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Item 7. Management’s Discussion and Analysis

2026-02-24 compared with 2025-02-18 · 282 added, 304 removed, 354 unchanged (62% of the section changed)

12 unchanged sentences

Strategic Objectives

In recent years, the Company has re-shaped its portfolio to focus on its leading positions in the tools & outdoor and engineered fastening markets.

Leveraging the benefits of a more focused portfolio, the Company initiated a business transformation in mid-2022 that includes reinvestment for faster growth as well as a $2.0 billion Global Cost Reduction Program through 2025.

The Company’s primary areas of multi-year strategic focus remain unchanged as follows:

• Advancing innovation, electrification and global market penetration to achieve mid-single digit organic revenue growth (2 to 3 times the market);

• Streamlining and simplifying the organization, and investing in initiatives that more directly impact the Company's customers and end users;

• Returning adjusted gross margins to historical 35%+ levels by accelerating the operations and supply chain transformation to improve fill rates and better match inventory with customer demand;

• Prioritizing cash flow generation and inventory optimization.

The Company's business transformation is intended to drive strong financial performance over the long term (beyond 2027), including:

• Mid-single digit organic revenue growth (2 to 3 times the market);

The Company is guided by its mission to build a world-class branded industrial company, by solving end users’ most pressing and complex challenges.

The strategy to achieve this mission is anchored by three core imperatives:

activating our brands with purpose, driving operational excellence, and accelerating innovation.

Activating our brands with purpose is rooted by the Company's brands standing for quality, safety and productivity.

The Company is investing resources to continue to deepen connections with end users, with every product, solution and service aligned with their evolving needs.

Driving operational excellence is centered on continuous improvement to deliver stronger results, including more effective resource allocation with higher return on investment.

The focus on driving annual net productivity will contribute to continued margin expansion and reinvestment into brand health and innovation.

Accelerating innovation is required to advance and expand the end-to-end workflow solutions that end users demand.

The Company's platforming method enables faster speed to market and leverages modularity combined with specialization to deliver uncompromised productivity and value.

With a strengthened foundation and a more streamlined, focused organization, the Company is positioned to drive performance towards its long-term financial targets.

The following targets, which are based on the tariff landscape as of January 2026, are expected to be reflected in the Company's 2028 financial results and assume that the Company's markets are growing by low-single digits and inflation approximates 2% per year.

• Mid-single digit organic revenue growth;

• 35% to 37% adjusted gross margins with mid to high-teens adjusted Earnings Before Interest, Taxes, Depreciation and Amortization margin ("adjusted EBITDA margin");

• Free cash flow equal to, or exceeding, net income;

• Cash Flow Return On Investment ("CFROI"), computed as cash from operations plus after-tax interest expense, divided by the two-point average of debt and equity, greater than or equal to the mid-teens;

• Free cash flow approximating 100% of GAAP net income over a multi-year period;

• Cash Flow Return On Investment ("CFROI"), computed as cash from operations plus after-tax interest expense, divided by the two-point average of debt and equity, in the low-to-mid-teens by 2028 and greater than or equal to the mid-teens beyond 2028;

• Solid investment grade credit rating.

In terms of capital allocation, the Company remains committed, over time, to returning excess capital to shareholders through a strong and growing dividend as well as a preference toward opportunistically repurchasing shares.

In the near term, the Company intends to direct any capital in excess of the quarterly dividend on its common stock toward debt reduction and internal growth investments.

Share Repurchases And Other Securities

During the first quarter of 2022, the Company repurchased 12,645,371 shares of its common stock for approximately $2.3 billion through a combination of an accelerated share repurchase ("ASR"), which provided for an initial delivery of 85% of the total notional share equivalent at execution, or 10,756,770 shares, and open market share repurchases for a total of 1,888,601 shares.

The final delivery of the remaining shares under the ASR totaled 3,211,317 and was completed during the second quarter of 2022.

Refer to Note I, Capital Stock , for further discussion.

In addition, on April 23, 2021, the Board of Directors approved repurchases by the Company of its outstanding securities, other than its common stock, up to an aggregate amount of $3.0 billion.

In terms of capital allocation, the Company’s top priority is funding organic growth investments that drive long-term value.

The Company also remains committed, over time, to maintaining a strong and growing dividend and has a preference toward opportunistic share repurchases.

In the near-term, the Company intends to utilize the net proceeds from the pending CAM divestiture to reduce debt, as further discussed below.

Repurchases Of Securities Other Than Common Stock

In April 2021, the Board of Directors approved repurchases by the Company of its outstanding securities, other than its common stock, up to an aggregate amount of $3.0 billion (the “April 2021 Authorization”).

Repurchases of $1.1 billion were made under the April 2021 Authorization.

In October 2025, the Board of Directors terminated the April 2021 Authorization including any amounts remaining available for repurchase thereunder, and approved repurchases by the Company of its outstanding securities, other than its common stock, up to an aggregate amount of $3.0 billion.

No repurchases have been executed pursuant to this authorization to date.

Refer to Note I, Capital Stock , for further discussion.

Pending Sale of Consolidated Aerospace Manufacturing ("CAM") Business

In December 2025, the Company announced that it had entered into a definitive agreement to sell its CAM business to Howmet Aerospace for $1.8 billion in cash.

The sale is subject to regulatory approvals and other customary closing conditions and is expected to close in the first half of 2026.

Cash proceeds, net of tax and fees, are expected to be in the range of $1.525 billion to $1.6 billion, which the Company expects to utilize to reduce debt.

For the year ended January 3, 2026, net sales and segment profit for the Engineered Fastening segment included $413.9 million and $31.3 million, respectively, related to the CAM business.

See below for further discussion of the Company's business segments and results.

Refer to Note S, Divestitures, for further discussion of the pending CAM divestiture.

Other Divestitures

On April 1, 2024, the Company sold its Infrastructure business comprised of the attachment and handheld hydraulic tools business to Epiroc AB for net proceeds of $728.5 million.

The Company used the net proceeds to reduce debt in the second quarter of 2024.

On August 19, 2022, the Company sold its Oil & Gas business comprised of the pipeline services and equipment businesses to Pipeline Technique Limited.

On July 22, 2022, the Company sold its Convergent Security Solutions ("CSS") business comprised of the commercial electronic security and healthcare businesses to Securitas AB for net proceeds of $3.1 billion.

On July 5, 2022, the Company sold its Mechanical Access Solutions ("MAS") business comprised of the automatic doors business to Allegion plc for net proceeds of $916.0 million.

Proceeds from the sale of these businesses were used to repay borrowings made in the first quarter of 2022 to fund the Company's share repurchase program previously discussed.

The use of proceeds to support a share repurchase program is consistent with the Company's long-term capital allocation strategy.

The Company has also divested several smaller businesses in recent years that allowed the Company to invest in other areas that fit into its long-term strategy.

The Company has also divested several businesses in recent years that allowed the Company to invest in other areas that fit into its long-term strategy.

Refer to Note S, Divestitures, for further discussion of the Company's divestitures.

Global Cost Reduction Program

In mid-2022, the Company launched a program comprised of a series of initiatives designed to generate cost savings by resizing the organization and reducing inventory with the ultimate objective of driving long-term growth, improving profitability and generating strong cash flow.

These initiatives are expected to optimize the cost base as well as provide a platform to fund investments to accelerate growth in the core businesses.

The program consists of a selling, general, and administrative ("SG&A") planned pre-tax run-rate cost savings of $500 million and a supply chain transformation expected to deliver $1.5 billion of pre-tax run-rate cost savings by the end of 2025 and facilitate the achievement of projected 35%+ adjusted gross margins.

The SG&A cost savings were generated by simplifying the corporate structure, optimizing organizational spans and layers and reducing indirect spend.

These savings will help fund $300 million to $500 million of innovation and commercial investments through 2025 designed to accelerate organic growth.

The $1.5 billion of pre-tax run-rate cost savings from the supply chain transformation has been, and continues to be, driven by the following value streams:

In mid-2022, the Company launched a Global Cost Reduction Program comprised of a series of initiatives designed to generate targeted pre-tax run-rate cost savings of $2.0 billion by resizing the organization, reducing inventory, and transforming its supply chain with the ultimate objective of driving long-term growth, improving profitability and generating strong cash flow.

The program has been completed as of the end of 2025 and has generated approximately $2.1 billion of pre-tax run-rate savings, exceeding its original cost savings target.

These savings were partially redeployed to fund over $300 million of innovation and commercial investments through 2025 designed to accelerate organic growth.

The program included selling, general, and administrative ("SG&A") cost savings driven by simplifying the corporate structure, optimizing organizational spans and layers and reducing indirect spend as well as a supply chain transformation.

The savings related to the supply chain transformation were driven by the following value streams:

• Material Productivity:

Implementing capabilities to source in a more efficient and integrated manner across all of the Company’s businesses and leveraging contract manufacturing;

Implemented capabilities to source in a more efficient and integrated manner across all of the Company’s businesses and leveraged contract manufacturing;

• Operational Excellence:

Redesigning in-plant operations following footprint rationalization to deliver incremental efficiencies, simplified organizational design and inventory optimization leveraging a standard operating model and LEAN principles;

Redesigned in-plant operations following footprint rationalization to deliver incremental efficiencies, simplified organizational design and inventory optimization leveraging a standard operating model and LEAN principles;

• Footprint Rationalization:

Transforming the Company’s manufacturing and distribution network from a decentralized and inefficient system of sites built through years of acquisitions to a strategically focused supply chain, inclusive of site closures, transformations of existing sites into manufacturing centers of excellence and re-configuration of the distribution network;

Transformed the Company’s manufacturing and distribution network from sites built through years of acquisitions to a strategically focused supply chain, inclusive of site closures, transformations of existing sites into manufacturing centers of excellence and re-configuration of the distribution network;

• Complexity Reduction:

Reducing complexity through platforming products and implementing initiatives to drive a SKU reduction.

