STANLEY BLACK & DECKER, INC.

Previous wording

In April 2021, the Board of Directors approved repurchases by the Company of its outstanding securities, other than its common stock, up to an aggregate amount of $3.0 billion. No repurchases have been executed pursuant to this authorization to date.

Current wording

In April 2021, the Board of Directors approved repurchases by the Company of its outstanding securities, other than its common stock, up to an aggregate amount of $3.0 billion, of which $2.25 billion remains available for future repurchases as of June 28, 2025. No repurchases have been executed pursuant to this authorization in the first half of 2025.

Previous wording

During the first three months of 2025 and since inception of the program, the Company has generated approximately $130 million and $1.7 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.

Current wording

During the first six months of 2025 and since inception of the program, the Company has generated approximately $280 million and $1.8 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.

Previous wording

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 $0.7 billion. Of the total estimated cash investment, approximately 30% is expected to be capital expenditures. Through 2024, the Company has made approximately $0.5 billion of total cash investments. The Company intends to continue prioritizing capital expenditures consistent with its existing approach and expects total capital expenditures, inclusive of the supply chain transformation, to approximate $0.3 billion in 2025 and 2.5% to 3.0% of net sales annually over the long term.

Current wording

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 $0.6 billion. Of the total estimated cash investment, approximately 30% is expected to be capital expenditures. Through 2024, the Company has made approximately $0.5 billion of total cash investments. The Company intends to continue prioritizing capital expenditures consistent with its existing approach and expects total capital expenditures, inclusive of the supply chain transformation, to approximate $0.3 billion in 2025 and 2.5% to 3.0% of net sales annually over the long term.

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. Corporate overhead as discussed below includes and excludes certain gains and charges. These amounts for the first quarters of 2025 and 2024 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. Corporate overhead as discussed below includes and excludes certain gains and charges. These amounts for the second quarter and year-to-date periods of 2025 and 2024 are as follows:

Previous wording

Below is a summary of the pre-tax Non-GAAP adjustments for the first quarters of 2025 and 2024.

Current wording

Below is a summary of the pre-tax Non-GAAP adjustments for the second quarter and year-to-date periods of 2025 and 2024.

Previous wording

Below is a summary of the Company’s operating results at the consolidated level, followed by an overview of business segment performance. Organic growth is utilized to describe the Company's results excluding the impacts of foreign currency fluctuations, acquisitions during their initial 12 months of ownership, and divestitures.

Current wording

Below is a summary of the Company’s operating results at the consolidated level, followed by an overview of business segment performance. Organic growth is utilized to describe the Company's results excluding the impacts of foreign currency fluctuations, acquisitions during their initial 12 months of ownership, divestitures, and transfers of product lines between segments.

Previous wording

Net Sales: Net sales were $3.745 billion in the first three months of 2025 compared to $3.870 billion in the first three months of 2024, representing a decrease of 3% as a 1% increase in volume was more than offset by a 2% decrease from foreign currency and a 2% decrease from the Infrastructure divestiture. Tools & Outdoor net sales were flat compared to the first three months of 2024 as a 1% increase in volume was offset by a 1% decrease from foreign currency. Engineered Fastening net sales decreased 21% compared to the first three months of 2024 as a 1% increase in price was more than offset by a 2% decrease in volume, a 2% decrease from foreign currency, a 16% decrease from the Infrastructure divestiture, and a 2% decrease from a product line transfer to Tools & Outdoor.

Current wording

Net sales were $7.690 billion in the first half of 2025 compared to $7.894 billion in the first half of 2024, representing a decrease of 3% as a 1% increase in price was more than offset by a 2% decrease in volume, a 1% decrease from the Infrastructure divestiture, and a 1% decrease from foreign currency. Tools & Outdoor net sales decreased 1% compared to the first half of 2024 as a 2% decrease in volume was partially offset by a 1% increase in price. Engineered Fastening net sales decreased 12% compared to the first half of 2024 as a 2% decrease in volume, a 9% decrease from the Infrastructure divestiture, and a 2% decrease from a product line transfer to Tools & Outdoor was partially offset by a 1% increase in price.

