Welcome everyone. Thanks for joining us. My name is Mike Rehaut. I'm the senior analyst covering the home building and building products sectors for JP Morgan. Really thrilled to have with us Stanley Black & Decker and to my immediate left Pat Hallinan, CFO. We also have from the IR team Michael Wherley and Christina Francis. Thanks everyone from SWK for joining us. I'm going to kind of conduct essentially like a fireside chat but I'll turn it over to Pat for just some brief introductory comments and, you know, intro on the company. Yeah. Well, thank you. I'll assume that you know that we're a tools and outdoor products company with about 85% of our portfolio and an industrial fastener with the balance, about 15% of the portfolio. You know, the few things I'd share with you is, you know, obviously with tariffs, 2025 was a challenging and interesting year, but we made important progress. Important progress on margin, on our balance sheet, and recovering the health of our brands. You know, we take a lot of pride in being able to deliver progress in challenging environments. We'll see what this year brings. You know, we remain confident that we could stay on our margin growth and cash journey, even if the macro remains flat to low growth, which is probably what's in front of us for 2026, and if not, some bit beyond 2026. In terms of our objectives, our long-term objectives are consistent with those that we shared late in 2024 at the Investor Day. Now, they probably move out to the end of 2028 instead of the end of 2027, but you know, getting the portfolio to mid-single-digit growth, getting gross margins to 35%-37%, achieving EBITDA margins that are mid-teens and better, and having the leverage at about 2.5 times net debt to EBITDA, and we still feel very much like we're on that journey and those are the targets we're chasing for 2028. Then, you know, as far as the current environment, I'm sure Michael will be asking me some questions about the current environment. You know, the first two months of 2026, January and February, very much in line with the expectations we had when we set guidance. You know, we'll see kinda where this war goes. You know, right now, it hasn't yet had a meaningful impact on the business. It certainly creates certain inflationary headwinds around fuel and resins and freight. Fortunately right now, those are roughly offset by the tailwinds of lower tariffs. We'll see kind of where the war and the consumer goes from here. With that, I'll kind of turn it back over to you. Great. No, thanks, Pat. Just to clarify, the comments around the long-term objectives moving out to 2028 versus 2027, I believe that's something that you spoke to during the past earnings call as well. Correct. Right? Yeah. Yeah. Yeah. Yeah. So that's- That's- That's nothing new per se. Yep ...outlook. Correct. Yeah. Okay, you know, maybe just to start on sales growth top line for 2026 and beyond. Mm-hmm. You know, you talked about just before kind of thinking in terms of a flat to low growth backdrop where it's kinda baked into your guidance for this year. Mm-hmm. So far, I guess kinda hitting that at least in January, February. Just to kind of go a little deeper, a little more granular in terms of the different end markets, as part of that, you know, flat to low single-digit outlook. I think in general, the overall was a low single-digits was the organic growth guidance. Mm-hmm. How does that break down between U.S. new res, U.S. repair and remodel, Europe, maybe non-res? You know, how does that low single digit if you were to parse it out a little bit? Yeah. You know, what I'd tell you, first of all, on a longer term scenario, our macro tends to ebb and flow with GDP, right? Mm-hmm. In that, you know, 85% of our portfolio is construction oriented, whether that's residential, commercial, industrial, or infrastructure. Over the long haul, it tends to ebb and flow with GDP. I would expect the GDP for this year to be a bit like last year. Again, war aside, we'll see what the war does to that. You know, last year the GDP was reasonable, you know, around 2.5% or better, but our end markets were below that, right? Right GDP last year was driven by things like data centers and GLP-1 drugs and stuff that has very little to do with us. You know, what I would say when we came to this year around flat, I don't wanna portray it as some hyper-scientific regression model we have. We put in 20 variables, and it spits out flat. We had some good things and some bad things, right? I would say on the good side is I do think, again, war aside, you know, there'd be modest growth in R&R. We would expect modest growth in durables generally. We would expect, whether you wanna call it market