10q10k10q10k.net

What changed in Stanley Black & Decker's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Stanley Black & Decker's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+439 added−434 removedSource: 10-K (2024-02-27) vs 10-K (2023-02-23)

Top changes in Stanley Black & Decker's 2024 10-K

439 paragraphs added · 434 removed · 304 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

64 edited+32 added−23 removed25 unchanged
Biggest changeRefer to the "Human Capital Management" section in this Item 1 below for additional information regarding the Company's commitment to supporting its employees and improving diversity, equity and inclusion. Description of the Business The Company’s operations are classified into two reportable business segments: Tools & Outdoor and Industrial.
Biggest changeThe Company’s renewed ESG priorities are as follows: • The People strategy includes broad based diversity, equity & inclusion ("DEI") initiatives supported by equal employment opportunities and the Company's Growing the Trades program. Refer to the "Human Capital Management" section below for additional information regarding the Company's commitment to supporting its employees and improving DEI.
Certain large customers offer private label brands (“house brands”) that compete across a wide spectrum of the Company’s Tools & Outdoor segment product offerings. Major Customers 5 A significant portion of the Company’s Tools & Outdoor products are sold to home centers and mass merchants in the U.S. and Europe.
Certain large customers offer private label brands (“house brands”) that compete across a wide spectrum of the Company’s Tools & Outdoor segment product offerings. 5 Major Customers A significant portion of the Company’s Tools & Outdoor products are sold to home centers and mass merchants in the U.S. and Europe.
The Company is continuing to execute initiatives across the global workforce designed to foster an inclusive workplace and facilitate equitable career development opportunities. 8 Management monitors hiring, retention, promotion and continued progress toward achieving the Company's DEI goals.
The Company is continuing to execute initiatives across the global workforce designed to foster an inclusive workplace and facilitate equitable career development opportunities. Management monitors hiring, retention, promotion and continued progress toward achieving the Company's DEI goals.
The Chief Diversity Officer (“CDO”), with the support of a dedicated team of diversity, equity, and inclusion (“DEI”) professionals, promotes a broad approach to DEI with the goal of accelerating Company performance, optimizing organizational culture, enhancing transparency, and strengthening accountability.
The Chief Diversity Officer (“CDO”), with the support of a dedicated team of diversity, equity, and inclusion professionals, promotes a broad approach to DEI with the goal of accelerating Company performance, optimizing organizational culture, enhancing transparency, and strengthening accountability.
In the Tools & Outdoor segment, significant trademarks include STANLEY®, BLACK+DECKER®, DEWALT®, FLEXVOLT®, IRWIN®, LENOX®, CRAFTSMAN®, PORTER-CABLE®, BOSTITCH®, FATMAX®, Powers®, Guaranteed Tough®, MAC TOOLS®, PROTO®, Vidmar®, FACOM®, Expert®, LISTA®, MTD®, CUB CADET®, TROY-BILT®, HUSTLER®, and the yellow & black color scheme for power tools and accessories.
In the Tools & Outdoor segment, significant trademarks include DEWALT®, CRAFTSMAN®, STANLEY®, BLACK+DECKER®, DEWALT FLEXVOLT®, DEWALT POWERSTACK®, DEWALT POWERSHIFT™, IRWIN®, LENOX®, PORTER-CABLE®, BOSTITCH®, FATMAX®, Powers®, Guaranteed Tough®, MAC TOOLS®, PROTO®, Vidmar®, FACOM®, Expert®, LISTA®, MTD®, CUB CADET®, TROY-BILT®, HUSTLER®, and the yellow & black color scheme for power tools and accessories.
Governmental Regulations The Company's operations are subject to numerous federal, state and local laws and regulations, both within and outside the U.S., in areas such as environmental protection, international trade, data privacy, tax, consumer protection, government contracts, climate change and others.
Governmental Regulations The Company's operations are subject to numerous federal, state and local laws and regulations, both within and outside the U.S., in areas such as environmental protection, international trade, anti-corruption, data privacy, tax, consumer protection, government contracts, climate change and others.
The Company’s Environmental, Health and Safety (“EHS”) Management System Plan describes the core elements of EHS responsibility and accountability, including policies and procedures that are designed in alignment with global standards, the Company’s Code of Business Ethics, applicable laws and individual facility needs.
Environment, Health and Safety The Company’s Environmental, Health and Safety (“EHS”) Management System describes the core elements of EHS responsibility and accountability, including policies and procedures that are designed in alignment with global standards, the Company’s Code of Business Ethics, applicable laws and individual facility needs.
However, laws and regulations may be changed, accelerated or adopted that impose significant operational restrictions and compliance requirements upon the Company and which could negatively impact its operating results and financial condition. Human Capital Management Stanley Black & Decker has a strategic vision to grow as an employer of choice with leading market positions in each of its major categories.
However, laws and regulations may be changed, accelerated or adopted that impose significant operational restrictions and compliance requirements upon the Company and which could negatively impact its operating results and financial condition. Human Capital Management The Company has a strategic vision to grow as an employer of choice with leading market positions in each of its major categories.
The Company does not anticipate difficulties in obtaining supplies for any raw materials used in its production processes and has taken proactive measures to secure energy supply in its European factories to insulate the Company's production from supply constraints in the region.
The Company does not anticipate difficulties in obtaining supplies for any raw materials used in its production processes and has maintained the proactive measures taken in 2022 to secure energy supply in its European factories to insulate the Company's production from supply constraints in the region.
Offerings span across multiple demographics (African American, Asian, Hispanic/Latino/Latinx, Disabilities, Women, LGBTQ+) and levels of participation range from early in career through executive level. Through the RISE (Reach. Inspire. Support. Engage.) Community program, the Company provides scholar students access to expanded experiential learning beyond their classrooms.
Offerings span across multiple demographics (African American, Asian, Hispanic/Latino/Latinx, Disabilities, Women, LGBTQ+) and levels of participation range from early in career through executive level. Through the RISE (Reach. Inspire. Support. Engage.) Community program, the Company provides scholar students, in high school and college, access to expanded experiential learning beyond their classrooms.
Additional information regarding the Company’s business segments and geographic areas is incorporated herein by reference to the material captioned “ Business Segment Results ” in Item 7 and Note P, Business Segments and Geographic Areas , of the Notes to Consolidated Financial Statements in Item 8 . 4 Tools & Outdoor The Tools & Outdoor segment is comprised of the Power Tools Group ("PTG"), Hand Tools, Accessories & Storage ("HTAS"), and Outdoor Power Equipment ("Outdoor") businesses.
Additional information regarding the Company’s business segments and geographic areas is incorporated herein by reference to the material captioned “ Business Segment Results ” in Item 7 and Note P, Business Segments and Geographic Areas , of the Notes to Consolidated Financial Statements in Item 8 . 4 Tools & Outdoor The Tools & Outdoor segment is comprised of the Power Tools Group ("PTG"), Hand Tools, Accessories & Storage ("HTAS"), and Outdoor Power Equipment ("Outdoor") product lines.
Refer to Item 1A. Risk Factors in Part I of this Form 10-K for additional information regarding various laws and regulations that affect the Company's business operations. 6 The Company is also subject to various environmental laws and regulations in the U.S. and foreign countries where it has operations.
Refer to Item 1A. Risk Factors in Part I of this Annual Report on Form 10-K for additional information regarding various laws and regulations that affect the Company's business operations. 6 The Company is also subject to various environmental laws and regulations in the U.S. and foreign countries where it has operations.
The Outdoor business primarily sells corded and cordless electric lawn and garden products, including hedge trimmers, string trimmers, lawn mowers, pressure washers and related accessories, and gas powered lawn and garden products, including lawn tractors, zero turn ride on mowers, walk behind mowers, snow blowers, residential robotic mowers, utility terrain vehicles (UTVs), hand-held outdoor power equipment, garden tools, and parts and accessories to professionals and consumers under the DEWALT®, CUB CADET®, BLACK+DECKER®, CRAFTSMAN®, TROY-BILT®, and HUSTLER® brand names.
The Outdoor product line primarily sells corded and cordless electric lawn and garden products, including hedge trimmers, string trimmers, lawn mowers, pressure washers and related accessories, and gas powered lawn and garden products, including lawn tractors, zero turn ride on mowers, walk behind mowers, snow blowers, residential robotic mowers, utility terrain vehicles (UTVs), hand-held outdoor power equipment, garden tools, and parts and accessories to professionals and consumers under the DEWALT®, CRAFTSMAN®, CUB CADET®, BLACK+DECKER®, and HUSTLER® brand names.
The Company’s human capital management fuels every part of the path to this vision. It begins with its Purpose (why we do what we do), Values (intrinsically what we prioritize), Leadership Principles (how we lead), Focus Forward Priorities (what we work on), Operating Model (how we work), and Key Performance Indicators (how we measure success).
The Company’s human capital management fuels every part of the path to this vision, supporting long-term growth. It begins with its Purpose (why we do what we do), Values (intrinsically what we prioritize), Leadership Principles (how we lead), Focus Forward Priorities (what we work on), Operating Model (how we work), and Key Performance Indicators (how we measure success).
Leveraging the benefits of a more focused portfolio, the Company initiated a business transformation that includes reinvestment for faster growth as well as the $2.0 billion Global Cost Reduction Program through 2025.
Leveraging the benefits of a more focused portfolio, the Company initiated a business transformation in mid-2022 that includes reinvestment for faster growth as well as the $2.0 billion Global Cost Reduction Program through 2025.
Lowe's accounted for approximately 15%, 15% and 17% of the Company's consolidated net sales in 2022, 2021 and 2020, respectively, while The Home Depot accounted for approximately 13%, 15% and 14% of the Company's consolidated net sales in 2022, 2021 and 2020, respectively. No other customer exceeded 10% of the Company's consolidated net sales in 2022, 2021 or 2020.
Lowe's accounted for approximately 14%, 15% and 15% of the Company's consolidated net sales in 2023, 2022 and 2021, respectively, while The Home Depot accounted for approximately 13%, 13% and 15% of the Company's consolidated net sales in 2023, 2022 and 2021, respectively. No other customer exceeded 10% of the Company's consolidated net sales in 2023, 2022 or 2021.
There were approximately 1,000 U.S. employees covered by collective bargaining agreements dispersed among 9 different local labor unions, and a majority of European employees are represented by Works Councils. Two U.S. collective bargaining agreements are scheduled for renegotiation in the next 12 months.
There were approximately 1,000 U.S. employees covered by collective bargaining agreements dispersed among 8 different local labor unions, and a majority of European employees are represented by Works Councils. Three U.S. collective bargaining agreements are scheduled for renegotiation in the next 12 months.
Retention The Company monitors organizational health through a variety of channels including employee opinion surveys, townhalls, roundtables, listening sessions, and an internal communications and social collaboration platform called Workplace.
Retention The Company monitors organizational health through a variety of channels including employee opinion surveys, town halls, roundtables, listening sessions, and an internal communications and social collaboration platform called Workplace.
The Company’s portfolio of programs is designed in the context of its compensation philosophy underpinned by the tenets of competitive pay, pay for performance, alignment with shareholder interests, and the Company's intent to provide fair and equitable pay supporting an inclusive culture.
The Company’s portfolio of programs is designed in the context of its compensation philosophy underpinned by the tenets of competitive pay, pay for performance, alignment with shareholder interests, balance of risk versus reward, and the Company's intent to provide fair and equitable pay supporting an inclusive culture.
Each year, the Company conducts an extensive talent review with its CEO where the leadership team, key talent, and succession plans are 9 reviewed. Afterwards, the CEO or CHRO leads a talent review with the Compensation & Talent Development Committee of the Board and the entire membership of the Board, at least annually. Refer to Item 10.
Each year, the Company conducts an extensive talent review with its CEO where the leadership team, key talent, and succession plans are reviewed. Afterwards, the CEO or CHRO leads a talent review with the Compensation & Talent Development Committee of the Board and the entire membership of the Board, at least annually.
Significant trademarks in the Industrial segment include STANLEY®, NELSON®, LaBounty®, Dubuis®, CribMaster®, POP®, Avdel®, Tucker®, NPR®, Spiralock®, PALADIN®, CAM®, Bristol Industries®, Voss™, Aerofit™, EA Patten™, Integra®, Optia®, PENGO® and STANLEY® Assembly Technologies. The terms of these trademarks typically vary from 10 to 20 years, with most trademarks being renewable indefinitely for like terms.
Significant trademarks in the Industrial segment include STANLEY®, NELSON®, CribMaster®, POP®, Avdel®, Tucker®, NPR®, Spiralock®, CAM®, Bristol Industries®, Voss™, Aerofit™, EA Patten™, Integra®, and Optia®. The terms of these trademarks typically vary from 10 to 20 years, with most trademarks being renewable indefinitely for like terms.
These ERGs are formed around various dimensions of diversity and are open to all employees. The ERGs include Abilities (visible and invisible abilities), African Ancestry, Asian Heritage, Hispanic/Latino/Latinx, Developing Professionals, Pride & Allies (LGBTQ+), Veterans, Women, and Working Parents. Company executives and leaders actively participate, sponsor and engage with the ERGs.
These ERGs are formed around various dimensions of diversity and employees are encouraged to engage with all ERGs when and how they prefer. The ERGs include Abilities (visible and invisible abilities), African Ancestry, Asian Heritage, Hispanic/Latino/Latinx, Developing Professionals, Pride & Allies (LGBTQ+), Veterans, Women, and Working Parents. Company executives and leaders actively participate, sponsor and engage with the ERGs.
Professional products include professional grade corded and cordless electric power tools and equipment including drills, impact wrenches and drivers, grinders, saws, routers and sanders, as well as pneumatic tools and fasteners including nail guns, nails, staplers and staples, and concrete and masonry anchors.
Professional products, primarily under the DEWALT® brand, include professional grade corded and cordless electric power tools and equipment including drills, impact wrenches and drivers, grinders, saws, routers and sanders, as well as pneumatic tools and fasteners including nail guns, nails, staplers and staples, and concrete and masonry anchors.
As of December 31, 2022, the Company has recorded $16.4 million in other assets related to funding by the Environmental Protection Agency ("EPA") and monies received have been placed in trust in accordance with the Consent Decree associated with the West Coast Loading Corporation ("WCLC") proceedings, as further discussed in Note S, Contingencies , of the Notes to Consolidated Financial Statements in Item 8 .
As of December 30, 2023, the Company has recorded $17.0 million in other assets related to funding by the Environmental Protection Agency ("EPA") and monies received have been placed in trust in accordance with the Consent Decree associated with the West Coast Loading Corporation ("WCLC") proceedings, as further discussed in Note S, Contingencies , of the Notes to Consolidated Financial Statements in Item 8 .
The Company offers over 50,000 training courses to its colleagues, and employees attended more than 40,000 hours of online voluntary learning in 2022. Additionally, the Company focuses on leadership development anchored around its Leadership Principles and Values, while promoting leadership habits and behaviors that highlight the importance of attributes like empathy, inclusivity and listening.
The Company offers over 25,000 training courses to its colleagues, and employees attended more than 29,000 hours of online and in-person voluntary learning in 2023. Additionally, the Company focuses on leadership development anchored around its Leadership Principles and Values, while promoting leadership habits and behaviors that highlight the importance of attributes like empathy, inclusivity and listening.
Annual revenues in the Tools & Outdoor segment were $14.4 billion in 2022, representing 85% of the Company’s total revenues. The segment is a worldwide leader in the tools and outdoor markets and carries iconic brands in the industry, including DEWALT®, CRAFTSMAN®, STANLEY®, BLACK+DECKER® and CUB CADET®. The PTG business includes both professional and consumer products.
Annual revenues in the Tools & Outdoor segment were $13.4 billion in 2023, representing 85% of the Company’s total revenues. The segment is a worldwide leader in the tools and outdoor markets and carries iconic brands in the industry, including DEWALT®, CRAFTSMAN®, STANLEY®, BLACK+DECKER® and CUB CADET®. The PTG product line includes both professional and consumer products.
Approximately 39% of global new hires in 2022 were women versus 37% in 2021, and in the U.S. approximately 39% of new employees were racially or ethnically diverse versus 45% in 2021. Development Talent development is a key enabler of the People & Culture pillar of the Company's Focus Forward strategy.
Approximately 35% of global new hires in 2023 were women versus 39% in 2022, and in the U.S. approximately 40% of new employees were racially or ethnically diverse versus 39% in 2022. Development Talent development is a key enabler of the People & Culture pillar of the Company's Focus Forward strategy.
An internal knowledge library of DEI resources is available on the Company intranet. Mentorship programs cultivate talent at the Company by pairing women, people of color, early career talent and DEI leadership development program participants with the Company’s leaders to influence leadership growth and mentor allyship. The Company has nine Employee Resource Groups ("ERGs") and two regional inclusion councils.
Mentorship programs cultivate talent at the Company by pairing women, people of color, early career talent and DEI leadership development program participants with the Company’s leaders to influence leadership growth and mentor allyship. The Company has nine Employee Resource Groups ("ERGs") and two regional inclusion councils.
Consumer products include corded and cordless electric power tools sold primarily under the BLACK+DECKER® brand, and home products such as hand-held vacuums, paint tools and cleaning appliances. The HTAS business sells hand tools, power tool accessories and storage products.
DIY and tradesperson focused products include corded and cordless electric power tools sold primarily under the CRAFTSMAN® brand, and consumer home products such as hand-held vacuums, paint tools and cleaning appliances primarily under the BLACK+DECKER® brand. The HTAS product line sells hand tools, power tool accessories and storage products.
As of December 31, 2022 and January 1, 2022, the Company had reserves of $129.3 million and $159.1 million, respectively, for remediation activities associated with Company-owned properties, as well as for Superfund sites, for losses that are probable and estimable.
As of December 30, 2023 and December 31, 2022, the Company had reserves of $124.5 million and $129.3 million, respectively, for remediation activities associated with Company-owned properties, as well as for Superfund sites, for losses that are probable and estimable.
In July 2022, the Company sold its Convergent Security Solutions ("CSS") business comprised of the commercial electronic security and healthcare businesses for net proceeds of $3.1 billion and its Mechanical Access Solutions ("MAS") business comprised of the automatic doors business for net proceeds of $922 million. These businesses were part of the previously reported Security segment.
In July 2022, the Company sold its Convergent Security Solutions ("CSS") business comprised of the commercial electronic security and healthcare businesses for net proceeds of $3.1 billion and its Mechanical Access Solutions ("MAS") business comprised of the automatic doors business for net proceeds of $916 million.
As of December 31, 2022, the Company's Board of Directors (the “Board”) is comprised of 33% women versus 36% in 2021, 17% racially or ethnically diverse directors versus 9% in 2021, and 17% that are of a diverse national origin versus 9% in 2021.
As of December 30, 2023, the Company's Board of Directors (the “Board”) is comprised of 45% women versus 33% in 2022, 18% racially or ethnically diverse directors versus 17% in 2022, and 18% that are of a diverse national origin versus 17% in 2022.
Liabilities have been recorded on those sites in accordance with the Company's policy. The amount recorded for identified contingent liabilities is based on estimates. Amounts recorded are reviewed periodically and adjusted to reflect additional technical and legal information that becomes available.
The Company may be liable for environmental remediation of sites it no longer owns. Liabilities have been recorded on those sites in accordance with the Company's policy. The amount recorded for identified contingent liabilities is based on estimates. Amounts recorded are reviewed periodically and adjusted to reflect additional technical and legal information that becomes available.
