanley Black & Decker is recognized as a Dividend King, having increased its dividends annually for 59 years, which is one of the longest streaks in the market. This achievement indicates a strong balance sheet capable of supporting future payouts. The current quarterly dividend is $0.83 per share, yielding 4.48% as of October 2 [5]

Core Insights - Academy Sports + Outdoors is committed to expanding its presence by opening 20-25 new stores in fiscal 2025, having recently opened two new locations and planning another in Morgantown, W.Va [1][4] - The company has surpassed 300 total stores as of Q1 2025, reinforcing its mission to provide quality sporting goods and outdoor gear to families across the United States [1][10] Expansion Plans - In 2023, Academy opened 14 new stores across six states, followed by 16 new stores in 2024 across ten states, including its first locations in Ohio [4] - As of 2025, Academy has opened 7 new stores in six states, marking its first entries in Pennsylvania and Maryland [4] Community Engagement - Academy celebrated new store openings by hosting donation shopping sprees with local non-profits, enhancing community involvement and support [3][4] - The company's donations have positively impacted local communities by providing essential equipment and promoting youth participation in sports [4] Product Offering - Each Academy store offers a wide range of products including apparel, footwear, sports equipment, and outdoor gear from top national brands at competitive prices [2][5] - Academy also features exclusive private label brands that provide quality outdoor apparel and equipment [6] Customer Experience - The company provides free services such as grill and bike assembly, and offers a rewards program, myAcademy, which includes various customer benefits [8][9]

Summary of Conference Call Company Overview - The conference call pertains to **Stanley Black & Decker**, a company involved in tools and outdoor products, discussing its recent performance and strategic direction. Key Points and Arguments Financial Performance - The company reported **organic year-over-year growth** and **margin expansion** in Q1, indicating progress in its transformation efforts [1] - The impact of tariffs on the company was initially estimated at **$1.7 billion**, which has now been reduced to an annualized range of **$500 to $600 million**, reflecting a positive shift in the trade environment [2][3] - The anticipated headwind from tariffs has decreased from **75 cents** to approximately **40 cents** per share, indicating improved financial conditions [2] Strategic Initiatives - The company is focused on achieving **35% plus gross margins** and is committed to a growth culture [5] - A significant transformation in the supply chain has been implemented to enhance productivity and efficiency, which is expected to yield long-term benefits [6][9] - The organizational structure has shifted to focus on brand management, allowing for better alignment with customer needs and driving demand for core brands like **DeWalt, Stanley, and Craftsman** [10][11] Supply Chain and Production - The company is actively reducing its reliance on China for U.S. consumption, aiming to be effectively out of China within **12 to 24 months** [20] - The strategy includes leveraging production capabilities in **Mexico** and ensuring compliance with **USMCA** regulations [21][33] - The company is working to simplify its manufacturing footprint and improve inventory turnover, with current inventory days at **150**, compared to pre-pandemic levels of **120-130** [44][45] Market Conditions - There is a noted strength in the professional market segment compared to the DIY segment, which remains soft due to economic instability [29] - The company anticipates that improvements in the economy and interest rates will eventually lead to increased consumer activity in the DIY sector [30] Pricing Strategy - The pricing environment is described as volatile, with the company committed to maintaining service levels and inventory flow to support customers [18] - The company has a flexible pricing strategy that can be adjusted based on market conditions and tariff impacts [22][24] Portfolio Management - The company is in the process of portfolio cleanup, focusing on divesting non-core assets to streamline operations and improve cash generation [51][52] Additional Important Content - The company has centralized its engineering organization to enhance innovation and product development efficiency [12][13] - There is a focus on building a more diverse and flexible production strategy across various geographic locations, including **Vietnam** and **India** [33] - The management expressed confidence in the talent and team dynamics within the company, which is crucial for executing its strategic vision [14] This summary encapsulates the essential insights from the conference call, highlighting Stanley Black & Decker's financial performance, strategic initiatives, market conditions, and operational adjustments.