Stanley Black & Decker(SWK) - 2024 Q4 - Annual Report

Cost Reduction and Savings Initiatives - The Company initiated a $2.0 billion Global Cost Reduction Program aimed at achieving mid-single digit organic revenue growth and returning adjusted gross margins to historical levels of over 35$510 million in pre-tax run-rate savings during 2024 as part of its Global Cost Reduction Program, with a target of reaching $2 billion by year-end 2025[197] - The Company expects to achieve$1.5 billion in pre-tax run-rate cost savings from supply chain transformation initiatives by the end of 2025[195] - The Company recognized net restructuring charges of approximately $100 million in 2024, expecting annual net cost savings of approximately$129 million by the end of 2025[253][256] Financial Performance - The Company reported net sales of $15.366 billion in 2024, a decrease of 3$15.781 billion in 2023, primarily due to a 2% decrease from the Infrastructure divestiture and a 1% decrease from foreign currency[225] - Gross profit for 2024 was $4.514 billion, or 29.4$3.933 billion, or 24.9% of net sales in 2023, with Non-GAAP adjustments reducing gross profit by $88.8 million in 2024 and$166.9 million in 2023[227] - Selling, general and administrative (SG&A) expenses were $3.333 billion, or 21.7$3.291 billion, or 20.9% of net sales in 2023, reflecting increased investments in growth initiatives[229] - The Company reported a diluted earnings per share of $4.36 for continuing operations in 2024, compared to$1.45 in 2023, reflecting significant Non-GAAP adjustments[220] - The Company’s net earnings from continuing operations attributable to common shareowners were $286.3 million in 2024, compared to a net loss of$281.7 million in 2023[220] Cash Flow and Liquidity - The Company aims for free cash flow to equal or exceed net income, with a target adjusted EBITDA margin in the mid to high teens[189] - Free cash flow for 2024 was $753 million, down from$853 million in 2023, and a notable recovery from an outflow of $1.990 billion in 2022[261] - Cash flows provided by operations were$1.191 billion in 2023, a significant improvement from cash used in operations of $1.460 billion in 2022, primarily due to a$1.123 billion reduction in inventory[260] - The company maintained investment grade credit ratings from major U.S. rating agencies, with no changes during 2024, which is crucial for its cost of funds and liquidity[268] - The company entered into a new $1.25 billion syndicated 364-Day Credit Agreement in June 2024, which serves as part of its liquidity back-stop for its commercial paper program[273] Inventory and Supply Chain Management - The Company has reduced inventory by over$2 billion since the end of the second quarter of 2022, supporting free cash flow generation[197] - The Company is focused on cash flow generation and inventory optimization to improve operational excellence[316] Brand and Market Positioning - The Company maintains a strong portfolio of brands, including DEWALT®, CRAFTSMAN®, and STANLEY®, which are prioritized across the Tools & Outdoor segment[202] - The Company has generated over 300 billion global brand impressions through various marketing initiatives, emphasizing brand building and commercial support[206] Tax and Regulatory Matters - The effective tax rate on continuing operations was (18.7)% in 2024, compared to 25.0% in 2023, primarily due to tax benefits from legal structure realignment and foreign deferred tax assets[236] - The Company reported a one-time tax liability of $110 million related to the Tax Cuts and Jobs Act, which it plans to pay interest-free over up to eight years[270] - The Company accounts for income taxes under the asset and liability method in accordance with ASC 740, recognizing deferred tax assets and liabilities for expected future tax consequences[308] Future Outlook and Strategic Initiatives - The Company aims to achieve mid-single digit organic revenue growth through innovation, electrification, and global market penetration[316] - The Company plans to return adjusted gross margins to historical levels of over 35% by transforming the supply chain and optimizing manufacturing and distribution networks[316] - Forward-looking statements include expectations around future operations, market share gain, and new product developments, with inherent risks and uncertainties[313] - The Company acknowledges potential adverse developments in litigation and regulatory liabilities that could impact future results[315] - The Company does not undertake any obligation to update forward-looking statements except as required by law[318]