During 2024 and since inception of the program, the Company has generated approximately $510 million and $1.5 billion, respectively, of pre-tax run-rate savings, driven by lower headcount, indirect spend reductions and the supply chain

transformation.

These savings are comprised of supply chain efficiency benefits, which support gross margin improvements as the benefits turn through inventory, and SG&A savings.

The Company believes that it is on track to grow to approximately $2 billion of pre-tax run-rate savings by year-end 2025.

Reduced complexity through platforming products and implemented initiatives to drive a SKU reduction.

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.

The cash investment required to achieve the $1.5 billion of pre-tax run-rate supply chain cost savings is expected to approximate $0.7 billion, as the source of the savings has shifted to value streams with lower required investment such as material and operational productivity.

Of the total estimated cash investment, approximately 30% is expected to be capital expenditures.

Through 2024, the Company has made approximately $0.5 billion of total cash investments.

The Company intends to continue prioritizing capital expenditures consistent with its existing approach and expects total capital expenditures, inclusive of the supply chain transformation, to approximate 2.5% to 3.0% of net sales annually in 2025 and beyond.

The charges associated with the ongoing execution of the supply chain transformation are reflected in the Non-GAAP adjustments detailed below in "Results From Operations" and the full year estimate of Non-GAAP adjustments detailed below in "2025 Planning Assumptions".

In addition, although the program is expected to be completed by the end of 2025, the Company expects to incur additional charges and make cash investments beyond 2025 relating to footprint actions to support the ongoing network transformation and reposition its supply chain, as necessary.

Driving Further Profitable Growth by Accelerating A Growth Culture and Fully Leveraging the Company's Core Franchises

Each of the Company's core franchises share common attributes:

they have markets which the Company believes have an attractive growth profile, compete in an attractive market structure where brands matter, can differentiate through rapid innovation and delivering productivity to customers and have the ability to achieve scale.

• The Tools & Outdoor business carries strong brands, proven innovation, global scale, and a broad offering of power tools, hand tools, outdoor products, accessories, and storage and digital products across many channels on a global basis.

• The Engineered Fastening business within the Industrial segment is a GDP+ growth business offering highly engineered, value-added innovative solutions with recurring revenue attributes, and carries strong profitability potential and global scale.

Management recognizes that these core franchises are important foundations that have a proven track record of providing strong cash flow and growth prospects.

Management is committed to growing these businesses through accelerating investments into innovative product development, brand support, commercial activation, and accelerating the operations and supply chain transformation to improve fill rates and better match inventory with customer demand, while improving global cost competitiveness.

Continuing to Invest in the Portfolio of Stanley Black & Decker Brands

The Company has a strong portfolio of brands associated with high-quality products including the iconic DEWALT®, CRAFTSMAN® and STANLEY® brands, which are the priority brands across the Tools & Outdoor segment.

The Company also goes to market with strong brands such as BLACK+DECKER®, DEWALT FLEXVOLT®, DEWALT POWERSTACK®, DEWALT POWERSHIFT™, CUB CADET®, TROY-BILT®, HUSTLER®, IRWIN®, LENOX®, PORTER-CABLE®, BOSTITCH®, PROTO®, MAC TOOLS®, FACOM®, Powers®, LISTA®, Vidmar®, and GQ®.

In 2024, the McLaren team sported the DEWALT® logo prominently on the team’s cars, fire suits, and equipment during the Formula 1 season, where it won its first Formula 1 Constructors’ Championship since 1998.

The Company also advertises in the English Premier League ("EPL"), which is the number one soccer league in the world, featuring the DEWALT® brand to a global audience.

In 2024, the Company also began sponsorships with one of the EPL’s “Big Six” football clubs, Tottenham Hotspur F.C., and in France, Ligue 1 club Olympique Lyonnais, for their 2024-2025 seasons.

The Company also continued its sponsorship of one of the world’s most popular football clubs, FC Barcelona, sponsoring both the Men’s and Women’s first teams, which includes marketing rights, hospitality assets and stadium signage.

In professional golf, the Company sponsored athletes on the PGA Tour, PGA Tour Champions, and PGA Tour Americas who represented either the DEWALT® or STANLEY® brand on tour.

CRAFTSMAN® maintained the title sponsorship of the NASCAR CRAFTSMAN® Truck Series through the Company’s sponsorship with NASCAR as the “Official Tools Partner of NASCAR” and “Official Tools" of all NASCAR-owned tracks.

The Company has also maintained long-standing NASCAR and NHRA team sponsorships, which provided brand exposure during nearly 60 events in 2024 with the DEWALT®, CRAFTSMAN®, and MAC TOOLS® brands.

The above marketing initiatives highlight the Company's strong emphasis on brand building and commercial support, which has resulted in more than 300 billion global brand impressions from digital and traditional advertising and strong brand awareness.

Allocating brand and advertising spend judiciously will continue to be the Company’s focus.

Among the goals:

placing end-user data and insights at the core of product commercialization, generating demand and brand loyalty through promotional support, in-market execution and salesforce effectiveness, evolving proven marketing programs that tie trusted global brands with societal purpose and tapping into technologies to build meaningful 1:1 experiences with customers, end users, employees and shareholders in line with the Company’s mission and vision.

The cash investment required to achieve the pre-tax run-rate supply chain cost savings was approximately $0.6 billion.

Of the total cash investment, approximately 30% related to capital expenditures.

The charges associated with the execution of the supply chain transformation are reflected in the Non-GAAP adjustments detailed below in "Results From Operations." Although the broader Global Cost Reduction Program has been completed, the Company expects to incur additional charges and make cash investments in 2026 relating to footprint actions to support the ongoing network transformation and reposition its supply chain, as necessary.

The expected charges related to these actions are reflected in the Company's full year estimate of Non-GAAP adjustments detailed below in "2026 Planning Assumptions".

Driving Profitable Growth Through Core Franchises and Brand-Led Commercial Execution

The Company’s core franchises operate in markets which the Company believes possess attractive long-term growth characteristics, competitive structures where brand and innovation influence outcomes, and the ability to scale globally while generating strong cash flow.

These franchises provide the foundation for sustained value creation through disciplined investment, operational execution, and customer focus.

• The Tools & Outdoor segment is a global growth platform anchored by leading brands, differentiated innovation, and broad channel reach.

The segment offers a comprehensive portfolio of power tools, hand tools, outdoor products, accessories, storage, and digital solutions designed to improve productivity for professional and consumer end users.

Global scale, innovation cadence, and brand strength are expected to support competitive positioning across regions and contribute to margin improvement over time.

The Company’s priority global brands within the Tools & Outdoor segment include DEWALT®, CRAFTSMAN®, and STANLEY®, supported by a broader portfolio of complementary brands.

• The Engineered Fastening segment serves end markets with GDP-plus growth profiles.

The segment provides highly engineered components and automation systems in the automotive, general industrial and aerospace markets.

The business benefits from recurring revenue characteristics, durable customer relationships, and global scale, supporting attractive profitability and cash generation.

Management continues to invest in these core franchises to drive growth and returns.

Priorities include product innovation, brand and commercial activation, and continued transformation of operations and supply chain capabilities to improve service levels, align inventory with demand, and enhance global cost competitiveness.

Investing in Brands to Drive Demand and Long-Term Value

The Company's portfolio of trusted, globally recognized brands is central to its commercial strategy, particularly within the Tools & Outdoor segment.

Brand investment is focused on driving demand, supporting effective product commercialization, and strengthening customer loyalty across channels and geographies.

Brand spending is managed as part of an integrated commercial approach that connects innovation, marketing, sales execution, and customer insights.

Investments are directed toward product launch support, in-market and promotional execution, retail and digital activation, sales force effectiveness, and selective partnerships that extend brand reach and relevance.

Select global sports and professional partnerships represent one element of this broader approach and are used to amplify brand visibility and engage priority end-user audiences.

These partnerships are intended to reinforce brand positioning and support demand generation, rather than function as standalone marketing activities.

The Company is proud to partner with globally-recognized organizations including the McLaren F1 Team, English Premier League, PGA Tour, and NASCAR.

Management remains focused on allocating brand and advertising spend with discipline, guided by data, performance insights, and return-oriented decision making.

Looking forward, brand investment will continue to prioritize alignment with end-user insights, effective in-market execution, and the use of technology to strengthen engagement, supporting sustainable growth and long-term shareholder value.

The Company’s operations are classified into two reportable business segments:

Tools & Outdoor and Industrial.

Tools & Outdoor and Engineered Fastening.

In the first quarter of 2025, the Industrial segment was renamed “Engineered Fastening” as a result of a more focused portfolio following recent divestitures.

The Engineered Fastening segment name change is to the name only and had no impact on the Company’s consolidated financial statements or segment results.

Both reportable segments have significant international operations and are exposed to translational and transactional impacts from fluctuations in foreign currency exchange rates.

Tools & Outdoor

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Storage products include tool boxes, sawhorses, cabinets and engineered storage solution products.

The Outdoor product line primarily sells corded and cordless electric lawn and garden products, including hedge trimmers, string trimmers, lawn mowers, pressure washers and related accessories, and gas powered lawn and garden products, including lawn tractors, zero turn ride on mowers, walk behind mowers, snow blowers, residential robotic mowers, hand-held outdoor power equipment, garden tools, and parts and accessories to professionals and consumers under the DEWALT®, CRAFTSMAN®, CUB CADET®, BLACK+DECKER®, and HUSTLER® brand names.

