• Full Year Revenue: $15.4 billion, flat on an organic basis.
• DEWALT Organic Growth: Mid-single digits in 2024.
• Aerospace Fastening Organic Growth: 22% in 2024.
• Adjusted Gross Margin: Greater than 31% in Q4 and 30% for the full year.
• Full Year Margin Expansion: 400 basis points.
• Full Year Adjusted EBITDA: $1.6 billion, with a margin of 10.1%.
• Full Year Adjusted EPS: $4.36.
• Free Cash Flow: Approximately $750 million for the full year.
• Debt Reduction: $1.1 billion in 2024.
• Q4 Revenue: $3.7 billion, flat versus prior year.
• Q4 Organic Revenue Growth: 3%.
• Q4 Adjusted Gross Margin: 31.2%, up 140 basis points versus prior year.
• Q4 Adjusted EBITDA Margin: 10.2%, up 80 basis points versus prior year.
• Q4 Adjusted EPS: $1.49.
• Q4 Free Cash Flow: $565 million.
• Tools and Outdoor Q4 Revenue: Approximately $3.2 billion, with 3% organic growth.
• Tools and Outdoor Q4 Adjusted Segment Margin: 10.2%, a 20-basis-point improvement.
• Power Tools Organic Growth: 5% in Q4.
• Hand Tools Organic Growth: 2% in Q4.
• Outdoor Organic Growth: 3% in Q4.
• Industrial Q4 Revenue Decline: 15% on a reported basis.
• Industrial Organic Revenue: Flat in Q4.
• Industrial Adjusted Segment Margin: 10.7% in Q4.
• 2025 Pre-Tariff Adjusted EPS Guidance: $5.25, plus or minus $0.50.
• 2025 Pre-Tariff Free Cash Flow Guidance: $750 million, plus or minus $100 million.

• Warning! GuruFocus has detected 7 Warning Signs with SWK.

Release Date: February 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Stanley Black & Decker Inc (NYSE:SWK) achieved significant progress in 2024, with gross margin expansion and solid free cash flow generation.
• The company delivered full-year revenues of $15.4 billion, maintaining flat organic growth despite a challenging market environment.
• DEWALT brand showed mid-single-digit organic growth, indicating successful investments and focus on market share gains.
• The aerospace fastening segment experienced standout organic growth of 22%, contributing positively to overall revenue.
• The company achieved a full-year adjusted gross margin of 30%, with a 400 basis point expansion driven by supply chain improvements.

Negative Points

• The consumer and DIY market environment remained soft, impacting overall demand and growth potential.
• The automotive segment faced high single-digit organic decline due to reduced OEM production schedules and tightened CapEx spending.
• Currency headwinds and the divestiture of the infrastructure business negatively impacted revenue growth.
• The company anticipates a muted demand environment in the first half of 2025, with several end markets not expected to improve until 2026.
• Potential tariffs pose a risk, with an estimated unmitigated impact of $90 million to $100 million, although mitigation plans are in place.

Q & A Highlights

Q: What is the expected gross margin expansion for 2025, and how will it progress throughout the year? A: Patrick Hallinan, CFO, stated that the company aims for approximately 250 basis points of full-year gross margin expansion in 2025 compared to 2024. The first half is expected to see a 100 basis points-plus increase year-over-year, with the back half experiencing a 300 basis points-plus expansion due to pricing adjustments and other factors. The fourth quarter is anticipated to exit at a midpoint between 34% and 35%.

Q: What are the planned SG&A investments for 2025, and how will they support growth? A: Christopher Nelson, COO, explained that investments will focus on core brands, particularly targeting professional users with innovations to enhance safety and productivity. The company has added approximately 400 field resources to drive market share growth, especially in underpenetrated areas. Patrick Hallinan added that SG&A as a percentage of sales is expected to be around 22% for the year.

Q: How does Stanley Black & Decker plan to achieve share gains and organic growth in 2025? A: Christopher Nelson highlighted that the company aims to build on DEWALT's momentum, which has seen seven consecutive quarters of growth. Additionally, investments in Stanley and Craftsman are expected to stabilize and drive modest share gains. The focus will be on professional users and expanding market presence.

Q: What is the company's strategy for mitigating the impact of potential tariffs? A: Patrick Hallinan noted that the company plans to offset potential tariff impacts through a combination of supply chain adjustments and pricing actions. The expected net impact of tariffs in 2025 is estimated at $10 million to $20 million, primarily due to timing lags in implementing countermeasures. The company is accelerating efforts to reduce reliance on Chinese production for the U.S. market.

Q: How did the promotional environment affect gross margins in the fourth quarter, and what is the outlook for 2025? A: Patrick Hallinan mentioned that while promotions were a slight headwind to gross margins in the fourth quarter, they were part of a successful strategy to drive growth. The company expects to maintain a similar promotional cadence in 2025, with promotions supporting strong sales performance without significantly impacting margins.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.