Stanley Black & Decker, Inc 10-Q for FY2023 Q1

Stanley Black & Decker, Inc. (SWK)

10-Q 2023-05-04 For: 2023-04-01

Added on April 06, 2026

About this 10-Q

Stanley Black & Decker, Inc filed this 10-Q on May 4, 2023, covering the quarter ended April 1, 2023 (FY2023 Q1).

Headline figures

Quarter ended April 1, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $3.93B; down 11.6% from $4.45B a year earlier
Net loss: $187.8M; compared with net income of $175.3M a year earlier
Diluted EPS: -$1.26; compared with $1.06 a year earlier

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CT						06-0548860
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)						(I.R.S. EMPLOYER IDENTIFICATION NUMBER)


Title Of Each Class		Trading Symbol	Name Of Each Exchange On Which Registered
Common Stock	$2.50 Par Value per Share	SWK	New York Stock Exchange



PART I — FINANCIAL INFORMATION			3
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS			3
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			29
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			38
ITEM 4. CONTROLS AND PROCEDURES			38
PART II — OTHER INFORMATION			41
ITEM 1. LEGAL PROCEEDINGS			41
ITEM 1A. RISK FACTORS			41
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			41
ITEM 6. EXHIBITS			43
SIGNATURE			45


	Year-to-Date
		2023		2022
Net Sales		$	3,931.8	$	4,448.0
Costs and Expenses
Cost of sales		$	3,096.3	$	3,142.6
Selling, general and administrative		823.0		949.2
Provision for credit losses		2.1		11.1
Other, net		63.7		62.0
Loss on sales of businesses		7.6		—
Restructuring charges		12.1		52.7
Interest income		(39.8)		(2.8)
Interest expense		130.9		54.7
		$	4,095.9	$	4,269.5
(Loss) earnings from continuing operations before income taxes		(164.1)		178.5
Income taxes on continuing operations		23.7		22.9
Net (loss) earnings from continuing operations		(187.8)		155.6
Less: Net earnings attributable to non-controlling interests		—		0.1
Net (Loss) Earnings from Continuing Operations Attributable to Common Shareowners		$	(187.8)	$	155.5
Add: Contract adjustment payments accretion		—		0.3
Net (Loss) Earnings from Continuing Operations Attributable to Common Shareowners - Diluted		$	(187.8)	$	155.8
Earnings from discontinued operations before income taxes		—		22.2
Income taxes on discontinued operations		—		2.4
Net earnings from discontinued operations		$	—	$	19.8
Net (Loss) Earnings Attributable to Common Shareowners - Diluted		$	(187.8)	$	175.6
Net (Loss) Earnings Attributable to Stanley Black & Decker, Inc.		$	(187.8)	$	175.3
Total Comprehensive (Loss) Income Attributable to Common Shareowners		$	(135.0)	$	147.6
Basic (loss) earnings per share of common stock:
Continuing operations		$	(1.26)	$	1.00
Discontinued operations		$	—	$	0.13
Total basic (loss) earnings per share of common stock		$	(1.26)	$	1.13
Diluted (loss) earnings per share of common stock:
Continuing operations		$	(1.26)	$	0.94
Discontinued operations		$	—	$	0.12
Total diluted (loss) earnings per share of common stock		$	(1.26)	$	1.06


