Q2 2024 Stanley Black & Decker Inc Earnings Call

July 30, 2024

Operator: Welcome to the second 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 on a listen-only mode.

Operator: Welcome to the second quarter, 2024 Stanley Black & Decker earnings conference call.

Yeah.

Shannon: Welcome to the second quarter 2020 for Stanley Black <unk> Decker earnings Conference call. My name is Shannon and I'll be your operator for today's call. At this time all participants are in a listen only mode.

Operator: My name is Shannon, and I will be your operator for today's call. At this time, all participants are in the listening mode.

Operator: Later, we welcome to the question and answer session. Please note that this conference has been recorded.

Operator: 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 Lange. Mr. Lange, you may begin.

Shannon: Later, we will conduct a question and answer session. Please note that this competition. They recorded I will now turn the call over to the Vice President of Investor Relations Dennis Lange, Mr. Lang you may begin.

Dennis Lange: I will now turn the call over to the Vice President of Investor Relations, Dennis Lange.

Dennis Lange: Mr. Lange, you may begin. Thank you, Shannon.

Dennis Lange: Thank you, Shannon. Good morning, everyone, and thanks for joining us for Stanley Black & Decker's 2024 Second Quarter Webcast. Here today, in addition to myself, are Don Allen, President and CEO; Chris Nelson, COO, EVP, and President of Tools & 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 in the Investor Relations section of our website. A replay of this morning's webcast will also be available beginning at 11 a.m. today.

Dennis Lange: Good morning, everyone. And thanks for joining us for Stanley Black & Decker's 2024 second 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.

Dennis Lange: Thank you Shannon good morning, everyone and thanks for joining us for Stanley Black <unk> Decker's 2024 second quarter webcast here. Today. In addition to myself is Don Allen, President and CEO, Chris Nelson C O O EVP and president of tools and outdoor and Pat Hallinan E V. P M.

Dennis Lange: 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.

Speaker Change: 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 second quarter results and.

Dennis Lange: This morning, Don, Chris, and Pat will review our second 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 call. And, as we normally do, we will be making some forward-looking statements during the call based on our current views. Such statements are based on assumptions about future events that may not prove to be accurate, and as such, they involve risk and uncertainty.

Dennis Lange: Various other matters, followed by a Q&A session consistent with prior webcast, we're gonna be sticking with just one question per caller.

Dennis Lange: And as we normally do, we will 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 if 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.

Dennis Lange: And as we normally do we will 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.

Dennis Lange: It's therefore possible that 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 our most recent 34 Act filing. Additionally, we may also reference non-GAAP financial measures during the call. For applicable reconciliations to the related GAAP financial measure and additional information, please refer to the appendix of the supplemental presentation and the corresponding press release, which are available on our website under the IRC. I'll now turn the call over to our President and CEO, Don Allen. Thank you, Dennis, and good morning, everyone.

Dennis Lange: We direct you to the cautionary statements in the 8-K that we filed with our press release and our most recent 34 Act filing. Additionally, we may also reference non-GAAP financial measures during the call. For applicable reconciliation to the related GAAP financial measure and additional information, please refer to the appendix of the supplemental presentation and the corresponding press release, which are available on our website under the IR section.

Dennis Lange: In the 8-K that we filed with our press release and our most recent 34 Act filings. Additionally, we may also reference non-GAAP financial measures during the call for applicable reconciliations to the related GAAP financial measure and additional information. Please refer to the appendix of the supplemental presentation and the corresponding press release, which.

Dennis Lange: Are available on our website under the IR section I'll now turn the call over to our President and CEO Don Allen.

Don Allen: I'll now turn the call over to our President and CEO, Don Allen. Thank you, Dennis, and good morning, everyone. As you saw in this morning's release, we extended our trajectory of solid execution on our operational priorities, which drove gross margin improvement versus the prior year and very strong cash generation in the second quarter. There's also extremely satisfying to report that we delivered organic growth this quarter. As you are aware, there was a significant demand normalization post-pandemic that required a recalibration of inventory for us and our customers. We believe that we have stabilized our share position in the marketplace.

Donald Allan: As you saw in this morning's release, we extended our trajectory of solid execution on our operational priorities, which drove gross margin improvement versus the prior year and very strong cash generation in the second quarter. It is also extremely satisfying to report that we delivered organic growth this quarter. As you are aware, there was a significant demand normalization post-pandemic that required a recalibration of inventory for us and our customers.

Donald Allan: Thank you Dennis and good morning, everyone.

Donald Allan: It is also extremely satisfying to report that we delivered organic growth this quarter.

Donald Allan: We're aware there was a significant demand normalization post pandemic that required a recalibration of inventory for us and our customers. We believe that we have stabilized our share position in the marketplace and this quarter, we capitalized on the strength of the dwell brands and supportive pockets of end market demand.

Donald Allan: We believe that we have stabilized our share position in the market, and this quarter, we capitalized on the strength of the DeWalt brand and supportive pockets of end market demand to deliver positive organic revenue growth for the period. Our priorities remain consistent at this stage of our transformation.

Don Allen: In this quarter, we capitalized on the strength of the dwelt brand and supportive pockets, event market demand to deliver positive organic revenue growth in the period. Our priorities remain consistent at this stage of our transformation. And this morning, you will hear tangible progress in each of these key areas of focus. First, we continue to drive profitability improvement through the significant transformation of our supply chain to achieve our target of 35% plus gross margins. Next, we experience strong free cash flow generation and significant balance sheet strength improvement. And finally, new investments to stimulate sustainable growth are increasing, with the primary aim of reinvigorating share gain to achieve organic growth at two to three times the market.

Donald Allan: To deliver positive organic revenue growth in the period.

Donald Allan: Our priorities remain consistent at this stage of our transformation.

Donald Allan: And this morning, you will hear tangible progress in each of these key areas of focus. First, we continue to drive profitability improvement through the significant transformation of our supply chain to achieve our target of 35% plus gross margin. Next, we experience strong free cash flow generation and significant balance sheet strength improvement. And finally, new investments to stimulate sustainable growth are increasing, with the primary aim of reinvigorating share gains to achieve organic growth at two to three times the market.

Donald Allan: And this morning, you will hear tangible progress in each of these key areas of focus.

Donald Allan: First we continue to drive profitability improvement through the significant transformation of our supply chain to achieve our target of 35% plus gross margins.

Donald Allan: Next we experienced strong free cash flow generation and significant balance sheet strength and improvement.

Donald Allan: And finally, new investments to stimulate sustainable growth are increasing with the primary aim of reinvigorating share gain to achieve organic growth at two to three times the market.

Don Allen: We continue to be energized by the compelling long-term growth opportunities in our industry and believe in our ability to capture their value. Yet, we remain clear-eyed about the near-term environment and expect mixed demand trends to continue in 2024 across our markets. As we capture the savings from the cost structure improvements, which are broadly in our control, we will be measured and disciplined as we selectively invest in the parts of our business that offer the best prospects for growth. We are focused on how we outperform the market to gain share in our pleas by the green shoots emerging in various channels.

Donald Allan: We continue to be energized by the compelling long-term growth opportunities in our industry and believe in our ability to capture their value. Yet, we remain clear-eyed about the near-term environment and expect mixed-demand trends to continue in 2024 across our market.

Donald Allan: We continue to be energized by the compelling long term growth opportunities in our industry and believe in our ability to capture their value.

Donald Allan: Yet we remain clear eyed about the near term environment and expect mixed demand trends to continue in 2024 across our markets.

Donald Allan: As we capture the savings from the cost structure improvements, which are broadly in our control, we will be measured and disciplined as we selectively invest in the parts of our business that offer the best prospects for growth. We are focused on how we outperform the market to gain share, and we are pleased by the green shoots emerging in various channels. So while our markets will be choppy for the short term, we are building the processes and structure to create a sustainable growth operating model, which will ensure that we significantly benefit from the long-term growth opportunities in the industries we serve.

Donald Allan: We capture the savings from the cost structure improvements, which are broadly in our control, we will be measured and disciplined as we selectively invest in the parts of our business that offer the best prospects for growth. We are focused on how we outperformed the market to gain share and are pleased by the green shoots emerging in various channels.

Don Allen: So, while our markets will be choppy for the short term, we are building the processes and structure to create a sustainable growth operating model, which will ensure we significantly benefit from the long-term growth opportunities in the industry's we serve.

Donald Allan: So while our markets will be choppy for the short term we are building the processes and structure to create a sustainable growth operating model, which will ensure we significantly benefit from the long term growth opportunities in the industries we serve.

Don Allen: I have asked Chris to describe how we are both thoughtfully and aggressively pursuing our growth agenda in tools and outdoor, which he will discuss in further detail this morning. 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. Our teams continue to accelerate savings actions, which have successfully delivered $1.3 billion of run rate savings program to date. These results reinforce our confidence in achieving our 35% plus adjusted growth margin goal. I am confident that by executing on our transformation strategy, we are positioning the company to deliver higher levels of sustainable organic revenue growth, profitability, and cash flow, which will drive strong long-term shareholder returns.

Donald Allan: I have asked Chris to describe how we are both thoughtfully and aggressively pursuing our growth agenda in tools and outdoor, which he will discuss in further detail this morning. Additionally, 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.

Donald Allan: I have as Christa described how we are both thoughtfully and aggressively pursuing our growth agenda and tool than outdoor which he will discuss in further detail. This morning.

Speaker Change: Our global cost reduction program remains on track for expected run rate savings of $1 5 billion.

Speaker Change: By the end of 2024 and $2 billion by the end of 2025.

Donald Allan: Our teams continue to accelerate savings actions, which have successfully delivered $1.3 billion of run rate savings programs to date. These results reinforce our confidence in achieving our 35% plus adjusted gross margin goal. I am confident that by executing on our transformation strategy, we are positioning the company to deliver higher levels of sustainable organic revenue growth, profitability, and cash flow, which will drive strong long-term shareholder returns. Now, turning to the second quarter results. We delivered $4 billion of revenue, down 3% versus the prior year.

Speaker Change: Our teams continue to accelerate savings actions, which has successfully delivered $1 $3 billion of run rate savings program to date. These.

Speaker Change: These results reinforce our confidence in achieving our 35% plus adjusted gross margin goal I.

Speaker Change: I am confident that by executing on our transformation strategy. We are positioning the company to deliver higher levels of sustainable organic revenue growth profitability and cash flow, which will drive strong long term shareholder returns.

Don Allen: Now turning to second quarter results. We delivered $4 billion in revenue, down 3% versus the prior year. This includes 1% of organic growth, which was led by default, the outdoor product categories, and engineer fastening. This was more than offset by a 3% drag from the infrastructure, the vestiture, and 1% of currency. Adjusted growth margin was 29.2% of 560 basis points versus the second quarter of last year. Our supply chain transformation was a major contributor to this improvement. It has strong momentum that we expect to carry through the back half and into 2025. Adjusted EBITDA margins returned to double digits and were 10.7%, which is a 5-point improvement versus prior year.

Donald Allan: This includes 1% of organic growth, which was led by DEWALT, the outdoor product categories, and EngineerFast. This was more than offset by a 3% drag from the infrastructure divestiture and 1%. Adjusted gross margin was 29.2%, up 560 basis points versus the second quarter of last year. Our supply chain transformation was a major contributor to this improvement. It has strong momentum that we expect to carry through the back half and into 2025.

Speaker Change: Now turning to second quarter results, we delivered $4 billion of revenue down 3% versus the prior year.

Speaker Change: This includes 1% of organic growth, which was led by the Walt the outdoor product categories and engineered fastening. This was more than offset by a 3% drag from the infrastructure divestiture and 1% of currency.

Speaker Change: Adjusted gross margin was 29, 2% up 560 basis points versus the second quarter of last year, our supply chain transformation was a major contributor to this improvement.

Speaker Change: It has strong momentum that we expect to carry through the back half and into 2025 <unk>.

Donald Allan: Adjusted EBITDA margins returned to double digits and were 10.7%, which is a five-point improvement versus the prior year. This was driven by our gross margin expansion, offset by deliberate increases in growth. Adjusted diluted earnings per share was $1.09 per share.

Speaker Change: Adjusted EBITDA margins returned to double digits and were 10, 7%, which is a five point improvement versus prior year. This was driven by our gross margin expansion.

Don Allen: This was driven by our growth margin expansion, offset by deliberate increases in growth investments. Adjusted the loot and earnings per share was $1.9 per second quarter. Free cash flow in the quarter approached half a billion dollars, primarily due to accelerated working capital improvements. The strong cash generation, along with proceeds from the infrastructure, the vestiture, contributed $1.2 billion of debt reduction in the quarter. We continue to prioritize improving balance sheet health, and in a few moments, Pat will address our plans for more progress over the next 18 months. As we deliver, we are also maintaining our commitment to returning value to our shareholders.

Speaker Change: Step by deliberate increases in growth investments adjust.

Speaker Change: Adjusted diluted earnings per share was $1 nine per second quarter.

Donald Allan: Free cash flow in the quarter approached half a billion dollars, primarily due to accelerated working capital improvements. The strong cash generation, along with proceeds from the infrastructure divestiture, contributed $1.2 billion of debt reduction in the quarter. We continue to prioritize improving balance sheet health, and in a few moments, Pat will address our plans for more progress over the next 18 months. Meanwhile, as we delever, we are also maintaining our commitment to returning value to our shareholders. And to that end, our Board of Directors approved a modest increase to our quarterly cash dividend, which is now $0.82 per share.

Speaker Change: Free cash flow in the quarter approached half a billion dollars.

Speaker Change: Primarily due to accelerated working capital improvements the strong cash generation along with proceeds from the infrastructure divestiture contributed $1.2 billion of debt reduction in the quarter.

Speaker Change: We continue to prioritize improving balance sheet health and in a few moments Pat will address our plans for more progress over the next 18 months.

Pat: As we Delever, we are also maintaining our commitment to returning value to our shareholders and to that end our board of directors approved a modest increase to our quarterly cash dividend, which is now 82 per share.

Don Allen: And to that end, our Board of Directors approved a modest increase to our quarterly cash dividend, which is now 82 cents per chair.

Don Allen: Finally, we are raising our 2024 full-year adjusted diluted EPS guidance range by 10 cents at the midpoint to a range of $3.70 up to $4.50, and increasing our free cash flow guidance to $650 up to $850 million. Pat will provide more color on this later in our presentation. I want to thank our team members for their collaboration and focus as we continue to make substantial progress on our transformation plan and achieve our interim financial goals we established about two years ago.

Donald Allan: Finally, we are raising our 2024 full-year adjusted diluted EPS guidance range by $0.10 at the midpoint to a range of $3.70 up to $4.50 and increasing our free cash flow guidance to $650 up to $850 million. Pat will provide more color on this later in our presentation. I want to thank our team members for their collaboration and focus as we continue to make substantial progress on our transformation plan and achieve our interim financial goals we established about two years ago. I will now pass this to Chris Nelson to review the business segment performance. Chris?

Pat: Finally, we are raising our 2020 for full year adjusted diluted EPS guidance range by 10 cents at.

Pat: At the midpoint to a range of $3 70 stands up to $4 50.

Pat: And increasing our free cash flow guidance to $6 50 up to $850 million.

Pat: Pat will provide more color on this later in our presentation.

Pat: I want to thank our team members for their collaboration and focus as we continue to make substantial progress on our transformation plan and achieve our interim financial goals, we established about two years ago.

