Stanley Black (SWK) Q1 Earnings & Revenues Miss Estimates
Stanley Black & Decker, Inc. SWK reported mixed first-quarter 2023 results. SWK’s earnings beat the Zacks Consensus Estimate by 43.8%. However, sales missed the same by 1.8%.
In the reported quarter, SWK incurred a loss of 41 cents per share, narrower than the Zacks Consensus Estimate of a loss of 73 cents per share. Our estimate for first-quarter adjusted earnings was a loss of 76 cents per share. The bottom line decreased 119.5% from the year-ago quarter’s $2.10.
Revenue Details
In the quarter under review, Stanley Black’s net sales were $3,931.8 million, reflecting a year-over-year decline of 11.6%. The results benefited 2% from favorable pricing. Foreign currency translation had an adverse impact of 2%, divestitures had a negative impact of 1% and lower volume affected sales 11%.
SWK’s top line missed the Zacks Consensus Estimate of $4,002 million. Our estimate for net sales in the reported quarter was $3,939.1 million.
Stanley Black reports net sales under two segments, namely Tools & Outdoor and Industrial. The segmental information is briefly discussed below:
Revenues from the Tools & Outdoor segment totaled $3,315.4 million, decreasing 12.8% year over year. Our estimate for segmental revenues was $3,342.0 million. Pricing added 2% to sales growth, while adverse foreign-currency translations lowered sales 2%. Lower volumes affected 13%.
Revenues from the Industrial segment grossed $616.4 million, decreasing 4.7% year over year. Our estimate for segmental revenues was $597.0 million. The segment gained 5% from effective pricing. Forex woes had a negative impact of 3% and lower volumes had a negative effect of 2%.
Stanley Black & Decker, Inc. Price, Consensus and EPS Surprise
Stanley Black & Decker, Inc. price-consensus-eps-surprise-chart | Stanley Black & Decker, Inc. Quote
Margin Profile
In the reported quarter, Stanley Black’s cost of sales decreased 1.5% year over year to $3,096.3 million. The metric represented 78.8% of the quarter’s net sales, compared with 70.6% in the year-ago quarter. The gross profit decreased 36% to $835.5 million. The gross margin decreased 810 basis points (bps) to 21.2%.
Selling, general and administrative expenses decreased 14.1% year over year to $825.1 million. The metric represented 21% of net sales in the reported quarter, compared with 21.6% in the year-ago period. Operating profit was $10.4 million in the quarter, compared with $345.1 million reported in the year-ago quarter. The margin declined 700 bps to 0.3%.
Balance Sheet and Cash Flow
While exiting the first quarter, Stanley Black had cash and cash equivalents of $387.6 million, down 2% from $395.6 million reported at the end of fourth-quarter 2022. The long-term debt balance increased 14% to $6,101.1 million from $5,352.9 million reported at the end of fourth-quarter 2022.
In the first three months of 2023, net cash used in operating activities was $286.3 million, compared with $1,241.1 million cash used in the year-ago period. Capital and software expenditures totaled $68.2 million, down from $139.8 million reported in the year-ago period. Free cash outflow (before dividends) in the year was $354.5 million, compared with $1,380.9 million free cash outflow a year ago.
During the same time period, Stanley Black did not spend any cash on business buyouts. SWK paid out dividends worth $119.8 million to its shareholders, up 3% from the year-ago period. Purchases of common stock for treasury were $4.8 million compared with $2,313 million in the year-ago period.
2023 Guidance
Stanley Black anticipates earnings in the range of breakeven to $2.00 per share in 2023. The bottom line is expected to be in the range of a loss of $1.65 per share to earnings of 60 cents per share compared with the prior guidance of a loss of $1.65 to earnings of 85 cents per share.
Free cash flow is expected to be $0.5 billion to $1.0 billion for 2023.
Zacks Rank & Stocks to Consider
SWK currently carries a Zacks Rank #4 (Sell). Some top-ranked companies from the Industrial Products sector are discussed below:
Ingersoll Rand Inc. IR presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks.
IR’s earnings surprise in the last four quarters was 8.5%, on average. In the past 60 days, estimates for Ingersoll Rand’s 2023 earnings have increased 3.3%. The stock has rallied 6.3% in the past six months.
Parker-Hannifin Corporation PH presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 9.1%, on average.
In the past 60 days, estimates for Parker-Hannifin’s fiscal 2023 (ending June 2023) earnings have increased 0.5%. The stock has gained 7.5% in the past six months.
Allegion plc ALLE presently carries a Zacks Rank of 2. ALLE’s earnings surprise in the last four quarters was 12.5%, on average.
In the past 60 days, Allegion’s earnings estimates have increased 4.1% for 2023. The stock has gained 1.7% in the past six months.
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Stanley Black & Decker, Inc. (SWK) : Free Stock Analysis Report
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