AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 5/6 · 18/10/2026
Moat—
Insufficient evidence for every rubric criterion; no category score is inferred.
structural advantage · — · Brands and completed savings establish competitive assets and operational progress, but do not establish a defensible structural advantage. The moat verdict remains uncertain.
durability · — · Repeated trademark disclosures establish continuity of assets, but not durable economic protection or competitor-relative returns.
customer dependency · — · The passages do not establish switching costs or customer dependence. Product similarity and retailer bargaining exposure do not conclusively establish interchangeability across the portfolio.
erosion resilience · — · Operational recovery and historical stress provide mixed business evidence, but resilience of an identifiable moat cannot be established.
Pricing power50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · Tools & Outdoor realized 7% higher pricing in 2022 and 4% in first-quarter 2026, alongside volume declines of 12% and 5%, respectively. Actual pricing flexibility is demonstrated, but premiums and demand elasticity are unresolved; volume declines cannot be attributed solely to price.
retention · 2/4 · Indirect demand evidence is mixed: 2023 retail point-of-sale demand remained above 2019 levels and second-quarter 2026 consolidated volume grew 3%, while earlier Tools & Outdoor volumes declined. This supports continuing demand without establishing customer-level retention or loyalty rates.
margin resilience · 2/4 · Price realization failed to offset inflation, supply-chain costs and lower volume in 2022. Industrial pricing and cost control subsequently offset lower volume, and 2026 recovery includes operational improvement but also approximately 250 basis points from net tariff refunds. Resilience is mixed and cannot be attributed to pricing alone.
contractual freedom · 2/4 · Realized price increases demonstrate practical ability to change customer pricing, while retailer consolidation creates disclosed negotiating constraints. This is an indirect, mixed assessment of commercial freedom; customer contract duration and repricing clauses are unavailable.
Predictability71
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 25.00
- Revenue growth volatility (pp)
- 5.65
- Positive FCF years (%)
- 80.00
- FCF margin volatility (pp)
- 6.47
Financial strength10
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 0.00
- netDebtEbitGrade
- 0.00
- interestCoverageGrade
- 7.36
- currentRatioGrade
- 31.18
- Debt / FCF (x)
- 8.52
- Net debt / operating income (x)
- 5.98
- Current ratio (x)
- 1.14
Capital allocation51
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 4.14
- 3-year average dilution (%)
- 0.69
- 3-year average SBC / revenue (%)
- 0.61
- cashConversionGrade
- 0.00
Management63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Inventory reduction, completed CAM disposal and elimination of commercial paper support discipline. First-half 2026 operating cash flow of $374.3 million exceeded $123.4 million of capital and software spending, but dividends, treasury purchases and forward settlement also absorbed substantial cash alongside divestiture proceeds. Outcomes are constructive without proving exceptional allocation returns.
incentive alignment · 3/4 · Actual below-target annual payouts and a 19.2% multiyear PSU payout demonstrate that weak performance reduced compensation; no discretion was applied to 2025 annual payouts. Ownership requirements, anti-hedging provisions and clawbacks strengthen alignment. Actual ownership compliance and long-term effectiveness remain unestablished.
execution · 2/4 · The completed savings program exceeded its target and inventory fell substantially. However, multiyear incentive metrics were largely below threshold, and 2025 divisional profit and working-capital performance missed goals. Execution is assessed from disclosed achievements and operating outcomes, with responsibility spanning successive management teams.
governance · 3/4 · Adopted annual director elections, majority voting, written consent and reduced special-meeting thresholds provide concrete accountability. Independent committees and disclosed compensation protections reinforce oversight. The executive-chair structure and absence of demonstrated long-term governance effectiveness limit the grade below exceptional.
Evidence
In the Tools & Outdoor segment, significant trademarks include DEWALT®, CRAFTSMAN®, STANLEY®, BLACK+DECKER®, DEWALT FLEXVOLT®, DEWALT POWERSTACK®, DEWALT POWERSHIFT™, IRWIN®, LENOX®, PORTER-CABLE®, BOSTITCH®, FATMAX®, Powers®, Guaranteed Tough®, MAC TOOLS®, PROTO®, Vidmar®, FACOM®, Expert®, CribMaster®, LISTA®, MTD®, CUB CADET®, TROY-BILT®, HUSTLER®, and the yellow & black color scheme for power tools and accessories.