or just not the headwinds of tariffs that we had during the second and the third quarter of last year, where manufacturers and retailers took promotions out of the market to deal with the Labor Day shock. Those were the good side. I would say new construction housing, we were just assuming down two or three points, autos, you know, flat to down a point or thereabout. In the ebb and flow of this, roughly flat, given we are, you know, very construction-focused, and I, you know, I wouldn't point to someone only like Home Depot, but, you know, with Home Depot guiding zerp to two, we're guiding flat, I'd say we're kind of in the same zip code, right? No, I mean, that all makes sense. You know, I think one of the standouts of the more recent your last quarter was the volume trends and obviously talking about that volume down 9% in tools and outdoor due to maybe a little bit greater amount of price elasticity. Mm-hmm I think it was discussed on the call, and it's obviously a softer underlying market. North American retail was kinda highlighted in terms of being a little more challenged on the opening price point and select promotional areas. How are the trends in this more specific area progressing so far in 2026? What's the risk of some of the Q4 dynamics continuing over the next six or 12 months? Yeah. I think as we shared at the end of, on the fourth quarter call, which was the end of January, beginning of February, we'll see a measure of that in the first quarter, but I don't expect it beyond. Mm-hmm ... the first quarter. The reason why is, you know, if I take us back to last year, in the May-June timeframe, and then again in the September-October timeframe, you know, you had to make a set of pricing decisions, in an environment that was pretty extreme and in an industry where, let's be honest, the manufacturers in this industry haven't been on a regular price cadence. It's not like a highly predictable environment. Our approach last year was, "Hey, we care about volume and share, but we're gonna make sure we take the price we need to protect margin, 'cause we need to get back to 35% margin in a reasonable timeframe to invest in growth." We were a first mover, and we were thoughtful but aggressive, knowing we might do some things that put some pressure on volume. Mm-hmm We'll adjust later. Mm-hmm. You know, since we took that price, you know, other competitors like Milwaukee have taken incremental price. You also have a number of the outdoor manufacturers that protected their 2025 shipments but have put price into their 2026 shipments. Those things have played out. Mm-hmm. On our premium brands like DEWALT and even our DIY brands, STANLEY and CRAFTSMAN, we've been adjusting promos at the pace we can. You know, some of those happened in the first quarter, but more of those will happen in the second quarter. On opening price points like BLACK+DECKER vacuums at Amazon, that kind of stuff. Mm-hmm We got those in as quickly as we can. I think you'll see a measure of that adjustment in the first quarter, but not full measure. Mm-hmm. Right. By the second quarter, you'll see the full measure of that adjustment. I think by the second quarter, we should be starting to see the types of share and sales performance we'll need to get to a full year that's around 2%. That's for a full year price tailwind. When you say 2%, you're talking about Yeah. 2% is organic. Yes, there's probably about 2% of price in there, but you also have some volume coming out of there, right? I mean, it's. I just think that we'll be back to kind of an elasticity that's closer to that 1:1 by the time we get to the second quarter. Okay. Um... You know, kind of in a related question, you know, given that there are a lot of moving pieces in this area, but when you think about the competitive backdrop overall, you know, where do you think we are in the life cycle of, you know, obviously there's a lot of back and forth timing-wise in terms of these price increases and the reactions in the market. When you take a step back and you think about the competitive backdrop in 2025, the level of intensity, the level of perhaps promotional intensity, outside of the necessary price increases taken, how would you think 2026 at this point would compare to 2025? I mean, I think, you know, as you know, I'm like 2.5-2.75 years into this chair. I would have said that this segment wasn't as disciplined maybe as some other segments in construction and building products, kind of pricing dynamics. I would characterize 2025 and 2026 as, I would say, encouragingly kind of disciplined and rational. Mm-hmm ... across the competitive set. I'd say, you know, where there's exceptions to that, they tend to be brands and/or