The Chief Executive Officer (“CEO”) and his direct staff are comprised of 42% women leaders, versus 36% in 2021, and 25% racially or ethnically diverse leaders versus 36% in 2021. Women represent approximately 35% of the Company's global workforce versus 33% in 2021. In the U.S., approximately 35% of employees are racially or ethnically diverse versus 34% in 2021.
The Chief Executive Officer (“CEO”) and his direct staff are comprised of 25% women leaders, versus 42% in 2022, and 25% racially or ethnically diverse leaders versus 25% in 2022. Women represented approximately 34% of the Company's global workforce in 2023 versus 35% in 2022.
Working Capital The Company continues to practice the operating principles encompassed by Operations Excellence, one element of the SBD Operating Model, which work in concert: sales and operations planning, operational lean, complexity reduction, global supply management, order-to-cash excellence, and upskilling the Company's workforce. The Company develops standardized business processes and system platforms to reduce costs and provide scalability.
Working Capital The Company continues to practice the operating principles encompassed by Operational Excellence, one element of the supply chain transformation, leveraging the principles of: sales and operations planning, operational lean, global supply management, order-to-cash excellence, and upskilling the Company's workforce. The Company aims to develop standardized business processes and system platforms to reduce costs and provide scalability.
The raw materials required are procured globally and generally available from multiple sources at competitive prices. As part of the Company's Enterprise Risk Management, the Company has implemented a supplier risk mitigation strategy in order to identify and address any potential supply disruption or material scarcity issues associated with commodities, components, finished goods and critical services.
As part of the Company's Enterprise Risk Management, the Company has implemented a supplier risk mitigation strategy in order to identify and address any potential supply disruption or material scarcity issues associated with commodities, components, finished goods and critical services.
To achieve this vision, the Company will be focusing intently on its Focus Forward strategy, which details the long-term focus areas that will guide the journey forward. The priorities include a strong foundation of People & Culture, with Talent Attraction, Development, and Retention being core focus areas.
To achieve this vision, the Company will be focusing intently on its Focus Forward strategy, which details the long-term focus areas that will guide the journey forward. The priorities and core focus areas include a strong foundation of attracting, developing and retaining talent, building organizational capabilities, and evolving the Company's culture.
The products and services are primarily distributed through a direct sales force and, to a lesser extent, third-party distributors. Other Information Competition The Company competes on the basis of its reputation for product quality, its well-known brands, its commitment to customer service, its strong customer relationships, the breadth of its product lines, its innovative products and customer value propositions.
Other Information Competition The Company competes on the basis of its reputation for product quality, its well-known brands, its commitment to customer service, its strong customer relationships, the breadth of its product lines, its innovative products and customer value propositions.
The business sells to customers in the automotive, manufacturing, electronics, construction, and aerospace industries, amongst others, and its products are distributed through a direct sales force and, to a lesser extent, third-party distributors. The Infrastructure business sells hydraulic tools and high quality, performance-driven heavy equipment attachment tools for off-highway applications.
The business sells to customers in the automotive, manufacturing, electronics, construction, and aerospace industries, amongst others, and its products are distributed through a direct sales force and, to a lesser extent, third-party distributors.
Of the 2022 amount, $39.4 million is classified as current and $89.9 million as long-term, which is expected to be paid over the estimated remediation period.
Of the 2023 amount, $46.0 million is classified as current and $78.5 million as long-term, which is expected to be paid over the estimated remediation period.
A copy of the Company's most recently filed Equal Employment Opportunity report to the U.S. government (EEO-1) can be found on the Company’s website.
In the U.S., approximately 35% of employees are racially or ethnically diverse in both 2023 and 2022. A copy of the Company's most recently filed Equal Employment Opportunity report to the U.S. government (EEO-1) can be found on the Company’s website.
Diversity, Equity & Inclusion The Company is committed to building and nurturing an inclusive culture of passion and belonging where employees feel valued and heard, and are positioned to succeed.
Diversity, Equity & Inclusion 8 The Company strives to build and nurture an inclusive culture of passion and belonging where employees feel valued and heard, and are positioned to succeed through equal employment opportunities.
The Company also supports its employees and promotes work/life balance through benefits such as paid parental leave, paid time off, flexible work arrangements and virtual/hybrid working model policies. In 2022, the Company continued its commitment to navigating through the COVID-19 pandemic with employee health and safety as a non-negotiable, foundational priority.
The Company also supports its employees and promotes work/life balance through benefits such as paid parental leave, paid time off, flexible work arrangements and virtual/hybrid working model policies.
The Company’s mission is to help its RISE scholars discover their passions, expose them to business, technology, STEM career opportunities and help to develop them as leaders. The Company is a signatory of the Paradigm for Parity coalition, which is committed to addressing the gender gap in corporate leadership.
The Company’s goal is to help its RISE scholars discover their passions, expose them to business, technology, and STEM career opportunities, and help to develop them as leaders. The Company continues to support gender representation in leadership as a part of its broader DEI goals.
The Company’s primary areas of strategic focus are as follows: • Continuing to advance innovation, electrification and global market penetration to achieve organic revenue growth of 2 to 3 times the market; • Streamlining and simplifying the organization, as well as shifting resources to prioritize investments believed to have a positive and more direct impact to customers; • Accelerating the operations and supply chain transformation to improve fill rates and better match the needs of its customers while improving adjusted gross margins back to historical 35%+ levels; and • Prioritizing cash flow generation and inventory optimization.
The Company’s primary areas of multi-year strategic focus remain unchanged as follows: • Advancing innovation, electrification and global market penetration to achieve organic revenue growth of 2 to 3 times the market; • Streamlining and simplifying the organization, and investing in initiatives that more directly impact the Company's customers and end users; • Returning adjusted gross margins to historical 35%+ levels by accelerating the operations and supply chain transformation to improve fill rates and better match inventory with customer demand; and • Prioritizing cash flow generation and inventory optimization.
Accordingly, the Company's net cash obligation as of December 31, 2022 associated with the aforementioned remediation activities is $112.9 million. The range of environmental remediation costs that is reasonably possible is $58.5 million to $220.1 million, which is subject to change in the near term. The Company may be liable for environmental remediation of sites it no longer owns.
Accordingly, the Company's net cash obligation as of December 30, 2023 associated with the aforementioned remediation activities is $107.5 million. As of December 30, 2023, the range of environmental remediation costs that is reasonably possible is $79.9 million to $226.8 million, which is subject to change in the near term.
EHS requirements apply to all employees and operating locations worldwide, including all manufacturing facilities, distribution centers, warehouses, laboratories, field service centers, retail locations, office locations and mobile units, as well as to the Company's subsidiaries and joint ventures (in which the Company exercises decision-making control over operations).
In 2023, the Company reinforced EHS as a 9 key priority that applies to employees and operating locations worldwide, including manufacturing facilities, distribution centers, warehouses, laboratories, field service centers, retail locations, office locations and mobile units, as well as to the Company's subsidiaries.
The recent portfolio transformation prompted the Company to re-baseline its ESG data and update its ESG targets to align with the more focused Company, while maintaining continuity with the legacy ESG pillars of people, products, and planet. The updated strategy and targets will be described in more detail within the Company’s ESG report to be released in 2023.
The portfolio changes discussed above prompted the Company to re-baseline its ESG data and update its ESG targets to align with the more focused Company and its business priorities and goals, while maintaining continuity with the legacy ESG pillars of people, products, and planet.
The Company strives to maintain a positive relationship with all its employees, as well as the unions and Works Councils representing them, where applicable. Talent Attraction, Development, and Retention 7 Attraction In 2022, the Company invested in expanding its employer of choice branding and building out a global talent acquisition center of excellence.
The Company strives to maintain a positive relationship with all its employees, as well as the unions and Works Councils representing them, where applicable. 7 Talent Attraction, Development, Retention and Compensation Attraction In 2023, the Company continued to invest in developing a global talent acquisition center of excellence, including hiring a dedicated Global Talent Acquisition Leader and continuing the work started in 2022 within the regions to better focus on skill shortages locally.
As of December 31, 2022, the Company had approximately 54,200 employees in 59 countries. Approximately 35% of total employees were employed in the U.S. In addition, the Company had approximately 5,700 temporary contractors globally, primarily in operations. The workforce is comprised of approximately 72% hourly-paid employees, principally in manufacturing and distribution centers, and 28% salaried employees.
In addition, the Company had approximately 7,300 temporary contractors globally, primarily in operations. The workforce is comprised of approximately 69% hourly-paid employees, principally in manufacturing and distribution centers, and 31% salaried employees.
Industrial The Industrial segment is comprised of the Engineered Fastening and Infrastructure businesses. Annual revenues in the Industrial segment were $2.5 billion in 2022, representing 15% of the Company’s total revenues. The Engineered Fastening business primarily sells highly engineered components such as fasteners, fittings and various engineered products, which are designed for specific application across multiple verticals.
The business primarily sells highly engineered components such as fasteners, fittings and various engineered products, which are designed for specific application across multiple verticals.
The Company is a global provider of hand tools, power tools, outdoor products and related accessories, as well as a leading provider of engineered fastening solutions and attachment tools for infrastructure applications, with 2022 consolidated annual revenues of $16.9 billion.
The Company is a global provider of hand tools, power tools, outdoor products and related accessories, as well as a leading provider of engineered fastening solutions, with 2023 consolidated annual revenues of $15.8 billion. Approximately 62% of the Company’s 2023 revenues were generated in the United States, with the remainder largely from Europe (16%), emerging markets (12%) and Canada (5%).
Raw Materials The Company’s products are manufactured using resins, ferrous and non-ferrous metals including, but not limited to, steel, zinc, copper, brass, aluminum and nickel. The Company also purchases components such as batteries, motors, engines, transmissions, and electronic components to use in manufacturing and assembly operations along with resin-based molded parts.
The Company also purchases components such as batteries, motors, engines, transmissions, and electronic components to use in manufacturing and assembly operations along with resin-based molded parts. The raw materials required are procured globally and generally available from multiple sources at competitive prices.
Legal requirements and responses may vary in the different countries in which the Company’s facilities are located. Governance and Oversight The CEO and the management Executive Committee are entrusted with developing and advancing the Company’s human capital strategy which is reviewed annually with periodic updates on progress with the Board.
The Company also organized the Corporate EHS team to support technically and more effectively with developing capabilities that enable strong performance at the Company’s sites globally. Governance and Oversight The CEO and the management Executive Committee are entrusted with developing and advancing the Company’s human capital strategy which is reviewed annually with periodic updates on progress with the Board.
Excel was a strategically important bolt-on acquisition that bolstered the Company's presence in the independent dealer network. The CAM acquisition further diversified the Company's presence in the industrial markets and expanded its portfolio of specialty fasteners in the aerospace and defense markets.
The MTD acquisition expanded the Company's presence in the $25 billion outdoor category, with strong brands and growth opportunities. Excel was a strategically important bolt-on acquisition that bolstered the Company's presence in the independent dealer network.
In recent years, the Company completed the acquisitions of the remaining 80 percent ownership stake of MTD Holdings Inc. ("MTD") for $1.5 billion, Excel Industries ("Excel") for $374 million, and Consolidated Aerospace Manufacturing, LLC ("CAM") for $1.4 billion. The MTD acquisition expanded the Company's presence in the $25 billion and growing outdoor category, with strong brands and growth opportunities.
In recent years, the Company has re-shaped its portfolio through a series of acquisitions and divestitures. In December 2021, the Company completed the acquisitions of the remaining 80 percent ownership stake of MTD Holdings Inc. ("MTD") for $1.5 billion and Excel Industries ("Excel") for $374 million.
Employee Wellness, Health and Safety The Company is committed to providing competitive benefits to attract and retain talent, which vary by country, including benefits and programs to support the broad wellness of its employees’ healthy lifestyles, mental health, and retirement readiness.
The implementation of the strategy will vary by country but will include benefits to support the broad wellness of employees’ healthy lifestyles, mental health, and retirement readiness, which will be bolstered by programs to support a healthy, psychologically safe culture at work.
A key part of development is leader and performance feedback. Throughout 2022, the Talent Development team began planning the Company’s annual feedback process in its new Human Capital Management tool, which has a targeted implementation date by the end of 2023. Lifelong learning is supported internally through Stanley Black & Decker University and externally with third-party partners.
The process started in the fourth quarter of 2023 and is targeted for full implementation by the middle of 2024. Lifelong learning is supported internally through Stanley Black & Decker University and externally with third-party partners.
This data will be available to all people leaders for their direct and indirect teams as the Company launches its new Human Capital Management tool by the end of 2023. Compensation Compensation and benefits are globally managed and tailored by country to maintain market competitiveness, and effectively attract, retain, and reward employees.
Compensation Compensation and benefits are globally managed and tailored by country to maintain market competitiveness, and effectively attract, retain, and reward employees.
DEI reviews are regularly completed by management to increase diverse representation at all levels of the organization by 1) creating consistent visibility to employee demographic data and trends, 2) highlighting women and racially diverse talent, and 3) increasing leadership accountability for creating a diverse and inclusive workplace. The Company provides training and guidance to employees including inclusive workforce modules.
Ongoing DEI reviews are completed by management to support diverse representation throughout the organization and emphasize leadership accountability to support a diverse and inclusive workplace across various dimensions of diversity. The Company provides training and guidance to employees including inclusive workforce modules. An internal knowledge library of DEI resources is available on the Company's intranet.
Working capital turns were 3.5 at the end of 2022, down 1.7 turns from 2021, as the Company focuses on optimizing inventory levels following the increased supply chain constraints and a consumer-driven slowdown in 2022 demand.
Working capital turns were 4.2 at the end of 2023, up 0.7 turns from 2022, driven by the Company's focus on optimizing inventory levels via improved supply chain conditions and strategic inventory management.
The information on the Company's website is not, and is not intended to be, part of this Form 10-K and is not incorporated into this report by reference.
Refer to the caption "Information About Our Executive Officers" in Part 1 of this Annual Report on Form 10-K and
As a result of this focus, inventory as of December 31, 2022 was $5.9 billion, down $775 million from its peak at the end of the second quarter of 2022. The Company plans to continue leveraging Operations Excellence to generate ongoing improvements in working capital turns, cycle times, complexity reduction and customer service levels.
As a result of this focus and planned production curtailments initiated during the back half of 2022, inventory as of December 30, 2023 was $4.7 billion, down $1.9 billion from its peak at the end of the second quarter of 2022.
The Company’s People & Culture foundation is something that everyone is responsible for – especially people managers. The Company’s goal is to continue to create an environment where its employees are included and can thrive. The Company remains fully committed to its key priorities of: Health & Safety; Diversity, Equity & Inclusion; Environmental & Social Responsibility; and Integrity & Compliance.
The Company’s People & Culture foundation is something that everyone is responsible for – especially people managers. The Company’s goal is to continue to strive to cultivate a diverse and inclusive environment where all employees thrive and are motivated to deliver their best work, extraordinary outcomes and achieve full potential.
Removed
Approximately 63% of the Company’s 2022 revenues were generated in the United States, with the remainder largely from Europe (15%), emerging markets (12%) and Canada (5%).
Added
In August 2022, the Company sold its Oil & Gas business comprised of the pipeline services and equipment businesses. Most recently, the Company announced in December 2023 that it had entered into a definitive agreement to sell its Infrastructure business, comprised of the attachment and handheld hydraulic tools business, for $760 million in cash.
Removed
The Company continues to execute a business strategy that involves organic growth in excess of the market and industry, geographic and customer diversification to foster sustainable revenue, earnings and cash flow growth over the long term. Over the past two years, the Company has focused the portfolio on its leading positions in the Tools & Outdoor and Industrial businesses.
Added
These recent acquisitions and divestitures are part of the Company's strategic commitment to simplify and streamline its portfolio to focus on its leading market positions in tools and outdoor, as well as engineered fastening systems. Refer to Note E, Acquisitions , and Note T, Divestitures , of the Notes to Consolidated Financial Statements in Item 8 for further discussion.
Removed
During this period, the focus for capital deployment will be on debt reduction, internal investment and shareholder return through dividends. The Company has focused its portfolio through a series of acquisitions and divestitures. In August 2022, the Company sold its Oil & Gas business comprised of the pipeline services and equipment businesses.
Added
In terms of capital allocation, the Company remains committed, over time, to returning excess capital to shareholders through a strong and growing dividend as well as opportunistically repurchasing shares. In the near term, the Company intends to direct any capital in excess of the quarterly dividend on its common stock toward debt reduction and internal growth investments.
Removed
These divestitures are part of the Company's strategic commitment to simplify and streamline its portfolio to focus on the core Tools & Outdoor and Industrial businesses. In November 2020, the Company sold its commercial electronic security businesses in five countries in Europe and emerging markets within the Security segment.
Added
The Company’s environmental, social and governance ("ESG") strategy is integrated into, and informed by, its overall long-term business strategy.
Removed
In October 2020, the Company sold a product line in Oil & Gas within the Industrial segment. The Company has also divested several smaller businesses in recent years that allowed the Company to invest in other areas that fit its long-term strategy.
Added
To grow the trades, the Company is tailoring its philanthropic efforts to fund trade skill-building initiatives with $30 million pledged by 2027. The Company believes this will generate end-user loyalty and brand ambassadorship that fuels long-term demand. • The Product strategy is focused on minimizing the environmental footprint of the Company’s products through an emphasis on Sustainable Innovation.
Removed
Refer to Note E, Acquisitions and Investments, and Note T, Divestitures , of the Notes to Consolidated Financial Statements in Item 8 for further discussion. 3 The Company’s business strategy is interdependent with its social responsibility strategy that encompasses workforce upskilling, product innovation, and environmental preservation, including mitigating the impacts of climate change.
Added
The Company’s products are increasingly designed with sustainability in mind – from more sustainable materials specified in product design and packaging, to more eco-friendly impacts resulting from the use of its products, to thoughtful end-of-life repair, reuse and recycling programs.
Removed
These are core business areas that ensure the long-term viability of the Company, its customers, suppliers, employee base, and communities. In 2017, the Company established an environmental, social, and corporate governance ("ESG") strategy to drive positive impact for people, products, and the planet.
Added
To measure progress in 3 this space, the Company set an intensity-based goal to reduce the greenhouse gas ("GHG") emissions of its products' material, transportation, and use phases (Scope 3) by 52% by 2030.
Removed
The Company's renewed ESG priorities are as follows: • Supporting the long-term viability of the skilled trades that the Company serves and which are integral to thriving economic communities by focusing philanthropic efforts on growing these trades; • Driving responsible product innovation by considering sustainability throughout all aspects of the product lifecycle, including material procurement from supply chain partners, product design, manufacturing, distribution and transportation, product use, product service, and end-of-life; and • Improving the sustainability of its operations by reducing carbon emissions, waste to landfill, and water use in water-stressed and scarce areas.
Added
To reach this goal, the Company plans to engage two-thirds of its suppliers to set their own Scope 1 and 2 GHG emissions reduction targets by 2027.