Previous wording

Cost of Sales and Gross Profit: The Company reported cost of sales of $2.624 billion in the first three months of 2025 compared to $2.761 billion in the first three months of 2024. The year-over-year change in cost of sales was primarily driven by the supply chain transformation efficiencies, partially offset by freight inflation and the initial impact from tariffs. Gross profit, defined as sales less cost of sales, was $1.121 billion, or 29.9% of net sales, in the first three months of 2025 compared to

Current wording

Cost of Sales and Gross Profit: The Company reported cost of sales of $2.879 billion in the second quarter of 2025 compared to $2.883 billion in the second quarter of 2024. The year-over-year change in cost of sales was primarily driven by lower volume and the supply chain transformation efficiencies partially offset by the impact from tariffs. Gross profit, defined as sales less cost of sales, was $1.067 billion, or 27.0% of net sales, in the second quarter of 2025 compared to $1.141 billion, or 28.4% of net sales, in the second quarter of 2024. Non-GAAP adjustments, which increased cost of sales and reduced gross profit, were $20.0 million for the three months ended June 28, 2025 and $33.5 million for the three months ended June 29, 2024. Excluding these adjustments, gross profit was 27.5% of net sales, for the three months ended June 28, 2025, compared to 29.2% of net sales, for the three months ended June 29, 2024. The year-over-year change in gross profit as a percent of sales and adjusted gross profit as a percent of sales was primarily due to a 3 point gross impact from tariffs and lower volume partially offset by the supply chain efficiencies and the initial benefits from price actions taken during the second quarter of 2025.

Previous wording

$1.109 billion, or 28.6% of net sales, in the first three months of 2024. Non-GAAP adjustments, which increased cost of sales and reduced gross profit, were $16.7 million for the three months ended March 29, 2025 and $14.4 million for the three months ended March 30, 2024. Excluding these adjustments, gross profit was 30.4% of net sales, for the three months ended March 29, 2025, compared to 29.0% of net sales, for the three months ended March 30, 2024. The year-over-year change in gross profit as a percent of sales and adjusted gross profit as a percent of sales was primarily driven by the aforementioned factors impacting cost of sales, as well as benefits from new innovation launches.

Current wording

The Company reported cost of sales of $5.503 billion in the first half of 2025 compared to $5.644 billion in the first half of 2024. The year-over-year change in cost of sales was primarily driven by the same factors discussed above that impacted the second quarter of 2025. Gross profit, defined as sales less cost of sales, was $2.187 billion, or 28.4% of net sales, in the first half of 2025 compared to $2.250 billion, or 28.5% of net sales, in the first half of 2024. Non-GAAP adjustments, which increased cost of sales and reduced gross profit, were $36.7 million for the six months ended June 28, 2025 and $47.9 million for the six months ended June 29, 2024. Excluding these adjustments, gross profit was 28.9% of net sales, for the six months ended June 28, 2025, compared to 29.1% of net sales, for the six months ended June 29, 2024. The year-over-year change in gross profit as a percent of sales and adjusted gross profit as a percent of sales was primarily due to the impact from tariffs and lower volume partially offset by the supply chain efficiencies and the initial benefits from price actions taken during the second quarter of 2025.

Previous wording

SG&A Expenses: SG&A, inclusive of the provision for credit losses, was $867.0 million, or 23.2% of net sales, in the first three months of 2025, compared to $851.8 million, or 22.0% of net sales, in the first three months of 2024. Within SG&A, Non-GAAP adjustments totaled $22.0 million for the three months ended March 29, 2025 and $20.1 million for the three months ended March 30, 2024. Excluding these adjustments, SG&A was 22.6% of net sales for the three months ended March 29, 2025, compared to 21.5% for the three months ended March 30, 2024. The year-over-year change in SG&A as a percent of sales and adjusted SG&A as a percent of sales was driven by investments in revenue generating initiatives designed to deliver increased market penetration and future market share gains.

Current wording

SG&A Expenses: SG&A, inclusive of the provision for credit losses, was $873.1 million, or 22.1% of net sales, in the second quarter of 2025, compared to $828.6 million, or 20.6% of net sales, in the second quarter of 2024. Within SG&A, Non-GAAP adjustments totaled $52.6 million for the three months ended June 28, 2025 and $27.6 million for the three months ended June 29, 2024. Excluding these adjustments, SG&A was 20.8% of net sales for the three months ended June 28, 2025, compared to 19.9% for the three months ended June 29, 2024. The year-over-year change in SG&A as a percent of sales and adjusted SG&A as a percent of sales was driven by growth investments, which were partially offset by cost control.

