STANLEY BLACK DECKER INC

Previous wording

Throughout this Management's Discussion and Analysis (“MD&A”), references to Notes refer to the "Notes To Unaudited Condensed Consolidated Financial Statements" in Part 1, Item 1 of this Form 10-Q, unless otherwise indicated.

Current wording

Throughout this Management's Discussion and Analysis (“MD&A”), references to Notes refer to the "Notes To Unaudited Condensed Consolidated Financial Statements" in Part 1, Item 1 of this Quarterly Report on Form 10-Q, unless otherwise indicated.

Previous wording

The SG&A cost savings are expected to be generated by simplifying the corporate structure, optimizing organizational spans and layers and reducing indirect spend. These savings will help fund $300 million to $500 million of innovation and commercial investments through 2025 designed to accelerate organic growth.

Current wording

The SG&A cost savings are generated by simplifying the corporate structure, optimizing organizational spans and layers and reducing indirect spend. These savings will help fund $300 million to $500 million of innovation and commercial investments through 2025 designed to accelerate organic growth.

Previous wording

The charges associated with the supply chain transformation are reflected in the Non-GAAP adjustments detailed below in "Results From Operations" and the full year estimate of Non-GAAP adjustments detailed below in "2024 Outlook". The cash investment required to achieve the $1.5 billion of pre-tax run-rate supply chain cost savings is expected to be approximately $0.9 billion to $1.1 billion, of which approximately 40% is expected to be capital expenditures. Through 2023, the Company has made approximately $0.2 billion of these cash investments. The Company will continue prioritizing capital expenditures consistent with its existing approach and expects total capital expenditures, inclusive of the supply chain transformation, to be $375 million to $475 million for 2024 and to approximate 3.0% to 3.5% of net sales annually in 2025 and beyond.

Current wording

The charges associated with the supply chain transformation are reflected in the Non-GAAP adjustments detailed below in "Results From Operations" and the full year estimate of Non-GAAP adjustments detailed below in "2024 Outlook". The cash investment required to achieve the estimated $1.5 billion of pre-tax run-rate supply chain cost savings is expected to be approximately $0.9 billion to $1.1 billion, of which approximately 40% is expected to be capital expenditures. Through 2023, the Company has made approximately $0.2 billion of these cash investments. The Company will continue prioritizing capital expenditures consistent with its existing approach and expects total capital expenditures, inclusive of the supply chain transformation, to be $325 million to $375 million for 2024 and to approximate 3.0% of net sales annually in 2025 and beyond.

Previous wording

During the first six months of 2024 and since inception of the program, the Company has generated approximately $295 million and $1.3 billion, respectively, of pre-tax run-rate savings, driven by lower headcount, indirect spend reductions and the supply chain transformation. These savings are comprised of supply chain efficiency benefits, which will support gross margin improvements as the benefits turn through inventory, and SG&A savings. The Company believes that it is on track to grow to approximately $2 billion of pre-tax run-rate savings by year-end 2025. In addition, the Company has reduced inventory by approximately $2.1 billion since the end of the second quarter of 2022 and expects further inventory and working capital reductions to support free cash flow generation in 2024.

Current wording

During the first nine months of 2024 and since inception of the program, the Company has generated approximately $400 million and $1.4 billion, respectively, of pre-tax run-rate savings, driven by lower headcount, indirect spend reductions and the supply chain transformation. These savings are comprised of supply chain efficiency benefits, which support gross margin improvements as the benefits turn through inventory, and SG&A savings. The Company believes that it is on track to grow to approximately $2 billion of pre-tax run-rate savings by year-end 2025. In addition, the Company has reduced inventory by approximately $2.0 billion since the end of the second quarter of 2022 and expects further inventory and working capital reductions to support free cash flow generation in 2024.

Previous wording

As previously discussed, the Company sold its Infrastructure business on April 1, 2024. This divestiture did not qualify for discontinued operations and therefore, its results were included in the Company's Consolidated Statements of Operations and Comprehensive (Loss) Income in continuing operations through the date of sale.

Current wording

As previously discussed, the Company sold its Infrastructure business on April 1, 2024. This divestiture did not qualify for discontinued operations and therefore, its results were included in the Company's Consolidated Statements of Operations and Comprehensive Income (Loss) in continuing operations through the date of sale.