… 39 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

76 edited+10 added−56 removed80 unchanged
Biggest changeBusiness operations outside of the United States are subject to political, economic and other risks inherent in operating in certain countries, such as: • the difficulty of enforcing agreements and protecting assets through legal systems outside the U.S. including intellectual property rights, which may not be recognized, and which the Company may not be able to protect outside the U.S. to the same extent as under U.S. law; • managing widespread operations and enforcing internal policies and procedures such as compliance with U.S. and foreign anti-bribery, anti-corruption, and sanctions regulations; • trade protection measures and import or export licensing requirements including those related to the U.S.'s relationship with China; • the application of certain labor regulations outside of the United States; • compliance with a wide variety of non-U.S. laws and regulations; • instability or changes in the general political and economic conditions in the countries where the Company operates (such as the conflict between Russia and Ukraine); • the threat of nationalization and expropriation; • increased costs and risks of doing business and managing a workforce in a wide variety of jurisdictions; • the increased possibility of cyber threats in certain jurisdictions; • government controls limiting importation of goods; • government controls limiting payments to suppliers for imported goods; • limitations on, or impacts from, the repatriation of foreign earnings; and • exposure to wage, price and capital controls. 14 Changes in the political or economic environments in the countries in which the Company operates could have a material adverse effect on its financial condition, results of operations or cash flows.
Biggest changeForeign Corrupt Practices Act of 1977 ("FCPA") and the UK Bribery Act of 2010; • trade protection measures and import or export licensing requirements including those related to the U.S.'s relationship with China and economic and trade sanctions administered by the Office of Foreign Assets Control; • the application of certain labor regulations outside of the U.S.; • compliance with a wide variety of non-U.S. laws and regulations; • instability or changes in the general political and economic conditions in the countries where the Company operates (such as the conflicts between Russia and Ukraine, and Israel and Hamas and tensions in South Korea, China and Taiwan); • the threat of nationalization and expropriation; • increased costs and risks of doing business and managing a workforce in a wide variety of jurisdictions; • the increased possibility of cyber threats in certain jurisdictions; • government controls limiting importation of goods; • government controls limiting payments to suppliers for imported goods; • limitations on, or impacts from, the repatriation of foreign earnings; and • exposure to wage, price and capital controls.
The potential consequences of a material cybersecurity incident and its effects include financial loss, reputational damage, litigation with third parties, theft of intellectual property, fines levied by the Federal Trade Commission or other government agencies, diminution in the value of the Company's investment in research, development and engineering, and increased cybersecurity protection and remediation costs due to the increasing sophistication and proliferation of threats, which in turn could adversely affect its competitiveness and results of operations.
The potential consequences of a material cybersecurity incident and its effects include financial loss, reputational damage, litigation with third parties, theft of intellectual property, fines levied by the Federal Trade Commission or other government agencies, diminution in the value of the Company's investment in research, development and engineering, and increased cybersecurity protection and remediation costs due to the increasing sophistication and proliferation of threats, which in turn could adversely affect the Company's competitiveness and results of operations.
Although these trade agreements generally have positive effects on trade liberalization, sourcing flexibility and cost of goods by reducing or eliminating the duties and/or quotas assessed on products manufactured in a particular country, trade agreements can also impose requirements that adversely affect the Company’s business, such as setting quotas on products that may be imported from a particular country into key markets including the U.S. or the European Union ("EU"), or making it easier for other companies to compete, by eliminating restrictions on products from countries where the Company’s competitors source products.
Although these trade agreements generally have positive effects on trade liberalization, sourcing flexibility and cost of goods by reducing or eliminating the duties and/or quotas assessed on products manufactured in a particular country, trade agreements can also impose requirements that adversely affect the Company’s business, such as setting quotas on products that may be imported from a particular country into key markets including the U.S. or the European Union ("EU"), or making it easier for other 12 companies to compete, by eliminating restrictions on products from countries where the Company’s competitors source products.
In addition, the Company’s ability to import these items in a timely and cost-effective manner may be affected by conditions at ports or issues that otherwise affect transportation and warehousing providers, such as fluctuations in freight costs, port and shipping capacity, labor disputes and shortages, severe weather due to climate change or increased homeland security requirements in the U.S. and other countries.
In addition, the Company’s ability to import these items in a timely and cost-effective manner may be affected by conditions at ports or issues that otherwise affect transportation and warehousing providers, such as fluctuations in freight costs, port and shipping capacity, labor disputes and shortages, severe weather, including severe weather due to climate change, or increased homeland security requirements in the U.S. and other countries.
In a limited number of circumstances, the magnitude of the Company’s purchases of certain items is of such significance that a change in established relationships with suppliers or increase in the costs of purchased raw materials, component parts or finished goods could result in manufacturing interruptions, delays, inefficiencies or an inability to market 16 products.
In a limited number of circumstances, the magnitude of the Company’s purchases of certain items is of such significance that a change in established relationships with suppliers or increase in the costs of purchased raw materials, component parts or finished goods could result in manufacturing interruptions, delays, inefficiencies or an inability to market products.
In addition, cybersecurity laws and regulations continue to evolve, and are increasingly demanding, both in the U.S. and globally, which adds compliance complexity and may increase costs of compliance and expose the Company to reputational damage or litigation, monetary damages, regulatory enforcement actions or fines in one or more jurisdictions.
In addition, cybersecurity laws and regulations continue to evolve, and are increasingly demanding, both in the U.S. and globally, which adds compliance complexity and may increase costs of compliance and expose the Company to reputational damage or litigation, monetary damages, regulatory enforcement actions, penalties, or fines in one or more jurisdictions.
Although the Company utilizes risk management tools, including hedging, as it deems appropriate, to mitigate a portion of potential market fluctuations in foreign currencies, there can be no assurance that such measures will result in all market fluctuation exposure being eliminated.
Although the Company 16 utilizes risk management tools, including hedging, as it deems appropriate, to mitigate a portion of potential market fluctuations in foreign currencies, there can be no assurance that such measures will result in all market fluctuation exposure being eliminated.
Despite these efforts, cybersecurity incidents (against the Company or parties with whom the Company contracts), depending on their nature and scope, could potentially result in the misappropriation, destruction, corruption or unavailability of critical data and confidential or proprietary information (the Company's or that of third parties) and the disruption of business operations.
Despite these efforts, cybersecurity incidents (against the Company or parties with whom the Company contracts), depending on their nature and scope, could potentially result in the misappropriation, disclosure, destruction, corruption or unavailability of critical data and confidential or proprietary information (the Company's or that of third parties) and the disruption of business operations.
While the Company believes any downturn in the European or emerging marketplaces might be offset to some degree by the relative stability in North America, the Company’s future growth, profitability and financial liquidity could be affected, in several ways, including, but not limited to, the following: • depressed consumer and business confidence may decrease demand for products and services; • customers may implement cost reduction initiatives or delay purchases to address inventory levels; • significant declines of foreign currency values in countries where the Company operates could impact both the revenue growth and overall profitability in those geographies; • a devaluation of foreign currencies could have an effect on the credit worthiness (as well as the availability of funds) of customers in those regions impacting the collectability of receivables; • a devaluation of foreign currencies could have an adverse effect on the value of financial assets of the Company in the effected countries; and • the impact of an event or changes to political and economic conditions (individual country default, Brexit, or break up of the Euro) could have an adverse impact on the global credit markets and global liquidity potentially impacting the Company’s ability to access these credit markets and to raise capital or disrupt global energy supply or supply chains.
While the Company believes any downturn in the European or emerging marketplaces might be offset to some degree by the relative stability in North America, the Company’s future growth, profitability and financial liquidity could be affected, in several ways, including, but not limited to, the following: • depressed consumer and business confidence may decrease demand for products and services; • customers may implement cost reduction initiatives or delay purchases to address inventory levels; • significant declines of foreign currency values in countries where the Company operates could impact both the revenue growth and overall profitability in those geographies; • a devaluation of foreign currencies could have an effect on the credit worthiness (as well as the availability of funds) of customers in those regions impacting the collectability of receivables; • a devaluation of foreign currencies could have an adverse effect on the value of financial assets of the Company in the effected countries; and • the impact of an event or changes to political and economic conditions (individual country default, or break up of the Euro) could have an adverse impact on the global credit markets and global liquidity potentially impacting the Company’s ability to access these credit markets and to raise capital or disrupting global energy supply or supply chains.
The interest coverage ratio tested for covenant compliance compares adjusted Earnings Before Interest, Taxes, Depreciation and Amortization to adjusted Interest Expense ("Adjusted EBITDA"/"Adjusted Interest Expense"); such adjustments to interest or EBITDA include, but are not limited to, removal of non-cash interest expense and stock-based compensation expense.
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"); such adjustments to interest or EBITDA include, but are not limited to, removal of non-cash interest expense and stock-based compensation expense.
The failure of one or more counterparties to the Company’s hedging arrangements to fulfill their obligations could adversely affect the Company’s results of operations. Tight capital and credit markets or the failure to maintain credit ratings could adversely affect the Company by limiting the Company’s ability to borrow or otherwise access liquidity.
The failure of one or more counterparties to the Company’s hedging arrangements to fulfill their obligations could adversely affect the Company’s results of operations. 17 Tight capital and credit markets or the failure to maintain credit ratings could adversely affect the Company by limiting the Company’s ability to borrow or otherwise access liquidity.
Low demand for new products and the inability to develop and introduce new products at favorable margins could adversely impact the Company’s performance and prospects for future growth. 13 The Company’s competitive advantage is due in part to its ability to develop and introduce new products in a timely manner at favorable margins.
Low demand for new products and the inability to develop and introduce new products at favorable margins could adversely impact the Company’s performance and prospects for future growth. The Company’s competitive advantage is due in part to its ability to develop and introduce new products in a timely manner at favorable margins.
However, any failure to achieve SKU rationalization efforts in an efficient manner or reduce inventory levels, or otherwise maintain appropriate inventory levels to meet consumer and customer demand, may expose the Company to risks of excess inventory and less marketable or obsolete inventory and could require the Company to sell excess or obsolete inventory at a discount, which could result in inventory write-offs that would negatively impact the Company’s revenues and profit margin.
Any failure to achieve SKU rationalization efforts in an efficient manner or reduce inventory levels in general, or otherwise maintain appropriate inventory levels to meet consumer and customer demand, may expose the Company to risks of excess inventory and less marketable or obsolete inventory and could require the Company to sell excess or obsolete inventory at a discount, which could result in inventory write-offs that would negatively impact the Company’s revenues and profit margin.
Strategic Risks The successful execution of the Company’s business strategy depends on its ability to recruit, retain, train, motivate, and develop employees and execute effective succession planning.
Strategic Risks 10 The successful execution of the Company’s business strategy depends on its ability to recruit, retain, train, motivate, and develop employees and execute effective succession planning.
The Company’s ability to access the credit markets, and the cost of these borrowings, is affected by the strength of its credit ratings and current 18 market conditions.
The Company’s ability to access the credit markets, and the cost of these borrowings, is affected by the strength of its credit ratings and current market conditions.
Legal, Tax, Regulatory and Compliance Risks The Company’s brands are important assets of its businesses and violation of its trademark rights by imitators, or the failure of its licensees or vendors to comply with the Company’s product quality, manufacturing requirements, marketing 19 standards, and other requirements could negatively impact revenues and brand reputation.
Legal, Tax, Regulatory and Compliance Risks The Company’s brands are important assets of its businesses and violation of its trademark rights by imitators, or the failure of its licensees or vendors to comply with the Company’s product quality, manufacturing requirements, marketing 18 standards, and other requirements could negatively impact revenues and brand reputation.
In the event the Company is not successful in effectively applying the Operations Excellence principles to its key business processes, including those of acquired businesses, its ability to compete and future earnings could be adversely affected. In addition, the Company may have to reduce prices on its products and services, or make other concessions, to stay competitive.
In the event the Company is not successful in effectively applying the Operational Excellence principles to its key business processes, including those of acquired businesses, its ability to compete and future earnings could be adversely affected. 13 In addition, the Company may have to reduce prices on its products and services, or make other concessions, to stay competitive.
Additionally, the global income tax provision can be materially impacted due to foreign currency fluctuations against the U.S. dollar since a significant amount of the Company’s earnings are generated outside the United States.
Additionally, the global income tax provision can be materially impacted due to foreign currency fluctuations against the U.S. dollar since a significant amount of the Company’s earnings are generated outside the U.S.
The Company’s ability to find qualified suppliers who meet its standards, including a majority having carbon emission reduction targets, and supply products in a timely, cost-effective and efficient manner is a significant challenge with the increasing demand from customers, especially with respect to goods sourced from outside the U.S.
The Company’s ability to find qualified suppliers who meet its standards, including a majority of suppliers by spend having carbon emission reduction targets, and supply products in a timely, cost-effective and efficient manner is a significant challenge with the increasing demand from customers, especially with respect to goods sourced from outside the U.S.
As the world moves towards a lower-carbon economy and as other industries begin to adopt similar battery technology for use in their products or increase their current consumption of battery technology, the increased demand could place capacity constraints on the Company’s supply chain.
In addition, many of the Company’s products incorporate battery technology. As the world moves towards a lower-carbon economy and as other industries begin to adopt similar battery technology for use in their products or increase their current consumption of battery technology, the increased demand could place capacity constraints on the Company’s supply chain.
In recent years, changes in U.S. policy regarding international trade, including import and export regulation and international trade agreements, have negatively impacted the Company’s business. For example, in 2018 the United States imposed tariffs on steel and aluminum as well as on goods imported from China and certain other countries, which resulted in retaliatory tariffs by China and other countries.
Changes in U.S. policy regarding international trade, including import and export regulation and international trade agreements, have negatively impacted the Company’s business. For example, in 2018 the U.S. imposed tariffs on steel and aluminum as well as on goods imported from China and certain other countries, which resulted in retaliatory tariffs by China and other countries.
Specifically, the Company has an interest coverage covenant that must be maintained to permit continued access to its committed revolving credit facilities.
The Company has an interest coverage covenant that must be maintained to permit continued access to its committed credit facilities.
The Company may not be able to compete effectively on all of these fronts and with all of its competitors, and the failure to do so could have a material adverse effect on its sales and profit margins.
The Company may not be able to compete effectively on all of these fronts and with all of its competitors, and the failure to do so could have a material adverse effect on its sales and profits.
In addition, the countries in which the Company’s products and materials are manufactured or imported from (including importation into the United States of the Company's products manufactured overseas) may from time to time impose additional quotas, duties, tariffs or other restrictions on its imports (including restrictions on manufacturing operations) or adversely modify existing restrictions.
In addition, the countries in which the Company’s products and materials are manufactured or imported from (including importation into the U.S. of the Company's products manufactured overseas) may from time to time impose additional quotas, duties, tariffs or other restrictions on its imports (including restrictions on manufacturing operations) or adversely modify existing restrictions.
The Company's facilities, supply chains, distribution systems, and information technology systems are subject to catastrophic loss due to natural disasters or other disruptions, including hurricanes and floods, power outages, fires, explosions, terrorism, equipment failures, sabotage, cyber incidents, any potential effects of climate change and adverse weather conditions, labor disputes, critical supply failure, inaccurate downtime forecast, political disruption, public health crises, like a regional or global pandemic, and other reasons, which can result in undesirable consequences, including financial losses and damaged relationships with customers.
The Company's facilities, supply chains, distribution systems, and information technology systems are subject to catastrophic loss due to natural disasters or other disruptions, including hurricanes and floods, power outages, fires, explosions, terrorism or other geopolitical tensions, equipment failures, sabotage, cybersecurity incidents, any potential effects of climate change and adverse weather conditions, labor disputes, critical supply failure, inaccurate downtime forecast, political disruption, public health crises, like a regional or global pandemic such as COVID-19, and other reasons, which can result in undesirable consequences, including financial losses and damaged relationships with customers.
Poor quality or an insecure supply chain, may also adversely affect the reliability and reputation of the Company. The effects of climate change, such as extreme weather conditions, could also place capacity constraints on the Company’s supply chain.
Poor quality or an insecure supply chain, may also adversely affect the reliability and reputation of the Company. The effects of extreme weather conditions, including as a result of climate change, could also place capacity constraints on the Company’s supply chain.
From time to time, the Company enters into arrangements with financial institutions to hedge exposure to fluctuations in currency and interest rates, including forward contracts, options and swap agreements. The Company may incur significant losses from hedging activities due to factors such as demand volatility.
The Company is exposed to counterparty risk in its hedging arrangements. From time to time, the Company enters into arrangements with financial institutions to hedge exposure to fluctuations in currency and interest rates, including forward contracts, options and swap agreements. The Company may incur significant losses from hedging activities due to factors such as demand volatility.
The cost and operational consequences of implementing, maintaining and enhancing these measures could increase significantly to overcome increasingly intense, complex, and sophisticated global cyber threats.
The cost and operational consequences of implementing, maintaining and enhancing these measures could increase significantly to overcome increasingly intense, complex, and sophisticated cybersecurity threats.
Cybersecurity incidents could disrupt business operations, result in the loss of critical and confidential information, and adversely impact the Company's reputation and results of operations.
Cybersecurity incidents could disrupt business operations, result in the loss of critical and confidential information, and adversely impact the Company's reputation, operating results, and financial condition.
Changes in value-added tax rebates, currently available to the Company or to its suppliers, could also increase the costs of the Company’s manufactured products, as well as purchased products and components, and could adversely affect the Company’s results. In addition, many of the Company’s products incorporate battery technology.
Changes in value-added tax rebates, currently available to the Company or to its suppliers, could also increase the costs of the Company’s manufactured products, as well as purchased products and components, and could adversely affect the Company’s results.
Failure to maintain credit ratings that are acceptable to investors may adversely affect the cost and other terms upon which the Company is able to obtain financing, as well as its access to the capital markets.
Failure to maintain credit ratings that are acceptable to investors may adversely affect the cost and other terms upon which the Company is able to obtain financing, as well as its access to the capital markets. The Company is exposed to credit risk on its accounts receivable.
During 2022, the Company made cash contributions to its defined benefit plans of approximately $32 million and expects to contribute $37 million to its defined benefit plans in 2023. There can be no assurance that the value of the defined benefit plan assets, or the investment returns on those plan assets, will be sufficient in the future.
During 2023, the Company made cash contributions to its defined benefit plans of approximately $42 million and expects to contribute $35 million to its defined benefit plans in 2024. There can be no assurance that the value of the defined benefit plan assets, or the investment returns on those plan assets, will be sufficient in the future.
Risks associated with business combinations and investment transactions include the following, any of which could adversely affect the Company's financial results, including its effective tax rate: • the failure to identify the most suitable candidates for acquisitions and to close on such acquisitions within desired time frames and at a reasonable cost; • difficulty in finding buyers or alternative exit strategies on acceptable terms in a timely manner, or disposing of a business at a price or on terms that are less desirable than the Company had anticipated; • the ability to conduct and evaluate the results of due diligence with respect to business combinations and investment transactions; • the failure to identify significant issues with a target company’s product quality, financial disclosures, accounting practices or internal control deficiencies or the factors necessary to estimate reasonably accurate costs, timing and other matters, and the failure to identify, or accurately assess the risks of, historical practices of target companies that would create liability or other exposures for the Company if they continue post-completion or as a result of successor liability; • the difficulties and cost in obtaining any necessary regulatory or government approvals on acceptable terms and any delay from the inability to satisfy pre-closing conditions; • the anticipated additional revenues from the acquired companies do not materialize, despite extensive due diligence; • the acquired businesses may lose market acceptance or profitability; • the impact of divestitures on the Company's revenue growth may be larger than projected, as the Company may experience greater dis-synergies than expected; • the diversion of Company management’s attention and other resources; • incurring significant restructuring charges and amortization expense, assuming liabilities, ongoing or new lawsuits related to the transaction or otherwise or pre-closing regulatory violations of the acquired business, potential impairment of acquired goodwill and other intangible assets, and increasing the Company's expenses and working capital requirements; • continued financial involvement in a divested business, such as through continuing equity ownership, guarantees, indemnities or other financial obligations; and • the loss of key personnel, distributors, clients or customers of acquired companies.