Business / Patents and Trademarks · Filed 24/02/2026
18 The Company’s trademarks have a reputation for quality and value and are important to the Company's success and competitive position.
Risk Factors / Trademark reputation · Filed 24/02/2026
In the Tools & Outdoor segment, significant trademarks include DEWALT®, CRAFTSMAN®, STANLEY®, BLACK+DECKER®, DEWALT FLEXVOLT®, DEWALT POWERSTACK®, DEWALT POWERSHIFT™, IRWIN®, LENOX®, PORTER-CABLE®, BOSTITCH®, FATMAX®, Powers®, Guaranteed Tough®, MAC TOOLS®, PROTO®, Vidmar®, FACOM®, Expert®, LISTA®, MTD®, CUB CADET®, TROY-BILT®, HUSTLER®, and the yellow & black color scheme for power tools and accessories.
Business / Significant trademarks · Filed 18/02/2025
The Company encounters active competition in the Tools & Outdoor and Engineered Fastening segments from both larger and smaller companies that offer the same or similar products and services or that produce different products appropriate for the same uses.
Business / Competition · Filed 24/02/2026
Certain large customers offer private label brands (“house brands”) that compete across a wide spectrum of the Company’s Tools & Outdoor segment product offerings.
Business / Private-label competition · Filed 24/02/2026
and Europe. A consolidation of retailers in both North America and abroad has occurred over time and the increasing size and importance of individual customers creates risk of exposure to potential volume loss or reduced leverage in price negotiations, which could have an adverse effect on net sales and profitability.
Risk Factors / Customer consolidation and price negotiations · Filed 24/02/2026
Tools & Outdoor net sales increased $1.606 billion, or 13%, in 2022 compared to 2021 due to a 7% increase in price and a 21% increase from acquisitions, partially offset by a 12% decrease in volume and a 3% decrease from foreign currency.
MD&A / Tools & Outdoor 2022 price and volume · Filed 27/02/2024
Tools & Outdoor net sales increased 2% compared to the first three months of 2025 as a 4% increase in price and a 3% increase from foreign currency was partially offset by a 5% decrease in volume.
MD&A / Tools & Outdoor first-quarter 2026 price and volume · Filed 29/04/2026
Excluding these adjustments, gross profit was 26.0% of net sales in 2022 compared to 33.6% in 2021, as price realization was more than offset by commodity inflation, higher supply chain costs, including the impact of planned production curtailments, and lower volume.
MD&A / Consolidated 2022 gross profit and cost pressures · Filed 27/02/2024
Patents and Trademarks No business segment is solely dependent, to any significant degree, on patents, licenses, franchises or concessions, and the loss of one or several of these patents, licenses, franchises or concessions would not have a material adverse effect on any of the Company's businesses.
Business / Dependence on patents and licenses · Filed 24/02/2026
The program was completed as of the end of 2025 and generated approximately $2.1 billion of pre-tax run-rate savings, exceeding its original cost savings target.
MD&A / Completed Global Cost Reduction Program · Filed 29/07/2026
The cash investment required to achieve the pre-tax run-rate supply chain cost savings was approximately $0.6 billion.
MD&A / Supply-chain transformation cash investment · Filed 24/02/2026
In addition, the Company has reduced inventory by over $2 billion since the end of the second quarter of 2022 and expects further working capital reductions to support free cash flow generation in 2026.
MD&A / Inventory reduction achieved · Filed 24/02/2026
Although the broader Global Cost Reduction Program has been completed, the Company continues to pursue targeted and strategic footprint actions to support the ongoing network transformation and reposition its supply chain, as necessary.
MD&A / Continuing footprint actions · Filed 29/07/2026
As a result, these products became subject to additional tariffs on imports from Mexico in 2025.
Risk Factors / Additional tariffs on relocated production · Filed 29/07/2026
The year-over-year change in gross profit as a percent of sales and adjusted gross profit as a percent of sales were primarily driven by operational cost improvement and favorable product mix, in addition to a benefit of approximately 250 basis points related to the net impact of tariff refunds realized as described above.
MD&A / Gross-margin improvement and tariff-refund contribution · Filed 29/07/2026
36 Table of Contents Consolidated Results Net Sales: Net sales were $3.961 billion in the second quarter of 2026 compared to $3.945 billion in the second quarter of 2025, relatively flat year-over-year, 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.
