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October 27, 2022

Stanley Black & Decker CEO: Headcount reductions are ‘largely completed’

PHOTO | CONTRIBUTED Stanley Black & Decker's New Britain headquarters.
By Andrew Larson

New Britain-based tool manufacturer Stanley Black & Decker made “tangible progress” during the third quarter, President and CEO Donald Allan Jr. said during an earnings call Thursday morning, following significant recent job cuts that are part of a larger cost-cutting initiative.

However, the company also lowered its earnings-per-share expectations for the year, citing challenges related to consumer and European demand weakness as well as cost inflation.

“We made tangible progress in transforming our business during the third quarter as we improved customer fill rates, deployed a new organizational structure, implemented cost controls and actively reduced our inventories,” Allan said. 

The Wall Street Journal reported earlier this month that Stanley, which has struggled with inflation and slowing demand following a boost in business at the start of the pandemic, cut about 1,000 finance jobs, although the company later refuted that number. 

Regardless, the finance layoffs are part of broader job cuts within the company “that have affected thousands of workers around the world,” the Wall Street Journal reported, citing unnamed current and former employees.

The Hartford Business Journal reported in July that Stanley was planning to implement a significant cost-cutting initiative that would trim expenses by up to $200 million by the end of this year, $1 billion by the end of next year and $2 billion within three years.

Allan on Thursday said headcount reductions are “largely completed” and that the company saw initial cost savings of $40 million during the third quarter. It expects to save $200 million by the end of the year.

For the third quarter, Stanley Black & Decker reported sales of $4.1 billion, up 9% from the prior year. That growth was driven by recent acquisitions, but was offset by lower volume.

Its profits for the quarter were $844.6 million, or $5.50 per share, compared to $414.2 million, or $2.51 per share, in the year-ago period. 

Stanley Black & Decker will continue working to reduce its inventory, which stood at $6.3 billion at the end of the quarter, Allan said. 

Recent acquisitions of MTD Holdings, a manufacturer of lawn mowers, snow blowers, trimmers and outdoor power equipment, and Excel Industries, which designs and manufactures commercial and residential turf equipment, contributed nearly $600 million in revenue, about 18% growth, according to Corbin B. Walburger, vice president of business development and interim CFO.

Those factors were partially offset by a 12% decline in volume and a -3% impact from currency on an organic basis, Walburger said. 

Allan said the company plans to deploy $300 million to $500 million to advance innovation over the next few years.

“As we introduce our new products and innovations, we will bring more digital tools and capabilities as well as additional commercial resources to engage directly with our customers,” Allan said.

The company also revised its 2022 earnings-per-share outlook, to 10 cents to 80 cents on a diluted GAAP basis from 80 cents to $2.05, and on a non-GAAP adjusted basis to $4.15 to $4.65 from $5 to $6.

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