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Stanley Black (SWK) Q4 Earnings & Revenues Surpass Estimates

Stanley Black & Decker, Inc. SWK reported impressive fourth-quarter 2022 results. SWK’s earnings beat the Zacks Consensus Estimate by 69.7% and sales beat the same by 3.3%.

In the reported quarter, SWK incurred a loss of 10 cents per share, narrower than the Zacks Consensus Estimate of 33 cents. However, the bottom line decreased 104.7% from the year-ago quarter’s $2.14.

Revenue Details

In the quarter under review, Stanley Black’s net sales were $3,986.8 million, reflecting year-over-year growth of 0.1%. The results benefited 7% from acquired assets and 7% from favorable pricing. Foreign currency translation had an adverse impact of 3%, divestitures had a negative impact of 1% and lower volume affected sales 10%.

SWK’s top line beat the Zacks Consensus Estimate of $3,860 million. Our estimate for net sales in the reported quarter was $4,243.9 million.

Stanley Black reports net sales under two segments, namely Tools & Outdoor and Industrial. The segmental information is briefly discussed below:

Revenues from Tools & Outdoor totaled $3,382.9 million, almost flat year over year. Our estimate for segmental revenues was $3,609.0 million. Acquisitions (Excel and MTD) contributed 8% and pricing added 7% to sales growth, while adverse foreign-currency translations lowered sales 3%. Lower volumes affected 12%.

Revenues from Industrial grossed $603.9 million, decreasing 1% year over year. Our estimate for segmental revenues was $634.9 million. The segment gained 1% from higher volumes and 9% from effective pricing. Forex woes had a negative impact of 5% and the Oil & Gas divestiture had a negative effect of 6%.

 

Stanley Black & Decker, Inc. Price, Consensus and EPS Surprise

Stanley Black & Decker, Inc. price-consensus-eps-surprise-chart | Stanley Black & Decker, Inc. Quote

 

Margin Profile

In the reported quarter, Stanley Black’s cost of sales increased 13.3% year over year to $3,233.3 million. The metric represented 81.1% of the quarter’s net sales compared with 71.7% in the year-ago quarter. The gross profit decreased 33.1% to $753.5 million. The gross margin decreased 940 basis points (bps) to 18.9%.

Selling, general and administrative expenses decreased 18.9% year over year to $757.2 million. The metric represented 19% of net sales in the reported quarter compared with 23.4% in the year-ago period. Operating loss was $3.7 million in the quarter against $193.6 million reported in the year-ago quarter. The margin declined 500 bps to -0.1%.

Balance Sheet and Cash Flow

While exiting the fourth quarter, Stanley Black had cash and cash equivalents of $395.6 million, up 178.4% from $142.1 million reported at the end of fourth-quarter 2021. The long-term debt balance increased 23% to $5,352.9 million from $4,353.6 million reported at the end of fourth-quarter 2021.

In 2022, net cash used in operating activities was $1,459.5 million against $663.1 million generated in the year-ago period. Capital and software expenditures totaled $530.4 million, up from $519.1 million reported in the year-ago period. Free cash outflow (before dividends) in the year was $1,989.9 million against $144.0 million free cash flow a year ago.

During the same time period, Stanley Black spent $71.9 million net of cash acquired on business buyouts. SWK paid out dividends worth $465.8 million to its shareholders, down 1.9% from the year-ago period. Purchases of common stock for treasury were $2,323.0 compared with $34.3 million in the year-ago period.

Outlook

Stanley Black anticipates adjusted earnings per share of $0.00-$2.00 in 2023. Earnings are predicted to be a loss of $1.65 to earnings of 85 cents per share.

Free cash flow is expected to be $0.5 to $1.0 billion for 2023.

Zacks Rank & Stocks to Consider

SWK currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked companies from the Industrial Products sector are discussed below:

Applied Industrial Technologies, Inc. AIT presently sports a Zacks Rank #1 (Strong Buy) and a trailing four-quarter earnings surprise of 20.1%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks.

AIT’s earnings estimates have increased 6.5% for fiscal 2023 (ending June 2023) in the past 60 days. Shares of Applied Industrial have risen 42.1% in the past six months.

Allegion plc ALLE presently carries a Zacks Rank of 2 (Buy). ALLE’s earnings surprise in the last four quarters was 8.8%, on average.

In the past 60 days, Allegion’s earnings estimates have remained steady for 2022. The stock has gained 16% in the past six months.

Valmont Industries, Inc. VMI presently has a Zacks Rank of 2. VMI’s earnings surprise in the last four quarters was 12.5%, on average.

In the past 60 days, Valmont’s earnings estimates have increased by a penny. The stock has rallied 22.4% in the past six months.

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