	April 1, 2023		December 31, 2022
ASSETS
Current Assets
Cash and cash equivalents	$	387.6	$	395.6
Accounts and notes receivable, net	1,607.9		1,231.0
Inventories, net	5,659.5		5,861.1
Prepaid expenses	449.0		441.4
Other current assets	31.7		45.6
Total Current Assets	8,135.7		7,974.7
Property, plant and equipment, net	2,307.1		2,353.1
Goodwill	8,516.2		8,502.7
Intangibles, net	4,430.6		4,474.8
Other assets	1,682.1		1,658.0
Total Assets	$	25,071.7	$	24,963.3
LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities
Short-term borrowings	$	1,828.8	$	2,102.9
Current maturities of long-term debt	1.2		1.2
Accounts payable	2,378.7		2,344.4
Accrued expenses	2,030.6		2,120.7
Total Current Liabilities	6,239.3		6,569.2
Long-term debt	6,101.1		5,352.9
Deferred taxes	625.7		709.2
Post-retirement benefits	353.4		353.9
Other liabilities	2,259.8		2,263.9
Commitments and Contingencies (Notes P and Q)
Shareowners’ Equity
Stanley Black & Decker, Inc. Shareowners’ Equity
Common stock, par value $2.50 per share: Authorized 300,000,000 shares in 2023 and 2022 Issued 176,902,738 shares in 2023 and 2022	442.3		442.3
Retained earnings	9,025.7		9,333.3
Additional paid in capital	5,068.8		5,055.6
Accumulated other comprehensive loss	(2,066.7)		(2,119.5)
	12,470.1		12,711.7
Less: cost of common stock in treasury (23,775,033 shares in 2023 and 23,919,208 shares in 2022)	(2,979.8)		(2,999.6)
Stanley Black & Decker, Inc. Shareowners’ Equity	9,490.3		9,712.1
Non-controlling interests	2.1		2.1
Total Shareowners’ Equity	9,492.4		9,714.2
Total Liabilities and Shareowners’ Equity	$	25,071.7	$	24,963.3


	April 1, 2023		December 31, 2022
Cash and cash equivalents	$	387.6	$	395.6
Restricted cash included in Other current assets	3.1		9.3

Cash, cash equivalents and restricted cash	$	390.7	$	404.9


	Preferred Stock		Common Stock		Additional Paid In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Non- Controlling Interests		Shareowners’ Equity
Balance December 31, 2022	$	—	$	442.3	$	5,055.6	$	9,333.3	$	(2,119.5)	$	(2,999.6)	$	2.1	$	9,714.2
Net loss	—		—		—		(187.8)		—		—		—		(187.8)
Other comprehensive income	—		—		—		—		52.8		—		—		52.8
Cash dividends declared — $0.80 per common share	—		—		—		(119.8)		—		—		—		(119.8)
Issuance of common stock (202,552 shares)	—		—		(21.5)		—		—		24.6		—		3.1
Repurchase of common stock (58,377 shares)	—		—		—		—		—		(4.8)		—		(4.8)
Stock-based compensation related	—		—		34.7		—		—		—		—		34.7
Balance April 1, 2023	$	—	$	442.3	$	5,068.8	$	9,025.7	$	(2,066.7)	$	(2,979.8)	$	2.1	$	9,492.4


(Millions of Dollars)	April 1, 2023		December 31, 2022
Trade accounts receivable	$	1,523.8	$	1,142.0
Trade notes receivable	92.4		100.1
Other accounts receivable	97.5		95.5
Gross accounts and notes receivable	$	1,713.7	$	1,337.6
Allowance for credit losses	(105.8)		(106.6)
Accounts and notes receivable, net	$	1,607.9	$	1,231.0


(Millions of Dollars)	Tools & Outdoor		Industrial		Total
Balance December 31, 2022	$	5,939.7	$	2,563.0	$	8,502.7

Foreign currency translation & other	15.8		(2.3)		13.5
Balance April 1, 2023	$	5,955.5	$	2,560.7	$	8,516.2


(Millions of Dollars)	Balance Sheet Classification	April 1, 2023		December 31, 2022		Balance Sheet Classification	April 1, 2023		December 31, 2022
Derivatives designated as hedging instruments:
Interest Rate Contracts Cash Flow	Other current assets	$	—	$	—	Accrued expenses	$	—	$	—
Foreign Exchange Contracts Cash Flow	Other current assets	$	4.1	$	4.5	Accrued expenses	$	5.2	$	4.2



Non-derivative designated as hedging instrument:
Net Investment Hedge		$	—	$	—	Short-term borrowings	$	739.8	$	—
Total designated as hedging instruments		$	4.1	$	4.5		$	745.0	$	4.2
Derivatives not designated as hedging instruments:
Foreign Exchange Contracts	Other current assets	$	10.3	$	7.7	Accrued expenses	$	9.2	$	11.9
Total		$	14.4	$	12.2		$	754.2	$	16.1


	Year-to-Date 2023
(Millions of Dollars)	Gain (Loss) Recorded in OCI		Classification of Gain (Loss) Reclassified from OCI to Income	Gain (Loss) Reclassified from OCI to Income		Gain (Loss) Recognized in Income on Amounts Excluded from Effectiveness Testing
Interest Rate Contracts	$	—	Interest expense	$	(1.5)	$	—
Foreign Exchange Contracts	$	(2.6)	Cost of sales	$	0.6	$	—