Chris Nelson: I will now pass it to Chris Nelson to review the business segment performance. Chris? Thank you, Don, and good morning, everyone. Beginning with Tools and Outdoor, second quarter revenue was approximately $3.5 billion with 1% organic growth versus prior year. To Walt delivered another strong quarter, generating its fifth consecutive quarter of organic growth. To Walt's performance combined with a stronger outdoor season drove 2% volume growth. We are particularly encouraged by this result, given the soft consumer backdrop. Total revenue was flat as volume benefits were offset by 1% of currency in addition to 1% of price, which was consistent with our plan to support DeWalt cordless promotions.

Pat: I will now pass it to Chris Nelson to review the business segment performance Chris.

Christopher John Nelson: Thank you, Don, and good morning, everyone. Beginning with tools and outdoor, second quarter revenue was approximately $3.5 billion, with 1% organic growth versus the prior year. DeWalt delivered another strong quarter, generating its fifth consecutive quarter of organic growth. This performance, combined with a stronger outdoor season, drove 2% volume growth. We are particularly encouraged by this result given the soft consumer backdrop. However, total revenue was flat as volume benefits were offset by 1% of currency in addition to 1% of price, which was consistent with our plan to support DeWalt's cordless promotion.

Christopher John Nelson: Thank you Don and good morning, everyone, beginning with tools and outdoor second quarter revenue was approximately $3 $5 billion with 1% organic growth versus prior year to Walt delivered another strong quarter generating its fifth consecutive quarter of organic growth to waltz performance combined with a stronger <unk>.

Speaker Change: Our season drove 2% volume growth.

Speaker Change: We are particularly encouraged by this result, given the soft consumer backdrop total revenue was flat as volume benefits were offset by 1% of currency. In addition to 1% of price, which was consistent with our plan to support to Walt cordless promotions.

Chris Nelson: We are now back in line with historical levels of seasonal promotions. Second quarter adjusted segment margin was 10.4% of 590 basis point improvement compared to last year. We delivered year-over-year margin expansion through lower inventory to stocking costs, supply chain transformation savings, and shipping cost reductions, which were partially offset by targeted investments designed to accelerate share gain in organic growth.

Christopher John Nelson: We are now back in line with historical levels of seasonal promotion. Second quarter adjusted segment margin was 10.4%, a 590 basis point improvement compared to last year. We delivered year-over-year margin expansion through lower inventory to stocking costs, supply chain transformation savings, and shipping cost reductions, which were partially offset by targeted investments designed to accelerate share gain and organic growth. Turning to product lines for the second quarter, power tools declined 2% organically, driven by the consumer DIY category.

We are now back in line with historical levels of seasonal promotions second quarter. Adjusted segment margin was 10, 4% or 590 basis point improvement compared to last year, we delivered year over year margin expansion through lower inventory destocking costs supply chain transformation savings.

Speaker Change: And shipping cost reductions, which were partially offset by targeted investments designed to accelerate share gains and organic growth turning to the product lines for the second quarter power tools declined 2% organically driven by the consumer DIY category.

Chris Nelson: Turning to product lines for the second quarter. Power tools declined 2% organically, driven by the consumer DIY category. Hand tools organic revenue was flat, with new DeWalt product introductions driving increased product listings with our customers. Outdoor organic revenue grew 6% with strong retail volume growth driven by handheld cordless outdoor power equipment and incremental retail product listings.

Christopher John Nelson: Hantool's organic revenue is flat, with new DeWalt product introductions driving increased product listings with our customers. Outdoor organic revenue grew 6% with strong retail volume growth, driven by handheld cordless outdoor power equipment and incremental retail product listings. Turning to tools and outdoor performance by region, North America generated 1% organic growth driven by the same factors as the overall segment. Second quarter U.S. retail point-of-sale demand was up modestly versus the prior year, led by outdoor and recovered to the walled cordless promotion. In Europe, organic revenue was down 3% as declines in France and Italy were partially offset by growth in the UK, the Nordics, and Iberia.

Speaker Change: Hand tools organic revenue was flat with new to wall product introductions driving increased product listings with our customers.

Speaker Change: Outdoor organic revenue grew 6% with strong retail volume growth driven by handheld cordless outdoor power equipment and incremental retail product listings.

Chris Nelson: Turning to tools and outdoor performance by region. North America generated 1% organic growth driven by the same factors as the overall segment. Second quarter US retail point of sale demand was up modestly versus the prior year, led by outdoor and regained DeWalt cordless promotions. In Europe, organic revenue was down 3% as declines in France and Italy were partially offset by growth in the UK, the Nordics, and Iberia. We are prioritizing investments and new product listings to grow market share and overcome the macro softness that is affecting this region's economy. To round out geographic performance for the quarter, all other regions in aggregate grew 5% organically.

Speaker Change: Turning to tools and outdoor performance by region, North America generated 1% organic growth driven by the same factors as the overall segment set.

Speaker Change: Second quarter U S retail point of sale demand was up modestly versus the prior year led by outdoor and regain to Walt cordless promotions in Europe organic revenue was down 3% as declines in France, and Italy were partially offset by growth in the U K, the Nordics and Iberia, we are prioritizing investments and new.

Christopher John Nelson: We are prioritizing investments and new product listings to grow market share and overcome the macro softness that is affecting this region's economy. To round out geographic performance for the quarter, all other regions grew 5% organically. This was driven by double-digit growth in Latin America, led by Brazil, along with high single-digit growth in India.

Speaker Change: Listings to grow market share and overcome the macro softness that is affecting this region's economy to round out geographic performance for the quarter. All other regions in aggregate grew 5% organically. This was driven by double digit growth in Latin America led by Brazil, along with high single digit growth in India.

Chris Nelson: This was driven by double-digit growth in Latin America led by Brazil, along with high single-digit growth in India. In summary for tools and outdoor, the quarter was highlighted by a return to organic growth with a meaningful step up to segment margin.

Christopher John Nelson: In summary, for tools and outdoor, the quarter was highlighted by a return to organic growth with a meaningful step up to segment margin. Now moving to industrial, second quarter industrial revenue declined 20% versus last year, which was nearly all due to the infrastructure divestiture.

Speaker Change: In summary for tools and outdoor the quarter was highlighted by a return to organic growth with a meaningful step up to segment margin.

Chris Nelson: Now moving to industrial. Second quarter industrial revenue declined 20% versus last year, which was nearly all due to the infrastructure to vestige. Price contributed positive 2% to growth, offset by a 2% currency headwind. The engineer-fascening business grew 2% organically, driven by aerospace growth, which more than offset the market softness and automotive and customer destocking in general industrial. And improvement of 50 basis points versus prior year driven by price realization and cost control.

Speaker Change: Now moving to industrial second quarter industrial revenue declined 20% versus last year, which was nearly all due to the infrastructure divestiture.

Christopher John Nelson: Price contributed positively 2% to growth, offset by a 2% currency headwind. The engineered fastening business grew 2% organically, driven by aerospace growth, which more than offset market softness in automotive and customer to stocking in general industrial. The aerospace business grew 24% organically, supported by new business wins and a strong booking rate. The industrial adjusted segment margin was 13.5%, an improvement of 50 basis points versus the prior year, driven by price realization and cost control.

Speaker Change: <unk> contributed positive 2% of growth offset by a 2% currency headwind the engineered fastening business grew 2% organically driven by aerospace growth, which more than offset the market softness in automotive and customer Destocking in general industrial and the aerospace business grew 24%.

Speaker Change: <unk> supported by new business wins, and a strong booking rate the industrial adjusted segment margin was 13, 5% an improvement of 50 basis points versus prior year, driven by price realization and cost control.

Chris Nelson: I'd like to thank our teams around the world for their dedication to delivering another solid performance in the second quarter. Their focused efforts delivered organic growth and margin expansion across both business segments.

Christopher John Nelson: I'd like to thank our teams around the world for their dedication to delivering another solid performance in the second quarter. Their focused efforts delivered organic growth and margin expansion across both business segments. Moving to the next slide.

Speaker Change: I'd like to thank our teams around the world for their dedication to delivering another solid performance in the second quarter Theyre focused efforts delivered organic growth and margin expansion across both business segments moving to the next slide.

Christopher John Nelson: As I reflect on my first year here at Stanley Black & Decker, much of my time and energy has been directed towards learning about our end users' and channel partners' priorities, and how to both efficiently and effectively accelerate the next phase of tools and outdoor organic growth and market share gain. It's clear to me that we have four essential attributes for success. One, an industry with strong long-term growth characteristics. Two iconic brands. 3.

Chris Nelson: Moving to the next slide, as I reflect on my first year here at Stanley Black & Decker, much of my time and energy has been directed towards learning about our end users and channel partners' priorities and how to both efficiently and effectively accelerate the next phase of tools and outdoor organic growth and market share gains. It's clear to me that we have 4 essential attributes for success: one in industry with strong long-term growth characteristics, two iconic brands, three a differentiated innovation engine, and four deep customer relationships in loyal end users. I have strong conviction that we can create long-term value by capturing the commercial opportunities ahead of us, both now and into the future.

Speaker Change: As I reflect on my first year here at Stanley Black <unk> Decker much of my time and energy has been directed towards learning about our end users and channel partners priorities and how to both efficiently and effectively accelerate the next phase of tools and outdoor organic growth and market share gains. It's clear to me that we have for essential atrophy.

Speaker Change: <unk> for success, one in industry with strong long term growth characteristics two iconic brands.

Christopher John Nelson: A differentiated innovation engine and 4. Deep customer relationships and loyal end-users. I have strong conviction that we can create long-term value by capturing the commercial opportunities ahead of us, both now and into the future. To capture these opportunities, we are funding investments both by redirecting existing resources towards the most promising opportunities, as well as investing incremental dollars consistent with the $300 to $500 million range that Don and Pat have referenced on previous occasions.

Speaker Change: Three a differentiated innovation engine and for deep customer relationships and loyal end users I have strong conviction that we can create long term value by capturing the commercial opportunities ahead of us both now and into the future.

Chris Nelson: To capture these opportunities, we are funding investments, both by redirecting existing resources towards the most promising opportunities, as well as investing incremental dollars, consistent with the 300 to 500 million dollar range that Don and Pat have referenced on previous occasions. Along with market-facing priorities, I've also been focused on our team, putting in place the right capabilities and skills to execute our strategy.

Speaker Change: To capture these opportunities we are funding investments both by redirecting existing resources towards the most promising opportunities as well as investing incremental dollars consistent with the $300 million to $500 million range that Dan and Pat have referenced on previous occasions.

Christopher John Nelson: Along with market-facing priorities, I've also been focused on our team, putting in place the right capabilities and skills to execute our strategy. I am pleased to have my new organization established with a leadership team consisting of seasoned Stanley Black & Decker veterans, complemented by external talent who bring fresh perspectives. They are all in place and driving forward momentum.

Speaker Change: Along with market facing priorities I've also been focused on our team putting in place the right capabilities and skills to execute our strategy I am pleased to have my new organization established with our leadership team consisting of seasoned Stanley Black <unk> Decker veterans complemented by external talent, who bring fresh perspectives.

Chris Nelson: I am pleased to have my new organization established, with a leadership team consisting of season Stanley Black & Decker veterans, complemented by external talent, who bring fresh perspectives. They are all in place in driving forward momentum. The valuable breadth and depth of knowledge across the leadership team and organization is allowing us to activate our strategy with urgency. We are prioritizing our resources on the highest impact opportunities, which we believe are serving the professional end user within our most attractive markets. Over the past 12 months, as we continue to streamline and focus our business, we've doubled down on being brand-led and are prioritizing to Walt, Crasman, and Stanley.

Speaker Change: <unk> they are all in place and driving forward momentum the valuable breadth and depth of knowledge across the leadership team and organization is allowing us to activate our strategy with urgency.

Christopher John Nelson: The valuable breadth and depth of knowledge across the leadership team and organization is allowing us to activate our strategy with urgency. We are prioritizing our resources on the highest-impact opportunities, which we believe are serving the professional end-user within our most attractive market. Over the past 12 months, as we've continued to streamline and focus our business, we've doubled down on being brand-led and are prioritizing DeWalt, Craftsman, and Stanley. These powerful brands have significant scale in the marketplace and strong brand equity with end users.

Speaker Change: We are prioritizing our resources on the highest impact opportunities, which we believe are serving the professional end user within our most attractive markets over the past 12 months as we continue to streamline and focus our business. We've doubled down on being brand led and are prioritizing to wall Craftsman and Stanley.

Chris Nelson: These powerful brands have significant scale in the marketplace and strong brand equity with end users. By continuing to strengthen these brands and maximizing brand health, we can capitalize on their potential for long-term growth, share gain, and margin improvement.

Speaker Change: Powerful brands have significant scale in the marketplace and strong brand equity with end users.

Christopher John Nelson: By continuing to strengthen these brands and maximizing brand health, we can capitalize on their potential for long-term growth, share gain, and margin improvement. As for innovation, we view our long-standing ability to listen to end users and to deliver purpose-built innovation as a core differentiating capability. We are laser focused on driving innovation to help solve the most pressing challenges our professional end users face, namely finding ways to improve their safety and productivity on the job site, while ensuring they have robust tools to help deliver the high-quality craftsmanship their customers expect.

Speaker Change: By continuing to strengthen these brands and maximizing brand health, we can capitalize on their potential for long term growth share gain and margin improvement.

Chris Nelson: Turning to innovation, we view our long-standing ability to listen to end users and to deliver purpose-built innovation as a core differentiating capability. We are laser-focused on driving innovation to help solve the most pressing challenges our professional end users face, namely finding ways to improve their safety and productivity on the job site, while ensuring they have robust tools to help deliver the high-quality craftsmanship their customers expect. Our core brands have been synonymous with delivering this type of value to job sites for many years, and we will continue to push the boundaries of these solutions as enhancing safety and productivity on the job site has never been more relevant to the professional end users.

Speaker Change: Turning to innovation, we view, our longstanding ability to listen to end users and to deliver purpose built innovation as a core differentiating capability.

Speaker Change: We are laser focused on driving innovation to help solve the most pressing challenges our professional end users face, namely finding ways to improve their safety and productivity on the job site, while ensuring they have robust tools to help deliver the high quality craftsmanship their customers expect our core brands had been synonymous with dish.

Christopher John Nelson: Our core brands have been synonymous with delivering this type of value to job sites for many years, and we will continue to push the boundaries of these solutions as enhancing safety and productivity on the job site has never been more relevant to the professional end user. For example, we announced the next evolution in battery technology this quarter, the DEWALT XR PowerPak 8Ah battery with table cell technology. This joins the reinvigorated XR line, which houses the best-performing 20-volt max batteries and power tools from DeWalt.

Speaker Change: Living this type of value to job sites for many years and we will continue to push the boundaries of these solutions as enhancing safety and productivity on the job site has never been more relevant to the professional end user.

Chris Nelson: Professor. For example, we announced the next evolution in battery technology this quarter, the DeWalt XR PowerPack 8-amp hour battery with Tabless Cell Technology. This joins the reinvigorated XR line, which houses the best performing 20 volt max batteries and power tools from DeWalt. This battery technology conducts more energy, delivers more power output, and has a longer lifespan, which enhances end-user productivity. We also introduce the DeWalt Tuff Series Construction Jack, a tool designed to increase productivity by giving one person the confidence and security to lift, level, and hold material without assistance. With up to 340 pounds of lift capacity and fine-tuning adjustment features, this tool is a must-have for any end-user.

Speaker Change: For example, we announced the next evolution in battery technology. This quarter, the dual wall X our power pack eight amp hour battery with tablets cell technology.

