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    SWK
    Earnings call· Jun 2026(Q2 FY26)

    STANLEY BLACK & DECKER Q2 FY26 earnings call SWK

    Jul 29, 2026 Source

    Executive summary

    Stanley Black & Decker Q2 FY26 - Strong Organic Growth and Margin Expansion

    Stanley Black & Decker delivered solid Q2 FY26 results, driven by disciplined execution of its strategy, leading to profitable organic growth and margin expansion. The company leveraged tariff refunds to accelerate strategic growth investments, particularly in go-to-market capabilities and product innovation. Management remains confident in achieving full-year targets and continuing its margin expansion journey despite a volatile macro environment.

    Highlights

    5

    • Total revenue was up 3% organically in Q2 FY26, slightly ahead of expectations.

    • Adjusted gross margin rate increased by 620 basis points year-over-year to 33.7% in Q2 FY26.

    • Adjusted EBITDA margin expanded by 320 basis points year-over-year to 11.3% in Q2 FY26.

    • Adjusted earnings per share reached $1.57, $0.37 above the midpoint of prior guidance.

    • Debt was paid down by $1.7 billion and 3.2 million shares were repurchased for $250 million in Q2 FY26.

    Concerns

    4

    • Outdoor revenue decreased 7% in Q2 FY26 due to weather-related demand softness.

    • Challenging market conditions were noted in France and other parts of Europe, impacting organic revenue.

    • Pockets of market softness and disruption from the Middle East partially offset growth in the Rest of the World.

    • Persistent inflationary pressures from battery metals, tungsten, oil, and oil derivatives continue to be a headwind.

    Guidance & targets

    22
    CategoryTargetConfidence
    Adjusted Earnings Per Share
    $5.20 to $5.80
    high materiality
    High
    Total Company Revenue
    About flat
    high materiality
    High
    Organic Revenue Growth
    Low single-digit percentage
    high materiality
    High
    Adjusted Gross Margin Expansion (exclusive of tariff benefit)
    Approximately 150 basis points
    medium materiality
    High
    Adjusted Gross Margin Expansion (from net tariff refund)
    Incremental 60 to 70 basis points
    medium materiality
    High
    Adjusted Gross Margin
    34% to 35% range
    high materiality
    High
    Adjusted Gross Margin
    35% to 37%
    high materiality
    High
    SG&A as a percentage of sales
    Around 23%
    medium materiality
    High
    Free Cash Flow
    $600 million to $800 million
    high materiality
    High
    Free Cash Flow (excluding CAM divestiture payments)
    $800 million to $1 billion
    high materiality
    High
    Tools & Outdoor Organic Growth
    Low single-digit
    medium materiality
    High
    Engineered Fastening Organic Growth
    Low single to mid-single digits
    medium materiality
    High
    GAAP Earnings
    $4.60 to $5.45
    medium materiality
    High
    Full Year Interest Expense
    About $255 million
    medium materiality
    High
    Other Net
    About $230 million
    medium materiality
    High
    Q3 Net Sales
    Around $3.7 billion
    high materiality
    High
    Q3 Organic Sales Growth
    3% to 4%
    high materiality
    High
    Q3 Adjusted Earnings Per Share
    Approximately $1.50 to $1.60
    high materiality
    High
    Adjusted Tax Rate
    19%
    medium materiality
    High
    Net Debt to Adjusted EBITDA
    At or around 2.5x
    high materiality
    High
    DEWALT Grow the Trades Program Investment
    $60 million
    low materiality
    High
    U.S. Commercial and Industrial Channel Sales
    Approach 10% of total Tools & Outdoor sales
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Tools & Outdoor
    Revenue was in line with prior year and slightly ahead of expectations, driven by volume strength in the U.S. across retail and commercial/industrial channels. Margin expansion was due to net productivity gains, favorable product mix, and net tariff refunds. Growth was seen across DEWALT, STANLEY, and CRAFTSMAN.
    Organic revenue: 3% (3% volume growth, flat pricing)Adjusted segment margin increase YoY: 380 bps (150 bps from net tariff refunds)Power Tools organic revenue: +8%Hand Tools, Accessories and Storage organic revenue: +2%Outdoor revenue: -7%North America organic revenue: +4% (U.S. retail mid-single digit, U.S. commercial and industrial low double digits)Europe organic revenue: -2%Rest of the World organic revenue: +3% (Latin America double-digit growth)
    		$3.6 billion3%—11.8% adjusted segment margin
    Engineered Fastening
    Revenue was impacted by the aerospace fasteners divestiture. Organic growth was driven by outperformance in automotive systems and fasteners and broad-based strength in global industrial markets. Margin expansion was largely due to net productivity gains and favorable volume and mix in automotive.
    Revenue reduction from aerospace fasteners divestiture: 21%Organic revenue: 3% (2% volume, 1% pricing)Adjusted segment margin increase YoY: 220 bps (50 bps from net tariff refunds)Automotive systems and fasteners organic growth: low single-digitGlobal industrial markets organic growth: high single-digit
    		Down 18%——13% adjusted segment margin