manufacturers that are opening price point big box-centric, where they were very afraid of kind of a do or die scenario. I mean, if you're kind of anchored to one or two big retailers and you're only opening price point. Mm-hmm ... they were pretty reticent to take price or at least as much price as other people were taking just because it was a big moment of truth where they don't have a big pro channel outlet. Mm-hmm ... for their products. Other than that, I mean, if you look across, you know, our biggest brand, which is over $7 billion of our tools and outdoor portfolio, DEWALT, competing against Milwaukee, Bosch, Makita, Hilti. The pricing was pretty. Mm-hmm ... consistent across. I mean, obviously we took it at different times, and at every SKU level there can be differences, and we're all kinda dialing that in, but it was pretty rational. I expect that to be the case for 2026. I can't speak with other retailers. Obviously, you're probably gonna get to some questions about tariffs, but our long-term expectation is the administration is gonna try to use 301s and 232 tariffs to effectively replace the IEEPA's. Now, it will take time. Mm-hmm ... to do that, and it may play out differently by country of origin and product category. What I've observed so far is we and others are, given where we think the long-term tariffs are going, we're not really thinking of everyday price adjustments in this- Mm-hmm 'Cause we need to know more before we even contemplate something like that. Maybe just on a due diligence standpoint in terms of just hitting on tariffs, you know, you mentioned what you had to go through last year. As it stands today and year to date, and I think this was also kind of hit on in the earnings call, but are you still looking at it like that, you know, some of the reductions in tariff rates are kind of roughly being offset by some of the increases in other, you know, material costs or freight or logistics? Or how does it all kind of shake out? Yeah. Well, I'd say, I'll get to the change with IEEPA's. I would say in general with the tariffs that came on last year, right? Mm-hmm. We kind of priced dollar for dollar for the tariffs, and then getting our margin percentage back was about tariff mitigation this year, which was largely just changing the country of origin and/or USMCA compliance to get, you know, $100-$200 million of mitigation out of the system to get your margin back. Mm-hmm. We're still very much on that path. We have a meeting every other Friday, and we're tracking all this progress as if nothing changed. Mm-hmm. You have a court ruling that took IEEPA's off- Right. put a different tariff in place, 122, that right now is at 10% threatening to go to 15, but is still a favorable headwind relative to IEEPA's. Right. The magnitude of that favorability right now, you know, in a short period, two or four weeks, is roughly being consumed by fuel inflation for ground transportation, resins, freight inflation in Europe, 'cause that's really where that's occurring, and then some metals inflation like tungsten and lithium in batteries. Those kind of forces kind of roughly offset each other. Right. Assuming this conflict is such that it doesn't affect the macroeconomy or the consumer materially, we're kind of still in the same zip code. You know, if oil prices went away, then you'd probably just have the tailwinds of tariffs showing through. Right. Those will go for the 150 days, and we'll kind of see where they go from there. Right. I don't know. Sure. Regarding the tariffs, are you in the talks with the government to sue them or refund, or do you plan? There are counterparties who would offer you $0.70 on the dollar for immediate cash back and then, you know, those kind of deals. Yeah. Are you looking at that? Yeah, we're not interested in any of the selling our IEEPA claims at a discount, 'cause we feel like if there's a legal case, we have a legal case to stand on. We've effectively cured our balance sheet issue with the sale of our aerospace fastener business, so we're not out there hunting for cash at a discount. I would tell you, yes, we fully expect to, and our, you know, our legal team and our trade compliance team very much engaged in pursuing refunds. We're doing it in concert with other tariff-related activities, right? I mean, we're having ear to the ground and are trying to put our viewpoint out there with maintaining USMCA either as is or something similar. There are some things we're talking to the government about in metals tariffs. We're pursuing it diplomatically, but it's our fiduciary responsibility to pursue it, and we would expect to pursue it by whatever means is the most effective means. Right now, we're just working