Speaker Change: This joins a reinvigorated ex airline which houses the best performing 20 volt, Max batteries and power tools from the Walt.

Christopher John Nelson: This battery technology conducts more energy, delivers more power output, and has a longer lifespan, which enhances end-user productivity. We also introduce the DEWALT Tough Series Construction Jack, a tool designed to increase productivity by giving one person the confidence and security to lift, level, and hold material without assistance. With up to 340 pounds of lift capacity and fine-tuning adjustment features, this tool is a must-have for any end user.

Speaker Change: This battery technology conduct more energy delivers more power output and has a longer lifespan, which enhances end user productivity.

Speaker Change: We also introduced the dual wall tough series construction, Jack a tool designed to increase productivity by giving one person the confidence and security to lift level and hold material without assistance with up to 340 pounds of lift capacity and fine tuning adjustment features. This tool is a must have.

Speaker Change: <unk> for any end user.

Chris Nelson: Market activation is another investment priority and growth opportunity. We are more aggressively activating our core brands through amplified digital product marketing and additional field resources, both with a goal of extending the reach and impact of our brands and innovation. We expect our elevated marketing efforts behind DeWalt, coupled with support to grow the trades through grants, scholarships, and tool donations, will broaden user engagement and brand investorship. These sales and marketing initiatives are funded with new investment dollars and the reallocation of resources, which illustrates our prioritization efforts towards our best prospects for growth. In addition to delivering cost savings and driving margin improvement, which you have heard from Don, our supply chain transformation is also an enabler of growth.

Christopher John Nelson: Market activation is another investment priority and growth opportunity. We are more aggressively activating our core brands through amplified digital product marketing and additional field resources, both with the goal of extending the reach and impact of our brands and innovation. We expect our elevated marketing efforts behind the wall, coupled with support to grow the trades through grants, scholarships, and tool donations, will broaden user engagement and brand ambassadorship. These sales and marketing initiatives are funded with new investment dollars and the reallocation of resources, which illustrates our prioritization efforts towards our best prospects for growth.

Speaker Change: Market activation is another investment priority and growth opportunity.

Speaker Change: We are more aggressively activating our core brands through amplified digital product marketing and additional field resources, both with the goal of extending the reach and impact of our brands and innovation, we expect our elevated marketing efforts behind the wall, coupled with support to grow the trades through grants scholarships and tool donation.

Speaker Change: <unk> will broaden user engagement and brand ambassadorship.

Speaker Change: These sales and marketing initiatives are funded with new investment dollars and the reallocation of resources, which illustrates our prioritization efforts towards our best prospects for growth. In addition to delivering cost savings and driving margin improvement, which you have heard from Don our supply chain transformation is also in.

Christopher John Nelson: In addition to delivering cost savings and driving margin improvement, which you have heard from Don, our supply chain transformation is also an enabler of growth. Enhancing operational efficiency and achieving 35% plus adjusted gross margin unlocks incremental optionality to invest even more behind our brands and accelerate the virtuous cycle of organic growth. We believe that our emphasis on operational excellence, in combination with the structural changes we are making to our production and distribution network, which are the crux of our supply chain transformation, can become a sustainable growth enabler for the company as we serve our customers and end-users with excellence and success.

Chris Nelson: Enhancing operational efficiency and achieving 35% plus adjusted gross margin unlocks incremental optionality to invest even more behind our brands and to accelerate the virtuous cycle of organic growth. We believe that our emphasis on operational excellence, in combination with the structural changes we are making to our production and distribution network, which are the crux of our supply chain transformation, can become a sustainable growth enabler for the company as we serve our customers and end users with excellence and speed. In addition, the continuous improvement capabilities we are strengthening as a part of this transformation will serve as a sustainable engine to help generate recurring productivity to self-fund the business and our brands.

Donald Allan: Enabler of growth enhancing operational efficiency, and achieving 35% plus adjusted gross margin unlocks incremental optionality to invest even more behind our brands and to accelerate the virtuous cycle of organic growth.

Donald Allan: We believe that our emphasis on operational excellence in combination with the structural changes, we are making to our production and distribution network, which are the crux of our supply chain transformation can become a sustainable growth enabler for the company as we serve our customers and end users with excellence and speed.

Christopher John Nelson: In addition, the continuous improvement capabilities we are strengthening as a part of this transformation will serve as a sustainable engine to help generate recurring productivity to self-fund the business and our brands. In summary, while the near-term market demand environment remains mixed, we are optimistic about the long-term growth opportunities in our industry. We are aggressively moving forward to accelerate the growth of our powerful brands with our end users and customers around the globe.

Donald Allan: In addition, the continuous improvement capabilities, we are strengthening as a part of this transformation will serve as a sustainable engine to help generate recurring productivity to self fund the business and our brands in summary, while the near term market demand environment remains mixed we are optimistic.

Chris Nelson: In summary, while the near-term market demand environment remains mixed, we are optimistic about the long-term growth opportunities in our industry. We are aggressively moving forward to accelerate the growth of our powerful brands with our end users and customers around the globe. We have a talented team deployed that is moving with speed and a clear mandate, executing our transformation plan and accelerating share gain. This simple but powerful mandate energizes our team as we work to position ourselves to win in the marketplace.

Speaker Change: <unk> about the long term growth opportunities in our industry. We are aggressively moving forward to accelerate the growth of our powerful brands with our end users and customers around the globe.

Christopher John Nelson: We have a talented team deployed that is moving with speed and a clear mandate, executing our transformation plan and accelerating share gain. This simple but powerful mandate energizes our team as we work to position ourselves to win in the marketplace. Thank you, and I'll now pass the call over to Pat Hallinan. Thanks, Chris, and good morning.

Speaker Change: We have a talented team deployed that is moving with speed and a clear mandate executing our transformation plan and accelerating share gain this simple, but powerful mandate energizes our team as we work to position ourselves to win in the marketplace. Thank you and I'll now pass the call over to Pat Hallinan.

Pat Hallinan: Thank you, and I'll now pass the call over to Pat Haliman. Thanks, Chris, and good morning. Turning to the next slide. We're two years into our transformation journey and are continuing to make meaningful progress each quarter. I would like to highlight our accomplishments during the second quarter and how we intend to meet our objectives with continued focus and intensity during the back half of 2024 and beyond. We achieved approximately 150 million dollars of pre-tax run rate cost savings in the quarter, bringing our aggregate savings to approximately 1.3 billion since program and steps. Cooperation, our performance represents strong execution.

Patrick D. Hallinan: Thanks, Chris and good morning, turning to the next slide.

Patrick D. Hallinan: We're two years into our transformation journey and are continuing to make meaningful progress each quarter. I would like to highlight our accomplishments during the second quarter and how we intend to meet our objectives with continued focus and intensity during the back half of 2024 and beyond. We achieved approximately $150 million of pre-tax run rate cost savings in the quarter, bringing our aggregate savings to approximately $1.3 billion since program inception.

Patrick D. Hallinan: We're two years into our transformation journey and are continuing to make meaningful progress each quarter I would like to highlight our accomplishments during the second quarter and how we intend to meet our objective with continued focus and intensity during the back half of 'twenty 'twenty four and beyond we achieved approximately 150 million.

Patrick D. Hallinan: A pretax run rate cost savings in the quarter, bringing our aggregate savings to approximately 1.3 billion since program inception.

Patrick D. Hallinan: Our performance represents strong execution. On a year-to-date basis, we are tracking the plan, driven by strategic sourcing. We are diligently capturing cost efficiencies to counter the soft demand backdrop. I am pleased to say the savings we generated in the first half support the second half gross margin expansion included in our guidance. More on that later.

Patrick D. Hallinan: Our performance represents strong execution on a year to date basis, we are tracking to plan driven by strategic sourcing action. We are diligently capturing cost efficiencies to counter the soft demand backdrop I am pleased to say the savings we generated in the first half.

Pat Hallinan: On a year-to-date basis, we are tracking to plan, driven by strategic sourcing actions. We are diligently capturing cost efficiencies to counter the soft demand backdrop. I am pleased to say the savings we generated in the first half support the second half gross margin expansion included in our guidance. More on that later; we continue to target $1.5 billion of pre-tax run rate savings by the year end of 2024 and $2 billion of pre-tax run rate savings by the end of 2025. We are on track to achieve both targets. As a reminder, the biggest areas where we see savings opportunities are strategic sourcing, operations excellence, footprint actions, and complexity reduction.

Patrick D. Hallinan: Port the second half gross margin expansion included in our guidance.

Patrick D. Hallinan: We continue to target $1.5 billion of pre-tax run rate savings by the year end of 2024 and $2 billion of pre-tax run rate savings by the end of 2025. We are on track to achieve both targets. As a reminder, the biggest areas where we see savings opportunities are strategic sourcing, operations excellence, footprint actions, and complexity. Strategic sourcing remains the largest contributor to our transformation savings to date.

Patrick D. Hallinan: More on that later, we continue to target $1 $5 billion of pre tax run rate savings by the year end of 2024.

Patrick D. Hallinan: And $2 billion of pre tax run rate savings by the end of 2025.

Patrick D. Hallinan: We are on track to achieve both targets.

Patrick D. Hallinan: As a reminder, the biggest areas, where we see savings opportunities our strategic sourcing operations excellence footprint actions and complexity reduction.

Pat Hallinan: Strategic sourcing remains the largest contributor to our transformation savings to date. We are actioning $5 billion of addressable spend across areas such as materials and components, finished goods, and indirect expenditure. Operations excellence is the next area of opportunity. Our initiatives are driving productivity improvements that translate into tangible results. This initiative encompasses our manufacturing, operating model, and leverages lean principles. In 2024, this has been particularly effective in reducing downtime and improving labor efficiency. We have a robust pipeline of projects lined up to deliver savings this year and beyond. Turning to footprint-related projects and product platforming, we are optimizing our distribution footprint as well as redesigning our manufacturing network to leverage scale and centers of excellence as we maximize operational efficiency.

Patrick D. Hallinan: Strategic sourcing remains the largest contributor to our transformation savings to date.

Patrick D. Hallinan: We are actioning $5 billion of addressable spend across areas such as materials and components, finished goods, and Indirect Expenditure. Operations excellence is the next area of opportunity. Our initiatives are driving productivity improvements that translate into tangible results. This initiative encompasses our manufacturing operating model and leverages lean principles. In 2024, this has been particularly effective in reducing downtime and improving labor efficiency.

Patrick D. Hallinan: We are actioning $5 billion of addressable span across areas, such as materials and components finish.

Patrick D. Hallinan: Finished goods and indirect expenditures opt.

Patrick D. Hallinan: Operations Excellence is the next area of opportunity.

Patrick D. Hallinan: Our initiatives are driving productivity improvements that translate into tangible results. This initiative encompasses our manufacturing operating model and Leverages lean principles.

Patrick D. Hallinan: In 2024, this has been particularly effective in reducing downtime and improving labor efficiency.

Patrick D. Hallinan: We have a robust pipeline of projects lined up to deliver savings this year and beyond. Turning to footprint-related projects and product platforming, we are optimizing our distribution footprint as well as redesigning our manufacturing network to leverage scale and centers of excellence as we maximize operational efficiency. This multi-year endeavor continues to progress as planned, and we expect to exit or transform a number of facilities across the globe over the next 18 months.

Patrick D. Hallinan: We have a robust pipeline of projects lined up to deliver savings this year and beyond.

Patrick D. Hallinan: Turning to footprint related projects and product platforming, we are optimizing our distribution footprint as well as redesigning our manufacturing network to leverage scale and centers of excellence as we maximize operational efficiency. This multiyear endeavor continues to progress as planned and we expect to exit.

Pat Hallinan: This multi-year endeavor continues to progress as planned, and we expect to exit or transform a number of facilities across the globe over the next 18 months. We are well underway with our platforming strategy, which identifies methods to standardize parts and components across product families to eliminate complexity and to improve procurement scale. We are incorporating this strategy into our product development process across power tools and outdoor products with significant opportunities across the craftsmen and zero-turn moors. This exciting program is in the early innings, and we believe it can be a source of material productivity well beyond 2025.

Patrick D. Hallinan: Our transform a number of facilities across the globe over the next 18 months.

Patrick D. Hallinan: We are well underway with our platforming strategy, which identifies methods to standardize parts and components across product families to eliminate complexity and improve procurement. We are incorporating this strategy into our product development process across power tools and outdoor products with significant opportunities across DeWalt, Craftsman, and Zero Turn Mower.

Patrick D. Hallinan: We are well underway with our platforming strategy, which identifies method to standardized parts and components across product families to eliminate complexity and to improve procurement scale.

Patrick D. Hallinan: We are incorporating this strategy into our product development process across power tools and outdoor products with significant opportunities across the wall Craftsman and zero turn mowers. This exciting program is in the early innings and we believe it can be a source of material productivity well beyond 2025.

Patrick D. Hallinan: This exciting program is in the early innings, and we believe it can be a source of material productivity well beyond 2025. In aggregate, our supply chain transformation initiatives are expected to generate approximately half a billion dollars of savings in 2020, achieve a full year gross margin of 30%, and fund additional growth investments in our core business. I would like to commend the organization for diligently pursuing the goals of our transformation. This journey would not be possible without everyone's contribution. We are developing the sustainable cost structure and operational efficiency needed to return our adjusted gross margin to 35% or greater while enabling targeted growth. Moving to the next slide.

Pat Hallinan: In aggregate, our supply chain transformation initiatives are expected to generate approximately half a billion dollars of savings in 2024, achieve a full-year gross margin of 30 percent, and fund additional growth investments in our core business. I would like to commend the organization for diligently pursuing the goals of our transformation. This journey would not be possible without everyone's contributions. We are developing the sustainable cost structure and operational efficiency needed to return our adjusted gross margin to 35 percent or greater while enabling targeted growth investment.

Patrick D. Hallinan: In aggregate our supply chain transformation initiatives are expected to generate approximately half a billion dollars of savings in 2024 achieve our full year gross margin of 30% and fund additional growth investments in our core business.

Speaker Change: I would like to commend the organization for diligently pursuing the goals of our transformation. This journey would not be possible without everyones contributions.

Speaker Change: We are developing the sustainable cost structure and operational efficiency needed to return, our adjusted gross margin to 35% or greater while enabling targeted growth investments.

Pat Hallinan: Moving to the next slide. Two main areas of focus this year are generating free cash flow and expanding gross margins to support long-term growth and value. We generated a historically strong $486 million of free cash flow in the second quarter of 2024. This brings our year-to-date free cash flow to approximately neutral. Our performance was supported by approximately $400 million of accelerated working capital improvements, which were realized earlier in 2024 versus our initial plan. We continued to make progress on our inventory levels and sequentially reduced our inventory balance by approximately $100 million this quarter. Inventory days remain below 150 and are moving toward our long-term target of approximately 120 to 130 days.

Speaker Change: Moving to the next slide.

Patrick D. Hallinan: Two main areas of focus this year are generating free cash flow and expanding gross margins to support long-term growth and value creation. We generated a historically strong $486 million of free cash flow in the second quarter of 2024. This brings our year-to-date free cash flow to approximately neutral. Our performance was supported by approximately $400 million of accelerated working capital improvements, which were realized earlier in 2024 versus our initial plan. We continued to make progress on our inventory levels and sequentially reduced our inventory balance by approximately $100 million this quarter.

Speaker Change: Two main areas of focus this year are generating free cash flow and expanding gross margin to support long term growth and value creation.