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 $129.0 million and $130.5 million for the first three months of 2025 and 2024, 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 $131.1 million and $260.1 million for the three and six months ended June 28, 2025, respectively, and $131.8 million and $262.3 million for the three and six months ended June 29, 2024, respectively.

Previous wording

Other, net: Other, net totaled $47.5 million and $80.0 million in the first three months of 2025 and 2024, respectively. Excluding Non-GAAP adjustments, Other, net totaled $56.2 million and $83.5 million for the first three months of 2025 and 2024, respectively. The year-over-year decrease in Other, net, both inclusive and exclusive of Non-GAAP adjustments, is primarily driven by appreciation of certain investments in the first quarter of 2025 compared to write-downs on certain investments in the first quarter of 2024, as well as lower environmental remediation costs and deal-related costs, and lower intangible asset amortization due to the divestiture of the Infrastructure business on April 1, 2024.

Current wording

Other, net totaled $115.2 million and $306.5 million in the first six months of 2025 and 2024, respectively. The year-over-year decrease was primarily driven by the same factors discussed above that impacted the second quarter of 2025 and 2024. Excluding Non-GAAP adjustments, Other, net totaled $132.3 million and $161.6 million for the first six months of 2025 and 2024, respectively, primarily driven by the net appreciation of certain investments in the first half of 2025 compared to write-downs on certain investments in the first half of 2024, as well as lower environmental remediation costs and lower intangible asset amortization.

Previous wording

Loss on Sale of Business: During the first three months of 2025, the Company reported a pre-tax loss of $0.3 million related to the divestiture of small business in the Engineered Fastening segment.

Current wording

Loss on Sale of Business: During the first half of 2025, the Company reported a pre-tax loss of $0.3 million related to the divestiture of small business in the Engineered Fastening segment.

Previous wording

Asset Impairment Charge: During the first three months 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.

Current wording

Asset Impairment Charge: During the first half 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 $77.2 million in the first quarter of 2025 compared to $87.9 million in the first quarter of 2024. The year-over-year decrease was primarily driven by lower commercial paper balances in 2025 and higher interest income.

Current wording

Interest, net: Net interest expense was $80.2 million in the second quarter of 2025 compared to $78.4 million in the second quarter of 2024. On a year-to-date basis, net interest expense was $157.4 million in 2025 and $166.3 million in 2024, primarily driven by higher interest income.

Previous wording

For the three months ended March 30, 2024, the Company recognized income tax expense of $28.8 million, resulting in an effective tax rate of 59.6%. Excluding the tax effect on Non-GAAP adjustments, for the three months ended March 30, 2024, the Company recognized income tax expense of $35.6 million, resulting in an effective tax rate of 29.7%. These effective tax rates differ from the U.S. statutory tax rate of 21% primarily due to non-deductible expenses, U.S. tax on foreign earnings, and losses for which a tax benefit is not recognized, partially offset by tax credits and state income taxes.

Current wording

Income Taxes: For the three and six months ended June 28, 2025, the Company recognized an income tax benefit of $75.2 million and $38.0 million, respectively, resulting in effective tax rates of (281.6)% and (24.6)%, respectively. Excluding the tax effect on Non-GAAP adjustments, for the three and six months ended June 28, 2025, the Company recognized an income tax benefit of $53.4 million and $8.7 million, respectively, resulting in effective tax rates of (48.7)% and (3.2)%, respectively. These effective tax rates for the three and six months ended June 28, 2025 differ from the U.S. statutory tax rate of 21% primarily due to the remeasurement of uncertain tax positions, partially offset by non-deductible expenses.

Previous wording

Income Taxes: For the three months ended March 29, 2025, the Company recognized income tax expense of $37.2 million, resulting in an effective tax rate of 29.2%. Excluding the tax effect on Non-GAAP adjustments, for the three months ended March 29, 2025, the Company recognized income tax expense of $44.7 million, resulting in an effective tax rate of 28.1%. These effective tax rates for the three months ended March 29, 2025 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 remeasurement of uncertain tax position reserves and tax credits.

Current wording

For the three and six months ended June 29, 2024, the Company recognized an income tax benefit 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 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 positions, tax credits, and state income taxes.

