Stanley Black & Decker (SWK 0.37%), a leader in tools and storage solutions, released its first-quarter earnings on May 2, showcasing resilience amid economic fluctuations. The company reported an adjusted earnings per share (EPS) of $0.56, slightly above the expected $0.55. Despite a 1.5% drop in revenue from the previous year, total revenue of $3.87 billion was likewise better than the consensus forecast for $3.83 billion.
| Metric | Q1 2024 | Q1 2024 Analysts Estimate | Q1 2023 | % Change |
|---|---|---|---|---|
| Adjusted EPS | $0.56 | $0.55 | ($0.41) | N/A |
| Revenue | $3.87 billion | $3.83 billion | $3.93 billion | (1.5%) |
| Gross margin | 28.6% | N/A | 21.2% | 7.4 percentage points |
Data source: Company results from company. Analyst estimates from FactSet.
The core of the operation
Stanley Black & Decker has cemented its place as a cornerstone in the tools and outdoor equipment industry. With renowned brands like DeWalt and Craftsman as well as its namesake marques, the company thrives on innovation, quality, and operational excellence. Its focus has sharply turned toward optimizing supply chains, reducing costs, and innovating on the product front as key strategies for sustainable growth.
In the earnings release, the company described consumer demand for its products in Q1 as "muted," and noted that volumes also fell on the infrastructure side of the business.
However, the company's adept maneuvering through cost-reduction initiatives and strategic portfolio adjustments speaks to its resilience. That cost-cutting program, which saved it $145 million in the quarter, is expected to yield $1.5 billion in savings by the end of 2024, and $2 billion by the end of 2025.
Quarterly highlights
Despite a sales dip in its tools and outdoor segment, brand strength in DeWalt partially offset sluggish demand. The smaller industrial segment faced steeper sales declines, with volumes falling even as it raised prices. Meanwhile, gross margin improved, thanks to reduced shipping costs and inventory destocking efforts.
Looking ahead
Management's reiteration of its 2024 guidance implies confidence in the company's strategic direction, with expectations of sustained operational and margin improvements. Adjusted EPS is forecast to land between $3.50 and $4.50, with free cash flow of $600 million to $800 million.
Investors are encouraged to monitor the company's progress in its global cost reduction program and its investments in innovation and growth initiatives. These areas, crucial for long-term value creation, embody Stanley Black & Decker's strategic pillars for navigating future market dynamics.