Speaker Change: We generated a historically strong $486 million of free cash flow in the second quarter of 2024. This brings our year to date free cash flow to approximately neutral.

Speaker Change: Our performance was supported by approximately $400 million of accelerated working capital improvements, which were realized earlier in 'twenty 'twenty four versus our initial plan. We continued to make progress on our inventory levels and sequentially reduced our inventory balance by approximately $100 million this quarter.

Patrick D. Hallinan: Inventory days remain below 150 and are moving toward our long-term target of approximately 120 to 130 days. The remainder of the working capital favorability was a result of improved accounts receivable and accounts payable balances versus our plan. Our strong free cash flow, along with the net proceeds from the infrastructure sale, enabled $1.2 billion of commercial paper reduction during the second quarter.

Speaker Change: Inventory days remained below 150 and are moving toward our long term target of approximately 120 to 130 days.

Pat Hallinan: The remainder of the working capital favorability was a result of improved accounts receivable and accounts payable balances versus our plan. Our strong free cash flow, along with the net proceeds from the infrastructure sale, enabled 1.2 million dollars of commercial paper reduction during the second quarter. The strong momentum in the first half and a modest reduction to our capital spending expectations gives us the confidence to raise our full year free cash flow guidance range to $650 to $850 million, up from our prior range of $600 to $800 million. We expect second half free cash flow in excess of the dividend to support an additional $400 to $500 million of short-term debt reduction by year end, which will result in a total debt balance that is a little over $6 billion.

Speaker Change: The remainder of the working capital favorability was a result of improved accounts receivable and accounts payable balances versus our plan.

Speaker Change: Our strong free cash flow along with the net proceeds from the infrastructure sale enabled $1.2 billion of commercial paper reduction during the second quarter.

Patrick D. Hallinan: The strong momentum in the first half and a modest reduction in our capital spending expectations gives us the confidence to raise our full-year free cash flow guidance range to $650 to $850 million, up from our prior range of $600 to $800 million. We expect second-half free cash flow in excess of the dividend to support an additional $400 to $500 million of short-term debt reduction by year-end, which will result in a total debt balance of a little over $6 billion.

Speaker Change: The strong momentum in the first half and a modest reduction to our capital spending expectations gives us the confidence to raise our full year free cash flow guidance range to $650 million to $850 million up from our prior range of $600 million to $800 million we.

Speaker Change: <unk> second half free cash flow in excess of the dividend to support an additional $400 million to $500 million of short term debt reduction by year end, which will result in a total debt balance that is a little over $6 billion. In 2025, we are targeting further deleveraging through free cash.

Patrick D. Hallinan: In 2025, we are targeting further deleveraging through free cash flow generation, coupled with the funds generated by the Strategic Portfolio Pruning Act. Our goal for the year-end 2025 is total debt in the low $5 billion zone, inclusive of inorganic cash. This plan enables us to achieve our desired leverage metrics and is consistent with the discussions with our rating agencies. Another item of note, this past quarter, we proactively renegotiated the company's core credit facility.

Pat Hallinan: In 2025, we are targeting further deleveraging through free cash flow generation coupled with the funds generated by strategic portfolio pruning actions. Our goal for the year end 2025 is total debt in the low $5 billion dollars zone, inclusive of inorganic cash generation. This plan enables us to achieve our desired leverage metrics and is consistent with the discussions with our rating agencies. Another item of note, this past quarter we proactively renegotiated the company's core credit facilities, securing access to significant liquidity to support the company's ongoing transformation. We prioritize maintaining investment grade credit ratings and have access to $3.5 billion in credit facilities backed by a long standing, well capitalized, and diversified bank group.

Speaker Change: Flow generation, coupled with the funds generated by strategic portfolio pruning actions our goal for the year end 'twenty 'twenty five is total debt in the low 5 billion dollar zone inclusive of inorganic cash generation.

Speaker Change: This plan enables us to achieve our desired leverage metrics and is consistent with the discussions with our rating agencies. Another item of note. This past quarter, we proactively renegotiated the company's core credit facilities.

Patrick D. Hallinan: Securing access to significant liquidity to support the company's ongoing transformation. We prioritize maintaining investment-grade credit ratings and have access to $3.5 billion in credit facilities backed by a long-standing, well-capitalized, and diversified bank. Our capital allocation priorities remain investing in our organic growth and our transformation, funding our long-standing cash dividend to return value to shareholders, and further strengthening our balance. Turning to profitability, adjusted gross margin was 29.2% in the second quarter. A 560 basis point improvement versus prior years, driven by lower inventory de-stocking costs, Supply Chain Transformation Benefits, and Lower Shipping Costs.

Speaker Change: Carrying access to significant liquidity to support the company's ongoing transformation, we prioritize maintaining investment grade credit ratings and have access to $3 5 billion in credit facilities backed by a long standing well capitalized and diversified Bank group.

Pat Hallinan: Our capital allocation priorities remain: investing in our organic growth and our transformation, funding our long standing cash dividend to return value to shareholders, and further strengthening our balance sheet. Turning to profitability, adjusted gross margin was 29.2% in the second quarter, a 560 basis point improvement versus prior year driven by lower inventory destocking costs, supply chain transformation benefits, and lower shipping costs. In the first half of 2024, we improved adjusted gross margin by 40 basis points sequentially versus the second half 2023, consistent with our plan. We are planning for further sequential improvement in the second half of this year, with adjusted gross margin expected to approximate 31%.

Speaker Change: Our capital allocation priorities remain investing in our organic growth and our transformation funding our long standing cash dividend to return value to shareholders.

Speaker Change: Further strengthening our balance sheet.

Speaker Change: Turning to profitability.

Speaker Change: Adjusted gross margin was 29, 2% in the second quarter.

Speaker Change: 560 basis point improvement versus prior year, driven by lower inventory destocking costs.

Speaker Change: Supply chain transformation benefits and lower shipping costs.

Patrick D. Hallinan: In the first half of 2024, we improved adjusted gross margin by 40 basis points sequentially versus the second half of 2023, consistent with our plan. We are planning for further sequential improvement in the second half of this year, with adjusted gross margin expected to approximate 31 percent. Our second half step up is supported by our supply chain transformation savings, which are and have been tracking to plan.

Speaker Change: In the first half of 'twenty 'twenty four we improved adjusted gross margin by 40 basis points sequentially versus second half 2023, consistent with our plan.

Speaker Change: We are planning for further sequential improvement in the second half of this year with adjusted gross margin expected to approximate 31%. Our second half step up is supported by our supply chain transformation savings, which are and have been tracking to plan.

Pat Hallinan: Our second half step up is supported by our supply chain transformation savings, which are and have been tracking the plan. Plan. This plan puts us on a path to deliver our long-held transformation goal of approximately 30% full-year 2024 adjusted gross margin and exit the year in the low 30s. We continue to be on a solid trajectory of adjusted gross margin improvement against a challenging macro backdrop. Our momentum gives us confidence in our ability to achieve our gross margin objectives for 2024 and achieve 35% plus adjusted gross margin within the transformation time horizon.

Patrick D. Hallinan: This plan puts us on a path to deliver our long-held transformation goal of approximately 30% full-year 2024 adjusted gross margin and exit the year in the low 30s. We continue to be on a solid trajectory of adjusted gross margin improvement against a challenging macro backdrop. Our momentum gives us confidence in our ability to achieve our gross margin objectives for 2024 and achieve 35% plus adjusted gross margin within the transformation timer. Now, turning to our 2024 guidance and the remaining key assumptions.

Speaker Change: This plan puts us on a path to deliver our long held transformation goal of approximately 30% full year 2024, adjusted gross margin and exit the year in the low thirties.

Speaker Change: We continue to be on a solid trajectory of adjusted gross margin improvement against the challenging macro backdrop.

Speaker Change: Our momentum gives us confidence in our ability to achieve our gross margin objectives for 2024 and achieved 35% plus adjusted gross margin within the transformation time horizon.

Pat Hallinan: Now turning to our 2024 guidance and the remaining key assumptions. In addition to the updated free cash flow guidance I just shared, we are revising GAAP earnings per share range to 90 cents to $2 and raising adjusted earnings per share range to $3.70 to $4.50. The gap earnings per share revision is primarily a result of incorporating the second quarter environmental reserve expense of approximately $155 million into the range. Adjusted earnings per share is being revised 10 cents higher at the midpoint. Our outlook factors in a soft macro environment in the second half. We are leveraging the cost savings within our control to offset this and generate second half adjusted EBITDA growth versus the prior year.

Speaker Change: Now turning to our 'twenty 'twenty four guidance and the remaining key assumptions.

Patrick D. Hallinan: In addition to the updated free cash flow guidance I just shared, we are revising the GAAP earnings per share range to $0.90 to $2 and raising the adjusted earnings per share range to $3.70 to $4.50. The GAAP earnings per share revision is primarily a result of incorporating the second quarter environmental reserve expense of approximately $155 million into the range. Adjusted earnings per share is being revised 10 cents higher at the midpoint.

Speaker Change: In addition to the updated free cash flow guidance I. Just shared we are revising GAAP earnings per share range to 90 to $2 and raising adjusted earnings per share range to $3 70 to $4 50.

The GAAP earnings per share revision is primarily a result of incorporating the second quarter environmental reserve expense of approximately $155 million into the range.

Speaker Change: Adjusted earnings per share is being revised 10 cents higher at the midpoint our outlook factors in a soft macro environment in the second half.

Patrick D. Hallinan: Our outlook factors in a soft macro environment in the second half, but we are leveraging the cost savings within our control to offset this and generate second half adjusted EBITDA growth versus the prior year. The EPS improvement at the midpoint passes along a portion of the second quarter operating outperformance and includes lower back half interest expense due to accelerated deleveraging. Our midpoint assumption for full year organic revenue is expected to be down a half a percentage.

Speaker Change: We are leveraging the cost savings within our control to offset this and generate second half adjusted EBITDA growth versus the prior year.

Pat Hallinan: The EPS improvement at the midpoint passes along a portion of the second quarter operating outperformance and includes lower back half interest expense due to accelerated de-leveraging. Our midpoint assumption for full year organic revenue is expected to be down a half a percentage point. This contemplates the continuation of the stretched consumer and tools and outdoor, along with a declining automotive production backdrop and industrial. Our sales range contemplates plus or minus 130 basis points, which is the primary area of adjusted earnings per share variability. Turning to the segments, tools and outdoor full year organic revenue is expected to decline 1% at the midpoint, plus or minus low single digits, with a range of variability similar to the total company.

The EPS improvement at the midpoint passes along a portion of the second quarter operating outperformance.

Speaker Change: And includes lower back half interest expense due to accelerated deleveraging.

Speaker Change: Our midpoint assumption for full year organic revenue is expected to be down a half a percentage point.

Patrick D. Hallinan: This contemplates the continuation of the stretched consumer in tools and outdoor along with a declining automotive production backdrop in industrial. Our sales range contemplates plus or minus 130 basis points, which is the primary area of adjusted earnings per share variability. Turning to the segment,

Speaker Change: This contemplates the continuation of the stretched consumer and tools and outdoor <unk>.

Speaker Change: Along with a declining automotive production backdrop in industrial.

Speaker Change: Our sales range contemplates plus or minus 130 basis points, which is the primary area of adjusted earnings per share variability.

Speaker Change: Turning to the segments.

Patrick D. Hallinan: Tools and Outdoor Full Year Organic Revenue is expected to decline 1% at the midpoint plus or minus low single digits with a range of variability similar to the total company. Pricing for tools and outdoor products is expected to be relatively flat for the full year, which is consistent with what we are seeing in the market today. The industrial segment's organic revenue is expected to be relatively flat to slightly positive as arrow fastener growth is partially pressured by global automotive OEM light vehicle production headwinds.

Speaker Change: Tools and outdoor full year organic revenue is expected to decline, 1% at the midpoint plus or minus low single digits with a range of variability similar to the total company.

Pat Hallinan: Pricing for tools and outdoors is expected to be relatively flat for the full year, which is consistent with what we are seeing in the market today. The industrial segment organic revenue is expected to be relatively flat to slightly positive as Arrow fasteners growth is partially pressured by global automotive OEM, like vehicle production headwind. We are maintaining a disciplined approach to cost management and remain committed to funding and reprioritizing investments for long-term organic growth. Our planning assumption for innovation, brand, marketing activation, and technology growth investments remains an incremental $100 million in 2024. Our expectation for full year S-GNA as a percentage of sales is to be in the mid-21 percent zone.

Speaker Change: Pricing for tools and outdoor is expected to be relatively flat for the full year, which is consistent with what we are seeing in the market today.

Speaker Change: The industrial segment organic revenue is expected to be relatively flat to slightly positive as arrow fasteners growth is partially pressured by global automotive OEM light vehicle production headwinds.

Patrick D. Hallinan: We are maintaining a disciplined approach to cost management and remain committed to funding and reprioritizing investments for long-term organic growth. Our planning assumption for innovation, brand, marketing activation, and technology growth investments remains an incremental $100 million in 2020. Our expectation for full year SG&A as a percentage of sales is to be in the mid 21% zone. Turning to profitability. We expect the total company adjusted EBITDA margin to approximate 10% for the full year, supported by savings from the transformation program.

Speaker Change: We are maintaining a disciplined approach to cost management and remain committed to funding and re prioritizing investments for long term organic growth.

Speaker Change: Our planning assumption for innovation brand marketing activation and technology growth investments remains an incremental $100 million in 2024, our expectation for full year SG&A as a percentage of sales is to be in the mid 21% zone.

Pat Hallinan: Turning to profitability, we expect total company adjusted EBITDA margin to approximate 10% for the full year, supported by savings from the transformation growth. program. Adjusted segment margin in tools and outdoor is planned to be up year over year, also driven by continued momentum from our ongoing strategic transformation. The industrial adjusted segment margin is expected to be flat to slightly positive versus the prior year as operating improvements and cost controls in engineered fascinating are offset by the delusion from the infrastructure business to vestiture. Our adjusted earnings per share range is 80 cents, with variability and market demand being the largest contributor.

Speaker Change: Turning to profitability.

Speaker Change: We expect total company adjusted EBITDA margin to approximate 10% for the full year.

Speaker Change: Supported by savings from the transformation program.

Patrick D. Hallinan: Adjusted segment margin in tools and outdoor is planned to be up year over year, also driven by continued momentum from our ongoing strategic transformation. The industrial adjusted segment margin is expected to be flat to slightly positive versus the prior year as operating improvements and cost controls and engineered fastening are offset by the dilution from the infrastructure business. Our adjusted earnings per share range is $0.80, with variability and market demand being the largest contributors.

Speaker Change: Adjusted segment margin in tools and outdoor is planned to be up year over year also driven by continued momentum from our ongoing strategic transformation.

Speaker Change: The industrial adjusted segment margin is expected to be flat to slightly positive versus the prior year.

Speaker Change: As operating improvements and cost controls in engineered fastening are offset by the dilution from the infrastructure business divestiture.

Speaker Change: Our adjusted earnings per share range is 80 cents with variability and market demand being the largest contributor.

Pat Hallinan: We will work to optimize adjusted gross margin and manage SGNA thoughtfully throughout the year to balance the macro uncertainty while working hard to preserve investments to position the business for long-term growth. Turning to other elements of our guidance, gap earnings include pre-tax non-gap adjustments ranging from $445 to $495 million dollars, largely related to the supply chain transformation program, as well as the second quarter environmental expense. The adjusted tax rate is expected to be 10 percent for the full year, with the third quarter approximating 20 percent and a benefit in the fourth quarter. Our 2024 guidance assumptions at the midpoint are noted on the slide to assist with modeling.