Risks associated with business combinations and investment transactions include the following, any of which could adversely affect the Company's financial results, including its effective tax rate: • the failure to identify the most suitable candidates for acquisitions and to close on such acquisitions within desired time frames and at a reasonable cost; • difficulty in finding buyers or alternative exit strategies on acceptable terms in a timely manner, or disposing of a business at a price or on terms that are less desirable than the Company had anticipated; • the ability to conduct and evaluate the results of due diligence with respect to business combinations and investment transactions; • the failure to identify significant issues with a target company’s product quality, financial disclosures, accounting practices or internal control deficiencies or the factors necessary to estimate reasonably accurate costs, timing and other matters, and the failure to identify, or accurately assess the risks of, historical practices of target companies that would create liability or other exposures for the Company if they continue post-completion or as a result of successor liability; • the difficulties and cost in obtaining any necessary regulatory or government approvals on acceptable terms and any delay from the inability to satisfy pre-closing conditions; • the anticipated additional revenues from the acquired companies do not materialize, despite extensive due diligence; • the acquired businesses may lose market acceptance or profitability; • difficulties in retaining existing or attracting new business and operational relationships, including with customers, suppliers and other counterparties; • the impact of divestitures on the Company's revenue growth may be larger than projected, as the Company may experience greater dis-synergies than expected; • the diversion of Company management’s attention and other resources; • incurring significant restructuring charges and amortization expense, assuming liabilities, ongoing or new lawsuits related to the transaction or otherwise or pre-closing regulatory violations of the acquired business, potential impairment of acquired goodwill and other intangible assets, and increasing the Company's expenses and working capital requirements; • continued financial involvement in a divested business, such as through continuing equity ownership, guarantees, indemnities or other financial obligations; • increased volatility and market vulnerability as a result of a more focused portfolio following completion of business combinations and investment transactions; and • the loss of key personnel, distributors, clients or customers of acquired companies and difficulty in maintaining employee morale. 11 In addition, the current and the proposed changes to the U.S. and foreign regulatory approval process and requirements in connection with an acquisition or divestiture may jeopardize, delay or reduce the anticipated benefits of the transaction to the Company.
For example, steel and copper are critical to the design of the Company's products and some countries, including Chile and Australia, where steel and copper are sourced from have experienced and are expected to continue to experience severe weather due to climate change.
For example, steel and copper are critical to the design of the Company's products and some countries, including Chile and Australia from which steel and copper are sourced, have experienced and are expected to continue to experience severe weather.
Operations Excellence, one element of the SBD Operating Model, is a continuous operational improvement process applied to many aspects of the Company’s business such as procurement, quality in manufacturing, maximizing customer fill rates, integrating acquisitions and other key business processes.
Operational Excellence, one element of the supply chain transformation, is a continuous operational improvement process applied to many aspects of the Company’s business such as procurement, quality in manufacturing, maximizing customer fill rates, integrating acquisitions and other key business processes.
Additionally, other countries have enacted or are enacting data localization laws that require data to stay within their borders. In many cases, these laws and regulations apply not only to transfers between unrelated third parties but also to transfers between the Company and its subsidiaries.
Such failure to properly respond could also result in similar exposure to liability. Additionally, other countries have enacted or are enacting data localization laws that require data to stay within their borders. In many cases, these laws and regulations apply not only to transfers between unrelated third parties but also to transfers between the Company and its subsidiaries.
The fair value of the defined benefit plan assets on December 31, 2022 was approximately $1.8 billion.
The fair value of the defined benefit plan assets on December 30, 2023 was approximately $1.8 billion.
Lastly, it is possible that future income tax legislation, including the Organization for Economic Cooperation and Development (“OECD”) Global Minimum Tax, may be enacted that could have a material impact on the Company’s worldwide income tax provision, cash tax liability, and effective tax rate beginning with the period that such legislation becomes enacted.
Lastly, it is possible that future income tax legislation, may be enacted that could have a material impact on the Company’s worldwide income tax provision, cash tax liability, and effective tax rate beginning with the period that such legislation becomes enacted.
In addition, the Company has a number of key suppliers in South Korea, China and Taiwan. Any future tensions or conflicts in such regions could cause material disruptions in the Company's supply chain which could, in turn, cause product shortages, delays in delivery and/or increases in the Company's cost incurred to produce and deliver products to its customers.
Specifically, the Company sources materials from South Korea, China and Taiwan, and any future tensions or conflicts in such regions could cause material disruptions in the Company's supply chain which could, in turn, cause product shortages, delays in delivery and/or increases in the Company's cost incurred to produce and deliver products to its customers.
The Company has invested and continues to invest in risk management and information security and data privacy measures in order to protect its systems and data, including employee training, organizational investments, incident response plans, table top exercises and technical defenses.
The Company has invested and continues to invest in risk management and information security and data privacy measures in order to protect its systems and data, including employee and critical service provider training, organizational investments, incident response plans, tabletop exercises, technical defenses and defensive product software designs.
The Company is exposed to risks related to compliance with data privacy laws. 20 To conduct its operations, the Company regularly moves data across national borders, and consequently is subject to a variety of continuously evolving and developing laws and regulations in the United States and abroad regarding privacy, data protection and data security.
To conduct its operations, the Company regularly moves data across national borders, and consequently is subject to a variety of continuously evolving and developing laws and regulations in the U.S. and abroad regarding privacy, data protection and data security.
Increased public awareness and concern regarding global climate change may result in more international, regional and/or federal requirements or other stakeholder expectations that could mandate more restrictive or expansive standards, more prescriptive reporting of environmental, social and governance metrics than the voluntary commitments the Company adopted, or require 21 related changes on a more accelerated time frame than the Company anticipates.
Increased international, regional, state and/or federal requirements or other stakeholder expectations could mandate more restrictive or expansive standards, more prescriptive reporting of environmental, social and governance metrics than the voluntary commitments the Company adopted, or require related changes on a more accelerated time frame than the Company anticipates.
The Company currently purchases renewable energy certificates (“RECs”) to mitigate the potential impact of carbon tax and is also assessing expanding its use of solar panels as an alternative energy source.
The Company currently purchases renewable energy certificates (“RECs”) to reduce Scope 2 emissions and is also assessing expanding its use of solar panels as an alternative energy source.
The Company's reputation and brand and its ability to attract new customers could also be adversely impacted if the Company fails, or is perceived to have failed, to properly respond to security breaches of its or third party’s information technology systems. Such failure to properly respond could also result in similar exposure to liability.
The Company's reputation and brand and its ability to attract new customers could also be adversely impacted if the Company fails, or is perceived to have failed, to properly respond to breaches resulting from its management of consumer data or of its or third party’s information technology systems.
Privacy Shield, will continue to require changes to certain business practices, thereby increasing costs, or may result in negative publicity, require significant management time and attention, and may subject the Company to remedies that may harm its business, including fines or demands or orders that the Company modify or cease existing business practices.
Privacy laws that may be implemented in the future, including laws regarding data and generative artificial intelligence, and court decisions impacting activities across borders, will continue to require changes to certain business practices, thereby increasing costs, or may result in negative publicity, require significant management time and attention, and may subject the Company to remedies that may harm its business, including fines or demands or orders that the Company modify or cease existing business practices.
The Company has undertaken restructuring and cost-reduction actions, the savings of which may be mitigated by many factors, including economic weakness, inflation, competitive pressures, higher labor costs and decisions to increase costs in areas such as sales promotion or research and development above levels that were otherwise assumed. 15 In the third quarter of 2022, the Company initiated a supply chain transformation aiming to improve fill rates and better match the needs of its customers, while improving gross margins.
The Company has undertaken restructuring and cost-reduction actions, the savings of which may be mitigated by many factors, including economic weakness, inflation, competitive pressures, higher labor costs and decisions to increase costs in areas such as sales promotion or research and development above levels that were otherwise assumed.
The Company has significant operations outside of the United States, which are subject to political, legal, economic and other risks arising from operating outside of the United States. The Company generates a significant portion of its total revenue outside of the United States.
The Company has significant operations outside of the U.S., which are subject to political, legal, economic and other risks arising from operating outside of the U.S. The Company has significant operations outside of the U.S.
The Company also faces risks related to the transition to a lower-carbon economy, such as its ability to successfully adopt new technology, meet market-driven demands for carbon neutral and renewable energy technology, or to comply with more stringent and increasingly complex environmental regulations or requirements for the Company's manufacturing facilities and business operations, increased prices related to freight and shipping costs and other permitting requirements.
If environmental laws or regulations are either changed or adopted and impose significant operational restrictions and compliance requirements on the Company, they may have a material adverse effect on the Company’s business, access to credit, capital expenditures, operating results and financial condition. 20 The Company also faces risks related to the transition to a lower-carbon economy, such as its ability to successfully adopt new technology, meet market-driven demands for low carbon, carbon neutral and renewable energy technology, or to comply with more stringent and increasingly complex environmental regulations or requirements for the Company's manufacturing facilities and business operations, increased prices related to freight and shipping costs and other permitting requirements.
The Company has certain significant customers, particularly home centers and major retailers. In 2022, the two largest customers comprised approximately 28% of consolidated net sales, with U.S. and international mass merchants and home centers collectively comprising approximately 41% of consolidated net sales.
In 2023, the two largest customers comprised approximately 27% of consolidated net sales, with U.S. and international mass merchants and home centers collectively comprising approximately 42% of consolidated net sales.
The Company is exposed to credit risk on its accounts receivable. The Company’s outstanding trade receivables are not generally covered by collateral or credit insurance.
The Company’s outstanding trade receivables are not generally covered by collateral or credit insurance.
Global cybersecurity threats and incidents can range from uncoordinated individual attempts to gain unauthorized access to information technology ("IT") systems to sophisticated and targeted measures known as advanced persistent threats, directed at the Company, its products, its customers and/or its third-party service providers, including cloud providers.
The Company’s information systems and data may be vulnerable to cybersecurity threats and incidents which can include uncoordinated individual attempts to gain unauthorized access to information technology ("IT") systems, sophisticated and targeted measures known as advanced persistent threats, breaches due to human error, malfeasance, or other cybersecurity incidents directed at the Company, its products, services and technologies, including those leveraging “Internet of Things” capabilities, its customers and/or its third-party service providers, including cloud providers.
Industry and Economic Risks The Company’s results of operations could be negatively impacted by inflationary or deflationary economic conditions which could affect the ability to obtain raw materials, component parts, freight, energy, labor and sourced finished goods in a timely and cost-effective manner, as well as lead to changes in interest rate environments which impact its cost of funds, the general strength of the economy and demand for its products in the market.
Disruptions to its information technology infrastructure from system failures, shutdowns, power outages, telecommunication or utility failures, cybersecurity incidents, and other events, including disruptions at its cloud computing, server, systems and other third party IT service providers, could interfere with its operations, interrupt production and shipments, damage customer and business partner relationships, and negatively impact its reputation. 15 Industry and Economic Risks The Company’s results of operations could be negatively impacted by inflationary or deflationary economic conditions which could affect the ability to obtain raw materials, component parts, freight, energy, labor and sourced finished goods in a timely and cost-effective manner, as well as lead to changes in interest rate environments which impact its cost of funds, the general strength of the economy and demand for its products in the market.
The report, rumor or assumption regarding a potential breach may have similar results, even if no breach has been attempted or occurred. Any of the foregoing may have a material adverse effect on the Company’s business, operating results and financial condition.
The report, rumor, assumption, or perception of a potential or suspected cybersecurity incident may have similar results, even if no such incident has been attempted or occurred. Any of the foregoing may have a material adverse effect on the Company’s reputation, operating results and financial condition. 19 The Company is exposed to risks related to compliance with data privacy laws.
A severe weather event in these countries could cause disruptions in the Company's supply chain which could, in turn, cause product shortages, delays in delivery and/or increases in the Company's cost incurred to produce and deliver products to its customers. 12 Changes in customer preferences, the inability to maintain mutually beneficial relationships with large customers, inventory reductions by customers, and the inability to penetrate new channels of distribution could adversely affect the Company’s business.
A severe weather event in these countries could cause disruptions in the Company's supply chain which could, in turn, cause product shortages, delays in delivery and/or increases in the Company's cost incurred to produce and deliver products to its customers.
Lead times for these items vary significantly and may be further impacted by global shortages of critical components. Global supply chain constraints in the wake of the COVID-19 pandemic limited the Company's visibility into availability and lead times for products and their component parts and raw materials but such constraints have softened in the second half of 2022.
Lead times for these items vary significantly and may be further impacted by global shortages of critical components. Global supply chain constraints in the wake of geopolitical tensions and conflicts have, and could again, adversely impact the availability and lead times for products, component parts and raw materials and thus negatively impact the Company’s results of operations.
As a result of the Black and Decker merger and other acquisitions, the Company has approximately $8.5 billion of goodwill, approximately $2.5 billion of indefinite-lived trade names and approximately $2.0 billion of net definite-lived intangible assets on December 31, 2022.
As of December 30, 2023, the Company has approximately $8.0 billion of goodwill, approximately $2.4 billion of indefinite-lived trade names and approximately $1.6 billion of net definite-lived intangible assets.
The Company generates approximately 37% of its revenues outside the U.S., including 15% from Europe and 12% from various emerging market countries. Each of the Company’s segments generates sales in these marketplaces.
Uncertainty about the financial stability of economies outside the U.S. could have a significant adverse effect on the Company's business, results of operations and financial condition. The Company generates approximately 38% of its revenues outside the U.S., including 16% from Europe and 12% from various emerging market countries. Each of the Company’s segments generates sales in these marketplaces.
The Company’s reputation, business, revenue and results of operations could be materially and adversely affected if it is unable to recruit, retain, train, motivate, and develop employees and successfully execute organizational change and management transitions at leadership levels. 10 The Company’s acquisitions, exiting of businesses, divestitures, strategic investments and alliances and joint ventures, as well as general business reorganizations, may result in financial results that are different than expected and certain risks for its business and operations.
The Company’s reputation, business, revenue and results of operations could be materially and adversely affected if it is unable to recruit, retain, train, motivate, and develop employees and successfully execute organizational change and management transitions at leadership levels.
The Company’s long-term growth plans are dependent on, among other things, the availability of funding to support corporate initiatives and the ability to increase sales of existing product lines.
The Company’s long-term growth plans are dependent on, among other things, the availability of funding to support corporate initiatives and the ability to increase sales of existing product lines. While the Company has not encountered financing difficulties to date, the capital and credit markets have experienced extreme volatility and disruption in the past and may again in the future.
The Company’s failure to continue to successfully avoid, manage, defend, litigate and accrue for claims and litigation could negatively impact its results of operations or cash flows.
If the Company is unable to mitigate any possible supply constraints or related increased costs or drive alternative technology through innovation, its profitably and financial results could be negatively impacted. The Company’s failure to continue to successfully avoid, manage, defend, litigate and accrue for claims and litigation could negatively impact its results of operations or cash flows.
The potential issuance of such securities may limit the Company’s ability to implement elements of its business strategy and may have a dilutive effect on earnings. 17 As described in Note H, Long-Term Debt and Financing Arrangements , of the Notes to Consolidated Financial Statements in Item 8 , the Company has a five-year $2.5 billion committed credit facility, a $1.5 billion syndicated 364-Day Credit Agreement, and a $0.5 billion revolving credit loan.
As described in Note H, Long-Term Debt and Financing Arrangements , of the Notes to Consolidated Financial Statements in Item 8 , the Company has a five-year $2.5 billion committed credit facility and a $1.5 billion syndicated 364-Day Credit Agreement. No amounts were outstanding against any of these facilities on December 30, 2023.
There continues to be a lack of consistent climate legislation, which creates economic and regulatory uncertainty.
Climate change legislation or regulations and changing market trends in response to climate change may adversely affect the Company's business. There continues to be a lack of consistent climate legislation, which creates economic and regulatory uncertainty.
These alternatives may not be available on short notice or could result in higher transit costs, which could have an adverse impact on the Company’s business and financial condition. The Company also relies on its ability to maintain inventory levels appropriate to meet consumer and customer demand.
These issues have delayed, and could delay in the future, importation of products or require the Company to locate alternative ports or warehousing providers to avoid disruption to customers. These alternatives may not be available on short notice or could result in higher transit costs, which could have an adverse impact on the Company’s business and financial condition.
The Company attempts to protect its intellectual property rights through a combination of patent, trademark, copyright and trade secret laws, as well as licensing agreements and third-party nondisclosure and assignment agreements. The Company’s trademarks have a reputation for quality and value and are important to the Company's success and competitive position.
The Company attempts to protect its intellectual property rights through a combination of patent, trademark, copyright and trade secret laws, as well as licensing agreements and third-party nondisclosure and assignment agreements; however, there can be no assurances that these resources will adequately protect the Company’s intellectual property rights and deter misappropriation or improper use of its technology.
For example, in 2022, the Company completed the divestitures of its Security and Oil & Gas businesses. The Company may make additional divestitures or pursue acquisitions in the future .
The Company may make additional divestitures or pursue acquisitions in the future .
Any determination that the Company has violated anti-bribery or anti-corruption laws or sanctions regulations could have a material adverse effect on the Company’s business, operating results and financial condition. Compliance with international and U.S. laws and regulations that apply to the Company’s international operations increases the cost of doing business in foreign jurisdictions.
Additionally, compliance with international and U.S. laws and regulations that apply to the Company’s international operations increases the cost of doing business in foreign jurisdictions.
No amounts were outstanding against any of these facilities on December 31, 2022. As of December 31, 2022, the Company had $7.5 billion of indebtedness, including $5.4 billion of principal and $2.1 billion of commercial paper borrowings.
As of December 30, 2023, the Company had $7.3 billion of indebtedness, including $6.2 billion of principal and $1.1 billion of commercial paper borrowings.
While the Company has experienced, and expects to continue to experience, these types of threats and incidents, none of them to date have been material to the Company. The Company deploys measures which align to industry accepted frameworks to deter, prevent, detect, respond to, and mitigate these threats.
The Company deploys measures which leverage industry accepted frameworks to deter, prevent, detect, respond to, and mitigate these threats.
The minimum interest coverage ratio will revert back to 3.5 times for periods after the second quarter of 2024. Management does not believe it is reasonably likely the Company will breach this covenant. Failure to maintain these ratios could adversely affect further access to liquidity. Future instruments and agreements governing indebtedness may impose other restrictive conditions or covenants.
The minimum interest coverage ratio will revert back to 3.5 times for periods after the second quarter of 2024. The Company was compliant with its debt covenant requirements in each of the 2023 quarterly measurement periods. Management does not believe it is reasonably likely the Company will breach this covenant.
During 2022, the interest coverage ratio must not be less than 3.5 times and is computed quarterly, on a rolling twelve months (last twelve months) basis. Under this covenant definition, the interest coverage ratio was 8.6 times EBITDA or higher in each of the 2022 quarterly measurement periods.
Subject to certain adjustments for portions of the 2023 and 2024 fiscal year periods as detailed below, the interest coverage ratio must not be less than 3.5 times and is computed quarterly, on a rolling twelve months (last twelve months) basis.
All of these evolving compliance and operational requirements impose significant costs that are likely to increase over time. Privacy laws that may be implemented in the future, and court decisions impacting activities across borders, including the Schrems II decision invalidating the EU - U.S.
All of these evolving compliance and operational requirements impose significant costs that are likely to increase over time.