Previous wording

The Company’s operating results at the consolidated level as discussed below include and exclude certain gains and charges impacting gross profit, SG&A, Other, net, and Income taxes. The Company’s business segment results as discussed below include and exclude certain gains and charges impacting gross profit and SG&A. These amounts for the second quarter and year-to-date periods of 2024 and 2023 are as follows:

Current wording

The Company’s operating results at the consolidated level as discussed below include and exclude certain gains and charges impacting gross profit, SG&A, Other, net, and Income taxes. The Company’s business segment results as discussed below include and exclude certain gains and charges impacting gross profit and SG&A. These amounts for the third quarter and year-to-date periods of 2024 and 2023 are as follows:

Previous wording

Below is a summary of the pre-tax Non-GAAP adjustments for the second quarter and year-to-date periods of 2024 and 2023.

Current wording

Below is a summary of the pre-tax Non-GAAP adjustments for the third quarter and year-to-date periods of 2024 and 2023.

Previous wording

Net Sales: Net sales were $4.024 billion in the second quarter of 2024 compared to $4.159 billion in the second quarter of 2023, representing a decrease of 3% as a 2% increase in volume was more than offset by a 3% impact from the Infrastructure divestiture and a 1% decrease from both foreign currency and price. Tools & Outdoor net sales were flat compared to the second quarter of 2023, with DEWALT® and outdoor leading volume gains of 2% that were partially offset by a 1% decrease in both foreign currency and price. Industrial net sales decreased 20% compared to the second quarter of 2023 as a 20% impact from the Infrastructure divestiture and a 2% decrease from foreign currency was partially offset by a 2% increase in price.

Current wording

Net Sales: Net sales were $3.751 billion in the third quarter of 2024 compared to $3.954 billion in the third quarter of 2023, representing a decrease of 5% as a 1% increase in price was more than offset by a 3% decrease in volume, a 2% decrease from the Infrastructure divestiture and a 1% decrease from foreign currency. Tools & Outdoor net sales decreased 3% compared to the third quarter of 2023 as a 1% increase in price was more than offset by a 3% decrease in volume and 1% decrease from foreign currency. Industrial net sales decreased 18% compared to the third quarter of 2023 as a 17% decrease from the Infrastructure divestiture and a 2% decrease in volume was partially offset by a 1% increase in price.

Previous wording

Net sales were $7.894 billion in the first half of 2024 compared to $8.091 billion in the first half of 2023, representing a decrease of 2% driven by a 1% impact from the Infrastructure divestiture and a 1% decrease from foreign currency. Tools & Outdoor net sales decreased 1% compared to the first half of 2023 as a 1% increase in volume was more than offset by a 1% decline in both price and foreign currency. Industrial net sales decreased 12% compared to the first half of 2023 as a 10% impact from the Infrastructure divestiture, a 3% decrease in volume and a 1% decrease from foreign currency was partially offset by a 2% increase in price.

Current wording

Net sales were $11.645 billion in the first nine months of 2024 compared to $12.045 billion in the first nine months of 2023, representing a decrease of 3% driven by a 2% decrease from the Infrastructure divestiture and a 1% decrease in volume. Tools & Outdoor net sales decreased 1% compared to the first nine months of 2023 driven by a 1% decrease in volume. Industrial net sales decreased 14% compared to the first nine months of 2023 as a 12% decrease from the Infrastructure divestiture, a 2% decrease in volume and a 1% decrease from foreign currency was partially offset by a 1% increase in price.

Previous wording

Gross Profit: Gross profit was $1.141 billion, or 28.4% of net sales, in the second quarter of 2024 compared to $932.1 million, or 22.4% of net sales, in the second quarter of 2023. Non-GAAP adjustments, which reduced gross profit, were $33.5 million for the three months ended June 29, 2024 and $51.4 million for the three months ended July 1, 2023. Excluding these adjustments, gross profit was 29.2% of net sales for the three months ended June 29, 2024, compared to 23.6% for the three months ended July 1, 2023, primarily due to lower inventory destocking costs, supply chain transformation benefits and lower shipping costs.

Current wording

Gross Profit: Gross profit was $1.121 billion, or 29.9% of net sales, in the third quarter of 2024 compared to $1.061 billion, or 26.8% of net sales, in the third quarter of 2023. Non-GAAP adjustments, which reduced gross profit, were $24.8 million for the three months ended September 28, 2024 and $32.2 million for the three months ended September 30, 2023. Excluding these adjustments, gross profit was 30.5% of net sales for the three months ended September 28, 2024, compared to 27.6% for the three months ended September 30, 2023, primarily due to supply chain transformation benefits.