The Industrial segment is comprised of the Engineered Fastening business and the Infrastructure business prior to its sale in April 2024.

The Engineered Fastening business primarily sells highly engineered components such as fasteners, fittings and various engineered products, which are designed for specific application across multiple verticals.

The Outdoor product line primarily sells corded and cordless electric lawn and garden products, including hedge trimmers, string trimmers, lawn mowers, pressure washers and related accessories, and gas powered lawn and garden products, including lawn tractors, zero turn ride on mowers, walk behind mowers, snow blowers, residential robotic mowers, hand-held outdoor power equipment, garden tools, and parts and accessories to professionals and consumers primarily under the DEWALT®, CRAFTSMAN®, CUB CADET®, BLACK+DECKER®, and HUSTLER® brand names.

Engineered Fastening

The Engineered Fastening segment is comprised of the Engineered Fastening business and included the Infrastructure business prior to its sale in April 2024.

The product lines include externally threaded fasteners, blind rivets and tools, blind inserts and tools, drawn arc weld studs and systems, engineered plastic and mechanical fasteners, self-piercing riveting systems, precision nut running systems, micro fasteners, high-strength structural fasteners, axel swage, latches, heat shields, pins, and couplings.

RESULTS OF OPERATIONS

The Company’s results represent continuing operations and as a result of the 2022 divestitures of the Company’s CSS and MAS businesses, as described in further detail under the heading “Divestitures” in this Item 7 above, exclude the commercial electronic security, healthcare, and automatic doors businesses.

These divestitures represented a single plan to exit the Security segment and were considered a strategic shift that had a major effect on the Company's operations and financial results.

Therefore, the operating results of these businesses were classified as discontinued operations through their respective dates of sale.

The divestiture of the Oil & Gas and the Infrastructure businesses did not qualify for discontinued operations and therefore, their results were included in the Company's continuing operations within the Industrial segment through the date of sale in the third quarter of 2022 and the second quarter of 2024, respectively.

The following is a discussion and analysis of changes in the results of operations and financial condition for the year ended January 3, 2026 compared to the year ended December 28, 2024.

The discussion and analysis of the year ended December 30, 2023 and changes in the results of operations and financial condition for the year ended December 28, 2024 compared to the year ended December 30, 2023, is omitted from this Form 10-K and can be found in "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 28, 2024, filed with the U.S.

Securities and Exchange Commission ("SEC") on February 18, 2025.

The Company’s results represent continuing operations and include the results of the divested Infrastructure business within the Engineered Fastening segment through the date of sale in the second quarter of 2024, as the divestiture of this business did not qualify for discontinued operations.

The pending divestiture of the CAM business did not qualify for discontinued operations and therefore, its results are included in the Company's continuing operations within the Engineered Fastening segment for all periods presented.

Certain Items Impacting Earnings and Non-GAAP Financial Measures

The Company has provided a discussion of its results both inclusive and exclusive of certain gains and charges.

The results and measures, including gross profit, SG&A, Other, net, Income taxes, and segment profit (including Corporate Overhead), on a basis excluding certain gains and charges, free cash flow, organic revenue and organic growth are Non-GAAP financial measures.

These Non-GAAP financial measures are defined and reconciled to their most directly comparable GAAP financial

measures below.

The Company considers the use of Non-GAAP financial measures relevant to aid analysis and understanding of the Company’s results and business trends aside from the material impact of these items and ensures appropriate comparability to operating results of prior periods.

The results and measures, including gross profit, SG&A, Other, net, Income taxes, segment profit, and corporate overhead, on a basis excluding certain gains and charges, free cash flow, organic revenue and organic growth are Non-GAAP financial measures.

These Non-GAAP financial measures are defined and reconciled to their most directly comparable GAAP financial measures below.

The Company considers the use of Non-GAAP financial measures relevant to aid analysis and understanding of the Company’s results, business trends and outlook measures aside from the material impact of certain gains and charges and ensures appropriate comparability to operating results of prior periods.

Supplemental Non-GAAP information should not be considered in isolation or as a substitute for the related GAAP financial measures.

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Forecasted full-year 2026 adjusted EPS is reconciled to forecasted full-year 2026 GAAP EPS under the section entitled "2026 Planning Assumptions" below.

Consistent with past methodology, forecasted full-year 2025 GAAP EPS excludes the impacts of potential acquisitions and divestitures, potential future regulatory changes or strategic shifts that could impact the Company's contingent liabilities or intangible assets, respectively, potential future cost actions in response to external factors that have not yet occurred, and any other items not specifically referenced under “2025 Planning Assumptions.” A reconciliation of forecasted 2025 free cash flow to its most directly comparable GAAP estimate is not available without unreasonable effort due to high variability and difficulty in predicting items that impact cash flow from operations, which could be material to the Company’s results in accordance with U.S.

Consistent with past methodology, forecasted full-year 2026 GAAP EPS excludes the impacts of potential acquisitions and divestitures (unless otherwise noted), future regulatory changes or strategic shifts that could impact the Company's contingent liabilities or intangible assets, respectively, potential future cost actions in response to external factors that have not yet occurred, and any other items not specifically referenced under “2026 Planning Assumptions.” A reconciliation of forecasted 2026 free cash flow to its most directly comparable GAAP estimate is not available without unreasonable effort due to high variability and difficulty in predicting items that impact cash flow from operations, which could be material to the Company’s results in accordance with U.S.

The Company believes such a reconciliation would also imply a degree of precision that is inappropriate for this forward-looking measure.

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The Company’s business segment results as discussed below include and exclude certain gains and charges impacting gross profit and SG&A.

Corporate overhead as discussed below includes and excludes certain gains and charges.

These amounts for 2025 and 2024 are as follows:

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Income taxes on continuing operations 3

Net Earnings from Continuing Operations Attributable to Common Shareowners - Diluted 286.3 373.4 659.7

Diluted earnings per share of common stock - Continuing operations $ 1.89 $ 2.47 $ 4.36

(Millions of Dollars) GAAP Non-GAAP Adjustments 2

Gross profit $ 3,932.6 $ 166.9 $ 4,099.5

Selling, general and administrative 1

16.0 88.6 104.6

(Loss) earnings from continuing operations before income taxes (375.7) 566.2 190.5

Income taxes on continuing operations (94.0) 65.8 (28.2)

Net (Loss) Earnings from Continuing Operations Attributable to Common Shareowners - Diluted (281.7) 500.4 218.7

Diluted (loss) earnings per share of common stock - Continuing operations $ (1.88) $ 3.33 $ 1.45

Net earnings from continuing operations 401.9 307.6 709.5

Diluted earnings per share of common stock - Continuing operations $ 2.65 $ 2.02 $ 4.67

(Millions of Dollars) GAAP Non-GAAP Adjustments 2

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Income taxes on continuing operations 3

Net Earnings from Continuing Operations Attributable to Common Shareowners - Diluted 165.5 558.2 723.7

(45.2) 92.6 47.4

Net earnings from continuing operations 286.3 373.4 659.7

Diluted earnings per share of common stock - Continuing operations $ 1.89 $ 2.47 $ 4.36

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2 Refer to table below for additional detail of the Non-GAAP adjustments

3 Income taxes attributable to Non-GAAP adjustments are determined by calculating income taxes on pre-tax earnings, both inclusive and exclusive of Non-GAAP adjustments, taking into consideration the nature of the Non-GAAP adjustments and the applicable statutory income tax rates.

Below is a summary of the pre-tax Non-GAAP adjustments for 2025 and 2024.

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Material Productivity & Operational Excellence 15.3 18.6

Inventory step-up charges — — 80.3

Facility-related costs 2.6 1.5 14.8

Voluntary retirement program 2

Other charges (gains) 1.3 (0.2) 1.3

Other charges 4.8 3.9

Gross Profit $ 50.6 $ 88.8

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Complexity Reduction & Operational Excellence 3

Acquisition & Integration-related costs 3

9.4 33.6 85.2

Transition services costs related to previously divested businesses 8.4 19.6

Functional transformation initiatives — — 19.2

Voluntary retirement program 2

Other charges (gains) 1.1 2.1 14.2

Other (gains) charges (2.0) 10.6

Selling, general and administrative $ 86.6 $ 81.3

$ (19.6) $ (25.1) $ 16.9

Income related to providing transition services to previously divested businesses $ (10.3) $ (19.6)

Voluntary retirement program 2

Environmental charges 4

Loss on sales of businesses — 10.8 8.4

Restructuring charges 6

99.9 39.4 140.8

Deal-related costs and other 5

Other, net $ (19.9) $ 123.6

Loss on sale of business $ 0.3 $ —

Asset impairment charges 6

72.4 274.8 168.4

Earnings from continuing operations before income taxes $ 466.0 $ 566.2 $ 642.2

1 Footprint Rationalization costs in 2024 primarily relate to accelerated depreciation of manufacturing and distribution center equipment of $48.9 million and other facility exit and re-configuration costs of $45.2 million.

In 2023, transfers and closures of targeted manufacturing sites, including Fort Worth, Texas and Cheraw, South Carolina as previously announced in March 2023, resulted in accelerated depreciation of production equipment of $49.1 million, non-cash asset write-downs of $44.0 million (predominantly tooling, raw materials and WIP), and other facility exit and re-configuration costs of $14.6 million.

2 Material Productivity & Operational Excellence costs in 2023 primarily related to third-party consultant fees to provide expertise in identifying and quantifying opportunities to source in a more integrated manner and re-design in-plant operations following footprint rationalization, developing a detailed program and related governance, and assisting the Company with the implementation of actions necessary to achieve the related objectives.