through normal channels with trade compliance and trade lawyers to do it. You know, it wouldn't be our first choice to have a lawsuit, but if that becomes what's in our fiduciary responsibility, then I guess we'll have to at least contemplate that, but. Moving on to market share and also kind of a competitive backdrop type of question, and I know this is something that you probably deal with almost every investor call. Also I guess just on, in the interest of being comprehensive in my questions. You know, maybe you could just comment on your share globally and in the U.S. over the last, you know, five-10 years, how it's changed to the extent it has, and you know, who have been kind of the other, let's say, winners or losers in this period? Maybe first talk about the U.S. in particular, 'cause I think that's where the most of the interest is, and if there's been any other notable shifts in your other key markets. Yeah. I would say, I don't know that I could parse kind of U.S. versus global, but I'll get at many of the things I think you want me to get at. I would tell you that I would think our share over the last three-five, maybe even seven years has kind of been flat. What it's been is you've had a brand like DEWALT continuing to outperform the market, maybe not grow as quickly as Milwaukee is growing, but consistently outperform the market. You've had headwinds in STANLEY, CRAFTSMAN, and BLACK+DECKER as you know kind of the three big brands, maybe you'd add IRWIN to that pile where anything that DEWALT was gaining, they were consuming, and we were effectively running in place. Mm-hmm. I think if you look at a competitor like TTI, I don't wanna claim that I know them intimately. You probably know them better than I do, as do many of these investors, but I think their Milwaukee brand has really been performing well. They've been exposed to weakness in Ryobi, 'cause the DIY consumer's been kind of weak. I think they've been gaining share through their Milwaukee brand, both in the U.S. and abroad. Mm-hmm. I think you have some other you know, really quality brands in the form of Makita, Bosch, and Hilti. We see those as very serious competitors. They can either be more niche product-focused, like in the case of Hilti, where they've been getting all their growth out of anchors and fastening and kind of things that are adjacent to that, which has been favorable in a data center environment. You have the Makitas and the Bosches focusing more on home geographic markets. I think them also with any of the other bit players have been kind of the net losers in this. Mm-hmm. I think in the case, again, I don't wanna claim I could speak for Milwaukee or Bosch. I think they've tried to focus their energies on geographies or parts of their portfolio. Mm-hmm that have made more sense. I think that combined with some lesser players, you know, like SKIL or whomever, that they've been kind of the share losers in that whole journey. I think, Mike, the opportunity for us is we at Stanley Black & Decker, we haven't been on our A game combining innovation, marketing, and sales execution, and we're excited about the growth opportunity. We feel like we have opportunities to take DEWALT higher than it's been. We see the green shoots in the STANLEY turnaround, and with the product launches we have this year in CRAFTSMAN and a renewed alignment in that brand with Lowe's and with Ace, we feel like, you know, this will be the year we make the turn in the back half of the year on CRAFTSMAN. I think we have growth opportunity across all three of those brands. I mean, that really kinda like you know. That's basically the next question that I have. You know, the question was around just in general product innovation within power tools, but maybe just to broaden it out and talk about, you know, you mentioned the STANLEY turnaround, you mentioned some of the product launches in CRAFTSMAN. When you think about DEWALT, STANLEY, CRAFTSMAN in terms of product innovation, maybe you could just highlight across the three different brands some of the top areas where, you know, you hope to move the needle in 2026 and into 2027. Yeah. I think it's unique to each brand, because I think one of the key tenets of each of their growth strategies is being hyper-focused on the end users, and they're all focused on different end users. You know, with DEWALT, it's about the pro. You know, for us, it's expanding into areas that go beyond our traditional strength. Our traditional strength in DEWALT is carpentry. We still have a leading position there. Whether you're talking mechanical, plumbing, electrical, and concrete, those are the spots of innovation, and much of the innovation there is coming from