Such covenants could restrict the Company in the manner in which it conducts business and operations as well as in the pursuit of its business strategy. The Company is exposed to counterparty risk in its hedging arrangements.
Failure to maintain these ratios could adversely affect further access to liquidity. Future instruments and agreements governing indebtedness may impose other restrictive conditions or covenants. Such covenants could restrict the Company in the manner in which it conducts business and operations as well as in the pursuit of its business strategy.
While the Company has not encountered financing difficulties to date, the capital and credit markets have experienced extreme volatility and disruption in the past (including in connection with COVID-19) and may again in the future. Market conditions could make it more difficult for the Company to borrow or otherwise obtain the cash required for significant new corporate initiatives.
Market conditions could make it more difficult for the Company to borrow or otherwise obtain the cash required for significant new corporate initiatives.
The Company is actively addressing this dynamic through the Global Cost Reduction Program implemented in the third quarter of 2022, which includes an initiative to reduce inventory levels by curtailing production and by reducing complexity through SKU rationalization. This initiative resulted in $775 million of inventory reduction in the second half of 2022.
The Company also relies on its ability to maintain inventory levels appropriate to meet consumer and customer demand. The Company is focused on optimizing inventory levels via improved supply chain conditions and strategic inventory management through the Global Cost Reduction Program implemented in mid-2022, which includes an initiative to reduce inventory levels by reducing complexity through SKU rationalization.
The Company is exposed to and becomes involved in various litigation matters arising out of the ordinary routine conduct of its business, including, from time to time, actual or threatened litigation relating to such items as commercial transactions, product liability, workers compensation, arrangements between the Company and its distributors, franchisees or vendors, intellectual property claims and regulatory actions.
The Company is exposed to and becomes involved in various legal proceedings, claims, disputes and investigations arising out of the conduct of its business, including the matters described in
This transformation will involve significant investment from the Company over the next two to three years, and the success and anticipated cost savings from this transformation are not assured.
In mid-2022, the Company initiated a supply chain transformation designed to return adjusted gross margins to historical 35%+ levels by improving fill rates and better matching inventory with customer demand. This transformation has and will continue to involve significant investment from the Company, and the success and anticipated cost savings from this transformation are not assured.
Removed
In addition, the current and the proposed changes to the U.S. and foreign regulatory approval process and requirements in connection with an acquisition or divestiture may jeopardize, delay or reduce the anticipated benefits of the transaction to the Company.
Added
The Company’s acquisitions, exiting of businesses, divestitures, strategic investments and alliances and joint ventures, as well as general business reorganizations, may result in financial results that are different than expected and certain risks for its business and operations.
Removed
In 2022 and 2021, the Company experienced significantly higher freight costs compared to freight costs incurred in 2020. These issues have delayed, and could delay in the future, importation of products or require the Company to 11 locate alternative ports or warehousing providers to avoid disruption to customers.
Added
Other potential consequences arising from the further escalation of conflicts and global geopolitical tensions cannot be predicted.

… 62 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

3 edited+25 added−0 removed0 unchanged
Biggest changeThe buildings are in good condition, suitable for their intended use, adequate to support the Company’s operations, and generally fully utilized.
Biggest changeThe buildings are in good condition, suitable for their intended use, adequate to support the Company’s operations, and generally fully utilized. Of the 121 facilities above, there are two owned and three leased facilities included in Industrial, which relate to the recently announced pending divestiture of the Infrastructure business. 24 ITEM 3.
ITEM 2. PROPERTIES As of December 31, 2022, the Company and its subsidiaries owned or leased significant facilities used for manufacturing, distribution and sales offices in 21 states and 22 countries. The Company leases its corporate headquarters in New Britain, Connecticut.
ITEM 2. PROPERTIES As of December 30, 2023, the Company and its subsidiaries owned or leased significant facilities used for manufacturing, distribution and sales offices i n 21 states and 22 count ries. The Company leases its corporate headquarters in New Britain, Connecticut.
The Company has 121 facilities including its corporate headquarters that are larger than 100,000 square feet, as follows: Owned Leased Total Tools & Outdoor 52 44 96 Industrial 15 7 22 Corporate 2 1 3 Total 69 52 121 The combined size of these facilities is approximately 34 million square feet.
The Comp any has 121 facilities including its corporate headquarters that are larger than 100,000 square feet, as follows: Owned Leased Total Tools & Outdoor 49 46 95 Industrial 15 8 23 Corporate 2 1 3 Total 66 55 121 The combined size of these facilities is approxima tely 36 milli on square feet.
Added
LEGAL PROCEEDINGS Government Investigations On January 19, 2024, the Company was notified by the Compliance and Field Operations Division (the “Division”) of the Consumer Product Safety Commission that the Division intends to recommend the imposition of a civil penalty of approximately $32 million for alleged untimely reporting in relation to certain utility bars and miter saws that were subject to voluntary recalls in September 2019 and March 2022, respectively.
Added
The Company is currently evaluating and believes there are defenses to the Division’s claims, and the Company is cooperating with the Division.
Added
However, given the early stage of this matter, at this time, the Company is not in a position to assess the likelihood of any potential loss or adverse effect on its financial condition or to estimate the amount of potential loss, if any, from this matter.
Added
As previously disclosed, the Company has identified certain transactions relating to its international operations that may raise compliance questions under the FCPA and voluntarily disclosed this information to the U.S. Department of Justice (“DOJ”) and the SEC in January 2023. The Company is cooperating with both agencies in their investigations of these transactions (the “FCPA Matters”).
Added
Currently, the Company does not believe that the FCPA Matters will have a material impact on its financial condition or results of operations, although it is possible that a loss related to the FCPA Matters may be incurred.
Added
Given the ongoing nature of the FCPA Matters, management cannot predict the duration, scope, or outcome of the DOJ’s or SEC’s investigations or estimate the potential magnitude of any such loss or range of loss, or the cost of the ongoing investigations.
Added
Any determination that certain transactions relating to the Company’s international operations were not in compliance with the FCPA could result in the imposition of fines, civil or criminal penalties, equitable remedies, including disgorgement, injunctive relief, or other sanctions against the Company. The Company also may become a party to litigation or other legal proceedings over the FCPA Matters described above.
Added
The Company is committed to upholding the highest standards of corporate governance and is continuously focused on ensuring the effectiveness of its policies, procedures, and controls. The Company is in the process, with the assistance of professional advisors, of reviewing and further enhancing relevant policies, procedures, and controls.
Added
Class Action Litigation As previously disclosed, on March 24, 2023, a putative class action lawsuit titled Naresh Vissa Rammohan v.
Added
Stanley Black & Decker, Inc., et al., Case No. 3:23-cv-00369-KAD (the “ Rammohan Class Action”), was filed in the United States District Court for the District of Connecticut against the Company and certain of the Company’s current and former officers and directors.
Added
The complaint was filed on behalf of a purported class consisting of all purchasers of Stanley Black & Decker common stock between October 28, 2021 and July 28, 2022, inclusive.
Added
The complaint asserts violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 based on allegedly false and misleading statements related to consumer demand for the Company’s products amid changing COVID-19 trends and macroeconomic conditions. The complaint seeks unspecified damages and an award of costs and expenses.
Added
On October 13, 2023, Lead Plaintiff General Retirement System of the City of Detroit filed an Amended Complaint that asserts the same claims and seeks the same forms of relief as the original complaint.
Added
The Company intends to vigorously defend this action in all respects and on December 14, 2023 filed a motion to dismiss the Amended Complaint in its entirety. Briefing on that motion is expected to conclude in April 2024.
Added
Given the early stage of this litigation, at this time, the Company is not in a position to assess the likelihood of any potential loss or adverse effect on its financial condition or to estimate the amount or range of potential losses, if any, from this action.
Added
Derivative Actions As previously disclosed, on August 2, 2023 and September 20, 2023, derivative complaints were filed in the United States District Court for the District of Connecticut, titled Callahan v. Allan, et al ., Case No. 3:23-cv-01028-OAW (the “ Callahan Derivative Action”) and Applebaum v.
Added
Allan, et al. , Case No. 3:23-cv-01234-OAW (the “ Applebaum Derivative Action”), respectively, by putative stockholders against certain current and former directors and officers of the Company premised on the same allegations as the Rammohan Class Action.
Added
The Callahan and Applebaum Derivative Actions were consolidated by Court order on November 6, 2023 and defendants’ responses to both complaints have been stayed pending the disposition of any motions to dismiss in the Rammohan Class Action. The individual defendants intend to vigorously defend the Callahan and Applebaum Derivative Actions in all respects.
Added
However, given the early stage of this litigation, at this time, the Company is not in a position to assess the likelihood of any potential loss or adverse effect on its financial condition or to estimate the amount or range of potential losses, if any, from these actions.
Added
On October 19, 2023, a derivative complaint was filed in Connecticut Superior Court, titled Vladimir Gusinsky Revocable Trust v. Allan, et al ., Docket Number HHBCV236082260S, by a putative stockholder against certain current and former directors and officers of the Company.
Added
Plaintiff seeks to recover for alleged breach of fiduciary duties and unjust enrichment under Connecticut state law premised on the same allegations as the Rammohan Class Action.
Added
By Court order on November 11, 2023, 25 the Connecticut Superior Court granted the parties’ motion to stay defendants’ response to the complaint pending the disposition of any motions to dismiss in the Rammohan Class Action. The individual defendants intend to vigorously defend this action in all respects.
Added
However, given the early stage of this litigation, at this time, the Company is not in a position to assess the likelihood of any potential loss or adverse effect on its financial condition or to estimate the amount or range of potential losses, if any, from this action.
Added
Other Actions In addition to the matters above, in the normal course of business, the Company is involved in various lawsuits and claims, including product liability, environmental, intellectual property, contract and commercial, advertising, employment and distributor claims, and administrative proceedings.
Added
The Company does not expect that the resolution of these matters occurring in the normal course of business will have a materially adverse effect on the Company’s consolidated financial position, results of operations or liquidity.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

0 edited+22 added−8 removed0 unchanged
Removed
ITEM 3. LEGAL PROCEEDINGS As previously disclosed, the Company has identified that certain expenses it incurred in previous years constituted undisclosed perquisites. The Company has voluntarily disclosed this information to the U.S. Securities and Exchange Commission (“SEC”) and is cooperating with the SEC’s investigation of this matter.
Added
Item 3. Legal Proceedings in Part I of this Annual Report on Form 10-K and other, actual or threatened proceedings, claims, disputes or investigations relating to such items as securities laws, anti-trust laws, commercial transactions, product liability, workers compensation, employee benefits plans, arrangements between the Company and its distributors, franchisees or vendors, intellectual property claims and regulatory actions.
Removed
Also, the Company has identified certain transactions relating to its international operations that may raise compliance questions under the U.S. Foreign Corrupt Practices Act (“FCPA”) and has voluntarily disclosed this information to the U.S. Department of Justice (“DOJ”) and the SEC. The Company is cooperating with both agencies in their investigations.
Added
In addition, the Company is subject to environmental laws in each jurisdiction in which business is conducted. Some of the Company’s products incorporate substances that are regulated in some jurisdictions in which it conducts manufacturing operations. The Company has been, and could be in the future, subject to liability if it does not comply with these regulations.
Removed
The Company is committed to upholding the highest standards of corporate governance and is continuously focused on ensuring the effectiveness of its policies, procedures, and controls. The Company is in the process, with the assistance of professional advisors, of reviewing and further enhancing relevant policies, procedures, and controls.
Added
In addition, the Company is currently being, and may in the future be, held responsible for remedial investigations and clean-up costs resulting from the discharge of hazardous substances into the environment, including sites that have never been owned or operated by the Company but at which it has been identified as a potentially responsible party under federal and state environmental laws and regulations.
Removed
Currently, the Company does not believe that these matters will have a material impact on its financial condition or results of operations, although it is possible that a loss related to these matters may be incurred.
Added
Changes in environmental and other laws and regulations in both domestic and foreign jurisdictions could adversely affect the Company’s operations due to increased costs of compliance and potential liability for non-compliance. The Company manufactures products and performs various services that create exposure to product and professional liability claims and litigation.
Removed
Given the ongoing nature of these matters, management cannot predict the duration, scope, or outcome of the SEC’s and DOJ’s investigations or estimate the potential magnitude of any such loss or range of loss, or the cost of the ongoing investigations.
Added
The failure of the Company’s products and services to be properly manufactured, configured, installed, designed or delivered, resulting in personal injuries, property damage or business interruption could subject the Company to claims for damages. The Company has and is currently defending product liability claims, some of which have resulted in settlements or monetary judgments against the Company.
Removed
Any determination that the Company’s expense and perquisite reporting practices were not in compliance with existing laws or regulations or that certain transactions relating to the Company’s international operations were not in compliance with the FCPA could result in the imposition of fines, civil or criminal penalties, equitable remedies, including disgorgement, injunctive relief, or other sanctions against the Company.
Added
The costs associated with defending ongoing or future product liability claims and payment of damages could be substantial. The Company’s reputation could also be adversely affected by such claims, whether or not successful. There can be no assurance that the Company will be able to continue to successfully avoid, manage and defend such matters.
Removed
The Company also may become a party to litigation or other legal proceedings over these matters. In addition to the matters above, in the normal course of business, the Company is involved in various lawsuits and claims, including product liability, environmental, intellectual property, contract and commercial, advertising, employment and distributor claims, and administrative proceedings.
Added
In addition, given the inherent uncertainties in evaluating certain exposures, actual costs to be incurred in future periods may vary from the Company’s estimates for such contingent liabilities. Refer to Note S, Contingencies , of the Notes to Consolidated Financial Statements in Item 8 for further information about legal proceedings and other loss contingencies. The Company’s products could be recalled.
Removed
The Company does not expect that the resolution of these matters occurring in the normal course of business will have a materially adverse effect on the Company’s consolidated financial position, results of operations or liquidity. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 24 PART II
Added
The Company maintains an awareness of and responsibility for the potential health and safety impacts on its customers and end users. The Company's product development processes include tollgates for product safety review, and extensive testing is conducted on product safety.
Added
Safety reviews are performed at various product development milestones, including a review of product labeling and marking to ensure safety and operational hazards are identified for the customer and end user.
Added
Despite safety and quality reviews, the Consumer Product Safety Commission or other applicable regulatory bodies may require, or the Company may voluntarily institute, the recall, repair or replacement of the Company’s products if those products are found not to be in compliance with applicable standards or regulations.
Added
A recall could increase the Company's costs and adversely impact its reputation. 21 The Company’s sales to government customers exposes it to business volatility and risks, including government budgeting cycles and appropriations, procurement regulations, governmental policy shifts, early termination of contracts, audits, investigations, sanctions and penalties.
Added
The Company derives a portion of its revenues from contracts with the U.S. government, state and local governments and foreign governments. Government contractors must comply with specific procurement regulations and other requirements.
Added
These requirements, although customary in government contracts, could impact the Company’s performance and compliance costs, including limiting or delaying the Company’s ability to share information with its business partners, customers and investors, which may negatively impact the Company’s business and reputation.
Added
The U.S. government may demand contract terms that are less favorable than standard arrangements with private sector customers and may have statutory, contractual or other legal rights to terminate contracts with the Company.
Added
For example, the U.S. government may have contract clauses that permit it to terminate any of the Company’s government contracts and subcontracts at its convenience, and procurement regulations permit termination for default based on the Company’s performance.
Added
In addition, changes in U.S. government budgetary priorities could lead to changes in the procurement environment, affecting availability of government contracting or funding opportunities. Changes in government procurement policy, priorities, regulations, technology initiatives and requirements, and/or contract award criteria may negatively impact the Company’s potential for growth in the government sector.
Added
Changes in government cybersecurity and system requirements could negatively impact the Company’s eligibility for the award of future contracts, negatively impacting the Company’s business and reputation. Government contracts laws and regulations impose certain risks, and government contracts are generally subject to audits, investigations and approval of policies, procedures and internal controls for compliance with procurement regulations and applicable law.
Added
If violations of law are found, they could result in civil and criminal penalties and administrative sanctions, including termination of contracts, refund of a portion of fees received, forfeiture of profits, suspension of payments, fines and suspensions or debarment from future government business. Each of these factors could negatively impact the Company’s business, results of operations, financial condition, and reputation.
Added
Other Risks The Company’s results of operations and earnings may not meet guidance or expectations. The Company’s results of operations and earnings may not meet guidance or expectations. The Company may provide public guidance on expected results of operations for future periods.
Added
This guidance is comprised of forward-looking statements subject to risks and uncertainties, including the risks and uncertainties described in this Annual Report on Form 10-K and in the Company’s other public filings and public statements, and is based necessarily on assumptions the Company makes at the time it provides such guidance. The Company’s guidance may not always be accurate.
Added
The Company may also choose to withdraw guidan c e, as it did in response to the uncertainty of the COVID-19 pandemic in 2020, or lower guidance in future periods.
Added
If, in the future, the Company’s results of operations for a particular period do not meet its guidance or the expectations of investment analysts, the Company reduces its guidance for future periods, or the Company withdraws guidance, the market price of the Company’s common stock could decline significantly. ITEM 1B. UNRESOLVED STAFF COMMENTS None.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+2 added−1 removed4 unchanged
Biggest changeIssuer Purchases of Equity Securities The following table provides information about the Company’s purchases of equity securities that are registered by the Company pursuant to Section 12 of the Securities Exchange Act of 1934 for the three months ended December 31, 2022: 2022 Total Number Of Common Shares Purchased (a) Average Price Paid Per Common Share Total Number Of Common Shares Purchased As Part Of A Publicly Announced Plan or Program (In Millions) Maximum Number Of Common Shares That May Yet Be Purchased Under The Program (b) October 2 - November 5 2,824 $ 76.43 — 20 November 6 - December 3 15,211 81.85 — 20 December 4 - December 31 36,412 79.20 — 20 Total 54,447 $ 79.79 — 20 (a) Shares of common stock in this column were deemed surrendered to the Company by participants in various benefit plans of the Company to satisfy the participants’ taxes related to vesting or delivery of time-vesting restricted share units under those plans.
Biggest changeIssuer Purchases of Equity Securities The following table provides information about the Company’s purchases of equity securities that are registered by the Company pursuant to Section 12 of the Securities Exchange Act of 1934 for the three months ended December 30, 2023: 2023 Total Number Of Common Shares Purchased (a) Average Price Paid Per Common Share Total Number Of Common Shares Purchased As Part Of A Publicly Announced Plan or Program (In Millions) Maximum Number Of Common Shares That May Yet Be Purchased Under The Program (b) October 1 - November 4 — $ — — 20 November 5 - December 2 — — — 20 December 3 - December 30 — — — 20 Total — $ — — 20 (a) The Company issues time-vested restricted stock units (“RSUs”) as part of its benefit plans.
Stock Performance Graph The following line graph compares the yearly percentage change in the Company’s cumulative total shareholder return for the last five years to that of the S&P 500 Index, S&P 500 Capital Goods Index and S&P 500 Industrials Index.
Stock Performance Graph The following line graph compares the yearly percentage change in the Company’s cumulative total shareholder return for the last five years to that of the S&P 500 Index and the S&P 500 Capital Goods Index.
Total return assumes reinvestment of dividends. 26 ITEM 6. REMOVED AND RESERVED
Total return assumes reinvestment of dividends. 29 ITEM 6. REMOVED AND RESERVED
(b) On April 21, 2022, the Board approved a share repurchase program of up to 20 million shares of the Company’s common stock (the “April 2022 Program”). The April 2022 Program does not have an expiration date.