Previous wording

Tools & Outdoor net sales decreased $3.7 million, or were relatively flat, in the first three months of 2025 compared to the first three months of 2024 as a 1% increase in volume was offset by a 1% decrease from foreign currency. Organic revenue increased 1%, with continued growth in DEWALT® supported by professional demand as well as strong shipments in advance of the outdoor season. Total revenue increased 2% in North America, decreased 2% in Europe, and decreased 9% in the rest of the world. Excluding the impact from foreign currency, organic revenue increased 2% in North America, remained flat in Europe, and decreased 3% in the rest of the world.

Current wording

Tools & Outdoor net sales decreased $71.0 million, or 1%, in the first half of 2025 compared to the first half of 2024 as a 2% decrease in volume was partially offset by a 1% increase in price. Total revenue decreased 1% in North America, increased 1% in Europe, and decreased 5% in the rest of the world. Excluding the impact from foreign currency, organic revenue decreased 1% in North America, Europe, and in the rest of the world.

Previous wording

Segment profit for the first three months of 2025 was $289.2 million, or 8.8% of net sales, compared to $255.7 million, or 7.8% of net sales, in the first three months of 2024. Excluding Non-GAAP adjustments, which primarily related to footprint actions associated with the supply chain transformation, of $25.0 million and $22.9 million for the three months ended March 29, 2025 and March 30, 2024, respectively, segment profit was 9.6% of net sales in the first three months of 2025 and 8.5% of net sales in the first three months of 2024. The year-over-year change in segment profit as a percent of sales and adjusted segment profit as a percent of sales was primarily due to supply chain transformation efficiencies and benefits from new innovation launches, which were partially offset by freight inflation, the initial impact from tariffs and investments in growth initiatives.

Current wording

Segment profit for the second quarter of 2025 was $238.1 million, or 6.9% of net sales, compared to $316.1 million, or 9.0% of net sales, in the second quarter of 2024. Excluding Non-GAAP adjustments, which primarily related to a voluntary retirement program in 2025 and footprint actions associated with the supply chain transformation in both periods, of $38.4 million and $52.6 million for the three months ended June 28, 2025 and June 29, 2024, respectively, segment profit was 8.0% of net sales in the second quarter of 2025 and 10.4% of net sales in the second quarter of 2024. The year-over-year change in segment profit as a percent of sales and adjusted segment profit as a percent of sales were primarily due to the impact from tariffs, lower volume, and investments in growth initiatives, partially offset by the supply chain transformation efficiencies, price and cost control.

Previous wording

Engineered Fastening net sales decreased $121.2 million, or 21%, in the first three months of 2025 compared to the first three months of 2024, as a as a 1% increase in price was more than offset by a 2% decrease in volume, a 2% decrease from foreign currency, a 16% decrease from the Infrastructure divestiture, and a 2% decrease from a product line transfer to the Tools & Outdoor segment. Engineered Fastening organic revenues decreased 1%, as aerospace and general industrial growth was more than offset by automotive market softness.

Current wording

Engineered Fastening net sales decreased $11.9 million, or 2%, in the second quarter of 2025 compared to the second quarter of 2024, as a 2% decrease in volume and a 3% decrease from a product line transfer to the Tools & Outdoor segment was partially offset by a 1% increase in price and 2% increase from foreign currency. Engineered Fastening organic revenues decreased 1%, as strength in aerospace was more than offset by declines in industrial and automotive.

Previous wording

Engineered Fastening segment profit for the first three months of 2025 totaled $39.0 million, or 8.4% of net sales, compared to $65.2 million, or 11.1% of net sales, in the corresponding 2024 period. Excluding Non-GAAP adjustments, which primarily related to costs associated with the supply chain transformation, of $7.7 million and $5.7 million for the three months ended March 29, 2025 and March 30, 2024, respectively, segment profit amounted to 10.1% of net sales in the first three months of 2025 compared to 12.1% of net sales in the first three months of 2024. The year-over-year change in segment profit as a percent of sales and adjusted segment profit as a percent of sales was primarily due to lower volume in higher margin automotive.

Current wording

Engineered Fastening segment profit for the second quarter of 2025 totaled $35.0 million, or 7.2% of net sales, compared to $66.8 million, or 13.5% of net sales, in the corresponding 2024 period. Excluding Non-GAAP adjustments, which primarily related to a voluntary retirement program in 2025 and costs associated with the supply chain transformation in both periods, of $17.3 million and $0.3 million for the three months ended June 28, 2025 and June 29, 2024, respectively, segment profit amounted to 10.8% of net sales in the second quarter of 2025 compared to 13.5% of net sales in the second quarter of 2024. The year-over-year change in segment profit as a percent of sales and adjusted segment profit as a percent of sales were primarily due to lower volume in the higher-margin automotive business.

