Stanley Black & Decker (SWK) 29 Oct 242024 Q3 Earnings call transcript

Welcome to the Third Quarter 2024 Stanley Black & Decker Earnings Conference Call. My name is Shannon, and I will be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Vice President of Investor Relations, Dennis Lange. Mr. Lange, you may begin.

Shannon. you, Thank and & everyone, joining for us Good XXXX thanks Third Black Decker's Quarter Stanley morning, for Webcast.

& EVP Here today, and President, EVP COO, President Don is Pat Tools and and CFO. in addition CEO; to Chris myself Outdoor; Hallinan, and Allan, Nelson,

Chris statements forward-looking be to possible they current are and actual the filed therefore Such may that we release the which morning, do, XXXX filing. IR in any make statements cautionary our making which just at Consistent with going section this This today. the a website. matters that will that uncertainty. involve we'll Xrd replay refer differ are not quarter on and earnings of sticking supplemental assumptions release, normally forward-looking events some call session. Don, Pat as morning based followed morning's one It's a review such, available question results today. of X-K also views. with accurate a.m. future and We beginning may our issued results Q&A other we on our direct XX be was our statements from recent with based Our risk to, the during of to prior be our we 'XX Act webcast that per we you statements materially this webcast, and are earlier press and caller. And various to most might we presentation, by as will the available and will on be in A prove

financial non-GAAP reference measures during also may the we call. Additionally,

measure the which of IR section. I'll to presentation corresponding our the appendix refer information, over release, now CEO, our reconciliations please to additional Allan. President the the and For press call Don under the turn related and on supplemental and GAAP available website are financial applicable to

and morning, everyone. Thank you, good Dennis,

generation, created X cash margin result continued improvements all operational we delivered solid of robust ago. as our quarter, execution well over as team gross years again framework against as our This a and priorities,

in you our on capture and reshape our choppy this focused gain we chain remain accelerate gain. By structure our and investments executing supply continue new value against growth saw areas we our cost slow, As to efficiencies to across key morning's control, chain share transformation strategy, initiatives share. in a within release, to market executing our fund to

We us to in we compelling the actions long-term and supplier further capture activation serve. industries together expect and these in-market choice our innovation our opportunities will as powerful position accelerate strengthen our brands, a enhance of

consistent of you as to strong free our key Our and stimulate growth priorities transformation. On progress call, strategic cash remain and we our in about hear prioritize each gross focus: margin completing of gain. sustainable work share generation areas towards investments expansion, flow will today's

margin. gross First,

profitability to significant percent continue XX-plus of the gross chain margin. drive our We our of transformation supply target through to achieve

Our end global billion cost by of of remains billion for $X.X $X rate XXXX. of savings track and XXXX expected program end by run reduction the the on

long future be organic for setting operational have Xx carry to of X in primary challenges over organic stabilized and at reinvigorating the self-generated sheet we EBITDA centered solid We're our the gain balance our cash forward on for sustainable the to conviction experienced in behind term. Through growth that expansion. has significant The share term. which an transformation, value have culture company a goal Decker with stimulate long the has there solid strength. into persevered profitability strengthening reducing & momentum future and behind next excellence team mindset, investments the opportunities through and organizational have to are new been we Black growth the growth we with further Stanley around achieve we finally, improvements, to us, we creation the strong are free growth leverage foundation generation hard-earned supporting significant our deployed also Next, to expect with flow market entire the progress short, XXXX. And medium and decade. The

we stable in weak we continue focus markets are in by informing look which said, aggregate gained pressured As relatively today, the quarter. of sixth agility business the of within are our growth our backdrop. cost housing investments they share at same service. the remain our production and refine These to as improve the on especially trends, our consumer the funding healthy as professional to for current continuation well mixed pockets relatively current structure. At be to consecutive factors tools, new That such DEWALT some as related automotive time,

the will the and the interest the next front half election optimistic greater lag markets have markets of will and an into are rates between settled. flow-through that reductions geographies our rate interest future year in is to prove turn effect in the to There choppy U.S. our will many rate be catalyst. likely favor cuts for demand until result We lower extend in a and will a initial we categories, be known expect and as

could short-cycle a our the second plan XXXX. demand be of as the stronger we will ensure thoughtfully in for production future, business, we and As half early ready inventory are to which as