Such withholdings of shares of common stock are not considered common stock repurchases under the Company's authorized common stock repurchase program. (b) On April 21, 2022, the Board approved a share repurchase program of up to 20 million shares of the Company’s common stock (the “April 2022 Program”). The April 2022 Program does not have an expiration date.
As of February 1, 2023, there were 8,519 holders of record of the Company’s common stock. Information required by Item 201(d) of Regulation S-K concerning securities authorized for issuance under equity compensation plans can be found under Item 12 of this Annual Report on Form 10-K.
Information required by Item 201(d) of Regulation S-K concerning securities authorized for issuance under equity compensation plans can be found under Item 12 of this Annual Report on Form 10-K.
The Company increased its annual dividend per common share by $0.20 in 2022 compared to 2021 and intends to continue to pay quarterly dividends in 2023. In July 2022, the Company raised the quarterly dividend per common share, its 55th consecutive increase, which extended its record for the longest, consecutive quarterly and annual dividend payments among industrial companies.
The Company increased its annual dividend per common share by $0.04 in 2023 compared to 2022 and intends to continue to pay quarterly dividends in 2024.
The S&P 500 Capital Goods Index represents a more focused group of 45 companies across major industrial manufacturing categories that carry similar operational characteristics to the Company. 25 THE POINTS IN THE ABOVE TABLE ARE AS FOLLOWS: 2017 2018 2019 2020 2021 2022 Stanley Black & Decker $ 100.00 $ 71.32 $ 101.54 $ 111.32 $ 119.46 $ 49.06 S&P 500 Index $ 100.00 $ 94.79 $ 126.03 $ 148.81 $ 191.48 $ 156.77 S&P 500 Capital Goods Index $ 100.00 $ 83.26 $ 110.83 $ 117.67 $ 139.93 $ 139.55 S&P 500 Industrials Index $ 100.00 $ 96.19 $ 128.70 $ 158.11 $ 202.22 $ 162.96 The comparison assumes $100 invested at the closing price on December 30, 2017 in the Company’s common stock, S&P 500 Index, S&P 500 Capital Goods Index, and S&P 500 Industrials Index.
The S&P 500 Capital Goods Index represents a focused group of companies across major industrial manufacturing categories that carry similar operational characteristics to the Company. 28 THE POINTS IN THE ABOVE TABLE ARE AS FOLLOWS: 2018 2019 2020 2021 2022 2023 Stanley Black & Decker $ 100.00 $ 142.37 $ 156.09 $ 167.50 $ 68.79 $ 93.18 S&P 500 Index $ 100.00 $ 132.96 $ 156.99 $ 202.02 $ 165.40 $ 208.83 S&P 500 Capital Goods Index $ 100.00 $ 133.11 $ 141.33 $ 168.07 $ 167.61 $ 199.85 The comparison assumes $100 invested at the closing price on December 28, 2018 in the Company’s common stock, S&P 500 Index, and S&P 500 Capital Goods Index.
Removed
Following the recent portfolio transformation, the Company has elected to replace the S&P 500 Industrials Index with the S&P 500 Capital Goods Index which it believes is a more appropriate comparison.
Added
In July 2023, the Company raised the quarterly dividend per common share, its 56th annual consecutive increase, which extended its record for the longest, consecutive quarterly and annual dividend payments among industrial companies listed on the NYSE. As of February 1, 2024, there were 8,258 holders of record of the Company’s common stock.
Added
In the Consolidated Financial Statements, shares of common stock withheld for tax purposes on behalf of the participant in connection with the vesting or delivery of RSUs are treated in a similar manner as common stock repurchases because they reduce the number of shares that would have been issued upon vesting or delivery.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

153 edited+44 added−42 removed78 unchanged
Biggest changeThe acquisition-related and other charges amounts for the year-to-date periods of 2022, 2021 and 2020 are as follows: 31 2022 GAAP Acquisition- Related Charges & Other Non-GAAP Gross profit $ 4,284.1 $ 127.4 $ 4,411.5 Selling, general and administrative 1 3,370.0 (180.3) 3,189.7 Operating profit 914.1 307.7 1,221.8 Earnings from continuing operations before income taxes and equity interest 37.9 642.2 680.1 Income taxes on continuing operations (132.4) 84.0 (48.4) Net Earnings from Continuing Operations Attributable to Common Shareowners - Diluted 165.5 558.2 723.7 Diluted earnings per share of common stock - Continuing operations $ 1.06 $ 3.56 $ 4.62 1 Includes provision for credit losses The Acquisition-Related Charges and Other in the table above relate to the following: • Charges reducing Gross profit primarily pertaining to inventory step-up charges; • Charges in SG&A primarily related to integration-related costs and a voluntary retirement program; • Other charges included in Earnings from continuing operations before income taxes and equity interest consisting of: ◦ $16.9 million in Other, net primarily related to a voluntary retirement program and deal costs; ◦ $8.4 million net loss relating to the sale of the Oil & Gas business; ◦ $168.4 million asset impairment charge related to the Oil & Gas business; and ◦ $140.8 million of restructuring charges primarily pertaining to severance and related costs; and • Income taxes on continuing operations include the tax effect on the above net charges. 2021 GAAP Acquisition- Related Charges & Other Non-GAAP Gross profit $ 5,092.2 $ 39.0 $ 5,131.2 Selling, general and administrative 1 3,193.1 (183.6) 3,009.5 Operating profit 1,899.1 222.6 2,121.7 Earnings from continuing operations before income taxes and equity interest 1,586.9 193.9 1,780.8 Income taxes on continuing operations 55.1 64.1 119.2 Share of net earnings of equity method investment 19.0 11.2 30.2 Net Earnings from Continuing Operations Attributable to Common Shareowners - Diluted 1,539.6 141.0 1,680.6 Diluted earnings per share of common stock - Continuing operations $ 9.33 $ 0.85 $ 10.18 1 Includes provision for credit losses The Acquisition-Related Charges and Other in the table above relate to the following: • Charges reducing Gross profit pertaining to inventory step-up charges and facility-related costs; • Charges in SG&A primarily related to a non-cash fair-value adjustment and functional transformation initiatives; • Other charges included in Earnings from continuing operations before income taxes and equity interest consisting of: ◦ $24.2 million in Other, net primarily related to deal transaction costs; ◦ $0.6 million net loss pertaining to divested businesses; ◦ $14.5 million of restructuring charges pertaining to severance and facility closures; and ◦ $68.0 million gain recognized on the MTD equity method investment upon acquisition; • Income taxes on continuing operations include the tax effect on the above net charges; and • An after-tax, pre-acquisition charge related to the Company's share of MTD's net earnings related primarily to a one-time retroactive duty on imports of a specific component. 32 2020 GAAP Acquisition- Related Charges & Other Non-GAAP Gross profit $ 4,318.1 $ 59.0 $ 4,377.1 Selling, general and administrative 1 2,579.3 (114.8) 2,464.5 Operating profit 1,738.8 173.8 1,912.6 Earnings from continuing operations before income taxes and equity interest 1,183.7 313.5 1,497.2 Income taxes on continuing operations 38.0 189.6 227.6 Share of net earnings of equity method investment 9.1 9.8 18.9 Net Earnings from Continuing Operations Attributable to Common Shareowners - Diluted 1,131.5 145.8 1,277.3 Diluted earnings per share of common stock - Continuing operations $ 6.97 $ 0.82 $ 7.79 1 Includes provision for credit losses The Acquisition-Related Charges and Other in the table above relate to the following: • Charges reducing Gross profit pertaining to inventory step-up charges, a cost reduction program and facility-related costs; • Charges in SG&A primarily for a cost reduction program and margin resiliency initiatives; • Other charges included in Earnings from continuing operations before income taxes and equity interest consisting of: ◦ $5.8 million in Other, net primarily related to a cost reduction program, loss on interest rate swaps in connection with the extinguishment of debt, and deal transactions costs, partially offset by a release of a contingent consideration liability relating to the CAM acquisition; ◦ $13.5 million net loss pertaining to divested businesses; ◦ $73.5 million of restructuring charges pertaining to severance and facility closures; and ◦ $46.9 million charge related to a loss on the extinguishment of debt; • Income taxes on continuing operations include the tax effect on the above net charges, as well as a one-time tax benefit of $118.8 million associated with a supply chain reorganization; and • An after-tax, pre-acquisition charge related to the Company's share of MTD's net earnings related primarily to restructuring charges.
Biggest changeThese amounts for 2023, 2022 and 2021 are as follows: 2023 (Millions of Dollars) GAAP Non-GAAP Adjustments 2 Non-GAAP Gross profit $ 3,932.6 $ 166.9 $ 4,099.5 Selling, general and administrative 1 3,290.7 (99.4) 3,191.3 (Loss) earnings from continuing operations before income taxes (375.7) 566.2 190.5 Income taxes on continuing operations (94.0) 65.8 (28.2) Net (Loss) Earnings from Continuing Operations Attributable to Common Shareowners - Diluted (281.7) 500.4 218.7 Diluted (loss) earnings per share of common stock - Continuing operations $ (1.88) $ 3.33 $ 1.45 2022 (Millions of Dollars) GAAP Non-GAAP Adjustments 2 Non-GAAP Gross profit $ 4,284.1 $ 127.4 $ 4,411.5 Selling, general and administrative 1 3,370.0 (180.3) 3,189.7 Earnings from continuing operations before income taxes 37.9 642.2 680.1 Income taxes on continuing operations (132.4) 84.0 (48.4) Net Earnings from Continuing Operations Attributable to Common Shareowners - Diluted 165.5 558.2 723.7 Diluted earnings per share of common stock - Continuing operations $ 1.06 $ 3.56 $ 4.62 34 2021 (Millions of Dollars) GAAP Non-GAAP Adjustments 2 Non-GAAP Gross profit $ 5,092.2 $ 39.0 $ 5,131.2 Selling, general and administrative 1 3,193.1 (183.6) 3,009.5 Earnings from continuing operations before income taxes and equity interest 1,586.9 193.9 1,780.8 Income taxes on continuing operations 55.1 64.1 119.2 Share of net earnings of equity method investment 19.0 11.2 30.2 Net Earnings from Continuing Operations Attributable to Common Shareowners - Diluted 1,539.6 141.0 1,680.6 Diluted earnings per share of common stock - Continuing operations $ 9.33 $ 0.85 $ 10.18 1 Includes provision for credit losses 2 Refer to table below for additional detail of the Non-GAAP adjustments Below is a summary of the pre-tax Non-GAAP adjustments for 2023, 2022 and 2021.
Financing Activities: Cash flows used in financing activities totaled $1.971 billion in 2022 primarily driven by share repurchases of $2.323 billion, credit facility repayments of $2.5 billion, the redemption and conversion of preferred stock for $750 million, cash dividend payments on common stock of $466 million, and net repayments of short-term commercial paper borrowings of $138 million, partially offset by $2.5 billion from credit facility borrowings, net proceeds from debt issuances of $993 million and proceeds from the issuance of remarketed Series D Preferred Stock of $750 million.
Cash flows used in financing activities totaled $1.971 billion in 2022 primarily driven by share repurchases of $2.323 billion, credit facility repayments of $2.5 billion, the redemption and conversion of preferred stock for $750 million, cash dividend payments on common stock of $466 million, and net repayments of short-term commercial paper borrowings of $138 million, partially offset by $2.5 billion from credit facility borrowings, net proceeds from debt issuances of $993 million and proceeds from the issuance of remarketed Series D Preferred Stock of $750 million.
Cash flows provided by financing activities totaled $919 million in 2021 primarily driven by net short-term commercial paper borrowings of $2.225 billion and $131 million of proceeds from issuances of common stock, partially offset by the redemption and conversion of preferred stock for $750 million, cash dividend payments on common stock of $475 million, and $75 million related to the termination of interest rate swaps.
Cash flows provided by financing activities totaled $919 million in 2021 primarily driven by net short-term commercial paper borrowings of $2.225 billion and proceeds from issuances of common stock of $131 million, partially offset by the redemption and conversion of preferred stock for $750 million, cash dividend payments on common stock of $475 million, and $75 million related to the termination of interest rate swaps.
The amount of liability recorded is based on an evaluation of currently available facts with respect to each individual site and includes such factors as existing technology, presently enacted laws and regulations, and prior experience in remediation of contaminated sites. The liabilities recorded do not take into account any 44 claims for recoveries from insurance or third parties.
The amount of liability recorded is based on an evaluation of currently available facts with respect to each individual site and includes such factors as existing technology, presently enacted laws and regulations, and prior experience in remediation of contaminated sites. The liabilities recorded do not take into account any claims for recoveries from insurance or third parties.
Divestitures On August 19, 2022, the Company sold its Oil & Gas business comprised of the pipeline services and equipment businesses to Pipeline Technique Limited. On July 22, 2022, the Company sold its Convergent Security Solutions ("CSS") business comprised of the commercial electronic security and healthcare businesses to Securitas AB for net proceeds of $3.1 billion.
Divestitures On August 19, 2022, the Company sold its Oil & Gas business comprised of the pipeline services and equipment businesses to Pipeline Technique Limited. On July 22, 2022, the Company sold its Convergent Security Solutions ("CSS") business comprised of the commercial electronic security and healthcare businesses to Securitas AB for net proceeds of approximately $3.1 billion.
Engineered Fastening organic revenues increased 7% driven by growth in the aerospace, automotive, and industrial markets. 35 Infrastructure organic revenues were up 14% with Attachment Tools providing 17% growth, which was partially offset by an organic decline in Oil & Gas, prior to its divestiture.
Engineered Fastening organic revenues increased 7% driven by growth in the aerospace, automotive, and industrial markets. Infrastructure organic revenues were up 14% with Attachment Tools providing 17% growth, which was partially offset by an organic decline in Oil & Gas, prior to its divestiture.
In the event that it is determined that an asset is not more likely that not to be realized, a valuation allowance is recorded against the asset. Valuation allowances related to deferred tax assets can be impacted by changes to tax laws, changes to statutory tax rates and future taxable income levels.
In the event that it is determined that an asset is not more likely than not to be realized, a valuation allowance is recorded against the asset. Valuation allowances related to deferred tax assets can be impacted by changes to tax laws, changes to statutory tax rates and future taxable income levels.
The 2025 Term Notes will accrue interest at a fixed rate of 2.3% per annum and the 2032 Term Notes at a fixed rate of 3.0% per annum, with interest payable semi-annually in arrears, and rank equally in right of payment with all of the Company's existing and future unsecured unsubordinated debt.
The 2025 Term Notes accrue interest at a fixed rate of 2.3% per annum and the 2032 Term Notes at a fixed rate of 3.0% per annum, with interest payable semi-annually in arrears, and rank equally in right of payment with all of the Company's existing and future unsecured unsubordinated debt.
The Company continued its sponsorship of one of the world’s most popular football clubs, FC Barcelona ("FCB"), sponsoring both the Men’s and Women’s first teams, which includes team and player image rights, hospitality assets and stadium signage.
The Company continued its sponsorship of one of the world’s most popular football clubs, FC Barcelona, sponsoring both the Men’s and Women’s first teams, which includes team and player image rights, hospitality assets and stadium signage.
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. See the Contractual Obligations table below for the estimated amounts due by period.
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. See the "Contractual Obligations" table below for 41 the estimated amounts due by period.
The Company’s policy is to accrue environmental investigatory and remediation costs for identified sites when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated.
The Company’s policy is to accrue environmental investigatory and remediation costs for identified sites when it is probable that a liability has been incurred and 47 the amount of loss can be reasonably estimated.
The Company does not undertake any obligation or intention to update or revise any forward-looking statements, whether as a result of future events or circumstances, new information or otherwise, except as required by law. 47
The Company does not undertake any obligation or intention to update or revise any forward-looking statements, whether as a result of future events or circumstances, new information or otherwise, except as required by law.
The combination of MTD, Excel and the Company's existing outdoor strategic business unit in Tools & Outdoor created a global leader in the $25 billion and growing outdoor category, with strong brands and growth opportunities.
The combination of MTD, Excel and the Company's existing outdoor strategic business unit in Tools & Outdoor created a global leader in the $25 billion outdoor category, with strong brands and growth opportunities.
The Company has not presented estimated pension and post-retirement funding beyond 2023 as funding can vary significantly from year to year based upon changes in the fair value of the plan assets, actuarial assumptions, and curtailment/settlement actions. (f) Income tax liability for the one-time deemed repatriation tax on unremitted foreign earnings and profits.
The Company has not presented estimated pension and post-retirement funding beyond 2024 as funding can vary significantly from year to year based upon changes in the fair value of the plan assets, actuarial assumptions, and curtailment/settlement actions. (f) Income tax liability for the one-time deemed repatriation tax on unremitted foreign earnings and profits.
A thorough analysis of all the facts and circumstances existi ng at that time would need to be performed to determine if recording an impairment loss would be appropriate. DEFINED BENEFIT OBLIGATIONS — The valuation of pension and other postretirement benefits costs and obligations is dependent on various assumptions.
A thorough analysis of all the facts and circumstances existi ng at that time would need to be performed to determine if recording an impairment loss would be appropriate. DEFINED BENEFIT OBLIGATIONS — T he valuation of pension and other postretirement benefits costs and obligations is dependent on various assumptions.
The interest coverage ratio tested for covenant compliance compares adjusted Earnings Before Interest, Taxes, Depreciation and Amortization to adjusted Interest Expense ("Adjusted EBITDA"/"Adjusted Interest Expense").
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").
Additional information regarding income taxes is available in Note Q, Income Taxes. 45 CAUTIONARY STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Additional information regarding income taxes is available in Note Q, Income Taxes. 48 CAUTIONARY STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
The 2022 increase was primarily driven by higher U.S. interest rates and higher average balances relating to the Company's commercial paper borrowings, as well as the $1.0 billion issuance of debt in the first quarter of 2022, partially offset by higher interest income due to an increase in rates.
The increase in 2022 compared to 2021 was primarily driven by higher U.S. interest rates and higher average balances relating to the Company's commercial paper borrowings, as well as the $1.0 billion issuance of debt in the first quarter of 2022, partially offset by higher interest income due to an increase in rates.
If the carrying value of a reporting unit (including the value of goodwill) is greater than its estimated fair value, an impairment charge would be recorded for the amount that the carrying amount of the reporting unit exceeded its fair value. As required by the Company’s policy, goodwill was tested for impairment in the third quarter of 2022.
If the carrying value of a reporting unit (including the value of goodwill) is greater than its estimated fair value, an impairment charge would be recorded for the amount that the carrying amount of the reporting unit exceeded its fair value. As required by the Company’s policy, goodwill was tested for impairment in the third quarter of 2023.
Consolidated Results Net Sales: Net sales were $16.947 billion in 2022 compared to $15.281 billion in 2021, representing an increase of 11% driven by a 7% increase in price and a 17% increase from acquisitions, partially offset by a 10% decrease in volume and a 3% decrease from foreign currency.
Net sales were $16.947 billion in 2022 compared to $15.281 billion in 2021, representing an increase of 11% driven by a 7% increase in price and a 17% increase from acquisitions, partially offset by a 10% decrease in volume and a 3% decrease from foreign currency.
The Company received total net proceeds from this offering of approximately $993 million, net of approximately $7 million of underwriting expenses and other fees associated with the transaction. The Company used the net proceeds from the offering for general corporate purposes, including repayment of indebtedness under the commercial paper facilities.