Previous wording

Gross profit was $2.250 billion, or 28.5% of net sales, in the first half of 2024 compared to $1.768 billion, or 21.8% of net sales, in the first half of 2023. Non-GAAP adjustments, which reduced gross profit, were $47.9 million for the six months ended June 29, 2024 and $124.8 million for the six months ended July 1, 2023. Excluding these adjustments, gross profit was 29.1% of net sales for the six months ended June 29, 2024, compared to 23.4% for the six months ended July 1, 2023, driven by the same factors discussed above that impacted the second quarter of 2024.

Current wording

Gross profit was $3.370 billion, or 28.9% of net sales, in the first nine months of 2024 compared to $2.828 billion, or 23.5% of net sales, in the first nine months of 2023. Non-GAAP adjustments, which reduced gross profit, were $72.7 million for the nine months ended September 28, 2024 and $157.0 million for the nine months ended September 30, 2023. Excluding these adjustments, gross profit was 29.6% of net sales for the nine months ended September 28, 2024, compared to 24.8% for the nine months ended September 30, 2023, primarily due to lower inventory destocking costs, supply chain transformation benefits and lower shipping costs.

Previous wording

SG&A Expenses: SG&A, inclusive of the provision for credit losses, was $828.6 million, or 20.6% of net sales, in the second quarter of 2024, compared to $837.3 million, or 20.1% of net sales, in the second quarter of 2023. Within SG&A, Non-GAAP adjustments totaled $27.6 million for the three months ended June 29, 2024 and $25.4 million for the three months ended July 1, 2023. Excluding these adjustments, SG&A was 19.9% of net sales for the three months ended June 29, 2024, compared to 19.5% for the three months ended July 1, 2023, as the Company increased investments to position the business to gain additional market share.

Current wording

SG&A Expenses: SG&A, inclusive of the provision for credit losses, was $797.1 million, or 21.2% of net sales, in the third quarter of 2024, compared to $794.3 million, or 20.1% of net sales, in the third quarter of 2023. Within SG&A, Non-GAAP adjustments totaled $15.1 million for the three months ended September 28, 2024 and $29.4 million for the three months ended September 30, 2023. Excluding these adjustments, SG&A was 20.8% of net sales for the three months ended September 28, 2024, compared to 19.3% for the three months ended September 30, 2023, as the Company increased growth investments designed to deliver future market share gains.

Previous wording

SG&A, inclusive of the provision for credit losses, was $1.680 billion, or 21.3% of net sales, in the first half of 2024, compared to $1,662.4 million, or 20.5% of net sales, in the first half of 2023. Within SG&A, Non-GAAP adjustments totaled $47.7 million for the six months ended June 29, 2024 and $46.1 million for the six months ended July 1, 2023. Excluding these adjustments, SG&A was 20.7% of net sales for the six months ended June 29, 2024, compared to 20.0% for the six months ended July 1, 2023, driven by the same factors discussed above that impacted the second quarter of 2024.

Current wording

SG&A, inclusive of the provision for credit losses, was $2.478 billion, or 21.3% of net sales, in the first nine months of 2024, compared to $2.457 billion, or 20.4% of net sales, in the first nine months of 2023. Within SG&A, Non-GAAP adjustments totaled $62.8 million for the nine months ended September 28, 2024 and $75.5 million for the nine months ended September 30, 2023. Excluding these adjustments, SG&A was 20.7% of net sales for the nine months ended September 28, 2024, compared to 19.8% for the nine months ended September 30, 2023, driven by the same factors discussed above that impacted the third quarter of 2024.

Previous wording

Distribution center costs (i.e. warehousing and fulfillment facility and associated labor costs) are classified within SG&A. This classification may differ from other companies who may report such expenses within cost of sales. Due to diversity in practice, to the extent the classification of these distribution costs differs from other companies, the Company’s gross margins may not be comparable. Such distribution costs classified in SG&A amounted to $131.8 million and $262.3 million for the three and six months ended June 29, 2024, respectively, and $130.7 million and $260.2 million for the three and six months ended July 1, 2023, respectively.

Current wording

Distribution center costs (i.e. warehousing and fulfillment facility and associated labor costs) are classified within SG&A. This classification may differ from other companies who may report such expenses within cost of sales. Due to diversity in practice, to the extent the classification of these distribution costs differs from other companies, the Company’s gross margins may not be comparable. Such distribution costs classified in SG&A amounted to $134.4 million and $396.7 million for the three and nine months ended September 28, 2024, respectively, and $132.7 million and $392.9 million for the three and nine months ended September 30, 2023, respectively.

