Research Update: Stanley Black&Decker Inc. Downgraded To 'A-' On Weaker-Than-Expected Performance; Outlook Negative

U.S. tool and outdoor products manufacturer Stanley Black&Decker Inc.'s weaker-than-expected financial performance due to inflationary pressures, high debt usage, and core business challenges resulted in strained credit metrics. We anticipate Stanley's S&P Global Ratings' adjusted leverage will remain above 5x this year due to elevated debt levels and materially reduced EBITDA margins, with benefits from management's strategic efforts to be realized more so in 2024 than in 2023. Thus, we lowered all of our ratings, including our long-term issuer credit ratings on Stanley by one notch to 'A-' from 'A' and our short-term rating to 'A-2' from 'A-1'. The negative outlook incorporates our expectation that adjusted debt to EBITDA will remain above 4x, with average EBITDA interest coverage

...- U.S. tool and outdoor products manufacturer Stanley Black & Decker Inc.'s weaker-than-expected financial performance due to inflationary pressures, high debt usage, and core business challenges resulted in strained credit metrics. - We anticipate Stanley's S&P Global Ratings' adjusted leverage will remain above 5x this year due to elevated debt levels and materially reduced EBITDA margins, with benefits from management's strategic efforts to be realized more so in 2024 than in 2023. - Thus, we lowered all of our ratings, including our long-term issuer credit ratings on Stanley by one notch to 'A-' from 'A' and our short-term rating to 'A-2' from 'A-1'. - The negative outlook incorporates our expectation that adjusted debt to EBITDA will remain above 4x, with average EBITDA interest coverage of above 6x due to the company's heavy debt load and execution risk from recent strategic initiatives....

Research Update