Patrick D. Hallinan: We will work to optimize, adjust the gross margin, and manage SG&A thoughtfully throughout the year to balance macrouncertainty while working hard to preserve investments to position the business for long-term growth. Turning to other elements of our guidance, GAAP earnings include pre-tax, non-GAAP adjustments ranging from $445 to $495 million, largely related to the Supply Chain Transformation Program as well as the second quarter environmental. The adjusted tax rate is expected to be 10% for the full year, with the third quarter approximating 20%, and a benefit in the fourth quarter.

Speaker Change: We will work to optimize adjusted gross margin and manage SG&A thoughtfully throughout the year to balance the macro uncertainty, while working hard to preserve investments to position the business for long term growth.

Speaker Change: Turning to other elements of our guidance.

Speaker Change: GAAP earnings include pretax non-GAAP adjustments, ranging from $445 million to $495 million largely related to the supply chain transformation program as well as the second quarter environmental expense the adjusted tax rate is expected.

Speaker Change: To be 10% for the full year with the third quarter approximating, 20% and a benefit in the fourth quarter.

Patrick D. Hallinan: Our 2024 guidance assumptions at the midpoint are noted on the slide to assist with modeling. We expect the third quarter adjusted earnings per share to be approximately 25% of the full year at mid-term. In summary, looking forward, we remain focused on executing our supply chain improvements to further improve gross margin and earnings in the second half of 2024, and our progress to date supports our improved full-year adjusted earnings and free cash flow. We remain confident that our actions to drive toward our target of 35 plus percent adjusted gross margin, while funding additional organic revenue growth investments, will continue to generate positive results.

Speaker Change: Our 'twenty 'twenty four guidance assumptions at the midpoint are noted on the slide to assist with modeling.

Pat Hallinan: We expect the third quarter adjusted earnings per share to be approximately 25 percent of the full year at the midpoint.

We expect the third quarter adjusted earnings per share to be approximately 25% of the full year at the midpoint in summary, looking forward, we remain focused on executing our supply chain improvements to further improve gross margin and earnings in the second half of 'twenty 'twenty, four and our progress to date.

Don Allen: In summary, looking forward, we remain focused on executing our supply chain improvements to further improve gross margin and earnings in the second half of 2024, and our progress to date supports our improved full year adjusted earnings and free cash flow outlook. We remain confident that our actions to drive toward our target of 35 plus percent adjusted gross margin while funding additional organic revenue growth investments will continue to generate positive results. Our top priorities remain delivering margin expansion, generating cash, and further strengthening the balance sheet to position the company for long-term growth and value creation.

Speaker Change: The ports are improved full year adjusted earnings and free cash flow outlook.

Speaker Change: We remain confident that our actions to drive toward our target of 35 plus percent adjusted gross margin while funding additional organic revenue growth investments will continue to generate positive results are.

Patrick D. Hallinan: Our top priorities remain delivering margin expansion, generating cash, and further strengthening the balance sheet to position the company for long-term growth and value creation. With that, I will now pass the call back to Dennis. Thank you, Pat.

Speaker Change: Our top priorities remain delivering margin expansion generating cash and further strengthening the balance sheet to position the company for long term growth and value creation.

Don Allen: With that, I will now pass the call back to Don. Thank you, Pat. As you heard this morning, the company is making meaningful progress across our key priorities of margin improvement, cash generation, and balance sheet health, while also investing in future sustainable growth. We are moving with speed and delivering results in a macro environment that has not been supportive, but we are confident that it will turn from a headwind to a tailwind in the future. Until then, we are focused on consistent execution while positioning the company to deliver higher levels of sustainable organic revenue growth, improve profitability, and cash flow to drive strong, long-term shareholder returns.

Speaker Change: With that I will now pass the call back to Don.

Dennis Lange: As you heard this morning, the company is making meaningful progress across our key priorities of margin improvement, cash generation, and balance sheets, while also investing in future sustainable growth. We are moving with speed and delivering results in a macro environment that has not been supportive, but we are confident that it will turn from a headwind to a tailwind in the future. Until then, we are focused on consistent execution while positioning the company to deliver higher levels of sustainable organic revenue growth, improved profitability, and cash flow to drive strong long-term shareholder returns. We are now ready for Q&A. Great. Thanks, Don.

Donald Allan: Thank you Pat as you heard this morning, the company is making meaningful progress across our key priorities of margin improvement cash generation and balance sheet health.

Donald Allan: While also investing in future sustainable growth, we are moving with speed and delivering results in a macro environment that has not been supportive, but we are confident that it will turn from a headwind to a tailwind in the future until then we are focused on consistent execution, while positioning the company to deliver higher levels of <unk>.

Donald Allan: Sustainable organic revenue growth improve profitability and cash flow to drive strong long term shareholder returns.

Dennis Lange: We are now ready for Q&A, Dennis.

Dennis Lange: We are now ready for Q&A Dennis.

Dennis Lange: Great. Thanks, Don.

Dennis Lange: Shannon, we can now start the Q&A, please. Thank you. Thank you. To ask a question, you will need to press star 1 1 on your telephone.

Operator: Shannon, we can now start the Q&A, please. Thank you. To ask a question, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. We ask that you please limit yourself to one question. John, please stand by. We'll compile the Q&A roster.

Shannon: Great. Thanks, Dan Shannon, we can now start the Q&A. Please thank you.

Speaker Change: Thank you to ask a question you will need to press star one on your telephone you will then hear an automated message advising your hand. This raced to withdraw your question. Please press star one again, we exited you please limit yourself to one question.

Operator: You will then hear an automated message advising your hand is free. To withdraw your question, please press star 11 again. We ask that you please limit yourself to one question. Please stand by. We'll compile the Q&A roster. Our first question comes from the line of Julian Mitchell with Barclays. Your line is now open. Hi, good morning.

Speaker Change: Please standby will compile the Q&A roster.

Julian Mitchell: Our first question comes from the line of Julian Mitchell with Barclays.

Speaker Change: Our first question comes from the line of Julian Mitchell with Barclays. Your line is now open.

Pat Hallinan: Your line is now open. Hi, good morning. Maybe just a question around the earnings trajectory. So it looks like sort of EPS is guided to be flatish sequentially in Q3 and then up, I think, 40 cents or so sequentially. In the fourth quarter. So understand that the sort of tax rate movement from 20% to negative tax in Q4.

Julian C.H. Mitchell: Hi, good morning.

Julian C.H. Mitchell: Good morning. Maybe just a question around the earnings trajectory. So it looks like sort of EPS is guided to be flattish sequentially in Q3 and then up, I think 40 cents or so, sequentially in the fourth quarter. So you can see the sort of tax rate movement from 20% to negative tax in Q4. But maybe you could flesh out any of the moving parts around sort of revenue and margin for the third and fourth quarter. And on that tax rate point, what's a good kind of placeholder for next year? Hey Julian, it's Pat.

Good morning, maybe just a question around the <unk>.

Julian C.H. Mitchell: Earnings trajectory. So it looks like sort of EPS is guided to be flattish sequentially in Q3.

Julian C.H. Mitchell: And then I think <unk> 40 cents or so sequentially in the fourth quarter.

Speaker Change: So understand the sort of tax rate movement from 20% to negative tax in Q4, but maybe if you could flesh out any of the moving parts around sort of revenue and margin.

Pat Hallinan: But maybe if you could flesh out any of the moving parts around sort of revenue and margin for the third and fourth quarter, and on that tax rate point, what's a good kind of placeholder for next year, please.

Speaker Change: For the third and fourth quarter and on that tax rate point, what's a good kind of place holder for next year. Please.

Pat Hallinan: Hey, Joanne, it's Pat.

Patrick D. Hallinan: Yeah, you have it correct. That's the correct EPS flow. You know, I'd say the fourth quarter seasonal revenue impact is what drives revenue and OM in the fourth quarter. So, you know, you're slightly north of $3.5 billion in revenue in the fourth quarter. And, you know, you're probably in between $300 and $330 million in the OM range in the quarter, with the flow in the third quarter obviously rounding out the back half of the year.

Patrick D. Hallinan: Hey, Julien it's Pat.

Pat Hallinan: You have it correct. That's the correct EPS flow.

Speaker Change: Yes.

Patrick D. Hallinan: You have it correct.

Speaker Change: The correct EPS flow.

Pat Hallinan: You know, I'd say the fourth quarter seasonal revenue impact is what drives the revenue and OM in the fourth quarter. So you're, you know, you're slightly north of 3.5 billion in revenue in the fourth quarter. And, you know, you're probably in between 300 and 330 million in the OM range in the quarter with the flow in the third quarter, obviously rounding out the back half of the year. You know, the third quarter is seasonally strong as some of the holiday shipments start humming around the September timeframe.

Speaker Change: I'd say the fourth quarter.

Speaker Change: Seasonal revenue impact is what drives the.

Speaker Change: The revenue and AUM in the fourth quarter, so you're you're slightly.

Speaker Change: North of $3 5 billion in revenue in the fourth quarter.

Speaker Change: And.

Speaker Change: You are probably.

Speaker Change: In between.

Speaker Change: 300 and.

Speaker Change: $330 million.

Speaker Change: O M range.

Speaker Change: In the quarter with the flow in the third quarter, obviously rounding out the back half of the year, the third quarter as seasonally strong as some of the holiday shipments start humming.

Patrick D. Hallinan: You know, the third quarter is seasonally strong as some of the holiday shipments start humming around the September time frame. In terms of the tax drivers, you know, as we've said before, these were some of the things that were in motion and affecting tax last year in 23, a set of discrete planning items that were put in motion even at the early stages of COVID and before. And so it'll play out through this year and a bit into next year.

Speaker Change: Humming around the September timeframe.

Pat Hallinan: In terms of the tax drivers, you know, as we've said before, these were some of the things that were in motion and affecting tax last year in 23, a set of discrete planning items that were put in motion, even early stages of COVID in before. And so a little play out through this year in a bit into next year. You know, I'd say for next year, we're probably in the high teens approaching 20 range would be my guidance for tax for next year. We're obviously not at 25 guidance yet, but that would be kind of the zip code I would expect to be in.

Speaker Change: In terms of.

Speaker Change: The tax drivers.

Speaker Change: Said before these were some of the things that were in motion and affecting tax last year and 23 set of discrete planning items.

Speaker Change: That were put in motion.

Speaker Change: Even.

Speaker Change: Early stages of Covid than before and so it'll play out through this year.

Patrick D. Hallinan: You know, I'd say for next year, we're probably in the high teens, approaching the 20 range would be my guidance for tax for next year. We're obviously not at 25 guidance yet, but that would be kind of the zip code I would expect to be in. Thank you. Our next question comes from the line of Tim Wojs with Baird. Your line is now open.

Speaker Change: A bit into next year I'd say for next year.

Speaker Change: We're probably in the.

Speaker Change: Hi, <unk>.

Speaker Change: It's approaching 20% range would be my guidance for tax for next year, We're obviously not at <unk>.

Speaker Change: <unk> guidance, yet, but that would be kind of the ZIP code I would expect to be in.

Pat Hallinan: Thank you.

Tim Wojs: Our next question comes from the line of Tim Woosh with Baird. Here on his open.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Tim Walsh with Baird. Your line is now open.

Chris Nelson: Yeah, hey guys, good morning. Nice to see you. Morning. Going through some tools.

Timothy Ronald Wojs: Yeah, hey, guys. Good morning. Nice to see you.

Timothy Ronald Wojs: Yeah, Hey, guys good morning, nice to see.

Speaker Change: Growth in tools.

Chris Nelson: Maybe on that, that, that kind of, you know, topics on just maybe can give us a little bit of an update just on the operating environment. It doesn't seem like a lot's changed, but kind of curious on your opinion there and just how your retailers are kind of thinking about, you know, kind of the promotional. Period at the end of the year. And then you guys mentioned in your prepare remarks a few times, you know, product listing ads and product focus ads there. If you can maybe just talk about some of the investments and where some of the priorities are and just maybe where you're kind of focused on adding incremental.

Speaker Change: Maybe on that kind of.

Christopher John Nelson: Morning, John. Just maybe if you could give us a little bit of an update on the operating environment. It doesn't seem like a lot's changed, but I'm kind of curious about your opinion there and just how your retailers are kind of thinking about, you know, kind of the promotional period at the end of the year. And then you guys mentioned in your prepared remarks a few times, you know, product listing ads and product focus ads there.

John: Topic, John just maybe if you can give us a little bit of an update just on the operating environment doesn't seem like a lot has changed but kind of curious on your opinion, there and just how your retailers are kind of thinking about kind of the promotional period at the end of the year.

Speaker Change: And then you guys mentioned in your prepared remarks, a few times product listing ads and product focus adds there. If you could maybe just talk about some of the investment and where some of the priorities are and just maybe where youre kind of focused on adding incremental shelf space.

Christopher John Nelson: If you can maybe just talk about some of the investments and where some of the priorities are and just maybe where you're kind of focused on adding incremental shelf space. All right. Hey, Tim, this is Chris.

Chris Nelson: She'll say.

Chris Nelson: All right, Tim. This is Chris. Nice hearing from you, and good morning as well. As far as the first part of the question from an operating environment perspective, as the guidance would indicate, we're essentially expecting the back afterists have a similar operating environment as a front half. And we are dialed into the back up to our run rate level of promotional support in the back half of the year. We feel very excited about what we've got laid in with our retailers and especially with our ability to drive more promotion and demand in our accretive cordless power tool segment.

John: Yeah.

Christopher John Nelson: Nice hearing from you and good morning as well. As far as the first part of the question from an operating environment perspective, as the guidance would indicate, we're essentially expecting the back aptus to have a similar operating environment as the front. You know, and we are dialed in to be back up to our run rate level of promotional support in the back half of the year. We feel very excited about what we've got lined up with our retailers and, you know, especially with our ability to drive more promotion and demand in our accretive cordless power tool segment. So that's what we're kind of looking at for the back half.

John: Alright, Hey, Tim This is Chris nice hearing from you and good morning, as well as far as the first part of the question from an operating environment perspective.

John: Yes.

John: Guidance would indicate we're essentially.

John: Expecting the back half to have a similar operating environment as a front half.

John: And we are dialed in to the back up to our run rate.

John: Level of promotional support in the back half of the year, we feel very excited about what we've got laid in with our retailers and especially with our ability to drive more promotion and demand in our and are accretive.

Chris Nelson: So that's what we're kind of looking at for the back half.

John: Cordless power tool segment. So that's what we're kind of looking at for the back half as far as.

Chris Nelson: As far as, you know, in that environment, you know, what is really important is, and that we're, as you heard from Don, we are absolutely committed to is executing our strategy. Because if you think about what's going to really drive their performance in the back half and beyond, it's going to be continuing that supply chain transformation that allows us to not only drive margin accretion, but as our service levels continue to improve, we're getting more opportunities to take, take share and shell space in that environment as we fulfill better for our customers. And then, if we think about the investments, what we are committed to do with the investments that were, and the incremental margins that we're generating, is to make sure that we funnel those to our highest growth priorities.

Christopher John Nelson: As far as, you know, in that environment, you know, what is really important and that we're, as you heard from John, absolutely committed to executing our strategy. If you think about what's going to really drive their performance in the back half and beyond, it's going to be continuing that supply chain transformation that allows us to not only drive margin accretion but, as our service levels continue to improve, we're getting more opportunities to take share and shelf space in that environment as we fulfill better for our customers.

