Stanley Black & Decker, Inc.

Welcome to the first quarter 2024 Stanley Black & Decker earnings conference call. My name is Shannon, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. Please note that this conference is being recorded. I will now turn the call over to the Vice President of Investor Relations, Dennis Lang. Mr. Lang, you may begin.

Thank you, Shannon. Good morning, everyone, and thanks for joining us for Stanley Black & Decker's 2024 First Quarter Webcast. Here today, in addition to myself, is Don Allen, President and CEO, Chris Nelson, COO, EVP, and President of Tools and Outdoor, and Pat Hallinan, EVP and CFO. Our earnings release, which was issued earlier this morning, and a supplemental presentation, which we will refer to, are available on the IR section of our website. A replay of this morning's webcast will also be available beginning at 11 a.m. today. This morning, Don, Chris, and Pat will review our 2024 first quarter results and various other matters followed by a Q&A session. Consistent with prior webcasts, we are going to be sticking with just one question per caller. And as we normally do, we'll be making some forward-looking statements during the call based on our current views. Such statements are based on assumptions of future events that may not prove to be accurate, and as such, they involve risk and uncertainty. It's therefore possible that the actual results may materially differ from any forward-looking statements that we might make today. We direct you to the cautionary statements in the 8K that we filed with our press release and in our most recent 34 Act filings. I'll now turn the call over to our President and CEO, Don Allen.

Thank you, Dennis, and good morning, everyone. Our first quarter performance was the result of consistent, solid execution, and we are making progress against key operational objectives. We continue to see significant value creation opportunities tied to our strategic business transformation, and the entire company is focused on the disciplined execution of this strategy. We are encouraged by the momentum that is building across the organization. Two of our primary areas of emphasis are free cash flow generation and gross margin expansion. We are focused on what is within our control and are pleased with the momentum behind our gross margin. This is particularly notable considering a significantly worse negative macro environment and corresponding revenue performance in 2023 and 24 versus our initial expectations at the outset of our transformation in mid-2022. Our global cost reduction program remains on track for expected run rate savings of $1.5 billion by the end of 2024 and $2 billion by the end of 2025. As we hit the halfway point of our journey, our decisive actions are delivering quantifiable results. Specifically, we have captured $1.2 billion of run rate savings program to date. We remain confident this will support 30% gross margins in 2024 consistent with our guidance. We are encouraged that approximately 80% of the company's revenue is expected to carry 2024 adjusted gross margins in excess of 30% and exit this year at or ahead of initial expectations. We believe these product lines will continue to improve upon their current adjusted gross margin profiles over the next 18 to 24 months. As it relates to the rest of the portfolio, or that 20%, which is predominantly our cyclically depressed outdoor business and the rapidly recovering aerospace fastener business, we are actioning significant cost efficiencies to make necessary improvements to the profitability of outdoor in response to the current market demands and refining the aerospace fastener product line cost base to drive significant growth leverage as wide-body plane production continues to recover. Our long-term success will be driven by improved profitability coupled with consistent market share gains. We believe our share position in tools is now stable to increasing. For example, our 2023 point-of-sale data in tools performed better than the category average across the North American home centers, which was led by our iconic DeWalt professional brand. We are also serving our customers better by delivering improved fill rates, earning the right for more activity across our brands. Retailers are recognizing this performance. For 2023, Ace Hardware named Craftsman as Vendor of the Year, and Grainger recognized Stanley Black & Decker with their Partners in Performance Award. Congratulations to our organization. This is a testament to the team's efforts, and as we work to get closer to our partners, it's an early indication that we are on the right track. As we report our first quarter performance, we are energized by how our transformation efforts are taking root. I am confident that by executing our strategy, we are positioning the company to deliver high levels of organic revenue growth, profitability, and cash flow to drive strong long-term shareholder returns. Turning to the first quarter results, our top line showed signs of stabilization with organic revenues down a point. Excluding the now divested infrastructure business, organic revenue was flat as engineered fastening and DeWalt growth was offset by muted consumer and DIY demand. Adjusted gross margin was 29%, up 590 basis points versus the first quarter of last year and 30 basis points above the second half of 2023. Adjusted diluted earnings per share was 56 cents. Adjusted gross margin expansion and EPS growth were both supported by lower inventory destocking costs supply chain transformation benefits, and reduced shipping costs. We are reiterating our 2024 full-year adjusted diluted EPS guidance range of $3.50 up to $4.50, as well as our expected free cash flow of $600 to $800 million. Pat will provide more color on this later in our presentation. On April 1st, we completed the sale of Stanley Infrastructure to Epiroc. We have already deployed net proceeds from the transaction to reduce short-term debt, demonstrating our commitment to further strengthening our balance sheet. Looking forward in 2024, we expect mixed demand trends to persist across our businesses, and we are driving supply chain cost improvements to expand margins, deliver earnings growth, and generate strong cash flow. At the same time, we are funding investments designed to fuel targeted long-term growth and market share gains across our businesses. I want to thank our team members around the world for their contributions to the progress that we have made on our transformation journey and for their energy and focus as we continue to charge forward. I will now pass it to Chris Nelson to review the business segment performance.