MD&A / Second-quarter 2026 consolidated sales bridge · Filed 29/07/2026
The 2023 U.S. retail point-of-sale demand remained above pre-pandemic 2019 levels, supported by price increases and strength in professional tools.
MD&A / 2023 retail point-of-sale demand · Filed 27/02/2024
Excluding Non-GAAP adjustments of $18.7 million and $7.8 million in 2023 and 2022, respectively, segment profit amounted to 11.8% of net sales in 2023 compared to 9.7% in 2022, as price realization and cost control more than offset lower volume.
MD&A / Industrial 2023 price realization and cost control · Filed 18/02/2025
AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS THREE AND SIX MONTHS ENDED JULY 4, 2026 AND JUNE 28, 2025 (Unaudited, Millions of Dollars) Second Quarter Year-to-Date 2026 2025 2026 2025 OPERATING ACTIVITIES Net earnings $ 351.3 $ 101.9 $ 410.9 $ 192.3 Adjustments to reconcile net earnings to cash provided by (used in) operating activities: Depreciation and amortization of property, plant and equipment 101.8 92.7 186.2 183.8 Amortization of intangibles 27.6 37.4 56.2 74.7 (Gain) loss on sales of businesses (273.7) — (270.6) 0.3 Asset impairment charges 5.3 — 28.0 — Stock-based compensation expense 24.4 28.0 52.6 64.4 Changes in working capital 282.1 127.6 (106.7) (341.4) Changes in other assets and liabilities 244.3 (173.3) 17.7 (379.8) Cash provided by (used in) operating activities 763.1 214.3 374.3 (205.7) INVESTING ACTIVITIES Capital and software expenditures (64.9) (79.6) (123.4) (144.6) Proceeds from sales of businesses, net of cash sold 1,814.6 — 1,814.7 5.0 Other 3.5 12.4 6.4 14.7 Cash provided (used in) investing activities 1,753.2 (67.2) 1,697.7 (124.9) FINANCING ACTIVITIES Payments on long-term debt — (0.3) (500.1) (500.3) Net short-term commercial paper (repayments) borrowings (1,750.2) (98.2) (604.8) 1,038.0 Proceeds from issuances of common stock 3.1 2.2 7.7 4.9 Purchases of common stock for treasury (252.1) (0.8) (267.4) (12.5) Cash dividends on common stock (124.3) (124.0) (250.3) (248.5) Partial cash settlement on forward share purchase contract (125.0) — (125.0) — Other (2.6) (1.9) (3.0) (2.6) Cash (used in) provided by financing activities (2,251.1) (223.0) (1,742.9) 279.0 Effect of exchange rate changes on cash, cash equivalents and restricted cash (5.6) 42.6 (12.5) 74.1 Change in cash, cash equivalents and restricted cash 259.6 (33.3) 316.6 22.5 Cash, cash equivalents and restricted cash, beginning of period 344.4 348.6 287.4 292.8 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD $ 604.0 $ 315.3 $ 604.0 $ 315.3 The following table provides a reconciliation of the cash, cash equivalents and restricted cash balances as of July 4, 2026 and January 3, 2026: July 4, 2026 January 3, 2026 Cash and cash equivalents $ 592.4 $ 280.1 Restricted cash included in Other current assets 11.6 7.3 Cash, cash equivalents and restricted cash $ 604.0 $ 287.4 See Notes to Unaudited Condensed Consolidated Financial Statements.
Financial Statements / First-half 2026 cash flows · Filed 29/07/2026
Divestitures On April 6, 2026, the Company sold the CAM business to Howmet Aerospace for $1.8 billion in cash.
MD&A / Completed CAM divestiture · Filed 29/07/2026
Dollars. As of July 4, 2026, the Company had no commercial paper borrowings outstanding.
Notes / Commercial paper outstanding at July 4, 2026 · Filed 29/07/2026
Our 2025 compensation program reflects this philosophy, as performance results under the Company’s 2025 MICP were below target resulting in bonus payouts ranging from 66.8% to 72.3% of target for named executive officers and our performance results under the 2023–2025 Long-Term Incentive Plan Performance Share Units (“LTIP PSUs”) resulted in a 19.2% payout as a result of below threshold performance for all metrics in 2023, 2024 and 2025 other than CFROI performance for 2023, which was above target.
