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August 16, 2025 • 4 min read
Stanley Black & Decker, the global powerhouse behind iconic brands like DEWALT, CRAFTSMAN, and STANLEY, recently released its financial results for the second quarter of 2025. Today, we're diving into the numbers from its latest 10-Q filing to understand the company's performance, the challenges it's navigating, and the strategic shifts shaping its future.
The quarter presents a mixed picture: while sales saw a slight dip, the company swung from a loss to a significant profit. Let's break down how they did it.
For the second quarter ending June 28, 2025, Stanley Black & Decker (SWK) reported net sales of $3.95 billion, a modest 2% decrease from the $4.02 billion reported in the same period last year. On the surface, this might seem underwhelming, but the real story lies in the bottom line.
The company posted a net profit from continuing operations of $101.9 million. This marks a dramatic turnaround from the $19.2 million loss it recorded in Q2 2024. This improvement is also reflected in its diluted earnings per share, which came in at $0.67, a stark contrast to the prior year's loss of ($0.13).
To get a clearer picture of how revenue is converted into profit, the following flow chart illustrates the major components of SWK's income statement.
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So, what fueled this impressive swing to profitability despite lower sales? A significant factor was the absence of a large, one-time environmental charge of $153.8 million that hit the company's results in Q2 2024. With that charge no longer weighing on the numbers, the year-over-year comparison looks much more favorable.
Digging deeper into the company's operations reveals pressure at the segment level. SWK operates through two main business segments:
The fact that both core operating segments saw their profits decline while the overall company profit improved underscores that the bottom-line turnaround was driven by factors outside of core operational performance, primarily the aforementioned environmental charge comparison.
Stanley Black & Decker is in the midst of a significant "Global Cost Reduction Program" aimed at streamlining the organization and improving efficiency. As part of this effort, the company initiated a Voluntary Retirement Program in June 2025 to right-size its corporate functions. This move, along with other supply chain transformation efforts, resulted in $18.8 million in restructuring charges for the quarter.
The company's goal is to simplify its operations and restore adjusted gross margins to their historical 35%+ levels. This quarter's GAAP gross margin was approximately 27%, showing there is still a long road ahead.
One area of concern is cash flow. While the company generated positive free cash flow (cash from operations minus capital expenditures) of $135 million in the quarter, this was a sharp decrease from the $486 million generated in Q2 2024. For the first half of the year, free cash flow remains negative at -$350 million. This indicates the company is still investing heavily in its transformation while navigating working capital challenges, particularly with inventory levels remaining elevated at $4.6 billion.
In conclusion, Stanley Black & Decker's Q2 results show a company making headline progress on profitability but facing underlying weakness in its core operations. The strategic restructuring is clearly the central focus, designed to create a leaner, more efficient organization. Investors will be watching closely to see if these bold moves can reignite organic sales growth and generate the strong, consistent cash flow needed to power the company through its transformation.
Last updated: August 16, 2025