Stanley Black & Decker Navigates Tough Q4: Sales Dip But Beats EPS Expectations, Eyes Steady 2024

Author: Akanksha Bakshi | February 01, 2024 02:04pm

Stanley Black & Decker Inc (NYSE:SWK) reported a fourth-quarter FY23 sales decline of 6% year-on-year to $3.74 billion, missing the consensus of $3.84 billion.

The revenue decline is primarily due to lower outdoor and DIY volume and infrastructure customer destocking. Adjusted EPS of $0.92 beat the consensus of $0.79.

Gross margin expanded by 280 bps to 29.6% sequentially, and adjusted gross margin was 29.8%, up from 19.5% YoY.

Adjusted gross margin expansion was driven by lower inventory destocking costs, supply chain transformation benefits, and lower shipping costs.

Net loss from continuing operations was (7.4%) of sales, down 490 bps YoY. Adjusted EBITDA margin was 9.4%, up 620 bps YoY.

Inventory reduced by ~$1.1 billion versus prior year Q4, driving $1.2 billion of cash from operating activities and $853 million of free cash flow generation in 2023. 

Stanley Black & Decker held $449.4 million in cash and equivalents as of December 30, 2023.

Related: Stanley Black & Decker Streamlines Portfolio With $760M Infrastructure Sale To Epiroc, Targets Debt Reduction

2024 Outlook: Stanley Black & Decker expects GAAP EPS of $1.60-$2.85 and Adjusted EPS of $3.50-$4.50 versus consensus of $4.46.

Stanley Black & Decker expects total organic revenue to be relatively flat YoY +/- 2 points, and Adjusted EBITDA margin of ~10%

The company sees a free cash flow of $0.6 billion to $0.8 billion. For Q1, SWK anticipates Adjusted EPS to approximate ~13% of FY Adjusted EPS.

Price Action: SWK shares are trading lower by 2.27% at $91.18 on the last check Thursday.

Posted In: SWK