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higher over as continue will to of the and EBITDA shareholder we to position via company significant strong cash We is levels discuss expansion. revenue drive will profitability deliver the organic which growth, term, what next long return long-term flow

interested are and the out attending, information. for IR you in more If reach Dennis to team

billion to million. future step-up XX.X%, expansion basis was prior earnings points strength reduce X Volume designed versus revenue the down We up was a healthy basis revenue, of provided to by pockets attributed demand for sixth in $X.X the We $XXX on quarter X primarily points second consumer closed point mixed the end chain transformation. Adjusted sales delivered Now was points shareholder versus This gains. debt and is diluted third X down by on last up partially by and flow and offset margin fasteners. The the was allocation capacity impact our gross per which was the year, backdrop higher delivered quarter by support cash XXX X-point as partially share ongoing X% XXX drag. a demand, year point divestiture, margin growth organic gross prior to early price. of Adjusted quarter. Free a namely offset generation results. was quarter, was the cash which million market aerospace driven year. as organic in of shifting a points. well our to supply of down continues weak market investments. had to to share our dividends, approximately versus negative balance quarter investments which deliver capitalized DEWALT $X.XX market the infrastructure with consecutive $XXX was sheet third XX.X%, which quarter Adjusted Strong of EBITDA prioritized in revenue. priorities, a Currency relatively third margin capital

to forging full to XXXX later our up cash million guidance guidance team our narrowing thank are reiterating $X.XX color our year to million. want $X.XX, choppy macro of to this adjusted flow ahead will our provide and presentation. I and we persistence diluted in in $XXX more focused environment. $XXX a for range their EPS free members staying Finally, despite Pat on

continue established X plan achieve the to ago. progress our on We and substantial make milestones years financial we over transformation

review investments to expansion committed the journey our to and is for will pass that gain within Nelson margin now our business remain segment performance. Chris it control. I share We generally will the to

volumes and line. good Beginning X%, a by third X%. brand as was consecutive currency and product outdoor Tools with the organic revenue demand spot, DEWALT a its organically plus everyone. delivering bright Price to was of to X% the Don, impacting weak X% down and you, Thank revenue prior attract $X.X & the growth was morning, quarter in approximately another year. billion, versus contributed declining sixth continues Outdoor, quarter tools quarter, backdrop consumer DIY with across

adjusted last year. quarter quarter the XX.X%, was rate margin segment XXX Third a third compared to basis improvement point

transformation supply growth us in Our continues chain deliver expansion, investments. while to year-over-year deliberate our margin help also increase funding

Power consumer and to Turning declined performance organically to DIY the the product in X% softness brands. third for due line quarter. Tools

by side, positive Volume season also was brands. the products sell-in priority our supported the initial the quarter. DEWALT On in across grew holiday cordless

in to the great We of lineup are be end excited offerings a our quarter. fourth users available that by will

down was face similar and consumer from X%. the revenue pressure Hand organic environment tools

the meaningful the pressured X%, DEWALT we the a However, enhance by the to and storage what space safety to end productivity declined of we to These DEWALT of products construction our ToughSystem designed innings Outdoor response with sales DXL innovative within product handling revenue jack. expansion growth channel. saw quarter. material our lineup well launches as new contributors destocking final as customer organic X.X the in user in recent to believe independent were strong be dealer the the

and market double-digit the in region. European Turning by X% growth driven backdrop. which was pressure more organically the Europe in X% revenue both America overall as to North grew declined Iberia, by factors offset the segment. soft by a driven performance U.K. Central organically same despite than This

us more regional prioritizing market accelerate will share product serve on to become investments new support listings. optimistic well expansion are the presence These advance We to our prospects as customers market for investments designed growth. and our and are

performance performance. again Our Tools growth Brazil, Europe, highlight, India. segment solid in remaining double-digit in growth America, in growth. with and driven & to single-digit the high along North Outdoor, by with summary, Latin organic outside strong led delivered This X% by regions, growth DEWALT In once was margin along for in was aggregate, America generating

improve ahead, As on our to strengthen remain we efforts we focused to our our continue margins gross and culture. further growth look

us gain. X prospects new behind these our Focusing investments best share on allows resources to and prioritize make imperatives core for

moving Now to Industrial.

and prior The on production was was as basis attributable aerospace the versus XX% XX% nearly spending. the down Automotive revenue to rate declined revenue to as single point cost is performance quarter double pleased declining This prior content growth prolonged OEMs destocking. X% conditions. low softness and notable organically, X volumes was supported XXX business customer of a business by predominantly automotive given business this industrial The strong price Third constrained was by was adjusted control. infrastructure by Industrial mixed reported improvement of and price. an which basis all driven offset contributed down was segment Organic the year, grew which points market in versus year, margin divestiture. XX.X%, vehicle fasteners rate. General realization X%, were to wins booking digits, segment CapEx market return reduced light after we see and schedules up new digits a to

enterprise-wide expansion are efforts We adjusted transformation in segments. both the across resulting operating see margin encouraged to

