STANLEY BLACK & DECKER, INC. Q4 FY2024 earnings call

• 2024 achievements: Delivered full year revenues of $15.4 billion, flat organically; adjusted gross margin 30% for full year, 31.2% in Q4; adjusted EBITDA $1.6 billion with margin 10.1%; free cash flow ~$750 million. - Q4 2024: $3.7 billion revenue, flat vs prior year; 3% organic revenue growth offset by infrastructure divestiture and currency headwind; adjusted gross margin 31.2%, up 140 basis points. - Supply chain transformation: Achieved ~$500 million pretax run rate cost savings in 2024, targeting $2 billion by end of 2025. - Innovation: Investing $100 million incrementally in 2025 to advance innovation pipeline and market activation for brand health and organic growth.

Tools and Outdoor: Fourth quarter revenue was approximately $3.2 billion, driven by 3% organic revenue growth. DEWALT delivered its seventh consecutive quarter of organic growth. Fourth quarter adjusted segment margin was 10.2%, a 20 basis point improvement versus Q4 2023. Full-year organic growth was slightly positive, with DEWALT posting mid-single-digit growth. Industrial: Fourth quarter revenue declined 15% on a reported basis due to infrastructure divestiture. Organic revenue was flat, with automotive market softness offset by price and aerospace organic growth in mid-teens. Full-year Engineered Fastening had 2% organic growth, and total industrial adjusted segment margin expanded 70 basis points to 12.5%.

• 2025 base case: Excludes tariff impacts; adjusted EPS midpoint $5.25 ± $0.50; free cash flow $750 million ± $100 million; organic revenue growth mid-single digits in low single-digit market; adjusted gross margin 35% plus; target adjusted EBITDA $2.5 billion. - 2025 expectations: Total company reported revenue relatively flat year over year; Tools and Outdoor organic revenue growth low single digits; Industrial organic revenue low single digits driven by aerospace recovery; SG&A as % of sales ~22%.

• Tariffs: Potential impact on profitability; company plans to mitigate via supply chain repositioning and price adjustments, but it's a dynamic environment with possible short-term disruption.

Q: About margin outlook, what's the cadence of expansion?

A: Full-year margin expansion ~250 basis points; first half ~100+ basis points up year over year, back half ~300+ basis points.

Q: SG&A investments for growth?

A: SG&A as % of net sales ~22% in 2025; investing in core brands, local market activation, and brand health.

Q: Share gains in 2025?

A: DEWALT to continue growth, and Stanley/Craftsman to see stabilization and modest share gains.

Q: Tariffs offsetting actions?

A: Mitigation via supply chain reconfiguration and pricing; $90-$100 million annualized unmitigated impact, working to offset with these actions.

Q: Promotional environment impact on margin?

A: Slight marginal headwind in Q4 2024, but promotional placement was accretive and felt good about positioning for 2025.