John: In that environment, what is really important is and that we're as you heard from John We are absolutely committed to is executing our strategy. Because if you think about what's going to really drive our performance in the back half and beyond it's going to be continuing that supply chain transformation that allows us to not only drive margin.

<unk>, but as our service levels continue.

John: Continue to improve we're getting more opportunities to take take share in shelf space in that environment as we fulfill better for our customers and then if we think about the investments, but we are committed to do with the investments that were in the incremental margins that we're generating is to make sure that we.

Christopher John Nelson: And then when we think about the investments, what we are committed to do with the investments and the incremental margins that we're generating is to make sure that we funnel those into our highest growth priorities. Specifically, we've been talking about how we want to make sure that with Stanley, Craftsman, and DeWalt, we are focusing on those brands and specifically investing in both market activation from a digital marketing perspective, as well as working to add field resources to make sure that we can work with our end users and our customers to make sure that they understand our story, understand our products, and we can continue to get feedback on where we need to drive innovation.

John: We funnel those to our highest growth priorities, specifically, we've been talking about how we want to make sure with Stanley Craftsman into wall, we are focusing on those brands and specifically investing in.

Chris Nelson: Specifically, we've been talking about how we want to make sure with Stanley Craftsman and DeWall, we are focusing on those brands and specifically investing in both market activation from a digital marketing perspective, as well as we've been working to add field resources to make sure that we can work with our end users and our customers to make sure that they understand our story, understand our products. And we can continue to get feedback on where we need to drive innovation. So that combination of the transformation with targeted investment that we're committed to, we've started to see some encouraging, encouraging performance, especially as you've heard for the past couple of quarters with DeWall.

John: Both.

John: Market activation from a digital marketing perspective, as well as we've been working to add field resources to make sure that we can work with our end users and our customers to make sure that they are understand.

John: Our story understand our products and we can continue to get feedback on where we need to drive innovation. So that combination of the transformation with targeted investment that we're committed to we are starting to see some encouraging encouraging.

John: Performance, especially as you've heard for the past couple of quarters with the Walt So we're going to stay committed to that.

Chris Nelson: So we're going to stay committed to that and understand that we're going to navigate a fairly flat macro environment.

John: And understand that we're going to we're going to navigate a fairly flat macro environment.

Chris Nelson: Thank you.

Christopher John Nelson: So that combination of the transformation with targeted investment that we're committed to, we've started to see some encouraging performance, especially as you've heard for the past couple of quarters with DeWalt. So we're gonna stay committed to that and understand that we're gonna navigate a fairly flat macro environment. Thank you. Our next question comes from the line of Jeffrey Sprague with Vertical Research Partners. Your line is now open.

Jeffrey Sprague: Our next question comes from the line of Jeffrey Sprague with the Vertical Research Partners; she lies now open. Hey, thank you. Good morning, everyone. Hey, with perhaps fingers crossed, right, getting close to some kind of cyclical bottom here on the consumer, the economy, rates, the whole thing.

Speaker Change: Thank you. Our next question comes from the line of Jeffrey Sprague with vertical Research partners. Your line is now open.

Jeffrey Todd Sprague: Hey, thank you. Good morning, everyone, with perhaps, fingers crossed, right, getting close to some kind of Cyclical bottom here on the consumer economy rates the whole thing. It's really want to kind of step back and get maybe a refreshed perspective, Don, maybe starting with you, but just on, you know, what really normalized could look like? And the spirit of the question kind of goes, right, you know, two billion in cost reduction is something like 11 bucks a share, right?

Jeffrey Todd Sprague: Hey, Thank you good morning, everyone.

Speaker Change: Hey.

With perhaps fingers crossed right getting close to some kind of.

Speaker Change: Cyclical bottom here on the consumer or the economy rates the whole thing, it's really one of the kind of step back.

Don Allen: I really want to kind of step back and get maybe a refresh perspective on maybe starting with you, but just on, you know, what really normalized could look like. And the spirit of the question kind of goes, right, you know, two billion in cost reduction is something like 11 bucks a share, right? Investments of two to 300 million dollars is two or three bucks. So, you know, there's a lot of, you know, quote-unquote gross savings in that construct, but where is the leakage, you know, on a net basis, right? And, you know, as revenues recover, you know, maybe in the construct of that 35% gross margin.

Speaker Change: And get maybe in a refresh perspective.

Jeffrey Todd Sprague: Investments of two to $300 million are two or three bucks. So, you know, there's a lot of, quote, unquote, gross savings in that construct. But, but where is the leakage, you know, on a net basis, right?

Speaker Change: Don maybe starting with you, but just on.

Speaker Change: What really normalized could look like.

And the spirit of the question kind of goes right $2 billion in cost reduction is something like 11 Bucks a share right.

Speaker Change: Investments of $2 million to $300 million is two or three bucks. So.

Speaker Change: There's a lot of.

Speaker Change: Quote unquote gross savings.

Speaker Change: Construct.

Speaker Change: But where is the leakage on a net basis right and.

Speaker Change: As revenues recover.

Donald Allan: And, you know, as, as revenues recover, you know, maybe in the construct of that 35% gross margin, you know, what, what really is kind of a realistic, you know, EBITDA, EBITDA margin, you know, on a normalized basis? Sorry for the philosophical question on an earnings call, but, you know, interested in your thoughts. Well, it's actually a very good question, Jeff, because it's something that, you know, we spend time actually thinking about as we go into our annual strat planning cycle, which is just beginning now, and be part of a board presentation in October, as we think through where we are in the transformation journey, the financial goals that we've established, what's the earnings, excuse me, the earnings potential for Stanley Black & Decker over the next three years and beyond.

Speaker Change: Maybe in the construct of that 35% gross margin.

Don Allen: And, you know, what really is kind of a realistic, you know, EBITDA, EBITDA margin, you know, on a normalized basis. Sorry for the philosophical question on an earnings call, but, you know, interested in your thoughts.

Speaker Change: What really is kind of a realistic.

Speaker Change: EBITDA EBITDA margin.

Speaker Change: On a normalized basis, sorry for the philosophical question on our earnings call but.

Speaker Change: Interested in your thoughts.

Don Allen: Well, it's actually a very good question, Jeff, because it's something that, you know, we spend time actually thinking about as we go into our annual strap planning cycle, which is just beginning now and be part of a board presentation in October as we think through where we are in the transformation journey, the financial goals that we've established, what's the earnings potential for Stanley Black & Decker over the next three years and beyond. And so, when you step back and begin to think that through, we clearly feel very good about where we are in the journey around transformation.

Donald Allan: And so when you step back and begin to think that through, we clearly feel very good about where we are on the journey around transformation; we think 35 plus percent is still very achievable in that time horizon. We do believe that as the markets begin to get stronger, or stabilize, and start to grow, and in some time frame, I think we're all wondering exactly what that time frame is, but let's presume that happens in the next, you know, year or so. Then, you know, we really think we're building an operating model around organic growth, as we said, that can grow two to three times in the market. And so how do you define the market?

Speaker Change: Well, it's actually a very good question, Jeff because it's something that we spend time actually thinking about as we go into our annual strap planning cycle.

Speaker Change: Which is just beginning now and be part of a board presentation in October as we think through where we are in the transformation journey the financial goals that we've established what's the earnings excuse me the earnings potential for Stanley Black <unk> Decker over the next three years and beyond.

Speaker Change: So when you step back and begin to think that through we clearly feel very.

Speaker Change: Good about where we are in the journey around transformation. We think 35 plus percent is still very achievable in that time horizon.

Don Allen: We think 35 plus percent is still very achievable in that time horizon. We do believe that the markets begin to get stronger or stabilize and start to grow. And in some time frame, I think we're all wondering exactly what that time frame is, but let's presume that happens in the next, you know, year or so. Then, you know, we actually really think we're building an operating model around organic growth, as we said, that can grow two to three times in the market. And so, how do you define the market? We've done a lot of different analysis on this, and there's different ways to look at it in the short term.

Speaker Change: We do believe as the markets begin to get stronger or stabilize and start to grow.

Speaker Change: And some time frame I think we're all wondering exactly what that timeframe is that let's presume that happens in the next year or so.

Speaker Change: And we really think we're building a operating model around organic growth as we said that can grow two to three times in the market.

Speaker Change: And so how do you define the market and we've done a lot of different analysis on this and there's different ways to look at it in the short term, but over the long term. If you just look at GDP and say can we grow two to three times GDP over the long term, we definitely think that is achievable.

Donald Allan: And we've done a lot of different analyses on this, and there are different ways to look at it in the short term. But over the long term, if you just look at GDP and say, can we grow two to three times GDP over the long term, we definitely think that is achievable. And so that puts you in a, you know, mid to high single-digit growth mode, depending on GDP over the long term.

Don Allen: But over the long term, if you just look at GDP and say, can we grow two to three times GDP over the long term, we definitely think that is achievable. And so, that puts you in a, you know, mid to high single-digit growth mode depending on GDP over the long term. And then what's the ultimate leverage you're going to get from that growth or benefit into margins. And I still think this is a 40-ish percent business as you grow and you leverage the effect of that. We will continue to invest. We're seeing the benefits of investing.

Speaker Change: So that puts you in may.

Speaker Change: Mid to high single digit growth mode, depending on GDP or.

Donald Allan: And then what's the ultimate leverage you're going to get from that growth or benefit into margins? And I still think this is a 40-ish percent business, as you grow, and you leverage the effect of that, we will continue to invest. We're seeing the benefits of investing. You know, we've said three to 500 million, and it probably is going to trend closer to that $500 million number in the time horizon we've talked about.

Speaker Change: The long term and then what is the ultimate leverage youre going to get from that growth.

Speaker Change: Benefit into margins and I still think this is a 40 ish percent business as you grow and you leverage the effect of that.

Speaker Change: We'll continue to invest we're seeing the benefits of investing.

Don Allen: You know, we said three to 500 million, and it probably is going to turn closer to that $500 million number in the time horizon we talked about. So the earnings potential is strong. I'm not necessarily going to throw a number out there and say, what do we think we can get to, but to say we can get back to where we were from our earnings point of view as a company does not scare any of us. It's just a question of the time horizon of that. Thank you.

Speaker Change: We said $3 to $500 million and it probably is going to trend closer to that $500 million number.

Donald Allan: So the earnings potential is strong; I'm not necessarily going to throw a number out there and say, what do we think we can get to, but to say we can get back to where we were from our earnings point of view as a company does not scare any of us; it's just a question of the time horizon. Thank you. Our next question comes from the line of Adam Baumgarten with Zellman & Associates.

Speaker Change: And the time horizon, we've talked about so the earnings potential is strong I'm not necessarily going to throw a number out there and say what do we think we can get to but to say we can get back to where we were from an earnings point of view as a company.

Speaker Change: Does not scare any of US. It's just a question of the time horizon of that.

Donald Allan: Your line is now open. Hey, good morning, everyone. I'm just curious if you could give us some color on point of sale trends through the quarter and into July would be helpful. Yeah, this is Chris, and nice to hear from you, Adam.

Speaker Change: Okay.

Adam Baumgarten: Our next question comes from the line of Adam Bumgarten with Desilman and Associates. She'll let us know.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Adam Baumgarten with Zelman and Associates. Your line is now open.

Chris Nelson: Hey, good morning, everyone. I'm curious if you could give us some color on point of sale trends through the quarter and into July. Be helpful.

Adam Michael Baumgarten: Hey, good morning, everyone. I'm, just curious if you could give us some color on point of sale trends through the quarter and into July would be helpful.

Chris Nelson: Yeah, this is Chris, and nice to hear from you, Adam. Throughout the quarter, as I think was mentioned earlier, point of sale was modestly positive. It was driven really; the positive aspects were driven by an outdoor season that was more normally patterned as that season would look, as well as the overperformance that we saw into wall. As we finished out the quarter and the outdoor season at peak, we kind of saw them coming back more to that flash type of perspective. And if you look at our back half, that's kind of what we think the market is going to look like in the back half as well.

Adam Michael Baumgarten: Yes. This is Chris nice to hear from you Adam.

Christopher John Nelson: Throughout the quarter, as I think was mentioned earlier, point of sale was modestly positive. It was driven, really, by an outdoor season that was more normally patterned, as that season would look, as well as the overperformance that we saw in DeWalt. As we finished out the quarter and the outdoor season had peaked, we kind of saw them coming back more to that flattish type of pattern, perspective, and if you look at our back half, that's kind of what we think the market is going to look like in the back half as well. Thank you. Our next question comes from the line of Nicole DeBlase with Deutsche Bank. Your line is now open. Yeah, thanks for the question.

Christopher John Nelson: Throughout the quarter as I think we've mentioned earlier point of sale was was modestly positive. It was driven really the positive aspects were driven by an outdoor season that was more more normally pattern.

Christopher John Nelson: As that season would look as well as the over performance that we saw to wall.

Christopher John Nelson: As we as we finished out the quarter and the.

Christopher John Nelson: The outdoor season at peak, we kind of saw them coming back more to that flattish type of.

Christopher John Nelson: Perspective, and if you look at our back half that's kind of what we what we think the market is going to look like in the back half as well.

Nicole DiBlase: Thank you.

Pat Hallinan: Our next question comes from the line of Nicole DiBlaze with Deutsche Bank. You'll let us know. Austin. Yeah, thanks for the question. Good morning, guys.

Thank you.

Nicole Sheree DeBlase: Our next question comes from the line of Nicole <unk> with Deutsche Bank. Your line is now open.

Nicole Sheree DeBlase: Good morning, guys. It's important to ask about free cash flow, so Dawn, can you, or Pat, can you guys talk about the cadence that you expect in the second half given, you know, the timing shift into the second quarter? So thoughts on networking capital and other variables in the back half. Thank you. Yeah, yeah, we're proud of the progress we made in the first half of the year. You know, that progress was driven both by year over year income improvement and also working capital improvement. You know, the back half of the year is traditionally the strong part of the year.

Nicole: Yes. Thanks for the question good morning, guys.

Pat Hallinan: Just wanted to ask about free cash flow. So, Don, can you, or Pat, can you guys talk about the cadence that you expect in the second half given, you know, the timing shifts into the second quarter? So thoughts on networking capital and other variables in the back off. Thank you. Yeah, we're proud of the progress we made in the front half of the year. You know, that, that progress was driven both by year-over-year income improvement, but also working capital improvement. You know, the back half of the year is traditionally the strong part of the year.

Nicole: Good morning to ask about free cash flow. So Don can you or Pat can you guys talk about the cadence that you expect in the second half given the timing shift into the second quarter, so thoughts on networking capital and other variables in the back half. Thank you.

Nicole Sheree DeBlase: Yes.

Speaker Change: I'm proud of the progress we've made in the front half of the year.

Speaker Change: That progress was driven both by year over year.

Speaker Change: Income improvement, but also working capital improvement.

Speaker Change: The back half of the year is traditionally a strong part of the year. So we expect the drivers in the back half to remain income and working capital but also.

Pat Hallinan: So, we expect the drivers in the back half to remain income and working capital, but also a bit of catbacks. And I'd say by the time we get to the end of the year. The drivers of the beat on our initial guidance are going to be a mix of working capital and catbacks. And, you know, those drivers are going to be pretty much even between those two; will be roughly on our inventory target for the year. And, you know, I would say it's going to be pretty traditionally weighted in that it's going to be pretty balanced across those two quarters, with a little bit towards the fourth.