Moving Tools accelerate growth and like the couple slide. we of aggressively resources are prioritizing to to Outdoor. how of next to highlight would a I examples thoughtfully in &

inception both First, which of communities the is grow support organizations it to organizations fund they in in can trades We've to trades is trades upskilling trades and users business people into serve, success not end-user also already continue people, reskilling the skills Canada, we more tradespeople. end promote the to since amplifying as and with high XXXX our professional investing trades. long-term focused generations initiatives trade to solve support future have newer industry. couple users, upskill scholarships skills the designed more on careers. Helping honor its a commitment, related million we in newer our The DEWALT to million the in priorities, both commitment. These we $X in advance established to our of growth this support their program investments deeper strong users million to on people and DEWALT's our is By and gap end education core as to the and than that is including in in with of in focused invested vitality of Trades expand highlight capacity number mechanical, XXX connections the investing and today strategy. by $XX are only to our support entering already and grow key partnered people grants investing help skilling, today, but finishing committed demand. skilled to initiatives shortage development. people and examples are both $XX There that announced will trades to building unlocking DEWALT initiatives sponsors trades also to well program important in September means United end recent their established in the that and trades generations where fields, trades share brand States nearly of in we awarded while also Person to support National our and the XX, loyalty. To trade pipe concrete, we including a

partnership our Stanley time was France, the better Nations At members team our DEWALT personal Orleans. and competition and challenges New our the final DEWALT We at Build women with their share also to WorldSkills. year, throughout Platinum are in aspirations. trades recent highlight the Conference Tradeswomen participation spent experiences, booth in event, also of and getting Lyon, partner. the I'll long-standing Facom tools featured as official partners. One proud the is our were This know

innovations, new users to demand creating You're for by I essential supporting are investment flywheel future. And in a one accustomed end users about virtuous our the from sustainable just to success. create these are last important. hearing of end our quarter, top loyal product They the programs as but are attributes more us as today shared

to prioritize with these innovation. to end building users We continue purpose-built deliver connections deeper

for attribute our is engine. innovation success differentiated key Another

are leader user productivity job productivity users designed new during tools the trade safety. end-to-end trades MAX site. to ecosystem that enhance how most focused our our to wide on solutions, utilizes a by of for one to a of the provides is control pump carrying a to particularly on technology site The to total solutions challenges robust in or for construction lifting, help recent optimizing job professionals. installation GRABO XX-volt we we pressing As of electric heavy job GRABO driving vacuum several end maximize site additions workflow, on unveil user focused and continuing the people materials. This the of is safety DEWALT's help Lifter on of applications The empower solve one powerful innovation professional range and are example face, just and

and clear Our a speed accelerating our gain. mandate, share talented team is executing with moving and plan transformation

pass profitable believe Hallinan. focused are we I'll and Pat are positioned We deliver and over to now the much, you and well growth. Thank very we organized, call sustainable, to

Thanks, Chris, good morning. and

third As the will objective and our shared, to accomplishments our Don third approximately run quarter program's $X.X continue rate our margin I progress and progression pretax $XXX detail highlight meaningful inception. bringing on our quarter, savings, our million achieved on in aggregate XXXX transformation financial focus we during of now make and to beyond. In XXXX delivering cost journey. we the savings approximately the billion our since

quarter Our across third our by and date execution demonstrates performance employees organization. program strong to

We progress work are tracking consistent streams. by driven plan, our across to

$X billion back, XXXX needed and and run amidst capturing our and by the actions diligently end demand as by XXXX. soft savings of of end freight billion $X.X inflation margin pursue the cost are complete efficiencies We backdrop the target a the transformation we of savings continue to to rate run of meet rate of objectives. Stepping gross pretax pretax we

on we towards both plus adjusted target. achieve XX% as work to track are targets margin our gross We

footprint strategic operations As transformation to supply core complexity transformation largest captured a by sourcing savings and our reminder, savings our are actions chain savings remains XXXX. sourcing, in to initiatives component-related driven the date, reduction. Strategic contributor excellence,

lean excellence base throughout supply functional leverages productivity our leveraging rationalizing our are the targeted of of opportunity, a the system. capturing at is strategic translates of being are across initiative which implemented the economies critical scale area improvements to activities our and Sourcing principles, on sites spend center which of This advantages excellence, globe. next focus to suppliers. Operations

as significant of as leverage scale our redesigning of excellence well X/X manufacturing efficiency. Approximately optimizing as our XXXX. are to operational maximize during distribution network facilities our footprint change centers and undergoing we are We

to work this expect XXXX We continue beyond. into and potentially

decreasing standardize well platforming procurement which and strategy product will is We to simplicity we of time our complexity, ultimately cycle the families. underway process. scale are and by across The improving as with our methods identify innovation we aim achieve components parts reducing

fresh bringing our well to material so and takes designing customers cost XXXX. beyond this holistic method cost also better combining can savings and to products a a to new approach more a with This faster are which while efficiently, design-to-value market competitive serve doing approach generate We at advantage. productivity

