Tariff Refunds Lift Stanley Black & Decker Q3 Profit and Guidance

Stanley Black & Decker (SWK ) reported third-quarter 2026 results on November 4, 2026, with net earnings rising to $272.1 million from $51.4 million a year earlier. Net tariff refunds helped drive the increase and supported higher full-year EPS and free-cash-flow guidance, while the board also approved a new $1 billion share-repurchase authorization.

Diluted EPS increased to $1.83 from $0.34, and adjusted EPS, which excludes certain gains and charges, rose to $2.31 from $1.43. Both included an approximately $0.67-per-share benefit from net tariff refunds. Gross margin expanded 760 basis points to 39.0%, with approximately 430 basis points of that increase attributed to the refunds. Subtracting the refund contribution leaves roughly 330 basis points of gross-margin expansion, calculated from the two reported figures. The net measure starts with an IEEPA tariff-refund gain and deducts directly attributable variable incentive compensation and growth investments, plus taxes for EPS.

Net sales slipped 1% to $3.73 billion, but rose 4% on the company’s organic basis. That measure removes the effects of recent acquisitions and divestitures, currency, product-line transfers and the strategic shift to licensing gas walk-behind outdoor products. Volume added six percentage points to consolidated growth, while pricing and portfolio changes subtracted two and four points, respectively; currency was flat. The bridge separates a portfolio-affected reported decline from growth in the underlying sales measure.

Tools & Outdoor Leads Organic Growth

Tools & Outdoor sales rose 2% to $3.34 billion and increased 4% organically. Volume contributed seven percentage points, while pricing subtracted three and the outdoor-products licensing transition subtracted two. The company identified power tools and strength in U.S. retail and commercial & industrial channels as the principal drivers. North America delivered 6% organic growth, compared with 1% in Europe and a 1% decline in Rest of World.

Segment margin reached 17.0%, up 520 basis points year over year. Management credited net productivity gains and favorable product mix for the improvement, which also included an approximately 430-basis-point benefit from net tariff refunds.

Engineered Fastening explains much of the consolidated portfolio effect. Sales fell 21% to $395.5 million from $500.5 million after the April 6, 2026 sale of Consolidated Aerospace Manufacturing, or CAM, reduced segment revenue by 22% on the year-over-year comparison. The company attributed 2% organic growth to broad-based industrial strength, partly offset by automotive results below its expectations. Segment margin slipped 20 basis points to 11.7%, with automotive demand pressure also affecting the comparison.

Cash Outlook and Repurchases Expand

Operating cash flow rose to $658.5 million from $221.2 million. After $73.5 million of capital and software expenditures, free cash flow reached $585.0 million, compared with $155.3 million a year earlier. The company defines free cash flow as operating cash flow less capital and software expenditures.

The company raised its 2026 GAAP EPS guidance to $5.45–$5.85 from $4.60–$5.45, and raised and tightened the adjusted EPS range to $5.95–$6.25 from $5.20–$5.80. Expected free cash flow increased to $1.0 billion–$1.2 billion from $600 million–$800 million, incorporating the tariff refund realized year to date and projected taxes and fees associated with the CAM divestiture. At their midpoints, the EPS ranges represent year-over-year growth of 113% on a GAAP basis and 31% on an adjusted basis from 2025.

The projected $0.40–$0.50 difference between the GAAP and adjusted EPS guidance ranges primarily reflects footprint and other cost actions, partly offset by the gain on the CAM sale and its related tax impact. Third-quarter pre-tax non-GAAP adjustments totaled $89.3 million, principally covering restructuring, a non-cash asset impairment and footprint actions.

The company repurchased approximately 2.5 million shares for approximately $250 million during the third quarter, fully using the $500 million authorization approved in April 2026. The separate repurchase authorization was approved on October 29, 2026, and expires on October 29, 2029.

The quarter therefore combines underlying sales growth with a material refund contribution to earnings and margins, alongside stronger cash generation and additional repurchase capacity. The central issue for subsequent results is how much of the margin and cash-flow improvement is sustained by ongoing operations separately from the refund and portfolio effects identified in this report.