Stanley Black & Decker Inc. (NYSE: SWK) reported first-quarter 2026 results on Wednesday, with adjusted EPS of 80 cents, beating the 63 cents estimate.

Revenue came in at $3.846 billion, above the $3.746 billion estimate, though shares traded lower after the release.

Margins, Costs And Profitability

Net sales rose 3%, with price and currency each contributing 3%. Volume declined 3%, primarily due to retail softness in North America. Investors are reacting to the volume decline.

Gross margin was 30.1%, while adjusted gross margin was 30.2%, impacted by tariffs, inflation and volume deleverage.

Net earnings were $59.6 million. EBITDA margin was 7.1%, and adjusted EBITDA margin was 9.2%.

Pre-tax non-GAAP adjustments totaled $81.0 million, mainly tied to restructuring, asset impairment, and footprint actions.

Segment Performance

Tools & Outdoor sales increased 2% to $3.34 billion, with organic revenue down 1% due to North America retail softness.

Segment margin was 8.3%, with adjusted margin at 8.7%, impacted by mix and tariffs.

Engineered Fastening sales rose 10% to $511 million, with organic growth of 7% driven by aerospace and automotive. Segment margin improved to 11.9%, with adjusted margin at 12.0%.

The segment included $117 million of sales and $22 million of profit from the CAM business prior to its sale.

Cash Flow and Balance Sheet

Operating cash flow was negative $388.8 million, and free cash flow was negative $447.3 million.

Cash totaled $333.7 million, with short-term borrowings of $1.74 billion and long-term debt of $4.70 billion.

The company completed the sale of Consolidated Aerospace Manufacturing for $1.8 billion, generating about $1.6 billion in net proceeds, largely used to reduce debt.

Outlook and Commentary

Patrick Hallinan, CFO, said, "We achieved this progress, despite ongoing macroeconomic challenges, driven by the commitment of our teams around the world. At the same time, the CAM transaction has sharpened our focus on our core business; it now allows us to pursue capital allocation that accelerates shareholder value creation, which we expect to take the form of share repurchases."

The company raised full-year 2026 GAAP EPS guidance to $4.15–$5.35 from $3.15–$4.35, above estimates. Adjusted EPS guidance was reaffirmed at $4.90–$5.70, compared with a $5.29 estimate.

Free cash flow is expected at $500–$700 million, or $700–$900 million excluding CAM-related taxes and fees.

Management cited global economic uncertainty, tariffs, inflation, and North America retail softness as ongoing headwinds.

Conference Call Highlights

Management said the aerospace fasteners strengthen the balance sheet and support future capital deployment.

The company expects share repurchases to be a priority following the transaction.

President and CEO Chris Nelson said the company "delivered a solid start to the year" and outperformed expectations on both revenue and earnings.

SWK Price Action: Stanley Black & Decker shares were down 4.09% at $75.12 at the time of publication on Wednesday, according to Benzinga Pro data.

Photo by Piotr Swat via Shutterstock