Stanley Black & Decker's Q2 2026 sales were flat at $3.96B (up 3% organically) while gross margin jumped 6 points to 33.0%, helped by cost savings and a $118M tariff refund; GAAP EPS of $2.33 includes the gain on selling its CAM aerospace unit, adjusted EPS was $1.57, and full-year EPS guidance was raised.
Revenue
$4.0B
+0.4% YoY
Net income
$351M
+244.8% YoY
Diluted EPS
$2.33
+247.8% YoY
Operating margin
9.0%
Overview
Stanley Black & Decker (maker of DEWALT, CRAFTSMAN, STANLEY and BLACK+DECKER tools) grew sales by just 0.4% in its second quarter of 2026 (three months ended July 4, 2026), to $3.961 billion. Profits rose far faster: gross margin was 33.0%, up 6.0 percentage points, and GAAP diluted EPS was $2.33, up from $0.67.
Most of the EPS jump comes from three things that won't repeat. Put them aside and the quarter is still a real improvement, just a smaller one:
A $273.7 million pre-tax gain on selling businesses, mostly the $1.8 billion sale of the aerospace-fastener business CAM to Howmet Aerospace on April 6.
A $118.0 million refund of tariffs after the U.S. Supreme Court struck down the IEEPA tariffs (tariffs imposed under emergency-powers law) on February 20, 2026. Bonuses and extra spending tied to the refund cost about $83.4 million, and the company says the net refund added about 250 basis points (2.5 percentage points) to gross margin and about $0.17 to EPS.
A distorted comparison on tax. In Q2 2025 the company recorded an income-tax benefit of $75.2 million (an effective tax rate of −281.6%), which inflated last year's profit. This quarter it paid a 29.6% GAAP rate.
"Adjusted" EPS is the company's own version of EPS that removes one-off gains and charges. It was $1.57 versus $1.08, up 45%. Take out the roughly $0.17 refund benefit and it's about $1.40, still around 30% higher than a year ago.
Key metrics
Metric
Q2 2026
Q2 2025
YoY Change
Net sales
$3,960.7M
$3,945.2M
+0.4%
Organic sales growth (company)
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The company doesn't report an operating income line. "Operating margin" here is gross profit ($1,305.8M) minus SG&A including credit-loss provisions ($947.9M), divided by sales. This matches total segment profit minus corporate overhead. It leaves out the CAM gain, restructuring, impairments, "Other, net" and interest. On the company's adjusted basis the same measure was 9.8% versus 6.7%. Source: Q2 2026 Form 10-Q and the July 29, 2026 earnings release.
What drove sales: volume up, price flat, CAM gone
"Organic" growth strips out currency moves and businesses bought or sold, so it shows the underlying business. Total sales were flat because gains and losses cancelled out. The 10-Q says sales were flat "as a 3% increase in volume and a 1% increase from foreign currency were offset by a 3% decrease from the CAM business divestiture and a 1% decrease from strategic outdoor product line transitions". The last item is the company's move to license out its gas walk-behind mowers instead of selling them itself. Pricing was flat. The 2025 price increases that offset tariffs are now fully in last year's base, so they no longer add to growth.
Q2 volume growth came after a weak first quarter. For the first half, Tools & Outdoor volume was down 1% and price was up 2%. Q2 volume was up 3%, so Q1 volume must have fallen.
Segments
Tools & Outdoor (sales $3,564.3M, +3%; 90% of the company). Organic revenue rose 3%, "primarily driven by power tools strength in U.S. retail and commercial and industrial ('C&I') channels." By region, organic growth was +4% in North America, −2% in Europe and +3% in the rest of the world. Segment margin rose to 10.9% from 6.9% (adjusted 11.8% from 8.0%). Management credits "net productivity gains and favorable product mix, as well as a net benefit of approximately 150 basis points related to tariff refunds." Without the refund, the adjusted margin would have been about 10.3%, still more than 2 points above last year.
Engineered Fastening (sales $396.4M, −18%). Reported sales fell because CAM left, which cost 21 points of growth. Organic revenue still rose 3%, "driven by industrial strength, as well as continued automotive fasteners growth." Adjusted segment margin was 13.0% versus 10.8%, helped by about 50 basis points of net tariff refund.
The cost story: program finished, new plant closures under way
The Global Cost Reduction Program ran from 2022 to 2025. It finished at the end of 2025 with about $2.1 billion of yearly pre-tax savings, against a $2.0 billion target, and more than $300 million of that was put back into innovation and sales. That's why gross margin was already moving up before the tariff refund.