as XXXX enhancements across be are much we we As a transformation, productivity progress diligently that we've contribution. company ability goals journey. for a XX-plus way like gross work not look a believe shared going transformation. confidence margin the the sustainable possible pursuing operational close The mindset everyone's forward. I that achieve out rather continue commend we instilling us percent a to it's the not the without would to achieve as developing this point including objectives method, it's for With is efficiency generating to margin to cost today, goal, the journey to our end would gives as our this on we and for organization the structure of gross our in adjusted and said,

to Moving slide. next the

is fiscal addition the is earnings of efficiencies in reductions, cash are strong sustainable free profitability improvements generation. cash cash our to translating signal latter million of quarter, of flow of flow expanding prior the dominated which cash and main and free gain. We cash in gross that to operating year-to-date cash XXXX year. line $XXX cash growth composition in free shift That in where generated working mix. healthier and quarter. In This brings a investment it profitable focus: generation. towards generating makeup broadly nearly said, year, free During capital long-term free This flow and support continued on flow cost we reflects free the benefits a flow make the in importantly, areas third to the progress flow and share in transformation cash free third flow weighted with current X from to margins was the

full range cash $XXX to million reiterating year million. our We flow free of are guidance $XXX

positive of as a as quarter expect drawdown be a well We working from fourth supported modest cash receivables inventory. to in generation reductions earnings by seasonal capital reduction

to Our is benefit expectation higher capital at expenditures $XX is XXXX previous lower is and With million, inventory we demand. of we at approach a the for guidance. of slightly which our half by assumption. the midpoint in measured This year-end acceleration XXXX possibility external we of mind, $XXX XXXX inventory July potential environment to that levels carry the back into as are and including for for management million the approximately changes million in taking an outlook that our will offset our an $XXX to markets, than navigate XXXX versus

we result billion planning to flow allocate forward, Looking of as reduction, to expect dividend cash little in over will is in gross debt debt $X which free the end are support a total of XXXX. a that excess of balance the we

Beyond year-end the for the free excess utilizing with deleveraging net plan to our achieve metrics actions. are leverage XXXX, by X.Xx XXXX. to of planning flow by we cash pruning dividend goal portfolio objective modest this achieve to and debt EBITDA We further approximately targeted beyond

was savings a by benefit year, profitability. Adjusted the versus the inflation. from basis primarily margin driven in XX.X% quarter, transformation prior gross improvement to XXX normal point net of Turning and third supply wage chain

for fourth sequential planning quarter, our chain transformation initiatives. supported further by the are We supply in improvement

full XXXX our on adjusted goal to us gross puts a plan current achieve Our year approximately margin. of path XX%

Now XXXX remaining and turning guidance assumptions. the to key

to guiding both adjusted and to earnings ranges per range reiterating $X.XX to GAAP narrowed, compared guidance. midpoint to unchanged prior with In to are addition cash the $X.XX range we but guidance, our at share as earnings free per $X.XX flow $X.XX to share

the production of weaker continued to end macro of in relatively anticipated and declines by automotive second the that marginally quarter, the driven factors have that continuation quarter, in bottomed. the is outlook soft appear yet Our than consumer that fourth softness global environment one a at

with we these the assuming offset point be we throughout done savings year. guidance, our generate EBITDA revenue revenue year leveraging primarily pressures control, within prior percentage and fourth midpoint will full the have approximately we are adjusted are versus X down the organic of declining the quarter As cost X.X%. year, our organic At to growth

our quarter ending forecast are than prior guidance, revenue. Our rates the moderate organic relatively rates, revenue as full previously foreign revenue currency year is in the at guidance recent third currency similar offsetting negative less total incremental to weakness

Turning to the segments.

full at for revenue at Outdoor points, full the with & organic down minus Tools midpoint, for basis unchanged relatively year the or pricing is year. outlook plus flat XX Our X%

the and plus the headwinds at midpoint, minus Industrial remain guidance committed we now basis growth known. segment X% U.S. greater points. that automotive long-term remain We share assumes positive expansion expect until global XX end to automotive will have the to We updated quarter. Broadly, effect, of prior interest soft our journey incorporates a assumption is about the for third production at reductions down similar rate and zone more that election we our production the term, our gain remain to organic investments choppy our be fourth expectation or markets fully revenue This Near [indiscernible] industry's the to in be control. the and our and that prospects. quarter have result global for than is within corrects, margin generally

to SG&A. Turning

a maintaining while long-term near-term the to disciplined softness, cost growth. are management investments given prioritizing We market organic for approach

an planning for growth brand, and $XXX marketing XXXX. activation innovation, remains investments incremental Our in million assumption technology

zone. SG&A, be of We year percentage XX% XXXX in expect the low sales, full to a as

the company XX% transformation the for total adjusted year, approximate expect EBITDA from to margin by full program. We savings supported