Previous wording

Other, net: Other, net totaled $226.5 million in the second quarter of 2024 compared to $66.6 million in the second quarter of 2023. The increase in 2024 compared to 2023 is driven by environmental remediation reserve adjustments. Excluding Non-GAAP adjustments, Other, net, totaled $78.1 million and $76.9 million in the second quarter of 2024 and 2023, respectively, relatively in-line versus prior year.

Current wording

Other, net: Other, net totaled $86.4 million in the third quarter of 2024 compared to $94.0 million in the third quarter of 2023. Excluding Non-GAAP adjustments, Other, net, totaled $89.4 million and $99.5 million in the third quarter of 2024 and 2023, respectively. The year-over-year decrease is primarily driven by lower write-downs on investments.

Previous wording

Loss on Sales of Businesses: During the first half of 2023, the Company reported a pre-tax loss of $7.6 million primarily related to the divestiture of a small business in the Industrial segment.

Current wording

Loss on Sales of Businesses: During the first nine months of 2023, the Company reported a pre-tax loss of $7.6 million primarily related to the divestiture of a small business in the Industrial segment.

Previous wording

Asset Impairment Charge: During the first half of 2024, the Company recorded a pre-tax impairment loss of $25.5 million related to the Infrastructure business. Refer to Note Q, Divestitures, for additional information on the divestiture of the Infrastructure business completed in the second quarter of 2024.

Current wording

During the first quarter of 2024, the Company recorded a pre-tax impairment charge of $25.5 million related to the Infrastructure business. Refer to Note Q, Divestitures, for additional information on the divestiture of the Infrastructure business completed in the second quarter of 2024.

Previous wording

Interest, net: Net interest expense was $78.4 million in the second quarter of 2024 compared to $99.4 million in the second quarter of 2023. On a year-to-date basis, net interest expense was $166.3 million in 2024 and $190.5 million in 2023. The year-over-year decreases were primarily driven by lower commercial paper balances in the second quarter of 2024.

Current wording

Interest, net: Net interest expense was $78.6 million in the third quarter of 2024 compared to $94.4 million in the third quarter of 2023. On a year-to-date basis, net interest expense was $244.9 million in 2024 and $284.9 million in 2023. The year-over-year decreases were primarily driven by lower commercial paper balances in 2024.

Previous wording

Income Taxes: For the three and six months ended June 29, 2024, the Company recognized an income tax benefit from continuing operations of $2.9 million and income tax expense of $25.9 million, respectively, resulting in effective tax rates of 13.1% and 98.9%, respectively. Excluding the tax effect on Non-GAAP adjustments, for the three and six months ended June 29, 2024, the Company recognized income tax expense on continuing operations of $52.7 million and $88.3 million, respectively, resulting in effective tax rates of 24.3% and 26.2%, respectively. These effective tax rates for the three and six months ended June 29, 2024 differ from the U.S. statutory tax rate of 21% primarily due to non-deductible expenses, losses for which a tax benefit is not recognized, and U.S. tax on foreign earnings, partially offset by the remeasurement of uncertain tax position reserves, tax credits, and state income taxes.

Current wording

Income Taxes: For the three and nine months ended September 28, 2024, the Company recognized an income tax benefit from continuing operations of $1.6 million and income tax expense of $24.3 million, respectively, resulting in effective tax rates of (1.8)% and 21.0%, respectively. Excluding the tax effect on Non-GAAP adjustments, for the three and nine months ended September 28, 2024, the Company recognized income tax expense on continuing operations of $10.4 million and $98.7 million, respectively, resulting in effective tax rates of 5.3% and 18.5%, respectively. These effective tax rates for the three months ended September 28, 2024 differ from the U.S. statutory tax rate of 21% primarily due to the recognition of previously unrecognized foreign deferred tax assets, remeasurement of uncertain tax position reserves, tax credits, and state income taxes, partially offset by non-deductible expenses and U.S. tax on foreign earnings. For the nine months ended September 28, 2024, the primary drivers are consistent with those discussed above, which in aggregate result in effective tax rates that approximate the U.S. statutory tax rate of 21%.

