Industrial and outdoor tools maker Stanley Black & Decker reported its 2023 second quarter financial results on Aug. 1, showing continued year-over-year sales declines that were smaller than the year’s first quarter.

The New Britain, Connecticut-based company posted total 2Q sales of $4.16 billion, down 5.3% year-over-year, following 1Q’s $3.9 billion that were down 12%. The company said the year-over-year decline was driven by lower volume (-5%) and SBD’s July 2022 Oil & Gas divestiture (-1%), partially offset by price realization (+1%).

SBD’s 2Q gross margin of 22.4% considerably trailed the 27.5% of a year earlier, while adjusted gross margin of 23.6% was up 50 basis points sequentially from 1Q and down from 2Q22’s 27.9%. The company said the YoY gross margin decline was primarily driven by production curtailments (-4% to 5%), selling through high-cost inventory and lower volumes.

SBD said its inventory at the end of 2Q was $5.3 billion, down approximately $375 million from the end of 1Q and about $1.4 billion over the last 12 months as the company continued to benefit from improving supply chain conditions and planned production curtailments.

SBD’s 2Q operating profit of $95 million was roughly one-fourth of the $354 million of a year earlier, with operating margin of 2.3% likewise dwarfed by the 8.1% of a year earlier.

The company’s 2Q23 net profit of $177 million more than doubled the $88 million of a year earlier.

“We continued to make significant progress against our strategic business transformation in the second quarter highlighted by strong execution against our cost savings program, continued inventory reduction, sequential gross margin improvement and numerous advances in our supply chain optimization initiative,” SBD President and CEO Donald Allan, Jr. said in the company’s 2Q23 earnings release. “While the operating backdrop remains dynamic with some underlying consumer softness, we continue to see strong demand in the professional construction, automotive and aerospace markets as well as further stabilization across global supply chains.”

By business segment in 2Q23:

• Tools & Outdoor sales of $3.54 billion were down 5.4% year-over-year, driven by lower volume (-6%). Organic sales were likewise down 5% YoY, which the company attributed to lower consumer outdoor and DIY market demand and modestly lower channel inventory. 
  • Segment profit and margin of $102 million on margin of 2.9% was down from 2Q22’s $362 million and 9.7%.
• Industrial sales of $617 million were down 4.8% year-over-year, as price (+4%) was more than offset by the Oil & Gas divestiture (-7%), volume (-1%) and currency (-1%). 
  • Engineered Fastening organic revenues were up 8% YoY, with double digit growth in aerospace and automotive, partially offset by softer industrial markets. 
  • Attachment Tools organic revenues were down 14%. 
  • Segment profit and margin of $72 million and 11.6% up from 2Q22’s $58 million and 9.0%.

Cost Savings Update

In its 2Q earnings report, Stanley Black & Decker provided an update on its Global Cost Reduction Program, which the company initially announced this past March — headlined by plant closures in South Carolina and Texas that involved over 350 job cuts.

SBD said the program’s initiatives — which include SKU reduction and platforming; strategic sourcing; facility consolidation; and operational excellence — remain on track to generate run-rate cost savings of approximately $1 billion by the end of 2023, growing to about $2 billion by 2025.

SBD added that, year-to-date, the program is ahead of schedule and achieved $460 million of pre-tax run-rate savings from lower headcount, indirect spend reductions and supply chain transformation.