Patrick D. Hallinan: So we expect the drivers in the back half to remain income and working capital but also a bit of CapEx. And I'd say by the time we get to the end of the year, the drivers of the beat on our initial guidance are going to be a mix of working capital and CapEx. And, you know, those drivers are going to be pretty much even between those two, and we will be roughly on our inventory target for the year.

Speaker Change: A bit of Capex and I'd say by the time, we get.

Speaker Change: To the end of the year.

Speaker Change: The drivers of.

The beat on our initial guidance are going to be a mix.

Speaker Change: Working capital.

Speaker Change: And Capex.

Speaker Change: And those drivers are going to be pretty much even between those two will be roughly.

Speaker Change: On our inventory target for the year.

Patrick D. Hallinan: And, you know, I would say it's going to be pretty traditionally weighted in that it's going to be pretty balanced across those two quarters, uh... with a little bit towards the fourth. Thank you. Our next question comes from the line of Nigel Coe with Wolf Research. Your line is now open. Thanks. Good morning, everyone.

Speaker Change: And I would say it's going to be.

Speaker Change: Pretty traditionally weighted than that.

Speaker Change: It's going to be.

Speaker Change: <unk>.

Speaker Change: Pretty balanced across those two quarters.

Speaker Change: With a little bit towards the fourth.

Pat Hallinan: Thank you.

Nigel Coe: Our next question comes from the line of Nigel Coe with Wolf Research. Your line is open. Thanks. Good morning, everyone.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Nigel Coe with Wolfe Research. Your line is now open.

Nigel Edward Coe: Thanks, Good morning, everyone.

Nigel Edward Coe: I'd be curious if you could maybe unpack the 1Q to 2Q gross margin, just given the divestment of infrastructure. I'm not sure if that was gross margin above the average or where that was. And then maybe the mix between the outdoor tool, sorry, the outdoor products versus power tools, given that negative mix.

Pat Hallinan: I'd be curious if you could just maybe unpack the two, the one to two to gross margin, just given the investment of infrastructure. I'm not sure if that was gross margin, you know, both the average or whether that was. And then maybe the mix between the outdoor tool, sorry, the outdoor products versus pow tools, given that nigga mix.

Nigel Edward Coe: I'm curious if you could just maybe unpack the the <unk> the <unk> gross margin just given the divestment of infrastructure.

I'm not sure if that was gross margin about <unk> capital or where that was and then maybe the mix between the two so you have to.

<unk> products versus power tools, given that negative mix there.

Patrick D. Hallinan: Then maybe just looking at the second half of the year. You said 31%. How do you think that 31% divides between 3Q and 4Q? I'll start with the latter part of that, Nigel, and then I'll come back to the other first-half dynamics.

Pat Hallinan: Then maybe just looking at the second half of the year, you said 31%, I think, Pat. How do you think that 31% divides between three and four key? I'll start with the latter part of that, Nigel, and then I'll come back to the other first half dynamics. You know, I'd say we were very confident in delivering our year and gross margin and taking that progression into 2025. And I think that's a critical message we want to get across. You know, we will finish the year at 30%. The fourth quarter will finish in the low 30s.

Speaker Change: Maybe just looking at the second half of the year, you said, 31% I think Tim.

Speaker Change: How do you think that 31% device between <unk> and <unk>.

Speaker Change: Yes.

Speaker Change: Okay.

Timothy Ronald Wojs: I'll start with the latter part of that Nigel and then I'll come back to the other.

Patrick D. Hallinan: You know, I'd say we were very confident in delivering our year in gross margin and taking that progression into 2025, and I think that's the most critical message we want to get across. You know, we will finish the year at 30 percent. In the fourth quarter, we'll finish in the low 30s.

Nigel Edward Coe: First half dynamics I'd say.

Speaker Change: We were very confident in delivering our year end gross margin and taking that progression into 2025 and I think that's the.

Timothy Ronald Wojs: The most critical message, we want to get across.

Timothy Ronald Wojs: We finished the year at 30%.

Timothy Ronald Wojs: Fourth quarter will finish in the low <unk>, we would expect the fall.

Pat Hallinan: You know, we would expect the fourth quarter, even with some of the seasonal dynamics of the fourth quarter, the fourth quarter is going to be north of 31%. And the third quarter is probably going to be at to slightly below 31%. I'd say those are the zip codes. But you know, those are all being driven off of the portfolio we have right now with, you know, the bias of progress at the gross margin line in the TNO business, which has been the case throughout this year and is likely to be the case heading in the next year.

Fourth quarter, even even with some of the seasonal dynamics of the fourth quarter. The fourth quarter is going to be north of 31%.

Patrick D. Hallinan: We would expect the fourth quarter, even with some of the seasonal dynamics of the fourth quarter, the fourth quarter is going to be north of 31 percent, and the third quarter is probably going to be slightly below 31 percent. I'd say those are the zip codes, but you know, those are all being driven off of the portfolio we have right now with, you know, the bias of progress at the gross margin line in the T&O business, which has been the case throughout this year and is likely to be the case heading into next year.

Timothy Ronald Wojs: In the third quarter is probably going to be at to slightly below 31% I'd say those are the zip codes.

Timothy Ronald Wojs: But those are all being driven off of the portfolio, we have right now.

Timothy Ronald Wojs: With.

Timothy Ronald Wojs: The bias of progress at the gross margin line.

Timothy Ronald Wojs: And the <unk> business, which has been has been the case throughout this year and is likely to be the case heading into next year.

Pat Hallinan: In terms of the dynamics across Q1 and Q2, I'd say there's less of a dynamic that is driven by the divestiture or any other movements. I mean, the divestiture was modestly dilutive in that regard, but we had anticipated that when we set up the plan and set up the guidance. And, you know, really what has been playing out across the front half of the year was the fact that, you know, we had some volume softness in the back half of 2023 that always puts a little bit of unabsorbed overhead onto our balance sheet, which is unfavorable.

Patrick D. Hallinan: In terms of the dynamics across Q1 and Q2, I'd say there's less of a dynamic that is driven by the divestiture or any other movement. I mean, the divestiture was modestly dilutive in that regard, but we had anticipated that when we set up the plan and set up the guidance, and, you know, really what we've been playing out across the front half of the year was the fact that, you know, we had some volume softness in the back half of 2023 that always puts a little bit of unabsorbed overhead onto our balance sheet, which is unfavorable, and against that, we were racing an acceleration of program savings, which is what we've been up against for a while now as the macro's been soft on our margin improvement journey, and, you know, we've been successful in driving savings despite the soft macro.

Timothy Ronald Wojs: In terms of the dynamics across.

Timothy Ronald Wojs: Q1 and Q2.

Speaker Change: I'd say, there's less of a dynamic that is.

Driven by the divestiture or any other movements.

Speaker Change: The divestiture.

Speaker Change: It was modestly dilutive.

Speaker Change: In that regard, but we had anticipated that.

Speaker Change: When we set up the plan and set up the guidance.

Speaker Change: And really what we've been playing out across.

Speaker Change: The front half of the year was the fact that we.

We had some volume softness in the back half of 2023.

Speaker Change: That always puts a little bit of Unabsorbed.

Speaker Change: Overhead onto our balance sheet, which is unfavorable and against that we were racing and acceleration of program savings, which is what we've been up against for a while now is the macro has been soft on our margin improvement journey.

Pat Hallinan: And against that, we were racing an acceleration of programs savings, which is what we've been up against for a while now as the macro has been soft on our margin improvement journey. And, you know, we've been successful in driving savings, despite the soft macro. We expect to continue doing that throughout this year and into next year. And I think the dynamics that unfolded across the quarters were really those things coming off the balance sheet and acceleration of savings relative to some softness in the back half of 23. And, you know, I think the really the favorable news is, you know, even with a stronger than expected outdoor performance, which is welcome from a revenue standpoint.

Speaker Change: And we've been successful.

Speaker Change: And driving savings despite the soft macro we expect to continue doing that.

Patrick D. Hallinan: We expect to continue doing that throughout this year and into next year, and I think the dynamics that unfolded across the quarters were really those things coming off the balance sheet, an acceleration of savings relative to some softness in the back half of 2023, and you know, I think that really the favorable news is, you know, even with a strong, stronger than expected outdoor performance, which is welcome from a revenue standpoint, we still deliver gross margin, you know, with strength coming from a segment that has gross margins slightly below fleet average, so we feel confident with the trajectory we're on, and we expect to continue making progress and get into the mid-30s by the end of next year. Thank you. Our next question comes from the line of Rob Wertheimer with Mellius Research.

Speaker Change: Throughout this year and into next year, and I think the dynamics that unfolded across the quarters were really.

Speaker Change: All those things coming off the balance sheet and acceleration of savings relative to some softness in the back half of 'twenty three.

And I think the really favorable news is.

Speaker Change: Even with a strong stronger than expected outdoor performance, which is welcome.

Pat Hallinan: We still delivered gross margin, you know, with strength coming from a segment that has gross margins slightly below fleet average.

Speaker Change: From a revenue standpoint, we still delivered gross margin.

Speaker Change: Yes.

Speaker Change: With strength coming from a segment that has gross margin slightly below fleet average so we feel confident with objectors the trajectory we're on.

Pat Hallinan: So we feel confident with the trajectory, the trajectory we're on, and we expect to continue making progress and get into the mid 30s by the end of next year. Thank you.

We expect to continue making progress.

Speaker Change: And get into the mid Thirty's by the end of next year.

Rob Wertheimer: Our next question comes from the line of Rob Wertheimer with Melius Research. You want to know? My question is on the consumer behavior.

Speaker Change: Thank you. Our next question comes from the line of Rob Wertheimer with Melius Research. Your line is now open.

Robert Cameron Wertheimer: Hi, my question is about consumer behavior. I think we all see some of the macro back and forth and other reports and such, but I'm curious what you're seeing in your internal data, you know, just to illustrate the consumer variability or weakness or uncertainty or whatever, and how much, if any, risk, or the upside or downside, does that kind of put into the back half? What's the variability around the trends you're seeing? Thank you. Thanks, Rob. This is Chris.

Robert Cameron Wertheimer: Yeah, Hi, My question is on the consumer behavior I think we all see some of the macro back in force and other reports and such but Im curious what youre seeing in your internal data.

Chris Nelson: I think we all see some of the macro back and forth in other reports and such, but I'm curious what you're seeing in your internal data, you know, just to illustrate the consumer variability or weakness or uncertainty or whatever and how much, if any, risk or the upside or downside does that kind of put into back half. What's the variability around the trends you're seeing. Thank you. Thanks, Rob.

Speaker Change: Illustrate the consumer variability of weakness or uncertainty or whatever and how much if any risk to the upside or downside does that kind of put into back half what's the variability around the trends you're seeing thank you.

Christopher John Nelson: I mean, we certainly have seen a continuation of the trend that we've seen where the professional is relatively stronger than the consumer, and we would expect that to continue. You know, we certainly have, as you would expect in this environment, seen consumers respond much more favorably to promotions, and that's good for us because we have an opportunity, as we get back up to our normal run rate on promotions, to benefit from that and benefit from a creative business.

Chris Nelson: This is Chris. I mean, we certainly have seen a continuance of the trend that we've seen where the professional is relatively stronger than the consumer. And we would expect that to continue. You know, we have certainly, as you would expect in this environment, seen consumers respond much more favorably to promotions, and that's good for us because we have an opportunity, as we get back up to our normal run rate on promotions, to benefit from that and benefit with a creative business. So we feel we feel good about that and what we see from the what we see from the opportunity with our merchandising in the back half.

Speaker Change: Thanks, Rob This is Chris I mean, we certainly have seen a continuance of the.

Christopher John Nelson: Trend that we've seen where the professional is relatively stronger than the consumer and we would expect that to continue.

Christopher John Nelson: We have certainly.

Christopher John Nelson: As you would expect in this environment seen consumers respond much more much more favorably to promotions and thats. Good for us because we're we have an opportunity as we get back up to our normal run rate on promotions to benefit from that and benefit with accretive business. So we feel.

Christopher John Nelson: So we feel good about that and what we see from the opportunity with our merchandising in the back half. As far as what we see looking forward, it's going to be an uneven environment as we go forward, and we're going to stay really focused on our mission to execute against the supply chain transformation as well as we know the things that we're investing in with our major brands and specifically targeting the professional provide us with some upside to the market that we're going to continue to stay diligent as we pursue.

Christopher John Nelson: We feel good about that.

Christopher John Nelson: And what we see from the what we see from the opportunity with our merchandising in the back half as far as what we see looking forward.

Chris Nelson: As far as, you know, what we see looking forward, I mean, it's going to be an uneven environment as we go forward and we're going to stay really focused on our mission to execute against the supply chain transformation, as well as we know the things that we're investing in with our major brands and specifically targeting the professional provides us some upside to the market that we're going to continue to stay, stay diligent as we pursue. So we're excited about where we're heading, and you know, do see that dynamic that you reference with the consumer. Thank you.

Christopher John Nelson: Is going to be an uneven environment as we go forward and.

Christopher John Nelson: We're going to stay really focused on are our mission to execute against the supply chain transformation as well as we know the things that we're investing in with our with our major brands and specifically targeting the professional provides.

Christopher John Nelson: <unk> provides us some upside to the market that we're going to continue to stay stay diligent as we pursue so we're we're excited about where we're heading in.

Christopher John Nelson: So we're excited about where we're heading, and do you see that dynamic that you referenced with the, Thank you. Our next question comes from the line of Michael Rehaut with JP Morgan. Your line is now open.

Speaker Change: Do you see that dynamic that you you referenced with the consumer.

Michael Rehaut: Our next question comes from the line of Michael Rehut with JP Morgan. Your line is now open. Thanks. Good morning, and congrats on the results.

Speaker Change: Thank you. Our next question comes from the line of Michael Rehaut with Jpmorgan. Your line is now open.

Michael Jason Rehaut: Thanks, good morning, and congrats on the results. I just wanted to dial in on a couple of areas if I could. First, just to get a better understanding of, It looks like a slight reduction in the midpoint of organic sales growth for the full year to down 50 basis points from maybe flattish before. And it would appear, correct me if I'm wrong, that perhaps you're also looking for tools and storage to go slightly negative again in the back half. So I just want to understand the drivers of that and see if I'm correct on the back half.

Michael Jason Rehaut: Thanks, Good morning, and congrats on the results.

Pat Hallinan: Just wanted to dial in in a couple of areas if I could first just to get a better understanding of it looks like a slight reduction of the midpoint of organic sales growth for the full year to down 50 basis points for maybe flatish before. And it would appear correctly if I'm wrong that perhaps you're also looking for tools and storage should go slightly negative again in the back half. You know, so I just want to understand the drivers of that and if I'm correct on the back half. And then, secondly, you also mentioned SGNA mid 21% and maybe going to the higher end of the three to 500 million in reinvestment.

Michael Jason Rehaut: Just wanted to dial in and a couple of areas if I could first.

Michael Jason Rehaut: Just to get a better understanding.

It looks like a slight.

Speaker Change: The reduction of the midpoint of organic sales growth for the full year two.

Speaker Change: 50 basis points.

Speaker Change: For maybe flattish before and it would appear.

Speaker Change: Correct me, if I'm wrong that perhaps youre also looking for tools <unk> storage to go slightly negative again in the back half.

Speaker Change: So I just wanted to understand the drivers of that and if I'm correct on the back half and then secondly, you also mentioned.