Previous wording

For the three and six months ended July 1, 2023, the Company recognized an income tax benefit from continuing operations of $253.3 million and $229.6 million, respectively, resulting in effective tax rates of 334.2% and 95.7%, respectively. During the three months ended July 1, 2023, the Company revised its estimated annual effective tax rate to reflect a tax benefit from an intra-entity asset transfer of certain intangible assets in connection with the continued reorganization of the Company’s supply chain. Accordingly, the income tax benefit for the three months ended July 1, 2023 included an incremental interim tax benefit to reflect the impact of the change in the estimated annual effective tax rate to the prior interim year-to-date tax expense, which reversed in the fourth quarter of 2023. The effective tax rates for the three and six months ended July 1, 2023 differ from the U.S. statutory tax rate of 21% primarily due to the tax benefit associated with the intra-entity asset transfer described above, tax on foreign earnings at tax rates different than the U.S. tax rate, state income taxes and tax credits, partially offset by U.S. tax on foreign earnings, non-deductible expenses and losses for which a tax benefit is not recognized.

Current wording

For the three and nine months ended September 30, 2023, the Company recognized an income tax benefit from continuing operations of $61.7 million and $291.3 million, respectively, resulting in effective tax rates of 108.2% and 98.1%, respectively. The income tax benefit for the three months ended September 30, 2023 included an incremental interim tax benefit to reflect the impact of a change in the estimated annual effective tax rate to the prior interim year-to-date tax benefit, which reversed in the fourth quarter of 2023. The effective tax rates for the three and nine months ended September 30, 2023 differ from the U.S. statutory tax rate of 21% primarily due to a tax benefit associated with the intra-entity asset transfer of certain intangible assets, tax on foreign earnings at tax rates different than the U.S. tax rate, state income taxes and tax credits, partially offset by U.S. tax on foreign earnings, non-deductible expenses and losses for which a tax benefit is not recognized.

Previous wording

Tools & Outdoor net sales decreased $44.3 million, or 1%, in the first half of 2024 compared to the first half of 2023, as a 1% increase in volume was more than offset by a 1% decline in both price and foreign currency. Organic revenue was flat in North America, decreased 3% in Europe and increased 6% in the rest of the world.

Current wording

Tools & Outdoor net sales decreased $92.0 million, or 3%, in the third quarter of 2024 compared to the third quarter of 2023 as a 1% price increase was more than offset by a 3% decline in volume and a 1% decrease from foreign currency. Organic revenue declined 2% as growth in DEWALT® was offset by the weak consumer and DIY backdrop. Organic revenue decreased 4% in North America, and increased 1% and 6% in Europe and the rest of the world, respectively.

Previous wording

Segment profit for the second quarter of 2024 was $316.1 million, or 9.0% of net sales, compared to $102.0 million, or 2.9% of net sales, in the second quarter of 2023. Excluding Non-GAAP adjustments of $52.6 million and $55.8 million for the three months ended June 29, 2024 and July 1, 2023, respectively, segment profit was 10.4% of net sales in the second quarter of 2024 and 4.5% in the second quarter of 2023. The year-over-year increase was primarily due to lower inventory destocking costs, supply chain transformation benefits and lower shipping costs, which were partially offset by growth investments.

Current wording

Segment profit for the third quarter of 2024 was $327.5 million, or 10.0% of net sales, compared to $273.4 million, or 8.1% of net sales, in the third quarter of 2023. Excluding Non-GAAP adjustments of $35.5 million and $39.4 million for the three months ended September 28, 2024 and September 30, 2023, respectively, segment profit was 11.1% of net sales in the third quarter of 2024 and 9.3% in the third quarter of 2023. The year-over-year increase was primarily due to supply chain transformation benefits, which were partially offset by growth investments.

Previous wording

Industrial net sales decreased $121.0 million, or 20%, in the second quarter of 2024 compared to the second quarter of 2023, as a 20% impact from the Infrastructure divestiture and a 2% decrease from foreign currency was partially offset by a 2% increase in price. Engineered Fastening organic revenues increased 2%, driven by aerospace growth which offset market softness in automotive and general industrial.

Current wording

Industrial net sales decreased $110.6 million, or 18%, in the third quarter of 2024 compared to the third quarter of 2023, as a 17% decrease from the Infrastructure divestiture and a 2% decrease in volume was partially offset by a 1% increase in price. Engineered Fastening organic revenues decreased 1% as aerospace expansion and a return to growth in general industrial was more than offset by market softness in automotive.

Previous wording

Industrial net sales decreased $152.5 million, or 12%, in the first half of 2024 compared to the first half of 2023, as a 10% impact from the Infrastructure divestiture, a 3% decrease in volume and a 1% decrease from foreign currency was partially offset by a 2% increase in price. Engineered Fastening organic revenues increased 4%, as aerospace and automotive growth were partially offset by general industrial market softness.