& assumptions expected and Our Industrial adjusted segment and Tools plan up for are with to prior consistent margin be our relatively Outdoor year-over-year.

the for demand range between $X.XX adjusted business being market and remain with earnings manage in low largest our growth. the and for is this long-term make SG&A share gross margin expect Our on thoughtfully adjusted high variability focused to environment. in the working investments that end. We the goals to hard while position per contributor

XX% The on a guidance adjustment elements which benefit tax to from the charges supply we brand XXXX is other versus the at from quarter. imply Other margin program, full midpoint unchanged transformation further prior quarter. chain improve focused relate and adjustments are charge executing environmental the of largely to second slide guidance. ranging be our the noted modeling. In for rate $XXX fourth with adjusted remain assist earnings in pretax to assumptions the the impairment supply to the improvements million will $XXX earnings. include to chain on the and These tax third guidance. gross GAAP year, at summary, midpoint reserve expected to the non-GAAP quarter noncash million, Turning

Our progress earnings gross remain date full outlook. to adjusted to drive our funding XX% margin additional We supports to narrowed target that revenue free our and year cash while organic our actions confident flow continue generate of plus positive towards growth investments will results.

Our position margin long-term and now company to further generating creation. With top balance the cash priorities delivering back expansion, the call remain growth strengthening to will for value Don. the that, sheet pass and I

Thank you, Pat.

the this growth balance making you company also our priorities key while As to cash share drive morning, sheet of and in gains. strength investing generation is across margin meaningful sustainable improvement, future progress heard

moving XXXX. results which middle the are demand, decisively likely We to of continue continue despite will to end deliver through market mixed

of via organic while on We expansion. the which execution focused drive growth, will cash long-term will profitability sustainable higher consistent return flow, levels shareholder this company significant stay EBITDA revenue positioning deliver to strong and

ready for We are now Dennis? Q&A.

we Great. please. start Thanks, the Don. Shannon, Q&A, now can

first line Mitchell Julian of [Operator with comes the from Instructions] Barclays. Our question

we And construct sort similar of just placeholder early flesh the distance? think about QX. margin when about half good next you about a it revenue kind year, down could flat of how exiting how year expansion, looks if you like you touching So this year, jump? still that out the plus are to half confident year today, a should if you're next of next as year-on-year to up be of Is margin it's then gross XX% thinking big XXX exiting of we operating about it a we're next year? next of see first so bps and as the margin XXXX? And sales a margins, year? of sort in bit sort looks that And of second via wondered sort exiting little Maybe sort thinking within really

Thanks, Julian.

at -- the the we'll how progress I'll related on let transformation of yes, with transformation color and give to where some circle perspectives I'll the So And out XX the Pat months. we thoughts in close in some to and back end Pat? then XXXX. we next XX are

a characterizing year. with we're in the the macros Julian, be say, we there. front 'XX part facing but guidance, sales, certainly, would now lot next If precise I here we're I start not of to Yes, give to expect

choppy, into soft auto the still headwinds So tools' year. demand part and of probably and next some front

gross So of to of right journey. really headwinds. We going plus in getting output in feel getting to remain is EBITDA. confident start. And those team, and XX% to about a the the had billion journey. a on getting like more our to on more growth the a certainly, achieve improvement. that part part Obviously, a timing very early targets. fourth next And of start the to $X-plus transformation key say has this plus growth And gross margin, flat key of about the and But gross likely down year. to we the been we to days journey quarter also EBITDA business. of we're that 'XX, margin then year. It's of than our remains as continue the margin depend when $X the not, a work where we towards headwinds together in in the margin is to is and expecting likely The to update and I'd of lot but flat down, XX% But share-driven guidance are to returning give the to we'll billion we've down probably we'd from

this to just the a bit part I year. acceleration the the think going next half XX-ish the certainly little first But of where year, margin will year. back relative that similar to absorption Again, are year relative we those to back relative year, we'll And fourth then seasonal which accelerated the to in next activities part Outdoor this I incremental in now from the of margin and be of we a you headwinds. business of identifying when in be mean, the the the of have is will it's of focus, part in to the a the balancing activities to plus expansion. update our it half activities the to of of are you we guidance dynamic the give early We of the as act of quarter be year some under year. of into part of this of and headwinds in in up right the early drive slow that the natural then demand the our click early And some extent enough headwinds. And accelerating from timed the terms