	Year-to-Date 2022
(Millions of Dollars)	Gain (Loss) Recorded in OCI		Classification of Gain (Loss) Reclassified from OCI to Income	Gain (Loss) Reclassified from OCI to Income		Gain (Loss) Recognized in Income on Amounts Excluded from Effectiveness Testing
Interest Rate Contracts	$	23.4	Interest expense	$	(1.2)	$	—
Foreign Exchange Contracts	$	6.5	Cost of sales	$	6.1	$	—


(Millions of Dollars)	Year-to-Date 2023 Interest Expense
Total amount in the Consolidated Statements of Operations and Comprehensive (Loss) Income in which the effects of the fair value hedges are recorded	$	130.9
Amortization of gain on terminated swaps	$	(0.1)


(Millions of Dollars)	Year-to-Date 2022 Interest Expense
Total amount in the Consolidated Statements of Operations and Comprehensive (Loss) Income in which the effects of the fair value hedges are recorded	$	54.7
Amortization of gain on terminated swaps	$	(0.1)


	April 1, 2023
(Millions of Dollars)	Carrying Amount of Hedged Liability (1)		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Liability


Long-Term Debt	$	533.0	Terminated Swaps	$	(20.0)


STANLEY BLACK & DECKER, INC.


	Year-to-Date
		2023		2022
OPERATING ACTIVITIES
Net (loss) earnings from continuing operations		$	(187.8)	$	155.6
Net earnings from discontinued operations		—		19.8
Adjustments to reconcile net (loss) earnings to cash used in operating activities:
Depreciation and amortization of property, plant and equipment		112.9		92.0
Amortization of intangibles		48.3		51.7

Loss on sales of businesses		7.6		—


Stock-based compensation expense		34.7		30.3
Changes in working capital		(181.2)		(1,336.1)
Changes in other assets and liabilities		(120.8)		(254.4)
Cash used in operating activities		(286.3)		(1,241.1)
INVESTING ACTIVITIES
Capital and software expenditures		(68.2)		(139.8)
Proceeds from sales of assets		2.9		9.0

Business acquisitions, net of cash acquired		—		(36.5)


Net investment hedge settlements		—		4.7
Other		4.1		(0.8)
Cash used in investing activities		(61.2)		(163.4)
FINANCING ACTIVITIES
Proceeds from debt issuances, net of fees		747.2		994.8
Stock purchase contract fees		—		(9.8)
Credit facility borrowings		—		2,250.0
Net short-term (repayments) borrowings		(285.9)		594.8
Proceeds from issuances of common stock		3.1		13.7
Purchases of common stock for treasury		(4.8)		(2,313.0)

Craftsman contingent consideration		(9.1)		(9.8)
Termination of interest rate swaps		—		22.7
Cash dividends on common stock		(119.8)		(116.3)

Other		(6.5)		(1.7)


	Year-to-Date
		2023	2022
Denominator (in thousands):
Basic weighted-average shares outstanding		149,574	155,433
Dilutive effect of stock contracts and awards		—	9,980
Diluted weighted-average shares outstanding		149,574	165,413


	Year-to-Date
		2023	2022
Number of stock options		5,735	2,545


	Year-to-Date 2023
(Millions of Dollars)	Total Gain (Loss) Recorded in OCI		Excluded Component Recorded in OCI		Income Statement Classification	Total Gain (Loss) Reclassified from OCI to Income		Excluded Component Amortized from OCI to Income
Forward Contracts	$	0.2	$	—	Other, net	$	—	$	—
Cross Currency Swap	$	(0.1)	$	—	Other, net	$	—	$	—
Non-derivative designated as Net Investment Hedge	$	(12.6)	$	—	Other, net	$	—	$	—


(Millions of Dollars)	Income Statement Classification	Year-to-Date 2023		Year-to-Date 2022
Foreign Exchange Contracts	Other, net	$	(1.0)	$	0.9


(Millions of Dollars)	Currency translation adjustment and other		(Losses) gains on cash flow hedges, net of tax		Gains (losses) on net investment hedges, net of tax		Pension (losses) gains, net of tax		Total
Balance - December 31, 2022	$	(1,907.4)	$	(44.5)	$	73.8	$	(241.4)	$	(2,119.5)
Other comprehensive income (loss) before reclassifications	64.0		(1.8)		(9.4)		(2.6)		50.2