Current wording

Industrial net sales decreased $263.1 million, or 14%, in the first nine months of 2024 compared to the first nine months of 2023, as a 12% decrease from the Infrastructure divestiture, a 2% decrease in volume and a 1% decrease from foreign currency was partially offset by a 1% increase in price. Engineered Fastening organic revenues increased 2%, primarily due to aerospace growth.

Previous wording

Industrial segment profit for the second quarter of 2024 totaled $66.8 million, or 13.5% of net sales, compared to $71.6 million, or 11.6% of net sales, in the corresponding 2023 period. Excluding Non-GAAP adjustments of $0.3 million and $8.5 million for the three months ended June 29, 2024 and July 1, 2023, respectively, segment profit amounted to 13.5% of net sales in the second quarter of 2024 compared to 13.0% in the second quarter of 2023. The year-over-year increase was primarily due to price realization and cost control.

Current wording

Industrial segment profit for the third quarter of 2024 totaled $70.2 million, or 14.4% of net sales, compared to $62.5 million, or 10.4% of net sales, in the corresponding 2023 period. Excluding a Non-GAAP gain of $2.6 million for the three months ended September 28, 2024 and a Non-GAAP charge of $10.5 million for the three months ended September 30, 2023, segment profit amounted to 13.9% of net sales in the third quarter of 2024 compared to 12.2% in the third quarter of 2023. The year-over-year increase was due to price realization and cost control.

Previous wording

Industrial segment profit for the first half of 2024 totaled $132.0 million, or 12.2% of net sales, compared to $139.0 million, or 11.3% of net sales, in the corresponding 2023 period. Excluding Non-GAAP adjustments of $6.0 million and $8.8 million for the six months ended June 29, 2024 and July 1, 2023, respectively, segment profit amounted to 12.8% of net sales in the first half of 2024 compared to 12.0% in the first half of 2023. The year-over-year increase was driven by the same factors discussed above for the second quarter of 2024.

Current wording

Industrial segment profit for the first nine months of 2024 totaled $202.2 million, or 12.9% of net sales, compared to $201.5 million, or 11.0% of net sales, in the corresponding 2023 period. Excluding Non-GAAP adjustments of $3.4 million and $19.3 million for the nine months ended September 28, 2024 and September 30, 2023, respectively, segment profit amounted to 13.1% of net sales in the first nine months of 2024 compared to 12.1% in the first nine months of 2023. The year-over-year increase was driven by the same factors discussed above for the third quarter of 2024.

Previous wording

Corporate Overhead includes the corporate overhead element of SG&A, which is not allocated to the business segments. Corporate Overhead amounted to $70.3 million and $78.8 million in the second quarter of 2024 and 2023, respectively. Excluding Non-GAAP adjustments of $8.2 million for the three months ended June 29, 2024 and $12.5 million for the three months ended July 1, 2023, the corporate overhead element of SG&A was $62.1 million and $66.3 million for the three months ended June 29, 2024 and July 1, 2023, respectively.

Current wording

Corporate Overhead includes the corporate overhead element of SG&A, which is not allocated to the business segments. Corporate Overhead amounted to $74.2 million and $69.6 million in the third quarter of 2024 and 2023, respectively. Excluding Non-GAAP adjustments of $7.0 million for the three months ended September 28, 2024 and $11.7 million for the three months ended September 30, 2023, the corporate overhead element of SG&A was $67.2 million and $57.9 million for the three months ended September 28, 2024 and September 30, 2023, respectively.

Previous wording

On a year-to-date basis, the corporate overhead element of SG&A amounted to $134.5 million in 2024 compared to $154.5 million in 2023. Excluding Non-GAAP adjustments of $14.1 million for the six months ended June 29, 2024 and $27.1 million for the six months ended July 1, 2023, the corporate overhead element of SG&A was $120.4 million and $127.4 million for the six months ended June 29, 2024 and July 1, 2023, respectively.

Current wording

On a year-to-date basis, the corporate overhead element of SG&A amounted to $208.7 million in 2024 compared to $224.1 million in 2023. Excluding Non-GAAP adjustments of $21.1 million for the nine months ended September 28, 2024 and $38.8 million for the nine months ended September 30, 2023, the corporate overhead element of SG&A was $187.6 million and $185.3 million for the nine months ended September 28, 2024 and September 30, 2023, respectively.

Previous wording

For the three and six months ended June 29, 2024, the Company recognized net restructuring charges of $29.8 million and $44.8 million, respectively, primarily related to severance costs. The Company expects to achieve annual net cost savings of approximately $104 million by the end of 2025 related to the restructuring costs incurred during the six months ended June 29, 2024. The majority of the $42.3 million of reserves remaining as of June 29, 2024 is expected to be utilized within the next 12 months.