    Operational metrics

    14
    Adjusted Gross Margin Rate
    33.7%Up 620 bps YoY
    Q2 FY26

    Largely supported by gross productivity and product mix.

    Adjusted EBITDA Margin
    11.3%Up 320 bps YoY
    Q2 FY26

    Slightly ahead of planning assumptions.

    Adjusted Earnings Per Share
    $1.57$0.37 above midpoint of guidance
    Q2 FY26

    Outperformance primarily driven by below-the-line items and net tariff refund benefit.

    Debt Paydown
    $1.7 billion
    Q2 FY26

    Proceeds from aerospace fasteners business sale plus additional operating cash flows used for debt reduction.

    Share Repurchases
    $250 million
    Q2 FY26

    Executed opportunistically, remains a capital allocation priority.

    Growth Investments (planned)
    $75 million to $100 million
    FY26

    Planned at the start of the year, further advanced by incremental tariff refund dollars.

    Working Capital Reduction
    $200 million
    FY26

    Targeted contribution to overall cash flow, supported by disciplined approach to working capital management.

    Days Sales in Inventory (target)
    135 days
    Long-term

    Targeting pre-pandemic norms.

    Net Tariff Refund Benefit (EPS)
    $0.17
    Q2 FY26

    Reflects phase one tariff refunds, partially offset by variable incentive compensation, growth investments, and taxes.

    Net Tariff Refund Benefit (EPS)
    $0.05
    FY26

    The remaining net benefit after accounting for incremental growth investments in Q3 and Q4.

    SG&A as Percentage of Sales
    23%
    FY26

    Includes incremental costs from compensation accruals and growth investments related to tariff refunds.

    Weighted Average Shares Outstanding
    151 million
    FY26

    Reduced due to share repurchases in Q2.

    U.S. Commercial and Industrial Channel Sales as % of Tools & Outdoor Sales
    Approach 10%
    2026

    Expected for 2026, driven by strong market context in non-residential construction.

    DEWALT Grow the Trades Program Investment
    $27 million
    Last 3 years

    Investment to help build a well-trained workforce and support skilled tradespeople.

    Industry KPIs

    2
    MetricValueDetails
    Tariff cost impact$100MUSD
    Order backlog order intake by segmentlow single-digit organic growth

    Product announcements

    1
    ProductTypeDetails
    CRAFTSMAN V20 Advanced Batterieslaunch

    Deals & partnerships

    1
    UndisclosedSale of aerospace fasteners business

    The sale of the aerospace fasteners business was completed early in the second quarter.

    Risks & headwinds

    7
    Weather-related demand softnessQ2 FY26

    Outdoor revenue decreased 7%

    Challenging market conditions in EuropeQ2 FY26

    Europe organic revenue down 2%

    Mitigation: Prioritized investment in Eastern Europe and Iberia.

    Market softness and disruption from the Middle EastQ2 FY26

    Partially offset broad-based contributions in Rest of the World organic revenue

    Geopolitically uncertain environmentOngoing

    Unquantified

    Mitigation: Continued focus on operational excellence and disciplined execution.

    Persistent inflationary pressuresFY26 and into 2027

    Roughly $100 million in headwinds for FY26

    Mitigation: Expect to neutralize with temporary tariff tailwind in FY26; likely price increase by 2027.