The Company received total net proceeds from this offering of approximately $993 million, net of approximately $7 million of underwriting expenses and other fees associated with the transaction. The Company used the net proceeds from the offering for general corporate purposes, including repayment of indebtedness under the commercial paper program.
Tools & Outdoor net sales increased 13% compared to 2021 due to a 7% increase in price and a 21% increase from acquisitions, partially offset by a 12% decrease in volume and a 3% decrease from foreign currency.
Tools & Storage net sales increased 13% compared to 2021 due to a 7% increase in price and a 21% increase from acquisitions, partially offset by a 12% decrease in volume and a 3% decrease from foreign currency.
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 Syndicated 364-Day Credit Agreement. The Company must repay all advances under the Syndicated 364-Day Credit Agreement by the earlier of September 6, 2023 or upon termination.
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 2023 Syndicated 364-Day Credit Agreement. The Company must repay all advances under the 2023 Syndicated 364-Day Credit Agreement by the earlier of September 4, 2024 or upon termination.
Other Significant Commercial Commitments: Amount of Commitment Expirations Per Period (Millions of Dollars) Total 2023 2024-2025 2026-2027 Thereafter U.S. lines of credit $ 4,500 $ 2,000 $ — $ 2,500 $ — Short-term borrowings, long-term debt and lines of credit are explained in detail within Note H, Long-Term Debt and Financing Arrangements . 41 MARKET RISK Market risk is the potential economic loss that may result from adverse changes in the fair value of financial instruments, currencies, commodities and other items traded in global markets.
Other Significant Commercial Commitments: Amount of Commitment Expirations Per Period (Millions of Dollars) Total 2024 2025-2026 2027-2028 Thereafter U.S. lines of credit $ 4,000 $ 1,500 $ 2,500 $ — $ — Short-term borrowings, long-term debt and lines of credit are explained in detail within Note H, Long-Term Debt and Financing Arrangements . 44 MARKET RISK Market risk is the potential economic loss that may result from adverse changes in the fair value of financial instruments, currencies, commodities and other items traded in global markets.
Impairment tests are completed separately with respect to the goodwill of each of the Company’s reporting units. For its annual impairment testing performed in the third quarter of 2022, the Company applied a 43 quantitative test for all of its reporting units using a discounted cash flow valuation model.
Impairment tests are completed separately with respect to the goodwill of each of the Company’s reporting units. For its annual impairment testing performed in the third quarter of 2023, the Company applied a quantitative test for all of its reporting units using a discounted cash flow valuation model.
(g) Supplier agreements with long-term minimum material purchase requirements and freight forwarding arrangements. (h) Future cash flows on derivative instruments reflect the fair value and accrued interest as of December 31, 2022. The ultimate cash flows on these instruments will differ, perhaps significantly, based on applicable market interest and foreign currency rates at their maturity.
(g) Supplier agreements with long-term minimum material purchase requirements and freight forwarding arrangements. (h) Future cash flows on derivative instruments reflect the fair value and accrued interest as of December 30, 2023. The ultimate cash flows on these instruments will differ, perhaps significantly, based on applicable market interest and foreign currency rates at their maturity.
On July 5, 2022, the Company sold its Mechanical Access Solutions ("MAS") business comprised of the automatic doors business to Allegion plc for net proceeds of $922.2 million. Proceeds from the sale of these businesses were used to repay borrowings made in the first quarter of 2022 to fund the Company's share repurchase program previously discussed.
On July 5, 2022, the Company sold its Mechanical Access Solutions ("MAS") business comprised of the automatic doors business to Allegion plc for net proceeds of $916.0 million. Proceeds from the sale of these businesses were used to repay borrowings made in the first quarter of 2022 to fund the Company's share repurchase program previously discussed.
RESULTS OF OPERATIONS The Company’s results represent continuing operations and as a result of the divestitures of the Company’s CSS and MAS businesses, as described in further detail under the heading “ Divestitures ” in this Item 7 above, exclude the commercial electronic security, healthcare, and automatic doors businesses.
RESULTS OF OPERATIONS The Company’s results represent continuing operations and as a result of the 2022 divestitures of the Company’s CSS and MAS businesses, as described in further detail under the heading “Divestitures” in this Item 7 above, exclude the commercial electronic security, healthcare, and automatic doors businesses.
The Company maintains an accounting policy of recording interest and penalties on uncertain tax positions as a component of Income taxes in the Consolidated Statements of Operations. The Company is subject to income tax in a number of locations, including many state and foreign jurisdictions. Significant judgment is required when calculating the worldwide provision for income taxes.
The Company maintains an accounting policy of recording interest and penalties on uncertain tax positions as a component of Income taxes in the Consolidated Statements of Operations. The Company is subject to income tax in a number of locations, including U.S. federal, state and foreign jurisdictions. Significant judgment is required when calculating the worldwide provision for income taxes.
Continuing to Invest in the Stanley Black & Decker Brands The Company has a strong portfolio of brands associated with high-quality products including STANLEY®, BLACK+DECKER®, DEWALT®, FLEXVOLT®, IRWIN®, LENOX®, CRAFTSMAN®, PORTER-CABLE®, BOSTITCH®, PROTO®, MAC TOOLS®, FACOM®, Powers®, LISTA®, Vidmar®, GQ® and through the 2021 acquisitions of MTD and Excel added CUB CADET®, TROY-BILT® and HUSTLER® in the Americas.
Continuing to Invest in the Stanley Black & Decker Brands The Company has a strong portfolio of brands associated with high-quality products including the iconic DEWALT®, CRAFTSMAN® and STANLEY® brands, as well as BLACK+DECKER®, DEWALT FLEXVOLT®, DEWALT POWERSTACK®, DEWALT POWERSHIFT™, IRWIN®, LENOX®, PORTER-CABLE®, BOSTITCH®, PROTO®, MAC TOOLS®, FACOM®, Powers®, LISTA®, Vidmar®, GQ® and through the 2021 acquisitions of MTD and Excel added CUB CADET®, TROY-BILT® and HUSTLER® in the Americas.
The Company’s primary exposure to interest rate risk comes from its commercial paper program in which the pricing is partially based on short-term U.S. interest rates. At December 31, 2022, the impact of a hypothetical 10% increase in the interest rates associated with the Company’s outstanding commercial paper borrowings would have been an incremental pre-tax loss of approximately $10 million.
The Company’s primary exposure to interest rate risk comes from its commercial paper program in which the pricing is partially based on short-term U.S. interest rates. At December 30, 2023, the impact of a hypothetical 10% increase in the interest rates associated with the Company’s outstanding commercial paper borrowings would have been an incremental pre-tax loss of approximately $5 million.
In February 2023, the Company entered into amendments to its 5-Year Credit Agreement, Syndicated 364-Day Credit Agreement, and Club 364-Day Credit Agreement to: (a) amend the definition of Adjusted EBITDA to allow for additional adjustment addbacks, not to exceed $500 million in the aggregate, for amounts incurred during each four fiscal quarter period beginning with the period ending in the third quarter of 2023 through the period ending in the second quarter of 2024, and (b) amend the minimum interest coverage ratio from 3.5 times to not less than 1.5 to 1.0 times computed quarterly, on a rolling twelve months (last twelve months) basis, for the period from and including the third quarter of 2023 through the second quarter of 2024.
In February 2023, the Company entered into an amendment to its 5-Year Credit Agreement to: (a) amend the definition of Adjusted EBITDA to allow for additional adjustment addbacks, not to exceed $500 million in the aggregate, for amounts incurred during each four fiscal quarter period beginning with the period ending in the third quarter of 2023 through the period ending in the second quarter of 2024, and (b) amend the minimum interest coverage ratio from 3.5 times to not less than 1.5 to 1.0 times computed quarterly, on a rolling twelve months (last twelve months) basis, for the period from and including the third quarter of 2023 through the second quarter of 2024.
Share Repurchases And Other Securities During the first quarter of 2022, the Company repurchased 12,645,371 shares of its common stock for approximately $2.3 billion through a combination of an accelerated share repurchase ("ASR") and open market share repurchases. The ASR terms provided for an initial delivery of 85% of the total notional share equivalent at execution, or 10,756,770 shares.
Share Repurchases And Other Securities During the first quarter of 2022, the Company repurchased 12,645,371 shares of its common stock for approximately $2.3 billion through a combination of an accelerated share repurchase ("ASR"), which provided for an initial delivery of 85% of the total notional share equivalent at execution, or 10,756,770 shares, and open market share repurchases for a total of 1,888,601 shares.
The Company expects funding obligations on its defined benefit plans to be approximately $37 million in 2023. Management has worked to minimize this exposure by freezing and terminating defined benefit plans where appropriate. Refer to Note L, Employee Benefit Plans, for further discussion regarding the Company's pension plans.
The Company expects funding obligations on its defined benefit plans to be approximately $35 million in 2024. Management has worked to minimize this exposure by freezing and terminating defined benefit plans where appropriate. Refer to Note L, Employee Benefit Plans, for further discussion regarding the Company's pension plans.
Management estimates the foreign currency impact from its derivative financial instruments outstanding at the end of 2022 would have been an incremental pre-tax loss of approximately $32 million based on a hypothetical 10% adverse movement in all net derivative currency positions.
Management estimates the foreign currency impact from its derivative financial instruments outstanding at the end of 2023 would have been an incremental pre-tax loss of approximately $19 million based on a hypothetical 10% adverse movement in all net derivative currency positions.
Acquisitions and Investments On December 1, 2021, the Company acquired the remaining 80 percent ownership stake in MTD Holdings Inc.
Acquisitions On December 1, 2021, the Company acquired the remaining 80 percent ownership stake in MTD Holdings Inc.
The 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 December 31, 2022, the Company had not drawn on its Syndicated 364-Day Credit Agreement .
The 2023 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 December 30, 2023, the Company had not drawn on its 2023 Syndicated 364-Day Credit Agreement.
Loss on Sales of Businesses: During 2022, the Company reported an $8.4 million net loss primarily related to the divestiture of the Oil & Gas business. During 2021, the Company reported a $0.6 million net loss on divestitures.
During 2022, the Company reported a net loss of $8.4 million primarily related to the divestiture of the Oil & Gas business. During 2021, the Company reported a $0.6 million net loss on divestitures.
(b) Future interest payments on long-term debt reflect the applicable interest rate in effect at December 31, 2022 . (c) Inventory purchase commitments primarily consist of open purchase orders to purchase raw materials, components, and sourced products.
(b) Future interest payments on long-term debt reflect the applicable interest rate in effect at December 30, 2023 . (c) Inventory purchase commitments primarily consist of open purchase orders to purchase raw materials, components, and sourced products.
Segments The Company’s operations are classified into two reportable business segments: Tools & Outdoor and Industrial. Tools & Outdoor The Tools & Outdoor segment is comprised of the Power Tools Group ("PTG"), Hand Tools, Accessories & Storage ("HTAS"), and Outdoor Power Equipment ("Outdoor") businesses. The PTG business includes both professional and consumer products.
Segments The Company’s operations are classified into two reportable business segments: Tools & Outdoor and Industrial. The Tools & Outdoor segment is comprised of the Power Tools Group ("PTG"), Hand Tools, Accessories & Storage ("HTAS"), and Outdoor Power Equipment ("Outdoor") product lines. The PTG product line includes both professional and consumer products.
FINANCIAL CONDITION Liquidity, Sources and Uses of Capital: The Company’s primary sources of liquidity are cash flows generated from operations and available lines of credit under various credit facilities. Operating Activities: Cash flows used in operations were $1.460 billion in 2022 compared to cash provided by operations of $663.1 million in 2021.
FINANCIAL CONDITION Liquidity, Sources and Uses of Capital: The Company’s primary sources of liquidity are cash flows generated from operations and available lines of credit under various credit facilities. Operating Activities: Cash flows provided by operations were $1.191 billion in 2023 compared to cash used in operations of $1.460 billion in 2022.
As assessments and remediation progress at individual sites, the amounts recorded are reviewed periodically and adjusted to reflect additional technical and legal information that becomes available. As of December 31, 2022, the Company had reserves of $129 million for remediation activities associated with Company-owned properties as well as for Superfund sites, for losses that are probable and estimable.
As assessments and remediation progress at individual sites, the amounts recorded are reviewed periodically and adjusted to reflect additional technical and legal information that becomes available. As of December 30, 2023, the Company had reserves of $125 million for remediation activities associated with Company-owned properties as well as for Superfund sites, for losses that are probable and estimable.
As part of the integration of these businesses into the Tools & Outdoor segment, the Company designed, developed and manufactured battery and electric-powered solutions for professional and residential users. This positioned the combined businesses to be a leader in outdoor power equipment as preferences shift from gas powered equipment toward electrified solutions.
As part of the integration of these businesses into the Tools & Outdoor segment, the Company designed, developed and manufactured battery and electric-powered solutions for professional and residential users. This positioned the combined businesses to be a leader in outdoor power equipment as preferences shift from gas powered equipment toward electrified solutions. Refer to Note E, Acquisitions, for further discussion.
Professional products include professional grade corded and cordless electric power tools and equipment including drills, impact wrenches and drivers, grinders, saws, routers and sanders, as well as pneumatic tools and fasteners including nail guns, nails, staplers and staples, and concrete and masonry anchors.
Professional products, primarily under the DEWALT® brand, include professional grade corded and cordless electric power tools and equipment including drills, impact wrenches and drivers, grinders, saws, routers and sanders, as well as pneumatic tools and fasteners including nail guns, nails, staplers and staples, and concrete and masonry anchors.
Credit Ratings and Liquidity: The Company maintains strong investment grade credit ratings from the major U.S. rating agencies on its senior unsecured debt (S&P A, Fitch BBB+, Moody's Baa2), as well as its commercial paper program (S&P A-1, Fitch F2, Moody's P-2).
Credit Ratings and Liquidity: 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).
Excluding acquisition-related and other charges of $235.4 million and $178.4 million in 2022 and 2021, respectively, segment profit amounted to 8.4% of net sales in 2022 compared to 16.9% in 2021, as the benefit from price realization was more than offset by commodity inflation, higher supply chain costs, production curtailment costs and lower volume.
Excluding Non-GAAP adjustments of $235.4 million and $178.4 million in 2022 and 2021, respectively, segment profit amounted to 8.4% of net sales in 2022 compared to 16.9% in 2021, as the benefit from price realization was more than offset by commodity inflation, higher supply chain costs, production curtailment costs and lower volume.
Global Cost Reduction Program During 2022, the Company advanced a series of initiatives designed to generate cost savings by resizing the organization and reducing inventory with the ultimate objective of driving long-term growth, improving profitability and generating strong cash flow.
Global Cost Reduction Program In mid-2022, the Company launched a program comprised of a series of initiatives designed to generate cost savings by resizing the organization and reducing inventory with the ultimate objective of driving long-term growth, improving profitability and generating strong cash flow.
Driving Further Profitable Growth by Fully Leveraging the Company's Core Franchises Each of the Company's franchises share common attributes: they have world-class brands and attractive growth characteristics, they are scalable and defensible, they can differentiate through innovation, and they are powered by the SBD Operating Model. • The Tools & Outdoor business is the tool company to own, with strong brands, proven innovation, global scale, and a broad offering of power tools, hand tools, outdoor products, accessories, and storage and digital products across many channels in both developed and developing markets. • The Engineered Fastening business within the Industrial segment is a highly profitable, GDP+ growth business offering highly engineered, value-added innovative solutions with recurring revenue attributes and global scale.
Driving Further Profitable Growth by Fully Leveraging the Company's Core Franchises Each of the Company's core franchises share common attributes: they have iconic brands and attractive growth characteristics, they are scalable and defensible and they can differentiate through innovation. • The Tools & Outdoor business carries strong brands, proven innovation, global scale, and a broad offering of power tools, hand tools, outdoor products, accessories, and storage and digital products across many channels in both developed and developing markets. • The Engineered Fastening business within the Industrial segment is a highly profitable, GDP+ growth business offering highly engineered, value-added innovative solutions with recurring revenue attributes and global scale.
However, due to the high degree of uncertainty regarding the timing of potential future cash flows associated with the contingent consideration liability related to the Craftsman acquisition and the unrecognized tax liabilities of $269 million and $552 million, respectively, at December 31, 2022, the Company is unable to make a reliable estimate of when (if at all) these amounts may be paid.
However, due to the high degree of uncertainty regarding the timing of potential future cash flows associated with the contingent consideration liability related to the Craftsman acquisition and the unrecognized tax liabilities of $209 million and $546 million, respectively, at December 30, 2023, the Company is unable to make a reliable estimate of when (if at all) these amounts may be paid.
Fluctuations in foreign currency rates negatively impacted cash by $32 million and $62 million in 2022 and 2021, respectively, due to the strengthening of the U.S. Dollar against other currencies. Fluctuations in foreign currency rates positively impacted cash by $23 million in 2020 due to the weakening of the U.S. dollar against other currencies.
Fluctuations in foreign currency rates positively impacted cash by $2 million in 2023. Fluctuations in foreign currency rates negatively impacted cash by $32 million and $62 million in 2022 and 2021, respectively, due to the strengthening of the U.S. dollar against other currencies.
Management considers free cash flow and CFROI important indicators 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.
Management considers free cash flow an important indicator of its liquidity and capital efficiency, as well as its ability to fund future growth 40 and provide dividends to shareowners, and is useful information for investors.
For example, if an exposure occurs from a European entity sourcing product from a U.S. supplier it may be possible to change to a European supplier. Management estimates the combined translational and transactional impact, on pre-tax earnings, of a 10% overall movement in exchange rates is approximately $244 million, or approximately $1.23 per diluted share.
For example, if an exposure occurs from a European entity sourcing product from a U.S. supplier it may be possible to change to a European supplier. Management estimates the combined translational and transactional impact, on pre-tax earnings, of a 10% overall movement in exchange rates is approximately $217 million.
The Company has $95.6 million of liabilities as of December 31, 2022 pertaining to unfunded defined contribution plans for certain U.S. employees for which there is mark-to-market exposure. The assets held by the Company’s defined benefit plans are exposed to fluctuations in the market value of securities, primarily global stocks and fixed-income securities.
The Company has $104.7 million of liabilities as of December 30, 2023 pertaining to unfunded defined contribution plans for certain U.S. employees for which there is mark-to-market exposure. The assets held by the Company’s defined benefit plans are exposed to fluctuations in the market value of securities, primarily global stocks and fixed-income securities.
Discount rates are developed considering the yields available on high-quality fixed income investments with maturities corresponding to the duration of the related benefit obligations. The Company’s weighted-average discount rates used to determine benefit obligations at December 31, 2022 for the United States and international pension plans were 5.36% and 4.70%, respectively.
Discount rates are developed considering the yields available on high-quality fixed income investments with maturities corresponding to the duration of the related benefit obligations. The Company’s weighted-average discount rates used to determine benefit obligations at December 30, 2023 for the United States and international pension plans were 5.04% and 4.43%, respectively.
With the exception of forecasted free cash flow included in 2023 Outlook as discussed below, the Non-GAAP financial measures of gross profit, SG&A, Other, net, and segment profit (including Corporate Overhead), presented on a basis excluding acquisition-related and other charges, as well as free cash flow and organic growth are defined and reconciled to their most directly comparable GAAP financial measures below.
With the exception of forecasted free cash flow included in "2024 Outlook" as discussed below, the Non-GAAP financial measures of gross profit, SG&A, Other, net, Income taxes, and segment profit (including Corporate Overhead), presented on a basis excluding certain gains and charges, as well as free cash flow, organic revenue and organic growth are defined and reconciled to their most directly comparable GAAP financial measures below.