3 Acquisition & integration-related costs primarily relate to the MTD and Excel acquisitions, including costs to integrate the organizations and shared processes, as well as harmonize key IT applications and infrastructure.

4 Includes deal-related costs, net of income related to providing transition services to previously divested businesses.

5 The $143.2 million pre-tax environmental charges in 2024 relate primarily to a reserve adjustment for the non-active Centredale Superfund site as a result of regulatory changes and revisions to remediation alternatives.

Restructuring charges 7

Non-GAAP adjustments before income taxes $ 396.2 $ 466.0

1 Footprint Rationalization costs primarily relate to site transformation and re-configuration costs of $35.4 million and $45.2 million in 2025 and 2024, respectively, as well as accelerated depreciation of manufacturing and distribution center equipment of $48.9 million in 2024.

Facility exit costs related to site closures are reported in Restructuring charges.

2 In June 2025, the Company implemented a voluntary retirement program (“VRP”) to right-size the Company’s corporate and support functions to align with a more focused portfolio following recent divestitures and more streamlined operations as part of the supply chain transformation.

The costs associated with the VRP relate to separation benefits provided to eligible employees who voluntarily retired from the Company.

3 Complexity Reduction & Operational Excellence costs in 2025 primarily relate to third-party consulting fees to provide expertise in identifying business model changes and quantifying related cost savings opportunities within the Company’s Engineered Fastening business, developing a detailed program and related governance, and assisting the Company with the implementation of actions necessary to achieve the identified objectives.

4 The $143.2 million pre-tax environmental charges in 2024 related primarily to a reserve adjustment for the non-active Centredale Superfund site as a result of regulatory changes and revisions to remediation alternatives.

5 Deal-related costs and other in 2025 include an $8.1 million gain on sale of a distribution center as part of the supply chain transformation and a $14.3 million gain related to a favorable patent infringement settlement, partially offset by deal costs associated with the announced divestiture of the CAM business.

6 Asset impairment charges in 2025 include:

(a) $108.4 million driven by updates to the Company’s brand prioritization strategy impacting the Lenox, Troy-Bilt, and Irwin trade names, (b) $43.9 million related to the write-down of certain minority investments pertaining to legacy corporate ventures, (c) $17.1 million related to the write-down of assets due to the planned exit of certain Outdoor product lines, and (d) $20.1 million related to a small business in the Tools & Outdoor segment.

Asset impairment charges in 2024 include:

(a) $41.0 million related to the Lenox trade name, (b) $25.5 million related to the Infrastructure business, and (c) $5.9 million related to a small business in the Engineered Fastening segment.

7 Refer to “Restructuring Activities” below for further discussion.

7 Asset impairment charges in 2024 include a $41.0 million pre-tax impairment charge related to the Lenox trade name, a $25.5 million pre-tax impairment charge related to the Infrastructure business, and a $5.9 million pre-tax impairment charge related to a small Industrial business.

Asset impairment charges in 2023 include a $124.0 million pre-tax impairment charge related to the Irwin and Troy-Bilt trade names and a $150.8 million pre-tax impairment charge related to the Infrastructure business.

The $168.4 million pre-tax impairment charge in 2022 related to the Oil & Gas business.

Below is a summary of the Company’s operating results at the consolidated level, followed by an overview of business segment performance.

Organic growth is utilized to describe the Company's results excluding the impacts of foreign currency fluctuations, acquisitions during their initial 12 months of ownership, and divestitures.

Organic growth is utilized to describe the Company's results excluding the impacts of foreign currency fluctuations, acquisitions during their initial 12 months of ownership, divestitures, and transfers of product lines between segments.

Consolidated Results

Net sales were $15.366 billion in 2024 compared to $15.781 billion in 2023, representing a decrease of 3%, as flat organic revenue was more than offset by a 2% decrease from the Infrastructure divestiture and 1% decrease from foreign currency.

Tools & Outdoor net sales decreased 1% compared to 2023 as a 1% increase in volume was more than offset by a 1% decrease in both price and foreign currency.

Industrial net sales decreased 15% compared to 2023 as a 1% increase in price was more than offset by a 13% decrease from the Infrastructure divestiture, a 2% decrease in volume, and a 1% decrease from foreign currency.

Net sales were $15.781 billion in 2023 compared to $16.947 billion in 2022, representing a decrease of 7%, as a 1% increase in price was more than offset by a 7% decrease in volume and a 1% decrease from the Oil & Gas divestiture.

Tools & Outdoor net sales decreased 7% compared to 2022 due to a 7% decrease in volume.

Industrial net sales decreased 4% compared to 2022 as a 3% increase in price was more than offset by a 4% decrease from the Oil & Gas divestiture and a 3% decrease in volume.

Gross Profit:

The Company reported gross profit of $4.514 billion, or 29.4% of net sales, in 2024 compared to $3.933 billion, or 24.9% of net sales, in 2023.

Non-GAAP adjustments, which reduced gross profit, were $88.8 million in 2024 and $166.9 million in 2023.

Excluding these adjustments, gross profit was 30.0% of net sales in 2024 compared to 26.0% of net sales in 2023, primarily driven by the supply chain transformation efficiencies and lower inventory destocking costs.

The Company reported gross profit of $3.933 billion, or 24.9% of net sales, in 2023 compared to $4.284 billion, or 25.3% of net sales, in 2022.

Non-GAAP adjustments, which reduced gross profit, were $166.9 million in 2023 and $127.4 million in 2022.

Despite lower volume, the impact of selling through high-cost inventory, and production curtailments, gross profit, excluding Non-GAAP adjustments, was 26.0% of net sales in both 2023 and 2022, due to price realization, supply chain transformation benefits, lower inventory destocking costs, and lower shipping costs.

SG&A Expenses:

Selling, general and administrative expenses, inclusive of the provision for credit losses, were $3.333 billion, or 21.7% of net sales, in 2024 compared to $3.291 billion, or 20.9% of net sales, in 2023.

Within SG&A, Non-GAAP adjustments totaled $81.3 million in 2024 and $99.4 million in 2023.

Excluding these adjustments, SG&A was 21.2% of net sales in 2024 compared to 20.2% in 2023, as the Company invested in growth initiatives designed to deliver increased market penetration and future market share gains.

SG&A expenses, inclusive of the provision for credit losses, were $3.291 billion, or 20.9% of net sales, in 2023 compared to $3.370 billion, or 19.9% of net sales, in 2022.

SG&A declined year-over-year on an absolute dollar basis reflecting cost reductions.

Within SG&A, Non-GAAP adjustments totaled $99.4 million in 2023 and $180.3 million in 2022.

Excluding these adjustments, SG&A was 20.2% of net sales in 2023 compared to 18.8% in 2022, reflecting the impact of lower sales volume, but relatively flat year-over-year on an absolute dollar basis as the benefits from the Global Cost Reduction Program were offset by increased investments in growth initiatives, higher variable compensation expense and inflation.

Net sales were $15.130 billion in 2025 compared to $15.366 billion in 2024, representing a decrease of 2%, as a 3% increase in price was more than offset by a 4% decrease in volume and a 1% decrease from the Infrastructure divestiture.

Tools & Outdoor net sales decreased 1% compared to 2024 as a 3% increase in price and a 1% increase from foreign currency were more than offset by a 5% decrease in volume.

Engineered Fastening net sales decreased 4% compared to 2024 as a 2% increase in volume, a 1% increase in price, and a 1% increase from foreign currency were more than offset by a 5% decrease from the Infrastructure divestiture and a 3% decrease from a product line transfer to Tools & Outdoor.

Cost of Sales and Gross Profit:

The Company reported cost of sales of $10.542 billion in 2025 compared to $10.851 billion in 2024.

The year-over-year decrease in cost of sales was primarily driven by lower volume and supply chain transformation efficiencies, partially offset by tariff costs and inflation.

Gross profit, defined as sales less cost of sales, was $4.588 billion, or 30.3% of net sales, in 2025 compared to $4.514 billion, or 29.4% of net sales, in 2024.

Non-GAAP adjustments, which increased cost of sales and reduced gross profit, were $50.6 million, or 0.4% of net sales, in 2025 and $88.8 million, or 0.6% of net sales in 2024.

Excluding these adjustments, gross profit was 30.7% of net sales in 2025 compared to 30.0% of net sales in 2024.

The year-over-year changes in gross profit as a percent of sales and adjusted gross profit as a percent of sales were primarily due to benefits from pricing strategies and supply chain cost transformation efficiencies partially offset by tariffs, lower volume and inflation.

Selling, general and administrative:

SG&A, inclusive of the provision for credit losses, were $3.333 billion, or 22.0% of net sales, in 2025 compared to $3.333 billion, or 21.7% of net sales, in 2024.

Within SG&A, Non-GAAP adjustments totaled $86.6 million, or 0.5% of net of sales, in 2025 and $81.3 million, or 0.5% of net sales in 2024.

Excluding these adjustments, SG&A was 21.5% of net sales in 2025 compared to 21.2% in 2024.

The year-over-year changes in SG&A as a percent of sales and adjusted SG&A as a percent of sales were driven by strategic growth investments, which were partially offset by disciplined and targeted cost management.

Distribution center costs (i.e.

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Due to diversity in practice, to the extent the classification of these distribution costs differs from other companies, the Company’s gross margins may not be comparable.

Such distribution costs classified in SG&A amounted to $534.4 million, $521.7 million and $498.7 million in 2024, 2023, and 2022, respectively.