Previous wording

The corporate overhead element of SG&A, which is not allocated to the business segments for purposes of determining segment profit, consists of the costs associated with the executive management team and expenses related to centralized functions that benefit the entire Company but are not directly attributable to the business segments, such as legal and corporate finance functions, as well as expenses for the world headquarters facility. Corporate overhead amounted to $74.4 million and $64.2 million in the first quarter of 2025 and 2024, respectively. Excluding Non-GAAP adjustments, which primarily consisted of transition services costs related to previously divested businesses, of $6.0 million for the three months ended March 29, 2025 and $5.9 million for the three months ended March 30, 2024, the corporate overhead element of SG&A was $68.4 million and $58.3 million for the three months ended March 29, 2025 and March 30, 2024, respectively.

Current wording

The corporate overhead element of SG&A, which is not allocated to the business segments for purposes of determining segment profit, consists of the costs associated with the executive management team and expenses related to centralized functions that benefit the entire Company but are not directly attributable to the business segments, such as legal and corporate finance functions, as well as expenses for the world headquarters facility. Corporate overhead amounted to $79.7 million and $70.3 million in the second quarter of 2025 and 2024, respectively. Excluding Non-GAAP adjustments, which primarily consisted of a voluntary retirement program in 2025 and transition services costs related to previously divested businesses in both periods, of $16.9 million for the three months ended June 28, 2025 and $8.2 million for the three months ended June 29, 2024, the corporate overhead element of SG&A was $62.8 million and $62.1 million for the three months ended June 28, 2025 and June 29, 2024, respectively.

Previous wording

For the three months ended March 29, 2025, the Company recognized net restructuring charges of $1.2 million, primarily related to severance costs partially offset by adjustments to facility exit costs related to site closures as part of the supply chain transformation. The Company expects to achieve annual net cost savings of approximately $15 million by the end of 2025 related to the restructuring costs incurred during the three months ended March 29, 2025. The majority of the $34.9 million of reserves remaining as of March 29, 2025 is expected to be utilized within the next 12 months.

Current wording

For the three and six months ended June 28, 2025, the Company recognized net restructuring charges of $18.8 million and $20.0 million, primarily driven by severance costs related to reorganizations of the Company’s corporate and support functions as well as severance and facility costs related to footprint actions associated with the supply chain transformation. The Company expects to achieve annual net cost savings of approximately $40 million by the end of 2026 related to the restructuring costs incurred during the six months ended June 28, 2025. The majority of the $39.9 million of reserves remaining as of June 28, 2025 is expected to be utilized within the next 12 months.

Previous wording

The $1.2 million of net restructuring charges for the three months ended March 29, 2025 includes: $1.6 million of net reversals in the Tools & Outdoor segment; $0.3 million of charges in the Engineered Fastening segment; and $2.5 million of charges in Corporate.

Current wording

The $20.0 million of net restructuring charges for the six months ended June 28, 2025 includes: $9.3 million in the Tools & Outdoor segment; $1.6 million in the Engineered Fastening segment; and $9.1 million in Corporate.

Previous wording

The anticipated annual net cost savings of approximately $15 million related to the first quarter 2025 restructuring actions include: $11 million in the Tools & Outdoor segment; $2 million in the Engineered Fastening segment; and $2 million in Corporate.

Current wording

The anticipated annual net cost savings of approximately $40 million related to the 2025 restructuring actions include: $13 million in the Tools & Outdoor segment; $2 million in the Engineered Fastening segment; and $25 million in Corporate.

Previous wording

In response to the United States’ recent policy actions and to safeguard gross margins, the Company has implemented a high-single digit U.S. Tools & Outdoor price increase in April, with plans to introduce a second price increase effective the beginning of the third quarter. The Company is also accelerating strategic adjustments to its supply chain with the objective of leveraging Mexico and reducing China tariff costs over the next 12-24 months. The Company expects to leverage its industry leading North American footprint as a competitive advantage (approximately 60% of cost of sales in the United States). Management also intends to continue proactively engaging with the U.S. administration. The 2025 earnings per share impact from tariffs net of price and supply chain adjustments is currently estimated to be roughly negative $0.75 reflecting the timing required to implement mitigation countermeasures. Refer to "2025 Planning Assumptions" below.