Patrick D. Hallinan: And then secondly, you also mentioned SG&A at mid-21% and maybe going to the higher end of the $300 million to $500 million in reinvestment. I was wondering if you had any early view on what 2025 SG&A could be, given those comments around higher reinvestment into the business. Hey Mike, it's Pat.

Speaker Change: SG&A mid 21% and maybe going to the higher end of the $3 million to $500 million.

Pat Hallinan: I was wondering if you had any early view on what 2025 SGNA could be given those comments around higher reinvestment into the business. Hey, Mike. It's Pat. Yeah, I think you're reading the year right. You know, we had a growth quarter. You're very proud of driving a growth quarter in a very soft macro. You know, the drivers of that were, I'd say, more traditional outdoor season, especially at retail and especially with electric products and outdoor. The wall posted its fifth consecutive quarter of growth. And then, you know, we had a strong arrow through the we had strong arrow performance throughout the quarter.

Speaker Change: Reinvestment I was wondering if you had any early view on what 2025 SG&A could be.

Speaker Change: Given those comments around higher re.

Speaker Change: Our reinvestment into the business.

Patrick D. Hallinan: Yeah, I think you're reading the year right. You know, we had a growth quarter. You're very proud of driving a growth quarter in a very soft macro. You know, the drivers of that were, I'd say, more traditional outdoor seasons, especially at retail and especially with electric products and outdoor. DeWalt posted it.

Patrick D. Hallinan: Hey, Mike It's Pat.

Mike: Yes, I think youre reading the year right.

Speaker Change: We had a growth quarter.

You are very proud of driving a growth quarter in a very soft macro.

Speaker Change: Drivers of that were I'd say more traditional outdoor season, especially at retail and especially with electric products and outdoor.

Speaker Change: The wall.

Patrick D. Hallinan: And then, you know, we had a strong arrow through the whole quarter, and auto didn't really start trailing off until late in the quarter. You know, our expectations for the back half, and we're just trying to be clear-eyed about the back half. We're not here to break some big new macro news. It's just we expect DIY to stay soft. Auto, we started trailing off in the second quarter.

Speaker Change: Posted its fifth consecutive quarter of growth and then we had strong aero through the we had strong aero performance throughout the quarter and auto didn't really start trailing off until late in the quarter.

Pat Hallinan: And auto didn't really start trailing off until light late in the quarter. You know, our expectation for the back half, and we're just trying to be clear, right about the back half. We're not here to break some big new macro news. It just we expect DIY to stay soft. It's been soft, and now we're heading into the holiday period where that's more consequential. Otto, we started trailing off in the second quarter of the latter part of the second quarter; we expect that to remain soft. And so that's really driving the back half. But you would be correct in interpreting the fact that, you know, we expect the TNO business to be down slightly in the back half, kind of roughly averaging down a hundredish basis point across the back half.

Our expectation for the back half and we're just trying to be clear eyed about the back half we're not here to break some big new macro news. It just we expect DIY to stay soft it's been soft and now we're heading into the holiday period, where that's more consequential.

Speaker Change: Auto.

Speaker Change: Started trailing off in the second quarter, the latter parts of the second quarter, we expect that.

Patrick D. Hallinan: In the latter parts of the second quarter, we expect that to remain soft. And so that's what's really driving the back half. But you would be correct in interpreting the fact that, you know, we expect the T&O business to be down slightly in the back half, kind of roughly averaging down 100-ish basis points across the back half, really on the backs of a soft consumer during the holiday period and the fact that, you know, the outdoor season has mostly run its course.

Speaker Change: To remain soft and so that's what's really driving the back half, but you would be correct in interpreting the fact that we expect.

Speaker Change: The <unk> business to be down slightly in the back half kind of roughly averaging down 100 ish basis point across the back half.

Pat Hallinan: Really on the backs of a soft consumer during a holiday period and the fact that the, you know, the outdoor season has mostly run its course. And then in industrial, you know, we expect Arrow to remain strong. But we do have some auto headwinds baked into that, which has that business to slight growth, but less robust than would have otherwise been the case had auto not trailed off. You know, the, the SGNA for the, for the year, you know, is going to be slightly above 21%. I would say for the year. As far as next year, I mean, we're not here to kind of give 25 guidance.

Speaker Change: Really on the backs of a soft consumer during the holiday period, and the fact that the outdoor season has mostly run its course.

Patrick D. Hallinan: And then in industrial, you know, we expect aero to remain strong, but we do have some auto headwinds baked into that, which has that business growing slightly, but less robust than would otherwise have been the case had auto not trailed off. You know, the SG&A for the year is going to be slightly above 21%, I would say. As far as next year, I mean, we're not here to kind of give you 25 guidance.

Speaker Change: And then in industrial we expect Aero to remain strong, but we do have some auto headwinds baked into that which has that business to slight growth, but less robust.

Speaker Change: Than would've otherwise been the case had auto not trailed off.

Speaker Change: The SG&A for the for the year.

Speaker Change: Is going to be slightly above 21% I would say for the year.

Speaker Change: As far as next year I mean, we're not here to kind of give 25 guidance.

Pat Hallinan: I don't expect SGNA as a percentage of sales next year to depart from this year in some meaningful way. All we were trying to signal is that we really believe this is a growth business. And we're going to invest behind growth. And we're going to protect growth investments. And so, Chris and his team and the broader organization is working to put growth behind the most promising elements of our business, and even in a soft macro, to protect those investments. But we're not trying to telegraph some meaningful departure of SGNA as a percentage of net sales.

Speaker Change: I don't expect.

Speaker Change: SG&A as a percentage of sales.

Speaker Change: Next year to depart from this year and some meaningful way all all.

Speaker Change: All we were trying to signal is that.

Speaker Change: We really believe this is a growth business and we're going to invest behind growth and we're going to protect growth investments.

Speaker Change: And so Chris and his team and the broader organization is working.

Christopher John Nelson: To put growth behind the most promising.

Christopher John Nelson: Elements of our business and even in a soft macro to protect those investments, but we're not trying to telegraph.

Christopher John Nelson: Some meaningful departure of SG&A as a percentage of net sales.

Joe Richie: You know, this year or next. Thank you.

Christopher John Nelson: This year or next.

Patrick D. Hallinan: I don't expect SG&A as a percentage of sales next year to depart from this year in some meaningful way. All we were trying to signal is that we really believe this is a growth business, and we're going to invest in growth, and we're going to protect growth investments. And so Chris and his team and the broader organization are working to put growth behind the most promising elements of our business and even in a soft macro to protect those investments, but we're not trying to telegraph some meaningful departure of SG&A as a percentage of net sales, you know, this year or next. Thank you. Our next question comes from the line of Joe Ritchie with Goldman Sachs. Your line is now open. Thanks. Good morning, everyone.

Christopher John Nelson: Yes.

Joe Richie: Our next question comes from the line of Joe Richie with Goldman Sachs. Your line is now open. Thanks. Good morning, everyone. Morning.

Speaker Change: Thank you.

Speaker Change: Next question comes from the line of Joe Ritchie with Goldman Sachs. Your line is now open.

Joseph Alfred Ritchie: Thanks, Good morning, everyone.

Joe Richie: So I said a near term and a longer term question on the, on the near term side, the commentary around getting to gross margins of approximately 31% by the third quarter. You need to just parse that out a little bit. If I look at things historically, it tends to be a seasonally lighter quarter, and you typically don't see that much improvement to few to three punes. I'd love to hear a little bit more about that.

Joseph Alfred Ritchie: Good morning.

Joseph Alfred Ritchie: Morning. So, I've got a near-term and a longer-term question. On the near-term side, the commentary around getting to gross margins of approximately 31% by the third quarter, can you maybe just parse that out a little bit? If I look at things historically, it tends to be a seasonally lighter quarter, and you typically don't see that much improvement from 2Q to 3Q, and so I'd love to hear a little bit more about that.

Joseph Alfred Ritchie: Yes.

Speaker Change: In the near term and a longer term question on the.

Joseph Alfred Ritchie: In the near term side, the commentary around getting some gross margin of approximately 31% by the third quarter can you, maybe just parse that out a little bit if I look at things historically tends to be a seasonally lighter quarter and you typically don't see that much improvement Q3 cadence I'd love to hear a little bit more about.

Joe Richie: And then just the longer term question is really more around like getting comfort with the timing of an eventual like volume and collection and specifically. Like, is there a way that you guys are tracking a replacement cycle and ultimately what we could see, you know, the timing of a collection? Thank you. Hey, Joe. I'll start with the first one. You know, I think reading our gross margin progression across time during this transformation has been complex because there's been so many factors in motion and. And some of them are what I would call a typical factors of when does expensive inventory come off the balance sheet.

Speaker Change: That and then just a longer term question is really more around like getting comfort with the timing of an eventual like volume inflection in specifically like is there a way that you guys are tracking a replacement cycle and ultimately when we could see that.

Joseph Alfred Ritchie: And then just the longer-term question is really more around getting comfort with the timing of an eventual volume inflection, and specifically, is there a way that you guys are tracking a replacement cycle, and ultimately, when we could see the timing of an inflection? Thank you. Hey Joe. It's Pat.

Speaker Change: Timing of an inflection.

Patrick D. Hallinan: I'll start with the first one. You know, I think reading our gross margin progression across time during this transformation has been complex because there have been so many factors in motion, and some of them are what I would call atypical factors of when does expensive inventory come off the balance sheet. You know, I would say the reading of gross margin across fiscal 2024 is more a factor of it took a bit more of our savings in the latter part of 23 and the early part of 24 relative to soft volume to generate the gross margin improvement that we saw.

Speaker Change: Yes.

Speaker Change: Hey, Joe It's Pat I'll start with the first one.

Speaker Change: Thank you.

Speaker Change: Reading, our gross margin progression across time during this transformation has been calm.

Speaker Change: Complex because there's been.

So many factors in motion then and some of them are what I would call. A typical factors of when does expensive inventory come off the balance sheet I would say the reed of gross margin across fiscal 2024 is more a factor of it took.

Pat Hallinan: You know, I would say the read of gross margin across fiscal 2024 is more a factor of it took. and a bit more of our savings in the latter part of 23 and the early part of 24 relative to soft volume to generate the gross margin improvement that we saw, and we had to accelerate saving throughout the latter part of 23 and throughout this whole year in a soft macro environment to get to our originally stated gross margin objectives throughout this whole journey. So, you know, Don and team laid out a roadmap in the latter part of 2022 that had us ending 2024 at roughly 30% and the fourth quarter in the low 30% tile. But that was on a much, much more robust market and volume assumption.

Speaker Change: A bit more of our savings in.

Speaker Change: The latter part of 'twenty, three and the early part of 'twenty four relative.

Speaker Change: To soft volume.

Speaker Change: To generate the gross margin improvement that we saw and we had to accelerate savings throughout the latter part of 'twenty three and throughout this whole year and a soft macro environment to get to our originally stated gross margin objectives throughout this whole journey so Donna.

Patrick D. Hallinan: And we had to accelerate savings throughout the latter part of 23 and throughout this whole year in a soft macro environment to get to our originally stated gross margin objectives throughout this whole journey. Don and his team laid out a roadmap in the latter part of 2022 that had us ending 2024 at roughly 30% and the fourth quarter in the low 30 percentile. But that was on a much, much more robust market and volume assumption. We're probably almost $1.5 billion in revenue down from that original 2022 assumption. And so we've been accelerating savings to drive gross margin improvement. All right.

Donna: Team laid out a road map in the latter part of 2022 that had us ending 2024 at roughly 30% in the fourth quarter in the low 30 percentile.

Speaker Change: But that was on.

Speaker Change: A much much more robust market and volume assumption, we're probably.

Pat Hallinan: We're probably, you know, almost, you know, 1.5 billion in revenue, down from that original 2022 assumption, and so we've been accelerating savings to drive gross margin improvement. So, the tick up from the first half of this year to the back half of this year has more to do with the savings cadence relative to longer-term margin dynamics than any kind of traditional seasonal dynamic.

Speaker Change: Almost.

Speaker Change: $1 5 billion in revenue down from that that our original 2022 assumption and so we've been accelerating savings.

Speaker Change: To drive gross margin improvement so the tick up from the first half of this year to the back half of this year has more to do with the savings cadence relative to longer term margin dynamics than any kind of traditional seasonal dynamic.

Chris Nelson: All right, and for the second one, you know, I think what I, this is Chris. What I would say is that, you know, first and foremost, we really, really like the end markets that we serve and we like them in the long term, and we think that there's, you know, as Don reference some really nice long term GDP plus growth potential in those markets. But whether, you know, especially when you're talking about the professional and it's linked to whether it's, you know, residential or commercial and industrial construction, but I think it's safe to say that whether it's professional or, you know, the consumer which you could argue partially driven by repair and remodel are all fairly interest rate sensitive businesses, and that would be the precursor to what we think would start the inflection point.

Christopher John Nelson: For the second one, you know, I think what I, this is Chris, what I would say is that, you know, first and foremost, we really like the end markets that we serve, and we like them for the long term. And we think that there's, you know, as Don referenced, some really nice long-term GDP plus growth potential in those markets. But whether, you know, especially when you're talking about professionals and it's linked to whether it's, you know, residential or commercial and industrial construction.

Speaker Change: Alright.

Speaker Change: One I think this is Chris what I would say is that first and foremost we we really we really like the end markets that we serve and we like them in the long term and we think that there is.

Speaker Change: As Don referenced some really nice long term GDP plus growth potential in those markets.

Donald Allan: But weather, especially when youre talking about the professional and it's linked to whether its residential or commercial and industrial construction.

Christopher John Nelson: But I think it's safe to say that whether it's professional or, you know, the consumer, which you could argue partially driven by repair and rebuttal, are all fairly interest rate sensitive businesses. And that would be the precursor to what we think would be the inflection point. And while it wouldn't be instantaneous, you know, we think that that is kind of the first thing that in the cycle we'd want to see change that would then start to unlock some of that longer-term potential that we do see for those end markets that we serve.

Speaker Change: But I think it's safe to say that whether its professional or the consumer which you could argue partially driven by repair and remodel are all fairly interest rate sensitive businesses and that would be the precursor to what we think would be start the inflection point and while it wouldn't be instantaneous we think that.

Chris Nelson: And while it wouldn't be instantaneous, you know, we think that that is kind of the first thing that in the cycle we want to see change that would then start to unlock some of that longer term potential that we do see for those end markets that we serve.

Speaker Change: That is kind of the first thing that in this cycle, we'd want to see change that would then start to unlock some of that longer term potential that we do see for those end markets that we serve.

Chris Nelson: Thank you.

Dennis Lange: This concludes the question-and-answer session.

Speaker Change: Thank you. This concludes the question and answer session I would now like to hand, the call back over to Dennis Lange for closing remarks.

Dennis Lange: I would now like to hand the call back over to Dennis Lane for COVID-19. Thanks, Shannon. We'd like to thank everyone again for their time and participation on the call. Obviously, please contact me if you have further questions. Thank you.

Dennis Lange: Thanks, Shannon wed like to thank everyone again for their time and participation on the call. Obviously, please contact me if you have further questions. Thank you.

Operator: This concludes today's conference call. Thank you for your participation.

Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.

Operator: You may now disconnect. Thank you.

Speaker Change: Yeah.

Speaker Change: Okay.

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Operator: Thank you for watching!

Speaker Change: Yes.

Speaker Change: Okay.

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Speaker Change: Yes.

Q2 2024 Stanley Black & Decker Inc Earnings Call

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