Stanley Black and Decker: Reports 3Q 2025 Results

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Information Source: Stanley Black & Decker

Solid Third Quarter Execution Amid Dynamic Operating Environment with Continued Growth in DEWALT and Year-Over-Year Gross Margin Expansion
Stanley Black & Decker (NYSE: SWK), a worldwide leader in tools and outdoor, today announced third quarter 2025 financial results.
  • Third Quarter Revenues of $3.8 Billion, In Line With the Prior Year as Price and Currency Gains Were Offset by Anticipated Lower Volume
  • Third Quarter Gross Margin Was 31.4% and Adjusted Gross Margin* Was 31.6%
  • Third Quarter EPS was $0.34 and Adjusted EPS* was $1.43, Inclusive of a Tax Rate Benefit (Full Year Tax Rate* Unchanged)
  • Third Quarter Cash From Operating Activities Was $221 Million; Free Cash Flow* Was $155 Million
  • Company Updates Full-Year 2025 Planning Assumption
Christopher J. Nelson, Stanley Black & Decker's President & CEO, commented, "Stanley Black & Decker delivered solid third quarter results, despite prevailing macroeconomic uncertainty. Our performance included continued growth in our DEWALT brand, year-over-year gross margin expansion and solid free cash flow. The gross margin progress achieved during the third quarter illustrates our rapid and effective response to tariffs and our commitment to achieving our long-term financial objectives.
"Our goal is to build a world-class, branded industrial company by solving our end users' most pressing and complex challenges. We have nearly reached a critical milestone on this journey, with our multiyear global cost reduction program on track to achieve the targeted 2025 and full-program savings. The proficiency we have developed through this transformation allows us to serve our customers and end users with greater effectiveness and improved profitability. We will continue to build upon the foundation established by our transformation and drive continuous improvement, as we execute our strategic imperatives of activating our brands with purpose, driving operational excellence and accelerating innovation. We remain focused on driving towards the goals outlined during our November 2024 capital markets day.
"We are well-positioned for profitable growth and are focused on creating significant value from our powerful brands and businesses to generate long-term revenue growth, margin expansion, cash generation and shareholder return."
Third Quarter 2025 Key Points:
  • Net sales were $3.8 billion, in line with the prior year as price (+5%) and currency (+1%) were offset by volume (-6%).
  • Gross margin was 31.4%, up 150 basis points versus the prior year rate. Adjusted gross margin* was 31.6%, up 110 basis points versus the prior year. The year-over-year changes for gross margin and adjusted gross margin* were primarily due to benefits from our pricing strategies and supply chain transformation efficiencies, partially offset by tariffs, lower volume, and inflation.
  • SG&A expenses were 21.1% of sales versus 21.2% in the prior year. Excluding charges, adjusted SG&A expenses* were 21.0% of sales, up vfrom20.8% in the prior year. Both measures of SG&A as a percentage of sales are relatively flat, consistent with our strategy to continue funding growth investments while exercising disciplined and targeted cost management.
  • Non-cash asset impairment charges of $169 million, stemming from the Company's annual third-quarter long-term strategic planning reviews. Its updated brand prioritisation impacted the Lenox, Troy-Bilt, and Irwin trade names, and its ongoing portfolio assessment resulted in the write-down of certain minority investments associated with legacy corporate ventures.
  • The tax rate was (-44.4%) for the quarter, and the adjusted tax rate* was 14.0% for the quarter. These include an effective audit settlement.
  • Net earnings were 1.4% of sales versus 2.4% in the prior year. Third quarter EBITDA* as a percentage of sales was 6.5% versus 8.6% in the prior year. Third quarter adjusted EBITDA* was 12.3% of sales versus 10.8% of sales in the prior year.
3Q'25 Segment Results
  • Tools & Outdoor net sales were in line with the third quarter 2024, as price (+5%), currency (+1%) and a product line transfer from Engineered Fastening (+1%) were offset by volume (-7%). Organic revenues* were down (-2%), driven by expected tariff-related promotional reductions and a soft consumer backdrop, partially offset by continued DEWALT growth. Regional total revenue growth was: North America (-2%), Europe (+6%) and the rest of the world (-1%). Regional organic revenues* were: North America (-2%), Europe (flat) and the rest of the world (-1%). The Tools & Outdoor segment margin was 11.8%, up 180 basis points versus the prior year rate of 10.0%. Adjusted segment margin* was 12.0%, up 90 basis points versus the prior year rate of 11.1%. The year-over-year change in both segment margin and adjusted segment margin was primarily due to price, supply chain transformation efficiencies, partially offset by tariffs, lower volume, and inflation.
  • Engineered Fastening net sales were up (+3%) versus the third quarter 2024, as volume (+4%), price (+1%), and currency (+1%) were partially offset by a product line transfer to Tools & Outdoor (-3%). Organic revenues* were up (+5%), supported by the stronger-than-anticipated automotive market and continued strength in aerospace, partially offset by lower industrial volume. The Engineered Fastening segment margin was 11.9% versus the prior year rate of 14.4%. Adjusted segment margin* was 12.8% versus the prior year rate of 13.9%. The year-over-year change in segment margin and adjusted segment margin reflects elevated production costs in relation to a tough prior year comparable. However, the third quarter segment margin expanded by 470 basis points and the adjusted segment margin expanded by 200 basis points sequentially versus the second quarter as the automotive market improved.
Global Cost Reduction Program On Track To Deliver Targeted Results
The Global Cost Reduction Program generated approximately $120 million of incremental pre-tax run-rate cost savings in the third quarter of 2025. Since the inception of the program in mid-2022, it has generated approximately $1.9 billion of the targeted $2.0 billion pre-tax run-rate cost savings. These initiatives are designed to support continued margin enhancement as the Company remains focused on achieving its long-term adjusted gross margin* target of 35+%.
2025 Planning Assumptions
Patrick D. Hallinan, Executive Vice President and CFO, commented, "During the third quarter, we prioritised meeting the needs of our end users, while executing targeted commercial strategies and supply chain adjustments to mitigate tariffs. We continue to focus on achieving our long-term margin and cash flow objectives while enhancing earnings power and strengthening the balance sheet. Progress on these objectives is allowing us to continue funding investments in innovation and brand activation to drive profitable growth and support the Company's focus on long-term value creation."
The 2025 EPS for management's base planning scenario is revised to $2.55 to $2.70 on a GAAP basis (From $3.45 (+/-$0.10)), incorporating the third quarter pre-tax non-cash asset impairment charges of $169 million. The Company is expecting the base planning scenario for 2025 adjusted EPS* of approximately $4.55, revised from approximately $4.65, reflecting higher production costs that we expect to adjust back to targeted levels during the fourth quarter. The Company is targeting free cash flow* to approximate $600 million, unchanged from last quarter.
The difference between the 2025 GAAP and the adjusted EPS* planning assumption range is approximately $1.85 to $2.00, consisting primarily of charges related to the supply chain transformation under the Global Cost Reduction Program, non-cash asset impairment charges, and other cost actions.
Non-GAAP Adjustments
Total pre-tax non-GAAP adjustments in the third quarter of 2025 were $217.6 million, primarily related to non-cash asset impairment charges and footprint actions related to the supply chain transformation. Gross profit included $8.0 million of charges, while SG&A included $4.1 million. Other, net included $4.3 million of charges, and Restructuring included $32.1 million of charges. In addition, the Company recognised $169.1 million of non-cash asset impairment charges in the third quarter of 2025.
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Stanley Black & Decker
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