The year-over-year increases in distribution costs in 2024 and 2023 are driven by temporary cost increases to support the Company's distribution network redesign.

Other, net totaled $448.8 million, $320.1 million, and $274.8 million in 2024, 2023, and 2022, respectively.

The year-over-year increase in 2024 is primarily driven by an environmental remediation reserve adjustment relating to the Centredale site, as further discussed in Note R, Contingencies , partially offset by lower intangible asset amortization due to the divestiture of the Infrastructure business.

Excluding Non-GAAP adjustments, Other, net, totaled $325.2 million, $345.2 million, and $257.9 million in 2024, 2023, and 2022, respectively.

The decrease in 2024 is driven by lower intangible asset amortization expense as a result of the divestiture of the Infrastructure business.

The increase in 2023 was driven by higher pension and environmental remediation costs as well as write-downs on certain investments.

Such distribution costs classified in SG&A amounted to $522.5 million in 2025 and $534.4 million in 2024.

Other, net totaled $240.7 million in 2025 compared to $448.8 million in 2024.

The year-over-year decrease is primarily driven by a $142.3 million environmental remediation reserve adjustment related to the Centredale site and write-downs on certain investments in 2024, as well as lower intangible asset amortization in 2025.

Excluding Non-GAAP

adjustments, Other, net, totaled $260.6 million in 2025 compared to $325.2 million in 2024.

The year-over-year decrease in Other, net, excluding Non-GAAP adjustments, is primarily driven by lower intangible asset amortization, environmental remediation expenses, and pension costs in 2025, and write-downs on certain investments in 2024.

Loss on Sales of Businesses:

During 2023, the Company reported a loss of $10.8 million primarily related to the divestiture of a small business in the Industrial segment.

During 2022, the Company reported a net loss of $8.4 million primarily related to the divestiture of the Oil & Gas business.

During 2025, the Company reported a pre-tax loss of $0.3 million primarily related to the divestiture of a small business in the Engineered Fastening segment.

Asset Impairment Charges :

During 2024, the Company recorded pre-tax, non-cash impairment charges of $72.4 million, comprised of $41.0 million related to the Lenox trade name, $25.5 million related to the Infrastructure business, and $5.9 million related to a small business in the Industrial segment.

During 2023, the Company recorded pre-tax, non-cash impairment charges of $274.8 million, comprised of $124.0 million related to the Irwin and Troy-Bilt trade names and $150.8 million related to the Infrastructure business.

During 2022, the Company recorded a pre-tax, non-cash impairment charge of $168.4 million related to the Oil & Gas business.

During 2025, the Company recorded pre-tax, non-cash impairment charges of $189.5 million, comprised of $108.4 million driven by updates to the Company’s brand prioritization strategy impacting the Lenox, Troy-Bilt, and Irwin trade names, $43.9 million related to the write-down of certain minority investments pertaining to legacy corporate ventures, $17.1 million related to the write-down of assets due to the planned exit of certain Outdoor product lines, and $20.1 million related to a small business in the Tools & Outdoor segment.

Refer to Note E, Goodwill and Intangible Assets , for additional information on the trade name impairments.

Refer to Note S, Divestitures , for additional information on the 2024 divestiture of the Infrastructure business and the 2022 divestiture of the Oil & Gas business.

Refer to Note L, Fair Value Measurements , for additional information on the minority investment write-downs.

Refer to Note S, Divestitures , for additional information on the 2024 divestiture of the Infrastructure business.

Interest, net:

Net interest expense in 2024 was $319.5 million compared to $372.5 million in 2023 and $283.8 million in 2022.

The 2024 decrease was primarily driven by lower commercial paper balances and lower U.S.

interest rates.

The increase in 2023 compared to 2022 was primarily driven by higher U.S.

interest rates and debt issuances in March 2023, partially offset by higher interest income due to an increase in rates.

Net interest expense in 2025 was $317.9 million compared to $319.5 million in 2024.

The year-over-year decrease was driven by higher interest income, partially offset by higher interest expense due to higher commercial paper balances.

Income Taxes :

The Company's effective tax rate on continuing operations was (18.7)% in 2024, 25.0% in 2023, and (349.3)% in 2022.

The Company's effective tax rate on continuing operations was 3.8% in 2025 and (18.7)% in 2024.

Excluding the tax effect on Non-GAAP adjustments, the effective tax rate in 2025 on continuing operations was 12.8%.

This effective tax rate differs from the U.S.

statutory tax rate primarily due to tax benefits associated with partial realignment of the Company's legal structure, remeasurement of uncertain tax position reserves, the recognition of previously unrecognized foreign deferred tax assets, state income taxes, and tax credits, partially offset by non-deductible expenses, U.S.

tax on foreign earnings, withholding taxes, and losses for which a tax benefit is not recognized.

Excluding the tax effect on Non-GAAP adjustments, the effective tax rate on continuing operations in 2023 was (14.8)%.

This effective tax rate differs from the U.S.

statutory tax rate primarily due to a tax benefit associated with an intra-entity asset transfer of certain intangible assets related to the continued reorganization of the supply chain, tax on foreign earnings at tax rates different than the U.S.

tax rate, state income taxes, and tax credits, partially offset by U.S.

tax on foreign earnings, non-deductible expenses, withholding taxes, and losses for which a tax benefit is not recognized.

Excluding the tax effect on Non-GAAP adjustments, the effective tax rate on continuing operations in 2022 was (7.1)%.

statutory tax rate primarily due to tax benefits associated with partial realignment of the Company's legal structure, remeasurement of uncertain tax positions, and tax credits, partially offset by withholding taxes, deferred tax assets for which a tax benefit is not recognized, U.S.

tax on foreign earnings, and non-deductible expenses.

Excluding the tax effect on Non-GAAP adjustments, the effective tax rate in 2024 on continuing operations was 6.7%.

This effective tax rate differs from the U.S.

tax rate, and the recognition of previously unrecognized foreign deferred tax assets, offset by U.S.

tax on foreign earnings and the remeasurement of uncertain tax position reserves.

On December 20, 2021, the Organization for Economic Cooperation and Development published a proposal for the establishment of a global minimum tax rate of 15% (“Pillar Two").

statutory tax rate primarily due to tax benefits associated with partial realignment of the Company's legal structure, remeasurement of uncertain tax positions, the recognition of previously unrecognized foreign deferred tax assets, state income taxes, and tax credits, partially offset by non-deductible expenses, U.S.

tax on foreign earnings, withholding taxes, and losses for which a tax benefit is not recognized.

On December 20, 2021, the Organization for Economic Cooperation and Development ("OECD") published a proposal for the establishment of a global minimum tax rate of 15% (“Pillar Two").

The Pillar Two rules provide a template that jurisdictions can translate into domestic law, to assist with the implementation within an agreed upon timeframe and in a coordinated manner.

Certain countries in which the Company operates have enacted legislation effective January 1, 2024, while other jurisdictions are in various stages of implementation.

On January 5, 2026, the OECD published a package introducing new safe harbors and a side-by-side system (“SbS”) in relation to the Pillar Two global minimum tax rules.

If enacted into law in each of the jurisdictions in which the Company operates following the indicated timeline, the SbS system would generally be expected to exempt the Company from the application of two of the three Pillar Two top-up taxes starting in 2026.

The Company has performed an assessment of the potential impact to its income taxes as a result of Pillar Two.

The assessment of the potential impact is based on the most recent tax filings, country-by-country reporting, and financial statements of affected

subsidiaries.

The assessment of the potential impact is based on the most recent tax filings, country-by-country reporting, and financial statements of affected subsidiaries.

Based on results of the assessment, the Company believes it can avail itself of the transitional safe harbor rules in most jurisdictions in which the Company operates.

There are, however, a limited number of jurisdictions where the transitional safe harbor relief does not apply for which the Company has accrued global minimum taxes of $3.9 million in 2024.

The Company does not currently expect a material impact to income taxes in those jurisdictions in the near term.

The Company continues to assess the potential impact of Pillar Two and monitor developments in legislation, regulation, and interpretive guidance in this area.

There are, however, a limited number of jurisdictions where the transitional safe harbor relief does not apply.

The Pillar Two tax impact from these jurisdictions is immaterial to the Company's 2025 income tax provision.

The Company continues to assess the potential impact of Pillar Two, including the SbS system, and monitor developments in legislation, regulation, and interpretive guidance in these areas.

On July 4, 2025, the U.S.

government enacted the One Big Beautiful Bill Act (“OBBBA”), which includes a broad range of tax reform provisions affecting businesses, including extending and modifying certain Tax Cuts & Jobs Act provisions and accelerating the phase-out of certain Inflation Reduction Act incentives.

The OBBBA includes provisions modifying net interest deduction limitations, expensing of U.S.-based research and development expenses, and tax depreciation methods, as well as international tax provisions modifying global intangible low-taxed income (GILTI), foreign-derived intangible income (FDII), base erosion and anti-abuse tax (BEAT), and foreign tax credits.

The Company evaluated the impacts of the OBBBA and concluded that it did not have a material impact on the Company’s consolidated financial statements in 2025 and does not

expect a material impact to future income tax provisions.

The Company will continue to assess the potential impact of the OBBBA and monitor developments in legislation, regulation, and interpretive guidance in this area.

Business Segment Results

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The Company’s operations are classified into two reportable business segments:

Tools & Outdoor and Industrial.

Tools & Outdoor and Engineered Fastening.

Tools & Outdoor:

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% of Net sales 10.1 % 9.0 %

Tools & Outdoor net sales decreased $62.9 million, or 1%, in 2024 compared to 2023 as a 1% increase in volume was more than offset by a 1% decrease in both price and foreign currency.