two different types of productivity benefits. You know, if you're talking about something like grinders for welders, we've had a lot of great innovations around making things via battery that are both compact relative to the hydraulically powered or air compressor powered rather tools available today with a battery. You kind of get rid of the cord, and you get better compactness. Mm-hmm. I'd say around concrete, we have battery innovations and power shift where we're bringing battery technology to replace fuel products in concrete. That's an example of what we're doing in DEWALT. Very differently in CRAFTSMAN, you know, when we bought CRAFTSMAN from Sears some years ago, you know, the brand, the CRAFTSMAN brand we acquired leveraged the tool portfolio that Stanley Black & Decker already owned. Mm-hmm. It borrowed probably maybe too many categories and at a cost structure that was probably higher than ideal for a DIY consumer. Mm. The launches this year for CRAFTSMAN are much more focused on home renovation and outdoor, all on a V20 battery platform, which is consistent with the DIYer who's looking to be a regular user of tools but, you know, doesn't need the performance and is looking for a price point below a DEWALT. You know, we're not gonna have— We probably had too many SKUs in each product category when we first rolled out CRAFTSMAN, because we were- Right Borrowing from a big catalog and that wasn't appropriate, and so we've really dialed in that brand. Mm-hmm. Stanley, you know, as Americans, we all sit here and we know Stanley for tape measures and utility knives because they kind of have long led those categories, and it's a hand tools brand in the U.S. Stanley, two-thirds of its sales are outside the U.S. Mm-hmm. Outside the U.S., it's also a power tools brand, and it's kind of at that mid-price point, mid-tier. Again, the STANLEY launch, which is, you know, probably about two to three quarters ahead of the CRAFTSMAN turnaround, has been around reinvigorating the innovation to make sure a tightness of SKUs, but a cost structure of SKUs that makes a more attractive price point. Some ergonomics and industrial engineering across both the power tools and hand tools category, and very different packaging and merchandising. When you go into stores outside the U.S., you're seeing STANLEY bays that are highly re-energized, and outside the U.S., packaging recyclability is a big thing and kind of leading in that range. You know, these are all examples of just working end user backed, what are people willing to pay for, how do you focus your innovation where you have a right to win and you can differentiate on productivity, safety, or ergonomics, and then how do you tie in the marketing and the sales execution, in a very tight alignment with that innovation. We, as we were focused on acquisitions five-plus years ago, we weren't doing this well enough, and I think- Right We have a lot of opportunity when we execute it well. Great. I have one more quick question, probably quickly, and then I want to turn it over to the audience as well. Brand investment and maybe just more broadly SG&A, you know, you guided to a 22% SG&A for 2026, up a little bit from 21.5% in 2025, I think. Mm-hmm. Earlier in 2025, it was even talked about more closer to 21. It kind of drifted up a little bit. What's the right number over time? Is it a 22? Could it be a little higher? Because obviously there's a lot going on, I think, around the product innovation, around the marketing, around other areas to support the brand. Mm-hmm. How should we think about that SG&A level? Yeah. I would say looking at the next three years where we expect the macro to be at best flat to low, right? Mm-hmm. The next three years, we would expect it to be 22 ± 50-75 basis points. Mm-hmm. The way we get there, though, Mike, is we're still trying to put $50-$100 million a year of incremental growth and innovation investment in, which basically means in a low growth environment, we have to, you know, go out and take cost out of the back office. Mm-hmm ... and other areas. You know, if you look at 2025 full year SG&A versus 2024 full year, we were roughly flat dollar for dollar. We put almost $100 million in for growth, but we stripped $100 million out of it, and I think that's going to be the formula for the next one to two years unless and until the macro turns. Mm-hmm. And then, you know, we get questions sometimes about, "Hey, we feel like you really have a growth opportunity," which we feel like the same. "Why don't you just throw more gasoline on the fire?" About $100 million-$150 million a year, we could use the SG&A productivity productively, and our channel partners would be receptive to what we're