Reclassification adjustments to earnings	—		0.5		—		2.1		2.6
Net other comprehensive income (loss)	64.0		(1.3)		(9.4)		(0.5)		52.8
Balance - April 1, 2023	$	(1,843.4)	$	(45.8)	$	64.4	$	(241.9)	$	(2,066.7)


	Year-to-Date
	Pension Benefits								Other Benefits
	U.S. Plans				Non-U.S. Plans				All Plans
(Millions of Dollars)	2023		2022		2023		2022		2023		2022
Service cost	$	2.0	$	1.6	$	2.8	$	3.9	$	0.1	$	0.1
Interest cost	13.5		8.0		10.6		6.0		0.5		0.2
Expected return on plan assets	(15.5)		(15.1)		(10.1)		(10.2)		—		—
Amortization of prior service cost (credit)	0.2		0.2		(0.2)		(0.2)		—		—
Amortization of net loss (gain)	2.2		1.5		0.8		2.1		(0.3)		(0.1)


Net periodic pension expense (benefit)	$	2.4	$	(3.8)	$	3.9	$	1.6	$	0.3	$	0.2


(Millions of Dollars)	Total Carrying Value		Level 1		Level 2		Level 3
April 1, 2023
Money market fund	$	12.0	$	12.0	$	—	$	—
Deferred compensation plan investments	$	18.4	$	18.4	$	—	$	—
Derivative assets	$	14.4	$	—	$	14.4	$	—
Derivative liabilities	$	14.4	$	—	$	14.4	$	—
Non-derivative hedging instrument	$	739.8	$	—	$	739.8	$	—
Contingent consideration liability	$	267.6	$	—	$	—	$	267.6
December 31, 2022
Money market fund	$	9.4	$	9.4	$	—	$	—
Equity security	$	3.2	$	3.2	$	—	$	—
Deferred compensation plan investments	$	19.0	$	19.0	$	—	$	—
Derivative assets	$	12.2	$	—	12.2		$	—
Derivative liabilities	$	16.1	$	—	$	16.1	$	—
Contingent consideration liability	$	268.7	$	—	$	—	$	268.7


(Millions of Dollars)	December 31, 2022		Net Additions		Usage		Currency		April 1, 2023
Severance and related costs	$	57.0	$	7.3	$	(25.8)	$	(0.3)	$	38.2
Facility closures and asset impairments	5.3		4.8		(6.3)		—		3.8
Total	$	62.3	$	12.1	$	(32.1)	$	(0.3)	$	42.0


(Millions of Dollars)	Term	Maximum Potential Payment		Carrying Amount of Liability
Guarantees on the residual values of leased assets	One to nine years	$	156.6	$	—
Standby letters of credit	Up to three years	170.7		—
Commercial customer financing arrangements	Up to six years	80.6		12.6
Total		$	407.9	$	12.6



(Millions of Dollars)	Year-to-Date 2022
Depreciation and amortization	$	0.4
Capital expenditures	$	4.0
Stock-based compensation	$	9.3


	(Millions of Dollars)	GAAP		Acquisition- Related Charges & Other		Non-GAAP
	Gross profit	$	835.5	$	73.4	$	908.9
	Selling, general and administrative1	825.1		(20.7)		804.4
	Operating profit	10.4		94.1		104.5
	Loss from continuing operations before income taxes	(164.1)		106.8		(57.3)
	Income taxes on continuing operations	23.7		(20.4)		3.3
	Net Loss from Continuing Operations Attributable to Common Shareowners - Diluted	(187.8)		127.2		(60.6)
	Diluted loss per share of common stock - Continuing operations	$	(1.26)	$	0.85	$	(0.41)
1	Includes provision for credit losses


2023	Total Number Of Common Shares Purchased (a)	Average Price Paid Per Common Share		Total Number Of Common Shares Purchased As Part Of A Publicly Announced Plan Or Program	(In Millions) Maximum Number Of Common Shares That May Yet Be Purchased Under The Program (b)
January 1 - February 4	19,826	$	78.17	—	20
February 5 - March 4	19,379	90.28		—	20
March 5 - April 1	19,067	79.05		—	20
Total	58,272	$	82.49	—	20


(4.1)			Eleventh Supplemental Indenture, dated as of March 6, 2023, between Stanley Black & Decker, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee, relating to the 6.272% Notes due 2026 and the 6.000% Notes due 2028 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on March 6, 2023).