Organic revenue was flat as growth in DEWALT® was offset by the weak consumer and DIY backdrop.

Organic revenue decreased 1% in North America, remained flat in Europe, and increased 6% in the rest of the world.

Segment profit amounted to $1,197.4 million, or 9.0% of net sales, in 2024 compared to $687.6 million, or 5.1% of net sales, in 2023.

Excluding Non-GAAP adjustments of $143.1 million and $196.7 million in 2024 and 2023, respectively, segment profit amounted to 10.1% of net sales in 2024 compared to 6.6% of net sales in 2023, primarily due to supply chain transformation benefits and lower inventory destocking costs, which were partially offset by growth investments.

Tools & Outdoor net sales decreased $1.057 billion, or 7%, in 2023 compared to 2022 due to a 7% decline in volume.

Organic revenue decreased 8%, 4% and 3% in North America, Europe and emerging markets, respectively.

The overall 7% organic decline was a result of lower consumer outdoor and DIY market demand.

The 2023 U.S.

retail point-of-sale demand remained above pre-pandemic 2019 levels, supported by price increases and strength in professional tools.

Segment profit amounted to $687.6 million, or 5.1% of net sales, in 2023 compared to $971.9 million, or 6.7% of net sales, in 2022.

Excluding Non-GAAP adjustments of $196.7 million and $235.4 million in 2023 and 2022, respectively, segment profit amounted to 6.6% of net sales in 2023 compared to 8.4% in 2022, as supply chain transformation savings and reduced shipping costs were more than offset by selling through high-cost inventory, production curtailments and lower volume.

Tools & Outdoor net sales decreased $146.0 million, or 1%, in 2025 compared to 2024 as a 3% increase in price and a 1% increase from foreign currency were more than offset by a 5% decrease in volume.

Organic revenue decreased 2% driven by a soft market backdrop and mid-year tariff related promotional reductions, partially offset by strategic pricing initiatives and growth in DEWALT®.

Total revenue decreased 2% in North America, increased 3% in Europe, and decreased 3% in the rest of the world.

Excluding the impact from foreign currency, organic revenue decreased 2%, 1%, and 2% in North America, Europe, and the rest of the world, respectively.

Tools & Outdoor segment profit amounted to $1.329 billion, or 10.1% of net sales, in 2025 compared to $1.197 billion, or 9.0% of net sales, in 2024.

Excluding Non-GAAP adjustments, which primarily related to a voluntary retirement program in 2025 and footprint actions associated with the supply chain transformation in both periods, of $81.6 million, or 0.6% of net sales, and $143.1 million, or 1.1% of net sales in 2025 and 2024, respectively, segment profit amounted to 10.7% of net sales in 2025 and 10.1% of net sales in 2024.

The year-over-year changes in segment profit as a percent of sales and adjusted segment profit as a percent of sales were primarily driven by higher pricing and supply chain transformation efficiencies.

Engineered Fastening:

(Millions of Dollars) 2025 2024

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% of Net sales 10.0 % 12.4 %

Industrial net sales decreased $352.5 million, or 15%, in 2024 compared to 2023, as a 1% increase in price was more than offset by a 13% decrease from the Infrastructure divestiture, a 2% decrease in volume, and a 1% decrease from foreign currency.

Engineered Fastening organic revenues increased 2% as aerospace and general industrial growth was partially offset by market softness in automotive.

Segment profit totaled $254.9 million, or 12.4% of net sales, in 2024 compared to $266.5 million, or 11.0% of net sales, in 2023.

Excluding Non-GAAP adjustments of $3.6 million and $18.7 million in 2024 and 2023, respectively, segment profit amounted to 12.5% of net sales in 2024 compared to 11.8% of net sales in 2023, as lower volume in automotive was more than offset by price realization and cost control.

Industrial net sales decreased $109.4 million, or 4%, in 2023 compared to 2022, as a 3% increase in price was more than offset by a 4% decrease from the Oil & Gas divestiture and a 3% decrease in volume.

Engineered Fastening organic revenues were up 6%, with double-digit growth in both aerospace and automotive, which was partially offset by softness in general industrial fastener markets.

Segment profit totaled $266.5 million, or 11.0% of net sales, in 2023 compared to $236.2 million, or 9.4% of net sales, in 2022.

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.

Engineered Fastening net sales decreased $89.3 million, or 4%, in 2025 compared to 2024, as a 2% increase in volume, a 1% increase in price, and a 1% increase from foreign currency were more than offset by a 5% decrease from the Infrastructure divestiture and a 3% decrease from a product line transfer to Tools & Outdoor.

Engineered Fastening organic revenues increased 3% driven by strength in aerospace, partially offset by declines in industrial and automotive.

Engineered Fastening segment profit totaled $197.0 million, or 10.0% of net sales, in 2025 compared to $254.9 million, or 12.4% of net sales, in 2024.

Excluding Non-GAAP adjustments of $29.3 million, or 1.5% of net sales in 2025, which related to a voluntary retirement program and costs associated with the supply chain transformation, and $3.6 million, or 0.1% of net sales in 2024, segment profit amounted to 11.5% of net sales in 2025 compared to 12.5% of net sales in 2024.

The year-over-year changes in segment profit as a percent of sales and adjusted segment profit as a percent of sales were primarily due to lower volume in the higher-margin automotive business.

Corporate Overhead:

Corporate Overhead includes the corporate overhead element of SG&A, which is not allocated to the business segments.

Corporate Overhead amounted to $270.6 million, $312.2 million, and $294.0 million in 2024, 2023, and 2022, respectively.

Excluding Non-GAAP adjustments of $23.4 million, $50.9 million, and $64.5 million in 2024, 2023, and 2022, respectively, the Corporate Overhead element of SG&A was $247.2 million, $261.3 million, and $229.5 million in 2024, 2023, and 2022, respectively.

The year-over-year decrease in 2024 compared to 2023 was primarily driven by the Company’s ongoing efforts to simplify the corporate cost structure and reduce indirect spend.

The year-over-year increase in 2023 compared to 2022 was primarily driven by higher employee-related variable compensation costs.

The corporate overhead element of SG&A, which is not allocated to the business segments for purposes of determining segment profit, consists of the costs associated with the executive management team and expenses related to centralized functions that benefit the entire Company but are not directly attributable to the business segments, such as legal and corporate finance functions, as well as expenses for the world headquarters facility.

Corporate Overhead amounted to $270.4 million in 2025 compared to $270.6 million in 2024.

Excluding Non-GAAP adjustments of $26.3 million in 2025 and $23.4 million in 2024, which primarily consisted of a voluntary retirement program in 2025 and transition services costs related to previously divested businesses in both periods, the Corporate Overhead element of SG&A was $244.1 million in 2025 compared to $247.2 million 2024.

RESTRUCTURING ACTIVITIES

A summary of the restructuring reserve activity from December 30, 2023 to December 28, 2024 is as follows:

(Millions of Dollars) December 30, 2023 Net Additions Usage Currency December 28, 2024

A summary of the restructuring reserve activity from December 28, 2024 to January 3, 2026 is as follows:

(Millions of Dollars) December 28, 2024 Net Additions Usage Currency January 3, 2026

Severance and related costs $ 25.3 $ 85.7 $ (64.2) $ (1.1) $ 45.7

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Total $ 45.4 $ 89.1 $ (85.6) $ (1.1) $ 47.8

During 2024, the Company recognized net restructuring charges of approximately $100 million, primarily related to severance and facility closures associated with the supply chain transformation.

During 2025, the Company recognized net restructuring charges of approximately $89 million, primarily driven by severance costs and certain related pension charges associated with reorganizations of the Company’s corporate and support functions and supply chain resources, as well as facility exit costs related to footprint actions associated with the supply chain transformation.

The Company expects to achieve annual net cost savings of approximately $188 million by the end of 2026 related to the restructuring costs incurred during 2025.

The majority of the $45 million of reserves remaining as of December 28, 2024 is expected to be utilized within the next twelve months.

During 2023, the Company recognized net restructuring charges of approximately $39 million, primarily related to severance and facility closures associated with the footprint rationalization actions under the supply chain transformation.

The Company estimates that these actions resulted in net cost savings of approximately $45 million in 2024.

During 2022, the Company recognized net restructuring charges of approximately $141 million, primarily related to severance and related costs, including SG&A cost actions under the Global Cost Reduction Program.

The majority of the $48 million of reserves remaining as of January 3, 2026 is expected to be utilized within the next twelve months.

During 2024, the Company recognized net restructuring charges of approximately $100 million, primarily related to severance and facility closures associated with the supply chain transformation.

The Company estimates that these actions resulted in net cost savings of approximately $129 million in 2025.

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$71 million pertaining to the Tools & Outdoor segment;

$8 million pertaining to the Industrial segment;

$5 million pertaining to the Engineered Fastening segment;

and $13 million pertaining to Corporate.

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$168 million in the Tools & Outdoor segment;

$7 million in the Industrial segment;

$9 million in the Engineered Fastening segment;

and $11 million in Corporate.

TARIFF POLICY IMPLICATIONS

In response to the United States’ policy actions in 2025 and potential policy changes in the future, the Company is continuing to execute its plan with the objective to safeguard gross margins and position the business for success with a focus on achieving its long-term financial objectives.

The Company's guiding principles and actions executed in response to tariffs include:

• Serving its end users and customers during a dynamic period;

• Minimizing cost increases through supply chain moves with a focus on leveraging the Company’s North American footprint and reducing China production for the United States by the end of 2026 or early 2027;

• Implementing price increases in 2025 with a long-term perspective and to protect cash flow;

• Continuing to proactively engage with the U.S.

administration.

