Stanley Black & Decker NYSE: SWK said second-quarter revenue was in line with the prior year and rose 3% organically, as strength in its U.S. tools business and commercial and industrial channels helped offset portfolio changes and weakness in outdoor products.
President and CEO Chris Nelson said the company delivered “profitable organic growth” and remained on track to meet its full-year sales and margin objectives. Adjusted earnings per share totaled $1.57, exceeding the midpoint of the company’s prior guidance range by $0.37. Adjusted gross margin increased 620 basis points year over year to 33.7%, while adjusted EBITDA margin rose 320 basis points to 11.3%.
The quarter’s gross margin included an approximately 250-basis-point benefit from net tariff refunds. Management said it intends to use those refunds to accelerate growth investments, including spending on product innovation, brand activation and go-to-market capabilities.
Tools Business Posts Growth, Led by Power Tools
Tools & Outdoor revenue was about $3.6 billion, up 3% from a year earlier. Organic revenue also rose 3%, reflecting 3% volume growth and flat pricing. Currency provided a 1% benefit, which was offset by the company’s transition to a licensing model for gas walk-behind outdoor products.
Power tools organic revenue increased 8%, while hand tools, accessories and storage revenue rose 2%. Outdoor organic revenue declined 7%, which Nelson attributed to fewer replenishment orders following weather-related demand softness.
North American organic revenue increased 4%, with U.S. retail sales up by a mid-single-digit percentage. The U.S. commercial and industrial channel grew by a low-double-digit percentage during the quarter. Nelson said the company has increased investment in that channel through job-site support, trade specialists, distribution resources and DEWALT product offerings aimed at large commercial construction projects.
Tools & Outdoor adjusted segment margin was 11.8%, up 380 basis points year over year. The improvement was driven mainly by productivity gains and favorable product mix, with net tariff refunds adding about 150 basis points.
Nelson said DEWALT, STANLEY and CRAFTSMAN all delivered organic growth in the quarter. He cited new products, improved channel placement and more targeted promotions as contributors to the power-tools performance. CRAFTSMAN’s V20 advanced batteries were well received, he said, supporting the brand’s V20 platform performance.
Engineered Fastening Grows Organically Despite Divestiture
Engineered Fastening revenue declined 18%, largely because the sale of the aerospace fasteners business reduced reported revenue by 21%. On an organic basis, however, revenue increased 3%, with volume contributing 2 percentage points and pricing contributing 1 percentage point.
Automotive systems and fasteners generated low-double-digit organic growth, while the industrial portion of the business posted high-single-digit organic growth. Nelson pointed to opportunities in solar and data-center-related applications as areas of industrial strength.
Adjusted segment margin for Engineered Fastening was 13%, up 220 basis points from a year earlier. Management attributed the increase largely to productivity, automotive volume and mix, while tariff refunds contributed about 50 basis points.
Guidance Raised as Company Plans Additional Investments
Chief Financial Officer Patrick Hallinan said the company raised and tightened its 2026 adjusted EPS outlook to a range of $5.20 to $5.80. The midpoint represents 18% year-over-year growth and is $0.20 above the midpoint of the previous range.
About $0.15 of the guidance increase reflects lower interest expense, the impact of second-quarter share repurchases and lower other-net costs in the first half, Hallinan said. The remaining $0.05 reflects the expected full-year net benefit from tariff refunds received during the second quarter.
The company maintained its revenue outlook, calling for total revenue to be about flat year over year and low-single-digit organic revenue growth, split roughly evenly between volume and price. It expects adjusted gross margin to expand by approximately 150 basis points for the full year excluding the tariff-refund effect. Refunds are expected to add another 60 to 70 basis points to full-year adjusted gross margin.
- Third-quarter net sales are expected to be about $3.7 billion, flat on a reported basis and up 3% to 4% organically.
- Third-quarter adjusted EPS is projected at approximately $1.50 to $1.60.
- Full-year free cash flow guidance was raised to $600 million to $800 million, including projected taxes and fees associated with the CAM divestiture.
- Excluding those payments, free cash flow is expected to be $800 million to $1 billion.
Hallinan said the company expects second-half adjusted gross margin of 34% to 35%, with the fourth quarter potentially modestly ahead of the third quarter. Productivity, tariff mitigation efforts, increased USMCA compliance and shifting U.S. tools production from China to North America are expected to support results.
Debt Reduction and Share Repurchases
Following the sale of its aerospace fasteners business early in the quarter, Stanley Black & Decker used proceeds and operating cash flow to reduce debt by approximately $1.7 billion. The company also repurchased 3.2 million shares for $250 million during the quarter.
Management said it expects net debt to adjusted EBITDA to be at or around 2.5 times by year-end, including buybacks. The company said its capital-allocation priorities include funding organic growth, supporting the dividend, repurchasing shares and considering bolt-on acquisitions when appropriate.
About Stanley Black & Decker (NYSE:SWK)
Stanley Black & Decker, Inc NYSE: SWK is a leading global manufacturer of industrial tools, engineered fastening systems, and security products. The company's portfolio includes power tools, hand tools, accessories, and storage solutions marketed under well-known brands such as DEWALT, Stanley, Craftsman and Black & Decker. In addition to its core tools and hardware offerings, the company provides customized assembly and installation systems for the automotive, electronics and aerospace industries.
Operations are organized across three principal business segments.
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