Stanley Black & Decker (SWK) Q2 2026 earnings summary

Executive summary

• Net sales for Q2 were $4.0B, flat year-over-year, with 3% organic growth led by strong U.S. retail and commercial/industrial channels in Tools & Outdoor, while Engineered Fastening declined 18% due to the CAM divestiture.

• Gross margin improved to 33.0% (up 600 bps), with adjusted gross margin at 33.7% (up 620 bps), driven by productivity, product mix, and net tariff refunds.

• Adjusted EPS was $1.57, $0.37 above guidance midpoint, and GAAP EPS was $2.33, both benefiting from net tariff refunds and the CAM divestiture.

• Proceeds from the CAM divestiture and operating cash flow were used to pay down $1.7B in debt and repurchase $250M in shares.

• Full-year 2026 EPS and free cash flow guidance were raised, reflecting strong margin expansion and capital returns.

Financial highlights

• Adjusted gross margin was 33.7%, up 620 bps year-over-year; EBITDA margin was 17.4%, and adjusted EBITDA margin was 11.3%, up 320 bps.

• Q2 net earnings were $351.3M, with diluted EPS of $2.33; free cash flow for the quarter was $698M.

• Tools & Outdoor Q2 revenue was $3.56B, up 3% organically, with segment margin at 10.9% (up 400 bps) and adjusted margin at 11.8% (up 380 bps).

• Engineered Fastening Q2 revenue was $396M, down 18% due to CAM divestiture, but organic revenue grew 3%; segment margin was 13.0% (up 580 bps), adjusted margin 13.0% (up 220 bps).

• SG&A expenses were 23.9% of sales; adjusted tax rate was 15.1%.

Outlook and guidance

• 2026 adjusted EPS guidance raised to $5.20–$5.80, GAAP EPS to $4.60–$5.45; free cash flow guidance increased to $600M–$800M, or $800M–$1B excluding divestiture taxes/fees.

• Organic revenue expected to grow low single digits year-over-year, with total revenue flat.

• Full-year adjusted gross margin expected to expand by 150 bps, plus 60–70 bps from tariff refunds.

• Q3 net sales expected around $3.7B, with organic growth of 3%–4%; adjusted EPS $1.50–$1.60.

• Guidance excludes further CAM results and potential future tariff refunds due to uncertainty.