Stanley Black & Decker Inc (SWK) Reports Q3 2023 Earnings: Key Highlights
Stanley Black & Decker Inc (NYSE:SWK) reported Q3 revenues of $4.0 billion, down from the previous year due to lower outdoor and DIY volume.
The company's Global Cost Reduction Program delivered $875 million of pre-tax run-rate savings since its initiation, on track for expected $2 billion run-rate savings by 2025.
Generated cash from operating activities of approximately $440 million and free cash flow of approximately $360 million in the third quarter, driven by inventory reductions.
Inventory reduced by approximately $1.7 billion since mid-2022.
Stanley Black & Decker Inc (NYSE:SWK) announced its third quarter 2023 financial results on October 27, 2023. The company reported Q3 revenues of $4.0 billion, a decrease from the previous year, primarily due to lower outdoor and DIY volume as well as attachment tool customer destocking. Despite this, the company's Global Cost Reduction Program has delivered $875 million of pre-tax run-rate savings since its initiation, and is on track for expected $2 billion run-rate savings by 2025.
Financial Performance
The company's third quarter gross margin was 26.8%, and the adjusted gross margin was 27.6%, up 290 basis points versus the prior year and 400 basis points sequentially. The third quarter operating margin was 6.7%, and the adjusted operating margin was 8.3%, up 210 basis points versus the prior year. The third quarter GAAP EPS was $0.03, and the adjusted EPS was $1.05.
Stanley Black & Decker Inc (NYSE:SWK) generated cash from operating activities of approximately $440 million and free cash flow of approximately $360 million in the third quarter, driven by inventory reductions. The company reduced its inventory by approximately $1.7 billion since mid-2022.
Updated 2023 EPS Guidance
The company updated its 2023 EPS guidance ranges. The full year GAAP EPS is now expected to be ($1.45) to ($1.00) (from ($1.25) to ($0.50)), raising adjusted EPS to $1.10 to $1.40 (from $0.70 to $1.30). The company is maintaining its free cash flow range of $0.6 billion to $0.9 billion.
CEO's Commentary
Donald Allan, Jr., Stanley Black & Decker's President & CEO, commented,
We successfully advanced our strategic business transformation in the third quarter. Our focused execution resulted in improvements versus prior year in adjusted gross margins and earnings per share as well as free cash flow. These performance improvements provide a solid foundation for additional investments in innovation and market activation to capture the compelling long-term growth opportunities in the markets we serve.
Outlook
Patrick D. Hallinan, Executive Vice President and CFO, commented on the company's outlook,
We are creating strong momentum with our cost reduction program, delivering $880 million in inventory reduction and $675 million of pre-tax run-rate cost savings year-to-date, both ahead of our initial plans. Our consistent, diligent execution enabled us to increase our 2023 adjusted earnings per share outlook and forms the foundation for continued adjusted gross margin improvements in 2024."
Explore the complete 8-K earnings release (here) from Stanley Black & Decker Inc for further details.
This article first appeared on GuruFocus.