Current wording

Refer to "2025 Planning Assumptions" below for more information.

Previous wording

This discussion of certain planning assumptions is intended to provide broad insight into the Company's near-term earnings and cash flow generation prospects. The Company's planning assumptions for 2025 are for diluted earnings per share on a GAAP basis to be $3.30 (+/- $0.15) and diluted earnings per share excluding Non-GAAP adjustments to be approximately $4.50. The Company is targeting free cash flow to meet or exceed $500 million.

Current wording

This discussion of certain planning assumptions is intended to provide broad insight into the Company's near-term earnings and cash flow generation prospects. The Company's planning assumptions for 2025 are for diluted earnings per share on a GAAP basis to be $3.45 (+/- $0.10) and diluted earnings per share excluding Non-GAAP adjustments to be approximately $4.65. The Company is targeting annual free cash flow to approximate $600 million. The gross annualized tariff impact is currently estimated to be approximately $800 million, which carries an assumption for country tariffs that includes July policy changes. Net of price adjustments and supply shifts the negative 2025 diluted earnings per share impact is expected to be approximately $0.65 reflecting the timing and costs required to implement mitigation countermeasures.

Previous wording

The difference between the planning assumptions for 2025 diluted earnings per share on a GAAP basis and diluted earnings per share excluding Non-GAAP adjustments is approximately $1.05 to $1.35, consisting primarily of charges related to the supply chain transformation under the Global Cost Reduction Program.

Current wording

The difference between the planning assumptions for 2025 diluted earnings per share on a GAAP basis and diluted earnings per share excluding Non-GAAP adjustments is approximately $1.10 to $1.30, consisting primarily of charges related to the supply chain transformation under the Global Cost Reduction Program and cost actions.

Previous wording

Free Cash Flow: Free cash flow, as defined in the table below, was an outflow of $485.0 million in the first quarter of 2025 compared to an outflow of $496.7 million in the corresponding period 2024. The year-over-year change in free cash flow was due to the same factors discussed above in operating activities. 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 $134.7 million in the second quarter of 2025 compared to an inflow of $485.8 million in the corresponding period 2024. On a year-to-date basis, free cash flow was an outflow of $350.3 million and $10.9 million in 2025 and 2024, respectively. The year-over-year change in free cash flow was due to the same factors discussed above in operating activities. 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

Financing Activities: Cash flows provided by financing activities totaled $502.0 million in the first quarter of 2025, primarily driven by net short-term commercial paper borrowings of $1.136 billion, partially offset by payments on long-term debt of $500.0 million and cash dividend payments on common stock of $124.5 million. Cash flows provided by financing activities totaled $548.6 million in the first quarter of 2024, primarily driven by net short-term commercial paper borrowings of $674.9 million, partially offset by cash dividend payments on common stock of $121.8 million.

Current wording

Cash flows provided by financing activities totaled $279.0 million in the first half of 2025, primarily driven by net short-term commercial paper borrowings of $1.038 billion, partially offset by payments on long-term debt of $500.3 million and cash dividend payments on common stock of $248.5 million. 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.

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 quarter of 2025. 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 half of 2025. 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.

Previous wording

Cash and cash equivalents totaled $345 million and $291 million as of March 29, 2025 and December 28, 2024, respectively, which was primarily held in foreign jurisdictions.

Current wording

Cash and cash equivalents totaled $312 million and $291 million as of June 28, 2025 and December 28, 2024, respectively, which was primarily held in foreign jurisdictions.

Previous wording

As a result of the Tax Cuts and Jobs Act (the "Act"), the Company's tax liability related to the one-time transition tax associated with unremitted foreign earnings and profits totaled $110 million at March 29, 2025. The Act permits a U.S. company to elect to pay the net tax liability interest-free over a period of up to eight years. The Company has considered the implications of paying the required one-time transition tax and believes it will not have a material impact on its liquidity.

Current wording

As a result of the Tax Cuts and Jobs Act (the "Act"), the Company's tax liability related to the one-time transition tax associated with unremitted foreign earnings and profits totaled $2 million at June 28, 2025. The Act permits a U.S. company to elect to pay the net tax liability interest-free over a period of up to eight years.