I do look 'XX of like a first expect what half from half saw at 'XX improvement, the least in year-over-year of bit 'XX. bit So to little you incremental to terms to first dynamics, of a 'XX,

circle We things thing that lot acquisitions Black not over created established knowing the we obviously, needed journey I of a And back the years ago broader this to to of we address. about If that just developing first and kind place framework that went into roughly. last X.X muscle were was significant that in consistently of grew things And overall we transformation been handful the share had & growth of amount several other Decker organic value. such gaining a as a decades. around a through that at there Stanley

this progress in And so progress Chris have muscle, both still that's that important and today I made the part more comments journey, make. and to And that we continue and and transformation. build an of to we

could in to this a muscle. a worked more allow to getting very gross or profitability gotten for to margins XX our that we the last can as the invest in continue of the we improve we've can months the the little into and the Pat headwinds us so as years a was of the together end strength XX% margin. business ourselves cash of value due strongly timing But see as get We thing the drivers lot feel continue and said, of develop X it, next as that we've to and business team, front X to to factors. other the XX-plus other our and flow bit, in vary but ability into and The still percent. above deeper The deeper

basis is the value So gain of we all margins we industry, that is sustainable think our once get on above share driver long-term we do in that which something our XX%. a biggest

details with Day. walk excited the objectives at from we to through now. overall But We're to established X more we come on more X.X we're very about years and pleased in ago. the transformation very are committed that through weeks So still to progress, Investor the

Chris from question next Snyder Morgan the Our of with Stanley. comes line

gross wanted up on the margin I follow to commentary.

up And of points. points. XXXX, So XXX to maybe seems year-end at XXX to get year-on-year up you basis will have that it kind 'XX, to year exit the 'XX need XX% basis like you then be

year-end that in more basically commentary I And guess, I prior it's of a anymore, distance? the the not was that's know that kind saying So dependent. it's target 'XX macro

maybe would kind macro XX% get there's you So year? that if to helpful. That can needed say that's exit be anything of to the on to next

pretty part expected, we the it. what of point the of corrected. not objective It's That's this the like a not it's fully our that feel strike. a That's year, are portfolio, really question know from our don't the I anymore. X we hasn't auto about towards we'll back back still while Boeing given profitable say part said. some part than working headwind, year I'd next see portfolio. year, this industrial And blip We're part the of Chris. lower Yes, it's smaller probably then we of a of our and still sales

up we and our complete because come ahead to of to interest incremental question any want way. And probably for rates to does will don't start and just in a affect more get offset just And So much it, that auto accelerated very next it's that be headwinds is we than off as of at enough tee sheet roll other of of the time it profitable to of or the able It's how pace still really year. do quickly effect. a what's on taking business. how industrial much our that's going And that what working team. activity at to anything, correct year. part say to implement then when end and will cost balance guidance ourselves. update the fixed both that next goal everybody I'd kind get We'll we of activities reduction

the said, have we still slope be made those will that's goal. preferred. have think than like we get to steeper timing of have the precisely. But way, certainly a next I And our the that affect factors headwinds I little the But that working year we along bit yes, would percent. confidence every XX-plus

In go to that. fact, we see of platforming good opportunities beyond

activities. just the I is of a timing So versus match-up headwinds accelerated think

of with from Wojs Baird. question next the comes Our Tim line

and that question. to follow-up question Just a then my last

and Don, just of first, And I you more changed the talk you're activity the mindset what second, and that's of accelerated of are? you of kind integration what get kind of organic internally make need maybe the pieces the you just attacking kind to something to Pat, just out incremental right? as guys taking are kind changes a where focused. cost from curious to So What kind guess are kind about costs. kind that of you the of of biggest is to buckets focus because organization then internally already lot I'm algorithm acquisition could that

don't that answer start second. I'll Pat? Why you

I'll you going. start, yes, work streams a lot mean I of as of Tim. we mentioned, have

than year see X But But next footprint. greater I we'll year one, X middle acceleration to internally, still you're those to is and 'XX be unlocking going platforming, working 'XX, on probably think the say and levers unlocking key the when again, expected. sourcing, talking all next footprint think some key I footprint specifically, something more we're but the of that's we're I'd action. pulling fronts, about but to

very last on But been XX is to gains. M&A joined Tim, from intense on X.X he's aspect the share market And working particular, we've for at in the last in towards the it of Nelson and weighted some months, team. organic his And thanks to focus question, made that hard years. the something Chris shifting as changes heavily growth culture us, for and XX an to

some to we'll ask to that, T&O. that the translate through some to on And industrial. I'm so give begin going Chris color actually as And to things over within we that of work then doing we're

us don't some So on color that? Chris, why you give more

Absolutely.