The company is now closing more plants and moving production. In H1 2026 it booked $60.0 million of restructuring charges ($50.0M in Tools & Outdoor) and a $28.0 million write-down of assets for a Tools & Outdoor product line it is exiting. It expects these actions to save about $120 million a year by the end of 2027 ($103M in Tools & Outdoor). Q2 also carried $29.0 million of "footprint rationalization" costs in cost of sales, mainly faster depreciation of equipment at plants closed in the quarter.
GAAP vs. adjusted: why they differ this time
Charges from the cost program usually make GAAP EPS lower than adjusted EPS. This quarter it's the other way round. Adjustments were a net pre-tax gain of $221.3 million: the $273.7M business-sale gain minus footprint costs, restructuring and impairment. That puts GAAP EPS ($2.33) $0.76 above adjusted EPS ($1.57).
Two cautions about adjusted EPS:
The tariff refund is not adjusted out. Both GAAP and adjusted EPS include the roughly $0.17 benefit.
Adjusted tax rates are unusually low in both years: 15.1% this quarter (helped by revaluing uncertain tax positions) and −48.7% in Q2 2025. Before tax, adjusted earnings rose from $109.7M to $277.7M. The EPS growth rate (+45%) understates the operating improvement, because last year's adjusted EPS also got a tax benefit.
Takeaway: Underneath the CAM sale gain and the tariff refund, the core business improved: adjusted gross margin was about 31% even without the ~2.5-point refund benefit, versus 27.5% a year ago, and the savings program exceeded its $2.0 billion target. But pricing was flat, first-half tool volume was down 1%, and new Section 301 tariffs are coming, so the second half has to show that margin can hold without one-off help.
Tariffs: refund in, new tariffs coming
The IEEPA tariffs added to 2025 costs and led the company to raise prices. After the Supreme Court ruling, U.S. Customs started paying refunds in phases. The company has filed claims for Phase 1 and Phase 2, and only the Phase 1 refund ($118.0M) has been booked. It says there is "no guarantee" more refunds will come and that any future refund "will most likely result in additional obligations," such as incentive pay and taxes. The temporary Section 122 tariffs that replaced IEEPA ended on July 24, 2026. The administration then announced Section 301 tariffs, and management's guidance assumes these "will approximate IEEPA-equivalent levels." The company still aims to reduce China production for the U.S. market "by the end of 2026 or early 2027."
Balance sheet and cash
Most of the CAM proceeds went to paying down debt. The company cut debt by $1.7 billion in the quarter and had no commercial paper (short-term borrowing) outstanding at July 4, down from $605.6M at year-end. It also bought back 3.24 million shares for $250.0M and paid $125M to partly settle an old forward share-purchase contract. Operating cash flow was $763.1M and free cash flow (operating cash flow minus capital spending) was $698.2M, versus $134.7M a year earlier. For the first half, free cash flow was +$250.9M, compared with −$350.3M in H1 2025. Net interest expense fell to $59.3M from $80.2M.
Guidance and outlook
Management raised full-year 2026 guidance:
GAAP EPS: $4.60–$5.45 (was $4.15–$5.35)
Adjusted EPS: $5.20–$5.80 (was $4.90–$5.70), about 18% growth at the midpoint
Free cash flow: $600–$800M (was $500–$700M), including the Q2 refund and expected taxes and fees on the CAM sale
The guidance leaves out CAM results after April 6 and any future tariff refunds. It assumes the temporary tariff relief in 2026 is offset by "higher inflation, primarily driven by battery metals, tungsten, and oil derivatives." The company expects the rest of the Phase 1 refund gain to be "further offset by additional growth investments deployed in the third and fourth quarters."
Our view: H1 adjusted EPS was $2.36, so the new range requires $2.84–$3.44 in H2. The higher end would mean clear margin gains without refund help and with Section 301 tariffs at IEEPA-like levels. Watch three things in Q3: (1) whether Tools & Outdoor volume stays positive now that price increases no longer help growth; (2) the adjusted gross margin without refunds, against the ~31% underlying level this quarter; and (3) Europe, which was the only region that shrank organically. Lower debt and interest costs make EPS less sensitive to these risks than it was a year ago. Whether the margin gain is truly permanent can't be judged until a quarter comes in without one-off items.