Previous wording

The Company has a $3.5 billion commercial paper program which includes Euro denominated borrowings in addition to U.S. Dollars. As of March 29, 2025, the Company had commercial paper borrowings outstanding of $1.1 billion, of which $215.7 million in Euro denominated commercial paper was designated as a net investment hedge. As of December 28, 2024, the Company had no commercial paper borrowings outstanding. Refer to Note H, Financial Instruments, for further discussion.

Current wording

The Company has a $3.5 billion commercial paper program which includes Euro denominated borrowings in addition to U.S. Dollars. As of June 28, 2025, the Company had commercial paper borrowings outstanding of $1.1 billion, of which $555.1 million in Euro denominated commercial paper was designated as a net investment hedge. As of December 28, 2024, the Company had no commercial paper borrowings outstanding. Refer to Note H, Financial Instruments, for further discussion.

Previous wording

In June 2024, the Company amended and restated its existing five-year $2.5 billion committed credit facility with the concurrent execution of a new five year $2.25 billion committed credit facility (the “5-Year Credit Agreement”). Borrowings under the 5-Year Credit Agreement may be made in U.S. Dollars, Euros or Pounds Sterling. A sub-limit of an amount equal to the Euro equivalent of $800.0 million is designated for swing line advances. Borrowings bear interest at a floating rate plus an applicable margin dependent upon the denomination of the borrowing and specific terms of the 5-Year Credit Agreement. The Company must repay all advances under the 5-Year Credit Agreement by the earlier of June 28, 2029 or upon termination. The 5-Year Credit Agreement is designated to be a liquidity back-stop for the Company's $3.5 billion U.S. Dollar and Euro commercial paper program. As of March 29, 2025 and December 28, 2024, the Company had not drawn on its five-year committed credit facility.

Current wording

In June 2024, the Company amended and restated its existing five-year $2.5 billion committed credit facility with the concurrent execution of a new five year $2.25 billion committed credit facility (the “5-Year Credit Agreement”). Borrowings under the 5-Year Credit Agreement may be made in U.S. Dollars, Euros or Pounds Sterling. A sub-limit of an amount equal to the Euro equivalent of $800.0 million is designated for swing line advances. Borrowings bear interest at a floating rate plus an applicable margin dependent upon the denomination of the borrowing and specific terms of the 5-Year Credit Agreement. The Company must repay all advances under the 5-Year Credit Agreement by the earlier of June 28, 2029 or upon termination. The 5-Year Credit Agreement is designated to be a liquidity back-stop for the Company's $3.5 billion U.S. Dollar and Euro commercial paper program. In June 2025, the 5-Year Credit Agreement was amended to include the covenants listed below. As of June 28, 2025 and December 28, 2024, the Company had not drawn on its five-year committed credit facility.

Previous wording

In June 2024, the Company terminated its 364-Day $1.5 billion committed credit facility ("the 2023 Syndicated 364-Day Credit Agreement") dated September 2023. There were no outstanding borrowings under the 2023 Syndicated 364-Day Credit Agreement upon termination. Contemporaneously, the Company entered into a new $1.25 billion syndicated 364-Day Credit Agreement (the "2024 Syndicated 364-Day Credit Agreement") which is a revolving credit loan. The borrowings under the 2024 Syndicated 364-Day Credit Agreement may be made in U.S. Dollars or Euros and bear interest at a floating rate plus an applicable margin dependent upon the denomination of the borrowing and pursuant to the terms of the 2024 Syndicated 364-Day Credit Agreement. The Company must repay all advances under the 2024 Syndicated 364-Day Credit Agreement by the earlier of June 27, 2025 or upon termination. The Company may, however, convert all advances outstanding upon termination into a term loan that shall be repaid in full no later than the first anniversary of the termination date provided that the Company, among other things, pays a fee to the administrative agent for the account of each lender. The 2024 Syndicated 364-Day Credit Agreement serves as part of the liquidity back-stop for the Company’s $3.5 billion U.S. Dollar and Euro commercial paper program. As of March 29, 2025 and December 28, 2024, the Company had not drawn on its 2024 Syndicated 364-Day Credit Agreement.

