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| Statement |
|---|
| This is the third consecutive quarter that we delivered sequential gross margin improvement |
| Consistent successful execution against our plan gives us the confidence to increase investments, which will accelerate organic growth behind our most powerful brands |
| Stanley Black & Decker’s third quarter performance reflects the continued successful advancement of our strategic business transformation |
| Our focused execution resulted in improvements versus prior year in adjusted gross margin and earnings per share, as well as free cash flow |
| We achieved this through improved supply chain conditions, strategic inventory management and the planned production curtailments initiated during the back half of 2022 |
| One, our cost and inventory position is healthier behind the momentum of our supply chain transformation and we are confident in the runway for this to continue |
| Two, our execution is stronger and the results now demonstrate the focus across the organization to enhance the customer experience and improve our financial position |
| Three, our performance today provides a solid foundation for the additional investments we are launching in innovation and market activation to capture the compelling long-term growth opportunities in the markets we serve |
| Our focus is on delivering best-in-class product innovation through our portfolio of world class brands, implementing cost efficiency measures within our control and driving share gain in our core markets |
| All aim to further improve margin, earnings and cash flow |
| While there are many important steps ahead of us on our journey, I am confident that we have the right strategy, a highly capable and motivated leadership team, and a strong competitive position to successfully execute our transformation |
| The demand for our Pro Tools, as well as automotive and aerospace fasteners remained healthy and demonstrated growth in the quarter |
| I will let Pat give it a little more color on that, but we are pleased that we have gotten to a more stable manufacturing level here in the fourth quarter |
| We positioned ourselves well over the last decade to be able to continue to address that |
| So I think we are positioned well for whatever may happen in the future |
| Adjusted gross margin rose to 27.6%, a 400-basis-point sequential improvement and 290 basis points favorable as compared to last year |
| The professional that ultimately is the ones the individuals that use our tools and because of that history and those channels that we have very strong presence in not only North-America, but the European markets, as well as emerging markets around the globe |
| We get strength in aerospace and auto in our fastener and Industrial businesses |
| Looking ahead to 2024, we expect additional sequential and year-over-year gross margin gains |
| The third quarter inventory reduction supported the generation of approximately $360 million of free cash flow in the period, resulting in one of the strongest third quarter cash generations in the company’s history |
| Benefits from lower supply chain costs contributed to third quarter adjusted diluted EPS of $1.05, which was better than our plan |
| Year-over-year expansion was driven by lower inventory destocking costs, supply chain transformation benefits and reduce shipping costs |
| I want to thank our 50,000 plus employees around the world for their focus, dedication and passion that contributed to another successful step forward in the third quarter |
| Our progress is encouraging and I am confident that by executing our strategy, we are positioning the company to deliver higher levels of organic growth, profitability and cash flow, as well as strong long-term shareholder returns |
| We improved Industrial adjusted operating margin by 110 basis points versus prior year, driven by continued price realization and cost actions to deliver adjusted operating margin of 12.2% in the quarter |
| This represents strong execution and continued year-over-year margin expansion for our Industrial team |
| Within this segment Engineered Fastening organic revenues were up 6%, including aerospace growth of 29% and auto growth of 9%, as we continue to capture the strong cyclical recoveries in these markets, which was partially offset by what occurred in industrial fastening |
| The long-term fundamentals for growth remain solid in all these businesses and we believe the temporary channel inventory destocking in Attachment Tool will be complete as we exit 2023 |
| Moving forward, we expect continued adjusted gross margin rate expansion driven by the benefits of the supply chain transformation |
| This is the fifth consecutive quarter of double-digit adjusted operating margin for the segment |
| Statement |
|---|
| Total revenue was $3.4 billion, down 5% organically versus prior year as a result of lower consumer Outdoor and DIY market demand |
| We have weak points in Outdoor and consumer trends |
| Revenue was $4 billion, which was down versus the prior year primarily due to lower Outdoor and DIY volume |
| Third quarter Industrial revenue declined 4% versus last year, as price realization and currency were more than offset by lower volume and a 3-point impact from our Q3 2022 Oil and Gas business divestiture |
| Power Tools declined 2% organically, pressured by Consumer Tools |
| Transitioning to Outdoor, organic revenue declined due to market demand choppiness as the industry resets from the pandemic era |
| Most of that is baking in the trends in Outdoors and Attachment Tools that we saw in the third quarter and also an expectation that unsettled UAW strike with at least two of the big auto manufacturers could pose some headwinds to our fastening business |
| Our Attachment Tool business experienced organic revenue declines, primarily as a result of customer destocking to normalize their inventory levels |
| As we head into the fourth quarter, the topline is probably a bit softer, probably to the tune of around $100-ish million or so versus the expectations we would have had a quarter ago |
| So a softness in the fourth quarter at the topline slightly is one of the reasons that the guidance in absolute terms in the fourth quarter is there |
| Including this impact, organic sales declined 4% |
| This resulted in fewer shipments in the quarter as there are elevated inventory levels globally impacting replenishment cycles |
| This implies a revenue midpoint of $15.9 billion for the year and includes estimated risks for auto strikes and continued infrastructure customer destocking |
| Our expected GAAP earnings per share range has been revised to negative $1.45 to negative $1 from negative $1.25 to negative $0.50, charges primarily from the global supply chain transformation and Outdoor business integration |
| Could things get worse? Possibly |
| So I think originally you guys were kind of expecting flat to slightly down in the quarter for Tools, obviously, a little bit weaker than that |
| And if the market is negative, we will -- we won’t be slight as much negative, if it’s stable or neutral will probably grow a little bit |
| It just as you reconcile and provide out the actual color and pricing was a little bit more than we would have expect |
| And we went through a period of time, in particular, in late 2021 and 2022, where we felt the impact of the shortage of semiconductors that really put us in a position where we actually lost some market share and we have been pretty frank and clear about that |
| Our European organic revenue was down 3% with bright spots from double-digit organic growth in the U.K |
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