Why Stanley Black & Decker Shares Are Trading Lower Today

Stanley Black & Decker, Inc. SWK reported first-quarter FY22 revenue growth of 20% year-over-year to $4.45 billion, led by acquisitions and price realization, missing the consensus of $4.65 billion.
Volume fell 6%, constrained by temporary electronic component supply challenges.
Adjusted EPS decreased to $2.10 compared to $2.85 in 1Q21, beating the consensus of $1.70.
The gross margin was 29.3% compared to 37.3% in 1Q21, and the adjusted gross margin was 31.3%, down from 37.4% last year.
Gross margin was down as price realization was more than offset primarily by commodity inflation, higher supply chain costs to serve demand, and lower volumes.
The adjusted operating margin for the quarter was 11.5%, a decrease from 18.5% in 1Q21.
Stanley Black & Decker's cash used in operating activities for Q1 was $1.24 billion, compared to $157.8 million a year ago. Free cash outflow was $1.38 billion.
Tools & Storage segment sales were $3.8 billion (+24% Y/Y), and a segment profit margin of 10%, down by 1,109 bps.
Industrial segment sales were $647 million (-2% Y/Y), and segment profit margin of 6.4%, down by 880 bps.
"Stanley Black & Decker capitalized on the strong demand environment, our recent strategic acquisitions in the fast-growing outdoor power equipment market and a 5% contribution from pricing to drive 20% quarterly revenue growth as well as higher sequential margins," commented CEO Jim Loree.
SWK initiated a $2 billion accelerated share repurchase during the quarter and completed $0.3 billion open-market repurchases.
FY22 Outlook: Stanley Black & Decker expects to deliver total revenue growth in the mid-twenties.
EPS outlook revised to $7.20 - $8.30 (from $10.10 - $10.70), and on an adjusted basis to $9.50 - $10.50 (from $12.00 - $12.50) vs. consensus of $11.98.
It expects a free cash flow of $1 billion-$1.5 billion.
Price Action: SWK shares are trading lower by 8.88% at $126.78 on the last check Thursday.

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