Current wording

In June 2025, the Company terminated its 364-Day $1.25 billion committed credit facility ("the 2024 Syndicated 364-Day Credit Agreement") dated June 2024. There were no outstanding borrowings under the 2024 Syndicated 364-Day Credit Agreement upon termination and as of December 28, 2024. Contemporaneously, the Company entered into a new $1.25 billion syndicated 364-Day Credit Agreement (the "2025 Syndicated 364-Day Credit Agreement") which is a revolving credit loan. The borrowings under the 2025 Syndicated 364-Day Credit Agreement may be made in U.S. Dollars or Euros and bear interest at a floating rate plus an applicable margin dependent upon the denomination of the borrowing and pursuant to the terms of the 2025 Syndicated 364-Day Credit Agreement. The Company must repay all advances under the 2025 Syndicated 364-Day Credit Agreement by the earlier of June 22, 2026 or upon termination. The Company may, however, convert all advances outstanding upon termination into a term loan that shall be repaid in full no later than the first anniversary of the termination date provided that the Company, among other things, pays a fee to the administrative agent for the account of each lender. The 2025 Syndicated 364-Day Credit Agreement serves as part of the liquidity back-stop for the Company’s $3.5 billion U.S. Dollar and Euro commercial paper program. As of June 28, 2025, the Company had not drawn on its 2025 Syndicated 364-Day Credit Agreement.

Previous wording

The 5-Year Credit Agreement and the 2024 Syndicated 364-Day Credit Agreement, as described above, contain customary affirmative and negative covenants, including but not limited to, maintenance of an interest coverage ratio. The interest coverage ratio tested for covenant compliance compares adjusted Earnings Before Interest, Taxes, Depreciation and Amortization to adjusted net Interest Expense ("Adjusted EBITDA"/"Adjusted Net Interest Expense"). The Company must maintain, for each period of four consecutive fiscal quarters of the Company, an interest coverage ratio of not less than 3.50 to 1.00, provided that the Company is only required to maintain an interest coverage ratio of not less than (i) 1.50 to 1.00 for any four fiscal quarter period ending on or before the end of the Company’s second fiscal quarter of 2024, and (ii) 2.50 to 1.00 for any four fiscal quarter period ending after the Company’s second fiscal quarter of 2024 through and including the Company’s second fiscal quarter of 2025. For purposes of calculating the Company’s compliance with the interest coverage ratio, as defined in each credit agreement, the Company is permitted to increase EBITDA to allow for additional adjustment addbacks incurred prior to the end of the Company’s second fiscal quarter of 2025, provided that (A) the sum of the applicable adjustment addbacks incurred through and including the Company’s second fiscal quarter of 2024 may not exceed $500 million in the aggregate, and (B) the sum of the applicable adjustment addbacks incurred from the Company’s third fiscal quarter of 2024 through and including the Company’s second fiscal quarter of 2025 may not exceed $250 million in the aggregate; provided, further, that the sum of the applicable adjustment addbacks for any four consecutive fiscal quarter period may not exceed $500 million in the aggregate.

Current wording

The 5-Year Credit Agreement and the 2025 Syndicated 364-Day Credit Agreement, as described above, contain customary affirmative and negative covenants, including but not limited to, maintenance of an interest coverage ratio. The interest coverage ratio tested for covenant compliance compares adjusted Earnings Before Interest, Taxes, Depreciation and Amortization to adjusted net Interest Expense ("Adjusted EBITDA"/"Adjusted Net Interest Expense"). The Company must maintain, for each period of four consecutive fiscal quarters of the Company, an interest coverage ratio of not less than 3.50 to 1.00, provided that the Company is only required to maintain an interest coverage ratio of not less than 2.50 to 1.00 for any four fiscal quarter period ending on or before the end of the Company’s second fiscal quarter of 2026. For purposes of calculating the Company’s compliance with the interest coverage ratio, the Company is permitted to increase EBITDA by an amount equal to the Applicable Adjustment Addbacks (as defined in the 2025 Syndicated 364-Day Credit Agreement), provided that the sum of the Applicable Adjustment Addbacks incurred in any four consecutive fiscal quarter periods ending on or before the end of the Company’s second fiscal quarter of 2026 shall not exceed $250,000,000 in the aggregate.

Previous wording

There have been no changes in the Company’s critical accounting estimates during the first quarter of 2025. Refer to the“Other Matters” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K for the year ended December 28, 2024 for a discussion of the Company’s critical accounting estimates.

Current wording

There have been no changes in the Company’s critical accounting estimates during the second quarter of 2025. Refer to the“Other Matters” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K for the year ended December 28, 2024 for a discussion of the Company’s critical accounting estimates.