Stanley Black & Decker Q3 Organic Sales Rise 4% as Margins Expand

Stanley Black & Decker (NYSE: SWK) reported 4% organic revenue growth and a sharp increase in adjusted profitability for the third quarter of 2026, as higher volumes, productivity gains, favorable product mix and tariff refunds offset lower pricing and portfolio changes. The company maintained full-year expectations for adjusted EPS of $5.95 to $6.25 and free cash flow of about $1.0 billion to $1.2 billion.

Third-quarter net sales fell 1% year over year to $3.7 billion. Volume contributed six percentage points of growth, while price reduced sales by two points and portfolio changes lowered them by four points. Foreign exchange was broadly neutral. Portfolio effects included the divestiture of Consolidated Aerospace Manufacturing and the transition of gas-powered walk-behind outdoor products to a licensing model.

Adjusted gross margin rose 780 basis points to 39.4%. Net tariff refunds contributed about 430 basis points, with the remaining improvement coming from gross productivity and product mix. The refunds also added approximately $0.67 per share to both GAAP and adjusted third-quarter earnings, after directly attributable variable compensation, growth investments and, for EPS, taxes.

GAAP diluted EPS was $1.83, while adjusted EPS was $2.31.

Tools & Outdoor drives organic growth

Tools & Outdoor generated net sales of $3.34 billion, up 2% from the prior-year quarter, while organic revenue increased 4%. The company said the organic increase was primarily driven by power tools strength in North America, with U.S. retail and commercial and industrial channels contributing to year-over-year growth.

Power tools revenue increased 10%, hand tools, accessories and storage rose 2%, and outdoor products declined 12%. By geography, North American sales increased 6%, Europe rose 1% and the rest of the world declined 1%.

The segment’s adjusted margin expanded 560 basis points to 17.6%. Tariff refunds accounted for about 430 basis points of that increase, while net productivity gains and favorable product mix provided the balance.

Industrial demand supports Engineered Fastening

Engineered Fastening reported $396 million in sales, down 21% year over year, largely reflecting a 22% negative portfolio effect from the CAM divestiture. Organic revenue increased 2%, supported by broad-based strength across global industrial markets, partly offset by automotive results that were below the company’s expectations.

Industrial revenue rose 10%, while automotive revenue declined 2%. Adjusted segment margin fell 110 basis points to 11.7%, largely because of automotive demand pressure. Tariff refunds did not affect the segment’s margin.

Full-year outlook and capital deployment

For 2026, Stanley Black & Decker expects total net sales to be approximately flat. Organic revenue is projected to increase by a low-single-digit percentage, with currency contributing about one percentage point and portfolio changes reducing reported sales by roughly three points.

The company forecasts low-single-digit organic growth for both Tools & Outdoor and Engineered Fastening. Adjusted segment margin is expected to increase year over year in Tools & Outdoor and remain flat in Engineered Fastening. Adjusted EBITDA margin is also expected to be higher than in 2025.

Full-year GAAP EPS is projected at $5.45 to $5.85, compared with adjusted EPS of $5.95 to $6.25. The adjusted EPS outlook includes a $0.60 benefit from net tariff refunds received through the first nine months but excludes any potential fourth-quarter refunds. Management said the company has received most of the refunds for which the government has provided a repayment pathway.

For the fourth quarter, Stanley Black & Decker expects approximately $3.6 billion in net sales and adjusted EPS of about $1.45. Adjusted gross margin is forecast at roughly 34% to 35%, compared with 33.3% in the fourth quarter of 2025. The company retained its long-term adjusted gross margin target of 35% to 37%.

Year-to-date free cash flow totaled $836 million. The company repurchased about 2.5 million shares for $250 million during the quarter, completing its previous $500 million authorization. Its board approved a new repurchase authorization of up to $1 billion on Oct. 29.

Stanley Black & Decker had $700 million of cash and $3.0 billion of additional commercial paper capacity at quarter-end. It is targeting debt leverage at or around 2.5 times adjusted EBITDA by year-end, with its next debt maturity scheduled for 2028.

The outlook remains subject to macroeconomic conditions, tariffs and other trade restrictions, inflation, automotive demand, supply-chain execution and the company’s ability to deliver planned productivity improvements. Management said temporary tariff-rate benefits from IEEPA cancellations are still expected to largely offset increasing inflation in its 2026 forecast.