Current wording

For the three and nine months ended September 28, 2024, the Company recognized net restructuring charges of $22.1 million and $66.9 million, respectively, primarily related to severance costs and facility closure charges. The Company expects to achieve annual net cost savings of approximately $122 million by the end of 2025 related to the restructuring costs incurred during the nine months ended September 28, 2024. The majority of the $33.9 million of reserves remaining as of September 28, 2024 is expected to be utilized within the next 12 months.

Previous wording

The $45 million of net restructuring charges for the six months ended June 29, 2024 includes: $35 million in the Tools & Outdoor segment; $5 million in Industrial; and $5 million in Corporate.

Current wording

The $67 million of net restructuring charges for the nine months ended September 28, 2024 includes: $56 million in the Tools & Outdoor segment; $6 million in Industrial; and $5 million in Corporate.

Previous wording

The $30 million of net restructuring charges for the three months ended June 29, 2024 includes: $28 million in the Tools & Outdoor segment, $1 million of net reversals in the Industrial segment, and $3 million in Corporate.

Current wording

The $22 million of net restructuring charges for the three months ended September 28, 2024 includes: $21 million in the Tools & Outdoor segment and $1 million in the Industrial segment.

Previous wording

The anticipated annual net cost savings of approximately $104 million related to the 2024 restructuring actions include: $91 million in the Tools & Outdoor segment; $5 million in the Industrial segment; and $8 million in Corporate.

Current wording

The anticipated annual net cost savings of approximately $122 million related to the 2024 restructuring actions include: $107 million in the Tools & Outdoor segment; $6 million in the Industrial segment; and $9 million in Corporate.

Previous wording

This outlook discussion is intended to provide broad insight into the Company's near-term earnings and cash flow generation prospects. The Company is updating 2024 guidance and expects diluted earnings per share to approximate $0.90 to $2.00 on a GAAP basis, revised from $1.60 to $2.85 ($3.70 to $4.50 excluding Non-GAAP adjustments, raised from $3.50 to $4.50). Free cash flow is expected to approximate $650 million to $850 million, raised from $600 million to $800 million. The Company expects second half free cash flow to fund the cash dividend and support an additional $400 million to $500 million short term debt reduction by the end of 2024.

Current wording

This outlook discussion is intended to provide broad insight into the Company's near-term earnings and cash flow generation prospects. The Company is updating 2024 guidance and expects diluted earnings per share to approximate $1.15 to $1.75 on a GAAP basis, narrowed from $0.90 to $2.00 ($3.90 to $4.30 excluding Non-GAAP adjustments, narrowed from $3.70 to $4.50). Management is reiterating its target for 2024 free cash flow generation to approximate $650 million to $850 million.

Previous wording

The difference between 2024 diluted earnings per share outlook and the diluted earnings per share range, excluding Non-GAAP adjustments, is approximately $2.50 to $2.80, consisting primarily of charges related to the supply chain transformation under the Global Cost Reduction Program and environmental reserve adjustments.

Current wording

The difference between 2024 diluted earnings per share outlook and the diluted earnings per share range, excluding Non-GAAP adjustments, is approximately $2.55 to $2.75, consisting primarily of charges related to the supply chain transformation under the Global Cost Reduction Program, environmental reserve adjustments and a brand impairment charge.

Previous wording

Operating Activities: Cash flows provided by operations were $573.0 million in the second quarter of 2024 compared to $264.4 million in the corresponding period of 2023, primarily driven by accelerated working capital improvements and timing within the year. Year-to-date cash flows provided by operations were $142.0 million in 2024 compared to cash flows used in operations of $21.9 million in 2023. The year-over-year change was primarily driven by higher earnings, partially offset by higher variable compensation.

Current wording

Operating Activities: Cash flows provided by operations were $285.8 million in the third quarter of 2024 compared to $443.9 million in the corresponding period of 2023, primarily driven by changes in working capital, partially offset by higher earnings. Year-to-date cash flows provided by operations were $427.8 million in 2024 compared to $422.0 million in 2023, relatively in-line with prior year as higher earnings were partially offset by changes in working capital.