Accordingly, market fluctuations in the fair value of plan assets can affect the net periodic benefit cost in the following year. The projected benefit obligation for defined benefit plans exceeded the fair value of plan ass ets by $307 million at December 31, 2022.
Accordingly, market fluctuations in the fair value of plan assets can affect the net periodic benefit cost in the following year. The projected benefit obligation for defined benefit plans exceeded the fair value of plan ass ets by $314 million at December 30, 2023.
This effective tax rate differs from the U.S. statutory tax rate primarily due to a benefit associated with the Company's supply chain reorganization, tax on foreign earnings, the remeasurement of uncertain tax position reserves, the remeasurement of deferred tax assets and liabilities due to foreign corporate income tax rate changes, and the tax benefit of equity-based compensation.
This effective tax rate differs from the U.S. statutory tax rate primarily due to a tax benefit associated with an intra-entity asset transfer of certain intangible assets related to the Company's supply chain reorganization, tax on foreign earnings, the remeasurement of uncertain tax position reserves, the remeasurement of deferred tax assets and liabilities due to foreign corporate income tax rate changes, and the tax benefit of equity-based compensation.
The year-over-year decrease was mainly attributable to lower accounts payable balances, lower earnings from continuing operations, and higher inventory balances. During the second half of 2020 and during 2021, the Company experienced higher than historical customer demand and increased supply chain constraints, resulting in historically high inventory levels.
The year-over-year change was mainly attributable to lower accounts payable balances, lower earnings from continuing operations, and higher inventory balances. During the second half of 2020 and during 2021, the Company experienced higher than historical customer demand and increased supply chain constraints, resulting in historically high inventory levels in the first half of 2022 as consumer and DIY demand softened.
The divestiture of the Oil & Gas business did not qualify for discontinued operations and therefore, its results are included in the Company's continuing operations within the Industrial segment for all periods presented through the date of sale in the third quarter of 2022.
The divestiture of the Oil & Gas business did not qualify for discontinued operations and therefore, its results were included in the Company's continuing operations within the Industrial segment through the date of sale in the third quarter of 33 2022.
The range of environmental remediation costs that is reasonably possible is $59 million to $220 million which is subject to change in the near term. The Company may be liable for environmental remediation of sites it no longer owns. Liabilities have been recorded on those sites in accordance with this policy.
As of December 30, 2023, the range of environmental remediation costs that is reasonably possible is $80 million to $227 million which is subject to change in the near term. The Company may be liable for environmental remediation of sites it no longer owns. Liabilities have been recorded on those sites in accordance with this policy.
In addition, on April 23, 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.
Refer to Note J, Capital Stock , for further discussion. 30 In addition, on April 23, 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.
During 2022, the National Collegiate Athletic Association sponsorship delivered DEWALT® to an estimated 269+ million viewers through TV-visible branding at 25 colleges and universities across five Division 1 conferences (Atlantic Coast Conference, Big Ten, Big 12, Pac-12 and Mountain West).
During 2023, the National Collegiate Athletic Association sponsorship delivered DEWALT® to an estimated 237+ million viewers through TV-visible branding and 9+ million fans in stadiums at 25 colleges and universities across five Division 1 conferences (Atlantic Coast Conference, Big Ten, Big 12, Pac-12 and Mountain West).
There were no outstanding borrowings under the 364-Day Credit Agreement upon termination and as of January 1, 2022 . Contemporaneously, the Company entered into a $1.5 billion s yndicated 364-Day Credit Agreement (the “Syndicated 364-Day Credit Agreement”) which is a revolving credit loan. Borrowings under the Syndicated 364-Day Credit Agreement may be made in U.S.
There were no outstanding borrowings under the Syndicated 364-Day Credit Agreement upon termination and as of December 31, 2022. Contemporaneously, the Company entered into a new $1.5 billion syndicated 364-Day Credit Agreement (the "2023 Syndicated 364-Day Credit Agreement") which is a revolving credit loan. The borrowings under the 2023 Syndicated 364-Day Credit Agreement may be made in U.S.
All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections or guidance of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new products, services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.
All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections or guidance of earnings, revenue, profitability or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new products, services or developments; any statements regarding future economic conditions or performance; any statements relating to initiatives concerning environmental, social and governance ("ESG") matters, including environmental sustainability and diversity, equity and inclusion; any statements of belief; and any statements of assumptions underlying any of the foregoing.
Consumer products include corded and cordless electric power tools sold primarily under the BLACK+DECKER® brand, and home products such as hand-held vacuums, paint tools and cleaning appliances. The HTAS business sells hand tools, power tool accessories and storage products.
DIY and tradesperson focused products include corded and cordless electric power tools sold primarily under the CRAFTSMAN® brand, and consumer home products such as hand-held vacuums, paint tools and cleaning appliances primarily under the BLACK+DECKER® brand. The HTAS product line sells hand tools, power tool accessories and storage products.
Failure to maintain strong investment grade rating levels could adversely affect the Company’s cost 38 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. Cash and cash equivalents totaled $396 million as of December 31, 2022, which was primarily held in foreign jurisdictions.
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. Cash and cash equivalents totaled $449 million as of December 30, 2023 of which approximately 50% was held in foreign jurisdictions.
Hand tools include measuring, leveling and layout tools, planes, hammers, demolition tools, clamps, vises, knives, saws, chisels and industrial and automotive tools. Power tool accessories include drill bits, screwdriver bits, router bits, abrasives, saw blades and threading products.
Hand tools include measuring, leveling and layout tools, planes, hammers, demolition tools, clamps, vises, knives, saws, chisels and industrial and automotive tools. Power tool accessories include drill bits, screwdriver bits, router bits, abrasives, saw blades and threading products. Storage products include tool boxes, sawhorses, medical cabinets and engineered storage solution products.
Management is committed to growing these businesses through accelerating investments into innovative product development, brand support, commercial activation, and accelerating the operations and supply chain transformation to improve fill rates and better serve the Company's customers, while improving global cost competitiveness.
Management is committed to growing these businesses through accelerating investments into innovative product development, brand support, commercial activation, and accelerating the operations and supply chain transformation to improve fill rates and better match inventory with customer demand, while improving global cost competitiveness.
The Company expects to achieve annual net cost savings of approximately $300 million by the end of 2023 related to the restructuring costs incurred during 2022. The majority of the $62 million of reserves remaining as of December 31, 2022 is expected to be utilized within the next twelve months.
The Company expects to achieve annual net cost savings of approximately $45 million by the end of 2024 related to the restructuring costs incurred during 2023. The majority of the $29 million of reserves remaining as of December 30, 2023 is expected to be utilized within the next twelve months.
In 2022, translational and transactional foreign currency fluctuations negatively impacted pre-tax earnings from continuing operations by approximately $144 million, or approximately $0.73 per diluted share. The Company’s exposure to interest rate risk results from its outstanding debt and derivative obligations, short-term investments, and derivative financial instruments employed in the management of its debt portfolio.
In 2023, translational and transactional foreign currency fluctuations negatively impacted pre-tax earnings from continuing operations by approximately $89 million. The Company’s exposure to interest rate risk results from its outstanding debt and derivative obligations, short-term investments, and derivative financial instruments employed in the management of its debt portfolio.
The anticipated annual net cost savings of approximately $300 million related to the 2022 restructuring actions include: $184 million in the Tools & Outdoor segment; $36 million in the Industrial segment; and $80 million in Corporate. 2023 OUTLOOK This outlook discussion is intended to provide broad insight into the Company's near-term earnings and cash flow generation prospects.
The anticipated annual net cost savings of approximately $45 million related to the 2023 restructuring actions include: $40 million in the Tools & Outdoor segment; $2 million in the Industrial segment; and $3 million in Corporate. 2024 OUTLOOK This outlook discussion is intended to provide broad insight into the Company's near-term earnings and cash flow generation prospects.
The Company’s operating results at the consolidated level as discussed below include and exclude acquisition-related and other charges impacting gross profit, SG&A, and Other, net. The Company’s business segment results as discussed below include and exclude acquisition-related and other charges impacting gross profit and SG&A.
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.
As of December 31, 2022 and January 1, 2022, the Company had commercial paper borrowings outstanding of $2.1 billion and $2.2 billion, respectively. The Company has a five-year $2.5 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.
As of December 31, 2022, the Company had commercial paper borrowings outstanding of $2.1 billion, which did not include any Euro denominated commercial paper. The Company has a five-year $2.5 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.
As discussed further in Note L, Employee Benefit Plans , the Company develops the expected return on plan assets considering various factors, which include its targeted asset allocation percentages, historic returns, and expected future returns. The Company’s expected rate of return assumptions for the United States and international pension plans were 4.69% and 3.41%, respecti vely, at December 31, 2022.
As discussed further in Note L, Employee Benefit Plans , the Company develops the expected return on plan assets considering various factors, which include its targeted asset allocation percentages, historic returns, and expected future returns. The Company’s expected rate of return assumptions for the United States and international pension plans were 6.70% and 5.29%, respecti vely, at December 30, 2023.
Storage products include tool boxes, sawhorses, medical cabinets and engineered storage solution products. 30 The Outdoor business primarily sells corded and cordless electric lawn and garden products, including hedge trimmers, string trimmers, lawn mowers, pressure washers and related accessories, and gas powered lawn and garden products, including lawn tractors, zero turn ride on mowers, walk behind mowers, snow blowers, residential robotic mowers, utility terrain vehicles (UTVs), hand-held outdoor power equipment, garden tools, and parts and accessories to professionals and consumers under the DEWALT®, CUB CADET®, BLACK+DECKER®, CRAFTSMAN®, TROY-BILT®, and HUSTLER® brand names.
The Outdoor product line primarily sells corded and cordless electric lawn and garden products, including hedge trimmers, string trimmers, lawn mowers, pressure washers and related accessories, and gas powered lawn and garden products, including lawn tractors, zero turn ride on mowers, walk behind mowers, snow blowers, residential robotic mowers, utility terrain vehicles (UTVs), hand-held outdoor power equipment, garden tools, and parts and accessories to professionals and consumers under the DEWALT®, CRAFTSMAN®, CUB CADET®, BLACK+DECKER®, and HUSTLER® brand names.
Free cash flow and cash from operations used in CFROI do not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company’s common and preferred stock and business acquisitions, among other items.
Free cash flow does not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company’s common and preferred stock and business acquisitions, among other items.
Excluding acquisition-related and other charges of $7.8 million and $13.1 million in 2022 and 2021, respectively, segment profit amounted to 9.7% of net sales in 2022 compared to 10.9% in 2021, as volume growth and price realization were more than offset by commodity inflation, higher supply chain costs and adverse mix.
Excluding Non-GAAP adjustments of $7.8 million and $13.1 million in 2022 and 2021, respectively, segment profit amounted to 9.7% of net sales in 2022 compared to 10.9% in 2021, as higher volumes and price realization were more than offset by commodity inflation, higher supply chain costs and adverse mix.
Additional factors that could cause actual results to differ materially from forward-looking statements are set forth in this Annual Report on Form 10-K, including under the headings “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in the Consolidated Financial Statements and the related Notes. 46 Forward-looking statements in this Annual Report on Form 10-K speak only as of the date hereof, and forward-looking statements in documents that are incorporated by reference herein speak only as of the date of those documents.
Additional factors that could cause actual results to differ materially from forward-looking statements are set forth in this Annual Report on Form 10-K, including under the headings “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in the Consolidated Financial Statements and the related Notes.
Important factors that could cause the Company's actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in its forward-looking statements include, among others, the following: (i) successfully developing, marketing and achieving sales from new products and services and the continued acceptance of current products and services; (ii) macroeconomic factors, including global and regional business conditions (such as Brexit), commodity prices, inflation and deflation, and currency exchange rates; (iii) laws, regulations and governmental policies affecting the Company's activities in the countries where it does business, including those related to tariffs, taxation, data privacy, anti-bribery, anti-corruption, government contracts and trade controls such as section 301 tariffs and section 232 steel and aluminum tariffs; (iv) the economic, political, cultural and legal environment of emerging markets, particularly Latin America, Russia, China and Turkey; (v) realizing the anticipated benefits of mergers, acquisitions, joint ventures, strategic alliances or divestitures, including the divestitures of the Security and Oil & Gas businesses; (vi) pricing pressure and other changes within competitive markets; (vii) availability and price of raw materials, component parts, freight, energy, labor and sourced finished goods; (viii) the impact the tightened credit markets and any discontinuation, reform or replacement of LIBOR and other benchmark rates may have on the Company or its customers or suppliers; (ix) the extent to which the Company has to write off accounts receivable or assets or experiences supply chain disruptions in connection with bankruptcy filings by customers or suppliers; (x) the Company's ability to identify and effectively execute productivity improvements and cost reductions; (xi) potential business and distribution disruptions, including those related to physical security threats, information technology or cyber-attacks, epidemics, pandemics, sanctions, political unrest, war, terrorism or natural disasters; (xii) the continued consolidation of customers, particularly in consumer channels and the Company’s continued reliance on significant customers; (xiii) managing franchisee relationships; (xiv) the impact of poor weather conditions and climate change; (xv) maintaining or improving production rates in the Company's manufacturing facilities, responding to significant changes in customer preferences, product demand and fulfilling demand for new and existing products, and learning, adapting and integrating new technologies into products, services and processes; (xvi) changes in the competitive landscape in the Company's markets; (xvii) the Company's non-U.S. operations, including sales to non-U.S. customers; (xviii) the impact from demand changes within world-wide markets associated with homebuilding and remodeling; (xix) potential adverse developments in new or pending litigation and/or government investigations; (xx) the incurrence of debt and changes in the Company's ability to obtain debt on commercially reasonable terms and at competitive rates; (xxi) substantial pension and other postretirement benefit obligations; (xxii) potential regulatory liabilities, including environmental, privacy, data breach, workers compensation and product liabilities; (xxiii) attracting and retaining key employees, managing a workforce in many jurisdictions, labor shortages, work stoppages or other labor disruptions; (xxiv) the Company's ability to keep abreast with the pace of technological change; (xxv) changes in accounting estimates; (xxvi) the Company’s ability to protect its intellectual property rights and associated reputational impacts; (xxvii) the continuing impact of the COVID-19 pandemic; and (xxviii) the Company’s ability to implement, and achieve the expected benefits (including cost savings and reduction in working capital) from its Global Cost Reduction Program including: continuing to advance innovation, electrification and global market penetration to achieve organic revenue growth of 2-3 times the market; streamlining and simplifying the organization, as well as shifting resources to prioritize investments believed to have a positive and more direct impact to customers; accelerating the operations and supply chain transformation to improve fill rates and better match the needs of its customers while improving adjusted gross margins back to historical 35%+ levels; prioritizing cash flow generation and inventory optimization; leveraging strategic sourcing and contract manufacturing; consolidating facilities and optimizing the distribution network; executing the SBD Operating Model to deliver operational excellence through efficiency, simplified organizational design and inventory optimization; and platforming products.
Important factors that could cause the Company's actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in its forward-looking statements include, among others, the following: (i) successfully developing, marketing and achieving sales from new products and services and the continued acceptance of current products and services; (ii) macroeconomic factors, including global and regional business conditions, commodity prices, inflation and deflation, interest rate volatility, currency exchange rates, and uncertainties in the global financial markets related to the recent failures of several financial institutions; (iii) laws, regulations and governmental policies affecting the Company's activities in the countries where it does business, including those related to tariffs, taxation, data privacy, anti-bribery, anti-corruption, government contracts and trade controls such as section 301 tariffs and section 232 steel and aluminum tariffs; (iv) the economic, political, cultural and legal environment in Europe and the emerging markets in which the Company generates sales, particularly Latin America and China; (v) realizing the anticipated benefits of mergers, acquisitions, joint ventures, strategic alliances or divestitures; (vi) pricing pressure and other changes within competitive markets; (vii) availability and price of raw materials, component parts, freight, energy, labor and sourced finished goods; (viii) the impact that the tightened credit markets may have on the Company or its customers or suppliers; (ix) the extent to which the Company has to write off accounts receivable, inventory or other assets or experiences supply chain disruptions in connection with bankruptcy filings by customers or suppliers; (x) the Company's ability to identify and effectively execute productivity improvements and cost reductions; (xi) potential business, supply chain and distribution disruptions, including those related to physical security threats, information technology or cyber-attacks, epidemics, natural disasters, pandemics, sanctions, political unrest, war or terrorism, including the conflicts between Russia and Ukraine, and Israel and Hamas and tensions or conflicts in South Korea, China and Taiwan; (xii) the continued consolidation of customers, particularly in consumer channels, and the Company’s continued reliance on significant customers; (xiii) managing franchisee relationships; (xiv) the impact of poor weather conditions and climate change and risks related to the transition to a lower-carbon economy, such as the Company’s ability to successfully adopt new technology, meet market-driven demands for carbon neutral and renewable energy technology, or to comply with more stringent and increasingly complex environmental regulations or requirements for its manufacturing facilities and business operations; (xv) failure to meet ESG expectations or standards, or achieve its ESG goals; (xvi) maintaining or improving production rates in the Company's manufacturing facilities, responding to significant changes in customer preferences, product demand and fulfilling demand for new and existing products, and learning, adapting and integrating new technologies into products, services and processes; (xvii) changes in the competitive landscape in the Company's markets; (xviii) the Company's non-U.S. operations, including sales to non-U.S. customers; (xix) the impact from demand changes within world-wide markets associated with homebuilding and remodeling; (xx) potential adverse developments in new or pending litigation and/or government investigations; (xxi) the incurrence of debt and changes in the Company's ability to obtain debt on commercially reasonable terms and at competitive rates; (xxii) substantial pension and other postretirement benefit obligations; (xxiii) potential regulatory liabilities, including environmental, privacy, data breach, workers compensation and product liabilities; (xxiv) attracting, developing and retaining senior management and other key employees, managing a workforce in many jurisdictions, labor shortages, work stoppages or other labor disruptions; (xxv) the Company's ability to keep abreast with the pace of technological change; (xxvi) changes in accounting estimates; (xxvii) the Company’s ability to protect its intellectual property rights and to maintain its public reputation and the strength of its brands; and (xxviii) the Company’s ability to implement, and achieve the expected benefits (including cost savings and reduction in working capital) from, its Global Cost Reduction Program including: continuing to advance innovation, electrification and global market penetration to achieve organic revenue growth of 2-3 times the market; streamlining and simplifying the organization, and investing in initiatives that more directly impact the Company's customers and end users; returning adjusted 49 gross margins to historical 35%+ levels by accelerating the supply chain transformation to leverage strategic sourcing, drive operational excellence, consolidate facilities, optimize the distribution network and reduce complexity of the product portfolio; improving fill rates and matching inventory with customer demand; prioritizing cash flow generation and inventory optimization; executing the SBD Operating Model to deliver operational excellence through efficiency, simplified organizational design; and reducing complexity through platforming products and implementing initiatives to drive a SKU reduction.
INCOME TAXES — The Company accounts for income taxes under the asset and liability method in accordance with ASC 740, Income Taxes , which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.
Additional information regarding environmental matters is available in Note S, Contingencies. INCOME TAXES — The Company accounts for income taxes under the asset and liability method in accordance with ASC 740, Income Taxes , which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.

… 159 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

1 edited+0 added−0 removed1 unchanged
Biggest changeSuch Financial Statements and Financial Statement Schedule are incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 48
Biggest changeSuch Financial Statements and Financial Statement Schedule are incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 51

Other SWK 10-K year-over-year comparisons