Stanley Black & Decker Inc. ( SWK ) shares are trading lower after the company reported better-than-expected fourth-quarter results and provided 2025 guidance.

Stanley Black & Decker ( SWK ) reported a fourth-quarter sales decline of 0.43% year over year to $3.720 billion, beating the consensus estimate of $3.580 billion.

Quarterly net sales remained flat, as volume growth (+4%) was offset by declines in price (-1%), currency (-1%), and the Infrastructure divestiture (-2%).

Gross profit increased 3.6% to $1.144 billion, and the gross margin expanded by 120 basis points to 30.8%. The adjusted gross margin was 31.2%, up 140 bps YoY.

Net earnings from continuing operations were 5.2% of sales, up from a loss from continuing operations (7.4%) of sales in the prior year. EBITDA rose to 9.1% of sales from 4.2%, while adjusted EBITDA increased to 10.2% of sales from 9.4%.

Adjusted EPS of $1.49 beat the analyst consensus of $1.27.

Tools & Outdoor net sales grew 2% YoY, with 4% volume growth offset by price (-1%) and currency (-1%), driving 3% organic revenue growth. Tools & Outdoor segment margin was 9.2%, down 10 bps YoY, and adjusted segment margin rose to 10.2% (+20 bps), supported by supply chain transformation despite higher costs and growth investments.

Industrial net sales declined 15% YoY, with flat organic sales. Industrial segment margin dropped to 10.7% from 11.2% and an adjusted margin was 10.7% vs. 11.1%, primarily due to lower automotive volume.

Operating cash flow for the quarter was $679 million, compared to $769.3 million a year ago. Free cash flow was ~$565 million. Stanley held $290.5 million in cash and equivalents as of December 28, 2024.

In the fourth quarter, Stanley Black & Decker’s Global Cost Reduction Program generated $110 million in additional pre-tax savings, contributing to total savings of approximately $1.5 billion since mid-2022 and supporting a return to 35%+ adjusted gross margins.

“With the recent tariff announcements, we are preparing for a dynamic backdrop in 2025 and expect to respond with supply chain and price actions designed to mitigate the impact from such tariffs to maintain our margin objectives, which enable us to fuel innovation and brand building. Our top priorities remain delivering margin expansion, cash generation and restoring balance sheet strength over the next 12 to 18 months to position the company for long-term growth and value creation,” commented Patrick D. Hallinan, Executive Vice President and CFO.

2025 Outlook: Excluding new tariffs, Stanley Black & Decker expects GAAP EPS of $4.05 (+/- $0.65) and adjusted EPS of $5.25 (+/- $0.50) versus consensus of $5.38.

The GAAP-to-adjusted EPS difference of $1.05 to $1.35 mainly reflects charges from the Global Cost Reduction Program’s supply chain transformation.

The company sees free cash flow of $750 million (+/—$100 million), excluding new tariffs.

The company plans to provide its base planning assumptions and commentary on the current tariff environment. In its conference call, the company said it sees annualized, unmitigated hit of around $90 million – $100 million if 10% China tariffs remain.

Price Action: SWK shares are trading lower by 5.67% at $81.75 premarket at the last check Wednesday.

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