doing. you know, you start getting beyond $100, $150, what's our ability to ramp headcount productively? What's our willingness of channel partners to take new products or change merchandising. Right, right. ... or anything like that? I mean, we'll keep challenging ourselves and try to push that envelope, but I think that's the world we're in is kind of 22% with us making the back office more efficient to fund growth on the front office. Yeah. Makes sense. I'll turn it over if there are any questions from the group. Yeah. You mentioned the new products. What% of sales come from new products, you know, you think this year or next year? Yeah, we don't do a Vitality Index. We may go down that path, but I don't know that we would be, like, you know, in where you might want a long-term target of 25-ish%, but I don't know if we've ever said anything like that, Christina and Mike, before. I would imagine they're somewhere in the 10+% for sure. Right Yeah. That's the same for the industry as well, the 10%? I don't know. I mean, I think a lot of developed world, construction durables, you know, people are usually trying to be around 25% for, you know, products that are 36 months old or younger. My experience is when you use that metric, though, you have to be sure you're not, you know, inspiring a lot of SKU complexity. I mean, I think the real question is. How do you gain share, and how do you gain share effectively and efficiently? You know, as we go forward and think about metrics like that, if we're gonna put vitality out there, internally, I would expect to hold our product developers so that we're not making lots of small volume SKUs, 'cause that just ends up, you know, complicating your manufacturing world. Just outside of the recent movements on resins and IEEPA, just to level set, coming into the year, what was the expectation around how much sourcing you'd get out of China, like your percent portfolio or like footprint reduction, as well as like USMCA compliance as you Kind of work through the year. Yeah, yeah. So, you know, as some of you may be familiar, we started 2025 at about 15% of U.S. COGS from China, and by the end of 2026, we're tracking to be, you know, down to very low single digits. I don't think we'll get to absolute zero just because there's always gonna be some low volume DEWALT SKUs that you're gonna wanna make in one place for the globe, and that one place might be China, and you just bear the tariff. We're very much tracking to that, so that by the end of 2026, you know, we're in very, very low single digit percentages of COGS from China. That's kind of. We're on this path, the long-term strategic path of being out of China, and we track it every week and we're ahead of schedule on that. I'd say for USMCA compliance, what we've been particularly thoughtful about not giving out specific percentages there 'cause we feel that's a competitive advantage for us. What we have said is, like appliance manufacturers and auto players that tend to be 70%+ USMCA compliant for products from Mexico, we would expect to be at that level or better, and we're tracking to that as well. Yeah. Sorry, just one quick follow-up related to tariffs. On the refund question earlier, have you guys communicated how many dollars of tariff impact you've had? We haven't We haven't. We'll, you know, we'll. If and when that becomes kind of a material thing that we have to, we will. But obviously if we start, you know, shooting up big trial balloons of hundreds of millions of dollars, somebody might come looking for them as well. We'll be thoughtful when that day comes, but it's, you know, What we have said publicly is IEEPA was the majority of the tariffs we were paying. That's what we've said publicly. What we have said publicly is our run rate of tariffs before the court ruling that just occurred a few weeks ago was $700-$800 million a year on an annualized full-year basis. It's a big number. Thank you. Anything else? Yeah. On the tariffs again, if it jumps to 15% now, what would be the impact on the tariffs? Yeah. 'Cause we don't know if and when that's gonna happen, and we haven't kind of given an earnings call, we can't kinda go between 10 and 15. Both are lower than the IEEPA, so both are actually a tailwind to our guidance, kinda irrespective of, you know, whether it's 10% or 15%. 'Cause, you know, the IEEPA, as you think of them, of roughly around a weighted average of 20%-25%, you're just talking what's the magnitude of the tailwind. It seems right now there's a lot of rhetoric around 15%, but there's actually no action around 15% right now. All right. I think we'll close it out here. Thank you very much. Thank you, Mike. Good to see you. Thank you for the answers.