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Stanley Black & Decker (NYSE:SWK) released its second quarter 2025 results on July 29, revealing a 2% year-over-year revenue decline amid tariff challenges while announcing a significant leadership transition plan.
Executive Summary
The company reported Q2 2025 revenue of $3.9 billion, down 2% versus the prior year, with organic revenue declining 3%. Despite overall weakness, the company’s professional DEWALT brand delivered topline growth, demonstrating resilience in the professional tools segment. Adjusted earnings per share reached $1.08, including a tax rate benefit, while GAAP EPS was $0.67.
In a major announcement, Stanley Black & Decker revealed that effective October 1, 2025, current COO Chris Nelson will become President and CEO, with current CEO Don Allan transitioning to Executive Chair of the Board.
"We delivered solid second quarter results amid a dynamic operating environment with continued growth of our professional DEWALT brand," said Don Allan, President and CEO, according to the presentation materials. "Our transformation program continues to deliver significant cost savings, with $150 million in quarter-to-date pre-tax run-rate savings and $1.8 billion program-to-date."
The company’s stock closed at $73.93 on July 28, and showed minimal movement in premarket trading following the earnings release.
Quarterly Performance Highlights
Stanley Black & Decker’s performance showed mixed results across segments. The Tools & Outdoor segment, which represents the majority of the company’s business, saw organic revenue decline 3%, with volume down 5%, partially offset by price increases of 2% and favorable currency impact of 1%.
Regional performance varied, with North America down 4%, Europe down 1%, and Rest of World showing 1% growth. The segment’s adjusted margin rate was 8.0%, down year-over-year primarily due to tariff impacts, lower volume, and growth investments, partially offset by supply chain transformation efficiencies and pricing actions.
The following slide details the segment performance breakdown:
The Engineered Fastening segment experienced a 1% organic revenue decline, with volume down 2% and a product line transfer to Tools & Outdoor representing a 3% headwind. These factors were partially offset by price (+1%) and currency (+2%). The segment’s adjusted margin rate was 10.8%, down versus prior year due to lower volume in higher-margin automotive applications, though aerospace showed strength.
Cash flow showed improvement, with net cash from operating activities of $214 million and free cash flow of $135 million for the quarter.
Tariff Impact and Mitigation Strategy
A significant focus of the presentation was the company’s strategy to navigate the substantial impact of tariffs. Stanley Black & Decker disclosed that tariffs represent an annualized gross impact of approximately $800 million, with a net impact of $0.65 on EPS for fiscal year 2025.
The company outlined its comprehensive approach to addressing these challenges:
The strategy includes accelerating adjustments to the supply chain, with initial contributions expected to begin in the second half of 2025. The company is taking a measured approach to pricing actions, with initial price contributions beginning in Q2 2025 and additional modest increases expected in early Q4 2025.
Stanley Black & Decker provided insights into its supply chain composition, noting that it has an industry-leading North American footprint representing over 60% of its cost of sales. The company’s U.S. supply chain of approximately $6.8 billion includes:
Strategic Initiatives
The company continues to execute its transformation program, which is targeted for completion in 2025. The initiative has already delivered $1.8 billion in program-to-date pre-tax run-rate cost savings, with $150 million achieved in the second quarter alone.
The transformation encompasses material productivity improvements, operational excellence initiatives, footprint rationalization, and complexity reduction. Beyond cost savings, Stanley Black & Decker is focusing on accelerating organic growth, particularly through its DEWALT Construction Technology solutions.
Forward-Looking Guidance
For full-year 2025, Stanley Black & Decker provided updated planning assumptions, projecting total revenue to be flat to down 1% compared to the prior year. The company expects adjusted EPS of approximately $4.65 and GAAP EPS of $3.45 (+/- $0.10).
Free cash flow is targeted at approximately $600 million for the year. For the third quarter, the company expects adjusted EPS to approximate 25% of the $4.65 full-year adjusted EPS midpoint.
By segment, Tools & Outdoor organic revenue is projected to decline approximately 1% with positive year-over-year adjusted segment margin. Engineered Fastening organic revenue is expected to grow approximately 1%, though with declining year-over-year adjusted segment margin.
Leadership Transition
The announced leadership change represents a significant development for Stanley Black & Decker. Chris Nelson, currently serving as COO, EVP and President of Tools & Outdoor, will succeed Don Allan as President and CEO effective October 1, 2025.
This transition comes as the company navigates challenging market conditions while continuing to execute its transformation strategy. The leadership change suggests a focus on continuity, as Nelson has been deeply involved in the company’s ongoing strategic initiatives.
The presentation materials did not include specific quotes from either executive regarding the transition, but the announcement signals the board’s confidence in the company’s strategic direction and Nelson’s ability to lead through the current challenges.
As Stanley Black & Decker continues to navigate tariff impacts and market dynamics, the company’s focus remains on completing its transformation program, mitigating external pressures, and positioning itself for long-term growth through operational excellence and strategic investments in its professional tool brands.
Full presentation:
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