lot for Tim. is on alignment as I the brand-centric of we've us we able can been provide around I the change really we the leaning a all, to organized provide cultural solutions, say to a around our been the most And end thing then produce how count the understanding be and our that solutions brands, have that mean, they question, that, and what and important culture need respect is we think for they but yes, our products, into with So that changing that more them significant brands users first focus trust. those core has that thanks I'd to organization. a and and customers

innovation get our we're all serves we integrated that Black the sure brands that sure meaning get and we as they thing identify business, job sure supporting we those really users those of end front that's then the end integrated the we market products that make to to to working laser and on the sure Particularly of Stanley end that in end into very customers going easier. we make then user, our and really professional can grow into we on that quickly making to is, & and third and explaining purchase and to pain so sure focus our are is enhance our to the utilize end their can end them we have brands and really field that representatives a key gain that manner the effectively end Decker to the investment those also making making more the -- serves hands we to market and then meeting make tools clear an ultimately that pipeline we serving driving on as as purpose-driven their points that terms professional making need really finally sure are the focused our driving are and then users tools with programs in the that innovations with a focus focused are identify users and think we the sample want Secondarily, sure and want and goal our productivity brand that users growth. And that well we of in in we have lives we which have building making innovation of marketing address that our are we sure professional innovation users our that for their understand what on that making on. From that make speed want share we site as going driving that they forward. drive of safety and sure we our can end [indiscernible] to driving

towards I puzzle. that pivot final investment driving of the to think front kind the preponderance the is of our end of the piece

Research with next from line Sprague Our question of Jeffrey comes Partners. Vertical the

sort that follow-up been had billion-plus you I then to on say frame. and comments Pat kind of XXXX. and again, $X just first, -- the trajectory, EBITDA previously something But of again, anything didn't unrelated that. in it of of some on to the the guess and pointing questions time mentioned about on outlook just one the outlook but

the confidence my with going given other? compounding hand each X% X%, your on down right, America your and little continuing sort and look of Just PT in mathematically tools America outdoor are they on DEWALT slipping if XXXX? And wonder that kind is though other of X%. categories, and down also only on just X is a that Just tools what's then us of to like you curious America, but question North down help as sales think share each North North underperform to that pointed gains start slow about

complexion just other American you going is So else speak North to Or the brand? that add any of CRAFTSMAN kind maybe on there, on there Stanley perspective something on and sales? share of

comment Pat. I'll question let I'll it's market Jeff, on take then Chris share. and the U.S. outlook

still EBITDA say, we'll would targeting $X-plus 'XX. I by billion of very no, -- much be So our

I fact, X-quarter front In a half the kind 'XX. probably think rolling somewhere that's basis, of on in of

think there. anything has So I don't changed

quickly our drive manage going offset income comments, we to gross mean, the headwinds, driving statement as EBITDA. in accelerating to but the mentioned EBITDA growth initiatives also recognize I total possible. the I value we're the As we're as margin to

EBITDA And on part terms I of changed at frame, billion-ish expansion. a Like that's sometime in we're meaningful threshold. meaning front basis probably 'XX, I frame don't a there's a anything said, time think time $X the that so in on of rolling

this All you. from Nice Chris. hearing right. Jeff, is

Just success of that confident to course provide share share we've we that, been is you that brand. a say North share all, I'd certainly the little the And gain are What this stable pointed nice sure. out, growing DEWALT experiencing more in over to as with of America. we're the color first our slightly in for on year

the been little I DEWALT of about to think the a talking dynamic where Pro consumer stronger that -- trends. And a of due bit more the is that would result, some as brand. we have have the CRAFTSMAN seen the the be the we impact certainly underlying play DIY that than relatively than out and brand underlying

only of consumer not brand grow, So we I but that to think continuing that that that we as well. see strength the strengthen as see as the

see back momentum talked some of of compound seeing in with year, about somewhere the kind half of next additional that DEWALT. about we we we're thinking should what As

Our comes of line from the DeBlase Bank. next Deutsche with Nicole question

additional pressures if broader Can input impacting costs bit the you're you line, with and that's what gross a Obviously, there top are margins? But than costs much steel costs guys are cost but down. little bit you're appreciate your a the about talk about steel. respect and you talk what seeing Totally how on to component side? could seeing little

year play I'd materials running. that's I ground And persistent we up. is would largely and would a the Where expect. slightly say higher slightly been I'll bit we that's U.S. has been been all be freight be Nicole, freight a expected more bit kind would thematically, say, down, in than the to of say, to

have to put vehicle -- the as kind fuel. and you capital more of opposed moving cost some cost actual inflation from a labor net X you ground seems from together, And freight, ground days which freight bit be and the to so these

at you expecting some And of And I'd kind deflation. or extremes slightly at next freight that been see. have this just say neither cost kind I'd as point, from inflation offsetting, we price and higher of neutral say extremes, mentioned, so tailwinds we're no of would headwinds for material year, the

with next of comes question Coe line Research. Our Wolfe from Nigel the

of lot margin the gross the here. about gradient talk improvement Obviously, of a

scenario So year make message just sure plan in talk about is play. Trump and factors if the is exit some tariffs that's $X of I rate you've -- the mix play to in still place, but here. next at the the the election there, just, for got and volume Don, billion are we've case? And in some maybe of just got obviously, wins, place want