Executive Compensation / Actual 2025 incentive payouts and multiyear performance · Filed 06/03/2026
The Compensation Committee applied no discretion in determining performance and payouts under the 2025 MICP for our named executive officers.
Executive Compensation / No discretion in 2025 annual incentive payouts · Filed 06/03/2026
Reward Provide Competitive Total Compensation Opportunity To attract and retain high caliber executive talent, total target compensation opportunity is designed to be competitive relative to comparable roles in the market and generally aligned to market median Compensation Committee retains the discretion to set individual total compensation opportunities based on factors such as: performance, experience, responsibilities, succession considerations, role criticality and/or retention risk ■ ■ ■ Require Executives to be Shareholders A significant portion of each NEO’s total target compensation is in the form of equity-based awards Robust stock ownership guidelines require executives to maintain meaningful ownership levels, further aligning executives’ interests with those of our shareholders ■ ■ Minimize Compensation Risk Compensation program risk assessed annually to ensure that our compensation structure does not incentivize excessive risk-taking Clawback policies covering all time and performance-based incentive compensation Anti-hedging and anti-pledging policies ■ ■ ■ Protect Shareholder Interests No repricing or cash buyouts of options without shareholder approval Double-trigger vesting for severance and equity awards in the event of a change in control No excise tax gross-ups under change in control agreements and no tax gross-ups on perquisites (other than relocation benefits) ■ ■ Executive Compensation Program Overview Total direct compensation for our executives is delivered through three primary elements: base salary, annual cash incentives, and long-term equity incentive awards.
Executive Compensation / Ownership, clawback and shareholder protections · Filed 06/03/2026
The Board and Company are proud of the Company’s track record of being responsive to shareholder feedback as outlined in the table below: Shareholder Feedback Highlights of Board and Company Actions Over the Past Six Years CORPORATE GOVERNANCE Increase accountability and responsiveness to shareholders Eliminate supermajority vote requirements Amended governance documents to: • Adopt majority vote standard for uncontested director elections, including a director resignation policy • Eliminate supermajority voting requirements • Permit shareholder action by written consent • Proactively lower the minimum threshold for shareholders to call a special meeting from 35% to 25% • Adopt annual elections for all directors Evaluate regular Board refreshment and appropriate composition, skills and expertise • 7 of the independent director nominees were first appointed in the last five years • Recently added board members bring perspectives critical to the Company’s business and industry in areas such as finance and risk management, operations and supply chain, sales and marketing, analytics and digitization, technology and innovation, transformation experience and capital allocation EXECUTIVE COMPENSATION Reinforce execution of Global Cost Reduction Program in executive compensation program Increase focus on absolute amount of Free Cash Flow and balance sheet health Increase emphasis on TSR in executive compensation program • Added a transformation modifier to the 2023 MICP, based upon achievement against goals under our Global Cost Reduction Program, which was replaced by the adjusted gross margin modifier for the 2024 and 2025 MICP • Adopted a Free Cash Flow metric (calculated as operating cash flow less capital and software expenditures) in place of the historical cash flow multiple of net earnings metric • The Company added an additional condition for its 2025 and 2026 MICP programs requiring that the Company's TSR be at or above the median of the applicable peer group for executive officers to receive any additional payouts under the 2025 and 2026 MICP's respective modifier viii 2026 PROXY STATEMENT TABLE OF CONTENTS 2026 PROXY STATEMENT Shareholder Feedback Highlights of Board and Company Actions Over the Past Six Years SUSTAINABILITY Incorporate sustainability strategy within the business model • Refined sustainability goals to reflect current business portfolio and to align with the business strategy of a more focused company Board Nominees The following table provides summary information about each of the Company’s director nominees (please see “Item 1—Election of Directors” for more information).
Governance / Adopted shareholder rights and compensation changes · Filed 06/03/2026
The Board also maintains effective oversight by consistently ensuring that each Board committee, other than the Executive Committee, is led by and composed entirely of independent directors.
Governance / Independent committee composition · Filed 06/03/2026
As detailed beginning on page vii of this proxy statement, the Board has strong corporate governance practices and all directors other than the Executive Chair and CEO are independent.
Governance / Board independence and executive leadership · Filed 06/03/2026
For 2025, adjusted division operating profit* performance was below threshold, the divisional trade working capital performance was below target and the adjusted division gross margin rate* performance was below target.
Executive Compensation / Actual 2025 divisional performance · Filed 06/03/2026