(4.2)			Form of Stanley Black & Decker, Inc.’s 6.272% Notes due 2026 (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on March 6, 2023).

(4.3)			Form of Stanley Black & Decker, Inc.’s 6.000% Notes due 2028 (incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K filed on March 6, 2023).

(10.1)			Underwriting Agreement, dated as of March 1, 2023, between Stanley Black & Decker, Inc. and BofA Securities, Inc., Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Wells Fargo Securities, LLC, as representatives of the several underwriters named therein (incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K filed on March 6, 2023).

(10.2)			Amendment No. 1 to Syndicated 364-Day Credit Agreement, dated as of February 23, 2023, by and among Stanley Black & Decker, Inc., the lenders identified on the signature pages thereto, and Citibank, N.A., as agent for the lenders (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 23, 2023).

(10.3)			Amendment No. 1 to Club 364-Day Credit Agreement, dated as of February 23, 2023, by and among Stanley Black & Decker, Inc., the lenders identified on the signature pages thereto, and Citibank, N.A., as agent for the lenders (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on February 23, 2023).

(10.4)			Amendment No. 2 to Amended and Restated Five Year Credit Agreement, dated as of February 23, 2023, by and among Stanley Black & Decker, Inc., the lenders identified on the signature pages thereto, and Citibank, N.A., as agent for the lenders (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on February 23, 2023).

(10.5)			Employment Offer Letter, dated January 13, 2023, between Stanley Black & Decker, Inc. and John T. Lucas (filed herewith).*

(10.6)			Employment Offer Letter, dated January 19, 2023, between Stanley Black & Decker, Inc. and Patrick Hallinan (filed herewith).*

(10.7)			Form of award document for 2023 Management Incentive Compensation Plan pursuant to the Stanley Black & Decker 2022 Omnibus Award Plan (filed herewith).*

(10.8)			Form of award document for 2023-2025 Long-Term Incentive Program (for award valued as percentage of salary) pursuant to the Stanley Black & Decker 2022 Omnibus Award Plan (filed herewith).*

(10.9)			Form of award document for 2023-2025 Long-Term Incentive Program (for award at specified fair value) pursuant to the Stanley Black & Decker 2022 Omnibus Award Plan (filed herewith).*

(31.1)			Certification by President and Chief Executive Officer pursuant to Rule 13a-14(a).

(31.2)			Certification by Executive Vice President and Chief Financial Officer pursuant to Rule 13a-14(a).

(32.1)			Certification by President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(32.2)			Certification by Executive Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


(101)			The following materials from Stanley Black & Decker Inc.'s Quarterly Report on Form 10-Q for the quarter ended April 1, 2023, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Operations and Comprehensive (Loss) Income for the three months ended April 1, 2023 and April 2, 2022; (ii) Condensed Consolidated Balance Sheets at April 1, 2023 and December 31, 2022; (iii) Condensed Consolidated Statements of Cash Flows for the three months ended April 1, 2023 and April 2, 2022; (iv) Consolidated Statements of Changes in Shareowners' Equity for the three months ended April 1, 2023 and April 2, 2022; and (v) Notes to Unaudited Condensed Consolidated Financial Statements**.

(104)			The cover page of Stanley Black & Decker Inc.'s Quarterly Report on Form 10-Q for the quarter ended April 1, 2023, formatted in iXBRL (included within Exhibit 101 attachments).


*			Management contract or compensation plan or arrangement.
**			Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.


Deborah Wintner
Interim Chief Human Resources Officer
Stanley Black & Decker


			Donald Allan President and Chief Executive Officer Stanley Black & Decker 1000 Stanley Drive, New Britain, CT 06053


Position	Weighting
	Corporate	Divisional
Corporate Participant	100%	0%
Division Participant	35%	65%


			Donald Allan President & Chief Executive Officer Stanley Black & Decker 1000 Stanley Drive, New Britain, CT 06053


(1)			The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)			The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


/s/ Donald Allan, Jr.
Donald Allan, Jr.
President & Chief Executive Officer
Date: May 4, 2023