    New Section 301 tariffs likely to be introducedWithin a few months

    Underlying run rate tariff costs expected to return to prior IEEPA levels

    Mitigation: Monitoring policy finalization; current guidance assumes return to prior levels.

    Macro environment volatilityOngoing

    Unquantified

    Mitigation: Team's ability to make decisions for continued growth and margin journey.

    What to watch in Q3 FY26

    5

    Adjusted Gross Margin (H2 FY26)

    H2 FY26
    Current33.7% (Q2 FY26)
    Target34% to 35%

    Why it matters

    This indicates the company's ability to achieve its margin expansion targets through productivity and tariff mitigation amidst inflationary pressures.

    As we look to the second half, we continue to have conviction in adjusted gross margin reaching the 34% to 35% range for the half year, a long-standing objective that continues to guide our efforts and priorities.

    Q&A highlights

    8

    What drove the 8% growth in Power Tools, the strongest in years, and is this growth sustainable?

    The rebound is attributed to increased placement with key channel partners, effective and accretive promotions, and a strong product pipeline across DEWALT, STANLEY, and CRAFTSMAN. Management believes this reflects momentum from multi-year investments in people, go-to-market strategies, and innovation, meeting a strong market context, particularly in the U.S. commercial and industrial channel.

    “I think what you're seeing is a number of quarters of hard work and consistency starting to pay off.”

    asked by Timothy Wojs · answered by Christopher Nelson

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Imperatives and Brand Activation

    Stanley Black & Decker is guided by strategic imperatives focused on purposeful brand activation, operational excellence, and accelerated innovation. The company aims to empower end users through groundbreaking solutions and become their partner of choice. Progress across DEWALT, STANLEY, and CRAFTSMAN reflects this strategy, with innovation and platforming enabling faster market response and more effective end-user service.

    02

    DEWALT's Focus on Professional End Users and Commercial & Industrial Channel

    DEWALT continues to be a growth engine, targeting professional end users in non-residential construction, particularly in data centers, power generation, and prefabrication manufacturing. The U.S. commercial and industrial channel is expected to approach 10% of total Tools & Outdoor sales in 2026, driven by roughly double-digit organic growth. Investments are directed towards strengthening go-to-market capabilities and expanding field presence to serve large-scale commercial projects.

    03

    DEWALT's Ecosystem Approach to Project Solutions

    DEWALT employs a comprehensive approach to commercial construction, including hiring project solution managers for large job sites, offering PERFORM & PROTECT product lines for safety and productivity, and providing anchor and fastening solutions. The company also utilizes DEWALT construction technology digital solutions, partners with local distributors for on-site product availability, and offers on-job-site training resources, including the DEWALT On Demand platform.

    04

    Momentum in STANLEY and CRAFTSMAN Brands

    Both STANLEY and CRAFTSMAN brands achieved positive organic growth in Q2 FY26, indicating the effectiveness of ongoing actions. STANLEY is undergoing brand revitalization, product refresh, and commercial actions to build its market position. CRAFTSMAN's brand positioning and portfolio expansion, including the new V20 Advanced Batteries, are resonating with consumers, contributing to strong platform performance and an improving margin profile.

    05

    Capital Allocation and Debt Reduction

    Following the sale of its aerospace fasteners business, Stanley Black & Decker deployed proceeds to pay down $1.7 billion in debt and repurchase 3.2 million shares for $250 million. The company maintains a focused portfolio, balance sheet strength, and a thoughtful approach to capital allocation, prioritizing growth investments, supporting the dividend, opportunistic share repurchases, and potential bolt-on M&A, all while aiming for an investment-grade credit rating.

    06

    Strategic Use of Tariff Refunds for Growth Investments

    Net tariff refunds received in Q2 FY26 provided flexibility to accelerate investments in strategic growth priorities. While a portion of the offsetting costs landed in Q2, the majority will flow through in Q3 and Q4 as incremental growth investments. These investments are incremental to the $75 million to $100 million planned for 2026 and are aimed at advancing the innovation pipeline and fueling market activation to enhance brand health and accelerate organic growth.

    AI-generated summary of the company’s earnings call. Not investment advice.