NEW YORK - Stanley Black & Decker (NYSE:SWK), a global leader in tools and outdoor equipment, reported a slight beat on its first quarter 2024 adjusted earnings per share (EPS), while revenue also surpassed analyst expectations.
The company announced an adjusted EPS of $0.56, marginally higher than the analyst consensus of $0.55. Revenue for the quarter was $3.87 billion, exceeding the consensus estimate of $3.82 billion and representing a 2% decline from the previous year's first quarter.
The company's performance was supported by growth in its DEWALT brand and Engineered Fastening segment, which helped mitigate the impact of lower Infrastructure volume and subdued consumer and DIY demand.
Gross margin improved significantly, with a reported 28.6% and an adjusted figure of 29.0%, marking an increase of 740 and 590 basis points, respectively, compared to the same period last year. This margin expansion was attributed to lower inventory destocking costs, supply chain transformation benefits, and reduced shipping costs.
Despite the revenue decline, the company's strategic business transformation and operational objectives have been credited for the solid execution that led to the positive financial results. President & CEO Donald Allan, Jr. emphasized the company's focus on supply chain cost improvements and innovation to drive long-term shareholder returns.
"We continue to see significant value creation opportunities tied to our strategic business transformation, and we remain focused on disciplined execution of our strategy," Allan stated.
For the second quarter of 2024, Stanley Black & Decker expects adjusted EPS to be in the range of $3.50 to $4.50, which, at the midpoint, is below the analyst consensus of $4.15. The company is maintaining its full-year guidance, anticipating GAAP EPS of $1.60 to $2.85, adjusted EPS of $3.50 to $4.50, and free cash flow of $0.6 billion to $0.8 billion.
The Tools & Outdoor segment experienced a slight decline in net sales compared to the first quarter of 2023, while the Industrial segment saw a 5% decrease in net sales year-over-year. However, both segments reported improvements in their margins due to cost control and price realization.
Stanley Black & Decker's Global Cost Reduction Program, aimed at generating significant pre-tax cost savings, has already achieved approximately $1.2 billion in savings since its mid-2022 inception. This program is a critical component of the company's strategy to return adjusted gross margins to historical levels above 35%.
The company's financial outlook remains cautious yet optimistic, with CFO Patrick D. Hallinan commenting on the ongoing strategic transformation and the company's focus on margin expansion, cash generation, and long-term growth. "The organization is focused on delivering margin expansion, cash generation, and balance sheet strength, while working together to position the Company for long-term growth and value creation," Hallinan explained.
As there was no percentage provided for the stock movement post-earnings, the market's reaction to these financial results cannot be determined from the information given.
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