Dive Brief:
- Stanley Black & Decker raised its 2026 earnings-per-share and free cash flow forecasts Wednesday as it reported a boost from tariff refunds in the third quarter.
- The New Britain, Connecticut-based maker of power tools recognized a $180.7 million pretax gain from tariff refunds realized during the quarter, according to its latest Form 10-Q. The net benefit from the refunds added about 67 cents to earnings per share and contributed about 430 basis points, or 4.3 percentage points, to the company's gross margin improvement, the company said.
- “These tariff refunds have clearly given us the rare opportunity to ramp up and pull forward certain growth investments into 2026,” CFO Patrick Hallinan said during an earnings call.
Dive Insight:
Stanley Black & Decker is among a growing number of companies reporting significant financial benefits from refunds tied to now-defunct tariffs. The refunds followed the Supreme Court's February decision striking down the Trump administration's use of the International Emergency Economic Powers Act to impose the levies.
The refunds have become a prominent topic on corporate earnings calls, with companies including Walmart, Target, Apple and Home Depot highlighting substantial impacts.
Companies mentioned tariff refunds 388 times across 72 S&P 500 earnings calls in the third quarter, according to an Oct. 22 analysis by financial research platform Equibles.
Stanley Black & Decker previously disclosed a $118 million pretax gain from IEEPA tariff refunds in the second quarter. That amount was partially offset by $83.4 million in directly attributable costs, including variable incentive compensation and growth investments.
The company's third-quarter filing said the $180.7 million pretax gain was partially offset by $48.2 million in directly attributable costs.
The toolmaker reported third-quarter net sales of $3.7 billion, down 1% from a year earlier. Adjusted earnings per share rose to $2.31 from $1.43 a year earlier, including a 67-cent benefit from net tariff refunds.
Adjusted gross margin increased by 780 basis points year over year. The company attributed 430 basis points of that improvement to the net benefit of tariff refunds. The remaining 350 basis points came primarily from productivity gains and a more favorable mix of products sold, Hallinan said.
The company raised its 2026 adjusted earnings-per-share outlook to a range between $5.95 and $6.25, from $5.20 and $5.80.
Stanley Black & Decker also raised its 2026 free cash flow outlook to a range of $1 billion to $1.2 billion, from $600 million to $800 million.
The revised outlook does not include potential fourth-quarter tariff refunds because their timing and amounts remain too uncertain, Hallinan said. The company has received most of the refunds for which the government has “provided a refund pathway,” he added.
The refunds are helping the company bring forward $70 million to $80 million in growth investments that had been planned for 2027, Hallinan said in response to an analyst's question. The spending will go toward areas including personnel, brand building and marketing.
“We continue to take a disciplined and returns-based approach to reinvesting a meaningful portion of these tariff refunds in brand health to support sustainable and profitable organic growth over the long term,” the finance chief said.