Refer to "2026 Planning Assumptions" below for more information.

2026 PLANNING ASSUMPTIONS

This discussion of certain planning assumptions is intended to provide broad insight into the Company's near-term earnings and cash flow generation prospects.

The Company's planning assumptions for 2025 are for diluted earnings per share on a GAAP basis to be $4.05 (+/- $0.65), diluted earnings per share excluding Non-GAAP adjustments to be $5.25 (+/- $0.50), and free cash flow to be $750 million (+/- $100 million).

These planning assumptions exclude the impact of new 2025 tariffs.

The difference between the planning assumptions for 2025 diluted earnings per share on a GAAP basis and diluted earnings per share excluding Non-GAAP adjustments is approximately $1.05 to $1.35, consisting primarily of charges related to the supply chain transformation under the Global Cost Reduction Program.

The Company's planning assumptions for 2026 are for diluted earnings per share on a GAAP basis to be $3.15 to $4.35 and for diluted earnings per share excluding Non-GAAP adjustments to be $4.90 to $5.70, which reflects year-over-year growth of 42% and 13%, respectively, at the midpoint of each range.

The Company is targeting free cash flow to be in the range of $700 to $900 million, reflecting an increase of 16% at the midpoint.

These underlying planning assumptions include results of the CAM business for the first half of 2026 and the tariff landscape as of January 2026.

The difference between the planning assumptions for 2026 diluted earnings per share on a GAAP basis and diluted earnings per share excluding Non-GAAP adjustments is approximately $1.35 to $1.75, consisting primarily of charges related to footprint actions and other cost actions.

FINANCIAL CONDITION

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Operating Activities:

Cash flows provided by operations were $1.107 billion in 2024 compared to $1.191 billion in 2023 as higher earnings were more than offset by lower cash flows from working capital due to the significant inventory reduction in 2023.

In 2023, cash flows provided by operations were $1.191 billion compared to cash used in operations of $1.460 billion in 2022.

The year-over-year change was primarily driven by the Company's focus on reducing inventory, as evidenced by a decline of $1.123 billion in inventory in 2023.

Cash flows provided by operations were $971.2 million in 2025 compared to $1,106.9 million in 2024 as higher earnings were more than offset by changes in working capital.

Free Cash Flow:

Free cash flow, as defined in the table below, was an inflow of $753 million in 2024 compared to an inflow of $853 million in 2023 and an outflow of $1.990 billion in 2022.

The year-over-year changes in free cash flow are due to the same factors discussed above in operating activities.

Free cash flow, as defined in the table below, was $687.9 million in 2025 and $753.0 million in 2024.

The year-over-year changes in free cash flow are due to the same factors discussed above in operating activities, as well as lower planned capital expenditures in 2025.

Management considers free cash flow an important indicator of its liquidity and capital efficiency, as well as its ability to fund future growth and provide dividends to shareowners, and is useful information for investors.

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(Millions of Dollars) 2025 2024

Net cash provided by (used in) operating activities $ 1,107 $ 1,191 $ (1,460)

Net cash provided by operating activities $ 971.2 $ 1,106.9

capital and software expenditures (283.3) (353.9)

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Investing Activities:

Cash flows provided by investing activities totaled $394 million in 2024 primarily due to net proceeds from sales of businesses of $736 million, partially offset by capital and software expenditures of $354 million.

Cash flows used in investing activities in 2023 totaled $328 million, primarily due to capital and software expenditures of $338 million.

Cash flows provided by investing activities in 2022 totaled $3.573 billion, primarily due to proceeds from the Security and Oil & Gas divestitures, net of cash sold, of $4.147 billion, partially offset by capital and software expenditures of $530 million.

Cash flows used in investing activities totaled $261.5 million in 2025 primarily due to capital and software expenditures of $283.3 million.

Cash flows provided by investing activities in 2024 totaled $394.2 million, primarily due to net proceeds from sales of businesses of $735.6 million, partially offset by capital and software expenditures of $353.9 million.

Financing Activities:

Cash flows used in financing activities totaled $794.4 million in 2025 primarily driven by payments on long term debt of $850.5 million and cash dividend payments on common stock of $500.6 million, partially offset by net short-term commercial paper borrowings of $572.9 million.

Cash flows used in financing activities totaled $1.557 billion in 2024 primarily driven by net repayments of short-term commercial paper borrowings of $1.057 billion and cash dividend payments on common stock of $491.2 million.

Cash flows used in financing activities totaled $816 million in 2023 primarily driven by net repayments of short-term commercial paper borrowings of $1.045 billion and cash dividend payments on common stock of $483 million, partially offset by net proceeds from debt issuances of $745 million.

Cash flows used in financing activities totaled $1.971 billion in 2022 primarily driven by share repurchases of $2.323 billion, credit facility repayments of $2.5 billion, the redemption and conversion of preferred stock for $750 million, cash dividend payments on common stock of $466 million, and net repayments of short-term commercial paper borrowings of $138 million, partially offset by $2.5 billion from credit facility borrowings, net proceeds from debt issuances of $993 million and proceeds from the issuance of remarketed Series D Preferred Stock of $750 million.

Fluctuations in foreign currency rates negatively impacted cash by $106 million in 2024 and $32 million in 2022, due to the strengthening of the U.S.

dollar against other currencies.

Fluctuations in foreign currency rates positively impacted cash by $79.3 million in 2025 due to the weakening of the U.S.

dollar against other currencies.

Fluctuations in foreign currency rates negatively impacted cash by $106.2 million in 2024 due to the strengthening of the U.S.

dollar against other currencies.

Refer to Note G, Long-Term Debt and Financing Arrangements , and Note I, Capital Stock , for further discussion regarding the Company's debt and equity arrangements.

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The Company maintains investment grade credit ratings from the major U.S.

rating agencies on its senior unsecured debt (S&P A-, Fitch BBB+, Moody's Baa3), as well as its commercial paper program (S&P A-2, Fitch F2, Moody's P-3).

There were no changes to any of the Company's credit ratings during 2024.

rating agencies on its senior unsecured debt (S&P BBB+, Fitch BBB+, Moody's Baa3), as well as its commercial paper program (S&P A-2, Fitch F2, Moody's P-3).

In the third quarter of 2025, S&P downgraded the Company's senior unsecured debt credit rating from A- to BBB+.

Failure to maintain investment grade rating levels could adversely affect the Company’s cost of funds, liquidity, and access to capital markets, but would not have an adverse effect on the Company’s ability to access its existing committed credit facilities.

Cash and cash equivalents totaled $291 million as of December 28, 2024, which was primarily held in foreign jurisdictions.

Cash and cash equivalents totaled $449 million as of December 30, 2023, of which approximately 50% was held in foreign jurisdictions.

As a result of the Tax Cuts and Jobs Act (the "Act"), the Company's tax liability related to the one-time transition tax associated with unremitted foreign earnings and profits totaled $110 million at December 28, 2024.

Cash and cash equivalents totaled $280.1 million and $290.5 million as of January 3, 2026 and December 28, 2024, respectively, which was primarily held in foreign jurisdictions.

The Act permits a U.S.

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See the "Contractual Obligations" table below for the estimated amounts due by period.

The Company has considered the implications of paying the required one-time transition tax and believes it will not have a material impact on its liquidity.

In August 2025, the Company redeemed its $350 million 6.272% notes at par prior to maturity.

The redemption was funded through the issuance of commercial paper at a lower prevailing interest rate.

The Company recognized a pre-tax loss of $0.3 million from the redemption related to the write-off of unamortized deferred financing fees.

The Company has a $3.5 billion commercial paper program which includes Euro denominated borrowings in addition to U.S.

As of January 3, 2026, the Company had $605.6 million of borrowings outstanding, of which $555.6 million in Euro denominated commercial paper was designated as a net investment hedge.

As of December 28, 2024, the Company had no commercial paper borrowings outstanding.

As of December 30, 2023, the Company had $1.1 billion of borrowings outstanding, of which $399.7 million in Euro denominated commercial paper was designated as a net investment hedge.

Refer to Note H, Financial Instruments , for further discussion.

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Dollar and Euro commercial paper program.

As of December 28, 2024 and December 30, 2023, the Company had not drawn on its five-year committed credit facility.

In June 2024, the Company terminated its 364-Day $1.5 billion committed credit facility ("the 2023 Syndicated 364-Day Credit Agreement") dated September 2023.

In June 2025, the 5-Year Credit Agreement was amended to include the covenants listed below.

As of January 3, 2026 and December 28, 2024, the Company had not drawn on its five-year committed credit facility.

In June 2025, the Company terminated its 364-Day $1.25 billion committed credit facility ("the 2024 Syndicated 364-Day Credit Agreement") dated June 2024.

There were no outstanding borrowings under the 2024 Syndicated 364-Day Credit Agreement upon termination and as of December 28, 2024.

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Dollar and Euro commercial paper program.

As of December 28, 2024, the Company had not drawn on its 2024 Syndicated 364-Day Credit Agreement.

As of January 3, 2026, the Company had not drawn on its 2025 Syndicated 364-Day Credit Agreement.

The 5-Year Credit Agreement and the 2025 Syndicated 364-Day Credit Agreement, as described above, contain customary affirmative and negative covenants, including but not limited to, maintenance of an interest coverage ratio.

The interest coverage ratio tested for covenant compliance compares adjusted Earnings Before Interest, Taxes, Depreciation and Amortization to adjusted net Interest Expense ("Adjusted EBITDA"/"Adjusted Net Interest Expense").