Previous wording

Free Cash Flow: Free cash flow, as defined in the table below, was an inflow of $485.8 million in the second quarter of 2024 compared to an inflow of $196.1 million in the corresponding period of 2023. On a year-to-date basis, free cash flow was an outflow of $10.9 million and $158.4 million in 2024 and 2023, respectively. The year-over-year change in free cash flow was primarily due to the same factors discussed above in operating activities, as well as higher planned capital expenditures in the first half of 2024. Management considers free cash flow an important indicator of its liquidity and capital efficiency, as well as its ability to fund future growth and provide dividends to shareowners, and is useful information for investors. Free cash flow does not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company’s common stock and business acquisitions, among other items.

Current wording

Free Cash Flow: Free cash flow, as defined in the table below, was an inflow of $199.3 million and $364.0 million in the third quarter of 2024 and the corresponding period of 2023, respectively. On a year-to-date basis, free cash flow was $188.4 million and $205.6 million in 2024 and 2023, respectively. The year-over-year change in free cash flow was primarily due to the same factors discussed above in operating activities, as well as higher planned capital expenditures in the first nine months of 2024. Management considers free cash flow an important indicator of its liquidity and capital efficiency, as well as its ability to fund future growth and provide dividends to shareowners, and is useful information for investors. Free cash flow does not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company’s common stock and business acquisitions, among other items.

Previous wording

Cash flows provided by investing activities totaled $586.2 million in the first half of 2024, primarily due to net proceeds from sales of businesses of $735.6 million, partially offset by capital and software expenditures of $152.9 million. Cash flows used in investing activities totaled $130.4 million in the first half of 2023, primarily due to capital and software expenditures of $136.5 million.

Current wording

Cash flows provided by investing activities totaled $500.8 million in the first nine months of 2024, primarily due to net proceeds from sales of businesses of $735.6 million, partially offset by capital and software expenditures of $239.4 million. Cash flows used in investing activities totaled $206.8 million in the first nine months of 2023, primarily due to capital and software expenditures of $216.4 million.

Previous wording

Financing Activities: Cash flows used in financing activities totaled $1.368 billion in the second quarter of 2024, primarily driven by net short-term commercial paper repayments of $1.246 billion and cash dividend payments on common stock of $121.8 million. Cash flows used in financing activities totaled $175.8 million in the second quarter of 2023, primarily driven by cash dividend payments on common stock of $119.7 million and net short-term commercial paper repayments of $42.0 million.

Current wording

Financing Activities: Cash flows used in financing activities totaled $234.3 million in the third quarter of 2024, primarily driven by cash dividend payments on common stock of $123.6 million and net short-term commercial paper repayments of $121.5 million. Cash flows used in financing activities totaled $387.7 million in the third quarter of 2023, primarily driven by net short-term commercial paper repayments of $266.4 million and cash dividend payments on common stock of $121.3 million.

Previous wording

Cash flows used in financing activities totaled $819.5 million in the first half of 2024, primarily driven by net short-term commercial paper repayments of $570.8 million and cash dividend payments on common stock of $243.6 million. Cash flows provided by financing activities totaled $148.4 million in the first half of 2023, primarily driven by proceeds from debt issuances, net of fees, of $745.9 million, partially offset by net repayments of short-term commercial paper borrowings of $327.9 million and cash dividend payments on common stock of $239.5 million.

Current wording

Cash flows used in financing activities totaled $1.054 billion in the first nine months of 2024, primarily driven by net short-term commercial paper repayments of $692.3 million and cash dividend payments on common stock of $367.2 million. Cash flows used in financing activities totaled $239.3 million in the first nine months of 2023, primarily driven by net repayments of short-term commercial paper borrowings of $594.3 million and cash dividend payments on common stock of $360.8 million, partially offset by net proceeds from debt issuances of $745.3 million.

Previous wording

The Company maintains investment grade credit ratings from the major U.S. rating agencies on its senior unsecured debt (S&P A-, Fitch BBB+, Moody's Baa3), as well as its commercial paper program (S&P A-2, Fitch F2, Moody's P-3). There were no changes to any of the Company's credit ratings during the first half of 2024. Failure to maintain investment grade rating levels could adversely affect the Company’s cost of funds, liquidity and access to capital markets, but would not have an adverse effect on the Company’s ability to access its existing committed credit facilities.

Current wording

The Company maintains investment grade credit ratings from the major U.S. rating agencies on its senior unsecured debt (S&P A-, Fitch BBB+, Moody's Baa3), as well as its commercial paper program (S&P A-2, Fitch F2, Moody's P-3). There were no changes to any of the Company's credit ratings during the first nine months of 2024. Failure to maintain investment grade rating levels could adversely affect the Company’s cost of funds, liquidity and access to capital markets, but would not have an adverse effect on the Company’s ability to access its existing committed credit facilities.