address that. maybe just Just

take to first Chris? You that want part,

start may precise feel Yes, we X but returning gain timing the I'll yes, say all and alter I'd And to of EBITDA. with first part, focused slightly, XX-month the growth, Nigel. basis, margin exit and our a the like still run get a statement still we're on share income focus, to manage XX% driven that's rolling we'll part EBITDA of basis in first hitting 'XX, an there. or that $X threshold we're rate the on total and billion gross

a likely Yes. lot the the in associated of If of will a is How are that it. election. new it? industries rolled so a to wins or front magnitude Trump many And And with it this regime. more It broad-based? how will be will to countries then we be and out the unknowns specific covered in there's tariff question be election, related tariff the exactly at point still

gone we've for. of be to in mentioned we that different with price we out tariffs possibility And previous have market. plan into there scenarios the obviously, of as been and gate, settings, since would a put variety the through coming spring the associated increases planning have this However, for

out lot the if and so to through become And worked of we've that. as through more concrete. work continue plays We'll a tariffs scenario the

have a that frame, given will customers around some We getting through reasonable implementing those delay the processes in price. knowing there's that of usually time market our into type work the

world. robust the fairly a the how moving built by we've mitigate these years, plan the different parts tariffs supply aspects would is thing to next second of of X over of The we chain production and

other to of of things to other from but And some see Mexico, parts parts that Asia, of likely Asia. potentially to China be moving maybe would we'll

moving And there's not back a to even so effective we're just unlikely to country. we do this And the labor about because do. that in have whether actually lot U.S. the that cost questions to it's

Those be. be variety then on relations the been significantly educate the going which obviously, have playbook to how are feel going it of of we different a and and depending out fairly be years. to play our to it we a as how things So if would Is activities X don't going into going and summer that actually out determined. how the be is working plays dynamics But robust a supply to XX% everything? Is we vary fall just know would play for to China? it out. And have XX% to be over to plan. politicians to What government this scenario exactly we've every this the all are go, shelf customers industry China ready chain our be I over going like is Or Is it the is China? next scenario we to country? that serve and this

the of process part as important an well. that's So

Our next comes from line Zelman question Adam Bumgarten the with Associates. of &

move XQ, year, from higher of quarter-over-quarter then XQ margins step margin gross [indiscernible] here. year? expect we sequentially saw the down this path should next and there Just like of in kind you on Obviously, gross implied to from

I'd businesses, it else. And the months down head the drive get year of slow whether that will precise that into Yes, things a industrials be case, little correction to we that how of relative are of of next get 'XX, margin variability still parts in midstream. don't to Adam, in auto the sense our we'll across mix gross is into much early of just the year, it's or outdoor the that bit everything as I in know early starting the this in

minus that things going get can don't the get specific are would that. things bps a But throughout broadly, maybe accelerate timing XX%, start into quarter very just I'd flows. we I few it plus first half, know at or going I to fourth of quarter few I shipment look so the Maybe types to above somewhere half. see -- those just And to getting in you say, it's you'll percent, to and think XX-ish specific if a first half because

the of Rob Our next from question comes Melius Research. line with Wertheimer

you give American bit little channel inventory the of is wanting a Tools partners Outdoor? a a at if a more sense of wonder just some season? I & of some some to is different the of of are weakness Maybe unpack North factors could that retail? Maybe strategy? contributing is Just your just different that sales the Maybe expectation magnitude [indiscernible]? order an weaker of how that of maybe holiday

Yes.

negative talked that I foremost, the So to modestly One was an earlier in start POS think of we that's the would there. kind we dynamics was few the of normalized we be and expected, -- things And as there's one outdoor what what being a first we our in season, about quarter. probably and that as case in rolled off QX. the is of had we

which on we there's underlying the see as do in the to are there the seeing we're look professional be on explain the also we having at the Secondarily, And marketplace of what activity. then this notably that, down effect consumer there's momentum more pretty some there strength activity DIY. And R&R if I think than metrics you obviously DIY being would of and kind year. at a for but that, that's well. that look much levels significant in on probably sentiment, the

starts, those don't some in the construction half as we our longer-term progress forward, to Moving look trends but residential real those about, improvements taking of activity, any see a first quarter start or more as in will we first we'll see catalyst on and talked the see growth construction spending, we in of are optimistic marketplace. change earnings, longer-term that industry. the we the And at in R&R home dynamics, some

hand the Dennis the concludes over like closing now session. to call Lange back would to for question-and-answer remarks. This I

thank Thank please to like their We'd on participation have Obviously, you. the for call. if further you time and everyone again any thanks. questions. contact me Shannon,

Thank conference today's call. your for concludes This participation. you

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