The Company must maintain, for each period of four consecutive fiscal quarters of the Company, an interest coverage ratio of not less than 3.50 to 1.00, provided that the Company is only required to maintain an interest coverage ratio of not less than (i) 1.50 to 1.00 for any four fiscal quarter period ending on or before the end of the Company’s second fiscal quarter of 2024, and (ii) 2.50 to 1.00 for any four fiscal quarter period ending after the Company’s second fiscal quarter of 2024 through and including the Company’s second fiscal quarter of 2025.

For purposes of calculating the Company’s compliance with the interest coverage ratio, as defined in each credit agreement, the Company is permitted to increase EBITDA to allow for additional adjustment addbacks incurred prior to the end of the Company’s second fiscal quarter of 2025, provided that (A) the sum of the applicable adjustment addbacks incurred through and including the Company’s second fiscal quarter of 2024 may not exceed $500 million in the aggregate, and (B) the sum of the applicable adjustment addbacks incurred from the Company’s third fiscal quarter of 2024 through and including the Company’s second fiscal quarter of 2025 may not exceed $250 million in the aggregate;

provided, further, that the sum of the applicable adjustment addbacks for any four consecutive fiscal quarter period may not exceed $500 million in the aggregate.

In addition, the Company has other short-term lines of credit that are primarily uncommitted, with numerous banks, aggregating to $296 million, of which approximately $206 million was available at December 28, 2024 and approximately $90 million of the short-term credit lines were utilized primarily pertaining to outstanding letters of credit for which there are no required or reported debt balances.

For purposes of calculating the Company’s compliance with the interest coverage ratio, the Company is permitted to increase EBITDA by an amount equal to the Applicable Adjustment Addbacks (as defined in the 2025 Syndicated 364-Day Credit Agreement), provided that the sum of the Applicable Adjustment Addbacks incurred in any four consecutive fiscal quarter periods ending on or before the end of the Company's second fiscal quarter of 2026 shall not exceed $250,000,000 in aggregate.

In addition, the Company has other short-term lines of credit that are primarily uncommitted, with numerous banks, aggregating to $299.8 million, of which approximately $216.1 million was available at January 3, 2026, and approximately $83.7 million of the short-term credit lines were utilized primarily pertaining to outstanding letters of credit for which there are no required or reported debt balances.

Short-term arrangements are reviewed annually for renewal.

At December 28, 2024, the aggregate amount of short-term and long-term committed and uncommitted lines of credit was approximately $3.8 billion.

At January 3, 2026, the aggregate amount of short-term and long-term committed and uncommitted lines of credit was approximately $3.8 billion.

The weighted-average interest rates on U.S.

dollar denominated short-term borrowings for the years ended December 28, 2024 and December 30, 2023 were 5.6% and 5.1%, respectively.

The weighted-average interest rates on Euro denominated short-term borrowings for the years ended December 28, 2024 and December 30, 2023 were 3.9% and 3.5%, respectively.

In March 2023, the Company issued $350.0 million of senior unsecured term notes maturing March 6, 2026 ("2026 Term Notes") and $400.0 million of senior unsecured term notes maturing March 6, 2028 (“2028 Term Notes”).

The 2026 Term Notes accrue interest at a fixed rate of 6.272% per annum and the 2028 Term Notes at a fixed rate of 6.0% per annum, with interest payable semi-annually in arrears, and both notes rank equally in right of payment with all of the Company's existing and future unsecured unsubordinated debt.

The Company received total net proceeds from this offering of $745.3 million, net of $4.7 million of underwriting expenses and other fees associated with the transaction.

The Company used the net proceeds from the offering for general corporate purposes, including repayment of indebtedness under the commercial paper program.

dollar denominated short-term borrowings for the years ended January 3, 2026 and December 28, 2024 were 4.6% and 5.6%, respectively.

The weighted-average interest rates on Euro denominated short-term borrowings for the years ended January 3, 2026 and December 28, 2024 were 2.3% and 3.9%, respectively.

In March 2015, the Company entered into a forward share purchase contract with a financial institution counterparty for 3,645,510 shares of common stock.

The contract obligates the Company to pay $350 million, plus an additional amount related to the forward component of the contract.

In June 2024, the Company amended the settlement date to June 2026, or earlier at the Company's option.

The contract obligates the Company to pay $350 million, plus an additional amount related

to the forward component of the contract.

In September 2025, the Company amended the settlement date to June 2028, or earlier at the Company's option.

Refer to Note G, Long-Term Debt and Financing Arrangements , and Note I, Capital Stock , for further discussion regarding the Company's debt and equity arrangements.

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Interest payments on long-term debt (b) 2,742 189 343 243 1,967

Short-term borrowings 606 606 — — —

Lease obligations 552 139 198 119 96

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(a) Future payments on long-term debt encompass all payments related to aggregate debt maturities, excluding certain fair value adjustments included in long-term debt, as discussed further in Note G, Long-Term Debt and Financing Arrangements.

(b) Future interest payments on long-term debt reflect the applicable interest rate in effect at December 28, 2024 .

(b) Future interest payments on long-term debt reflect the applicable interest rate in effect at January 3, 2026 .

(c) Inventory purchase commitments primarily consist of open purchase orders to purchase raw materials, components, and sourced products.

(d) In March 2015, the Company entered into a forward share purchase contract with a financial institution counterparty which obligates the Company to pay $350 million, plus an additional amount related to the forward component of the contract.

In June 2024, the Company amended the settlement date to June 2026, or earlier at the Company's option.

In September 2025, the Company amended the settlement date to June 2028 or earlier at the Company's option.

See Note I, Capital Stock, for further discussion.

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(g) Supplier agreements with long-term minimum material purchase requirements and freight forwarding arrangements.

(h) Future cash flows on derivative instruments reflect the fair value and accrued interest as of December 28, 2024.

(h) Future cash flows on derivative instruments reflect the fair value and accrued interest as of January 3, 2026.

The ultimate cash flows on these instruments will differ, perhaps significantly, based on applicable market interest and foreign currency rates at their maturity.

To the extent the Company can reliably determine when payments will occur, the related amounts will be included in the table above.

However, due to the high degree of uncertainty regarding the timing of potential future cash flows associated with the contingent consideration liability related to the Craftsman acquisition and the unrecognized tax liabilities of $167 million and $518 million, respectively, at December 28, 2024, the Company is unable to make a reliable estimate of when (if at all) these amounts may be paid.

However, due to the high degree of uncertainty regarding the timing of potential future cash flows associated with the contingent consideration liability related to the Craftsman acquisition and the unrecognized tax liabilities of $110 million and $406 million, respectively, at January 3, 2026, the Company is unable to make a reliable estimate of when (if at all) these amounts may be paid.

Refer to Note L, Fair Value Measurements, and Note P, Income Taxes, for further discussion.

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interest rates.

The Company has a $3.5 billion commercial paper program which includes Euro denominated borrowings in addition to U.S.

The impact of a hypothetical 10% increase in the average interest rate of the Company’s average commercial paper borrowings outstanding during 2025 would have been an incremental pre-tax loss of approximately $4 million.

The Company had no outstanding commercial paper borrowings at December 28, 2024.

As of January 3, 2026, the Company had $605.6 million of commercial paper borrowings outstanding.

The Company has exposure to commodity prices in many businesses, particularly brass, nickel, resin, aluminum, copper, zinc, steel, and energy used in the production of finished goods.

Generally, commodity price exposures are not hedged with derivative financial instruments, but instead are actively managed through customer product and service pricing actions, procurement-driven cost reduction initiatives and other productivity improvement projects.

The Company has $118.7 million of liabilities as of December 28, 2024 pertaining to unfunded defined contribution plans for certain U.S.

Generally, commodity price exposures are not hedged with

derivative financial instruments, but instead are actively managed through customer product and service pricing actions, procurement-driven cost reduction initiatives and other productivity improvement projects.

The Company has $124.4 million of liabilities as of January 3, 2026 pertaining to unfunded defined contribution plans for certain U.S.

employees for which there is mark-to-market exposure.

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The Company utilizes the current funded status to transition the portfolio toward investments that better match the duration and cash flow attributes of the underlying liabilities.

In 2024, investment gains resulted in an increase of $15 million to pension plan assets.

In 2023 and 2022, investment returns on pension plan assets resulted in an increase of $144 million and a decrease of $560 million, respectively.

The funded status percentage (total plan assets divided by total projected benefit obligation) of all global pension plans was 90% in 2024 and 87% in both 2023 and 2022.

In 2025 and 2024, investment gains resulted in an increase of $112 million and $15 million to pension plan assets, respectively.

The funded status percentage (total plan assets divided by total projected benefit obligation) of all global pension plans was 90% in 2025 and 2024.

The Company expects funding obligations on its defined benefit plans to be approximately $29 million in 2026.

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Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired businesses.

At December 28, 2024, the Company reported $7.906 billion of goodwill, $2.348 billion of indefinite-lived trade names and $1.383 billion of net definite-lived intangibles.

At January 3, 2026, the Company reported $7.288 billion of goodwill, $2.256 billion of indefinite-lived trade names and $831.2 million of net definite-lived intangibles.

Management tests goodwill for impairment at the reporting unit level.

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For its annual impairment testing performed in the third quarter of 2025, the Company applied a quantitative test for each of its reporting units using a discounted cash flow valuation model.

Based on the results of the Company’s annual impairment testing, it was determined that the fair value of each of its reporting units was in excess of its carrying amount.

With respect to the quantitative tests, the key assumptions applied to the cash flow projections were a discount rate of 10% for both reporting units, near-term revenue growth rates over the next six years, which represented cumulative annual growth rates

ranging from approximately 4.0% to 4.5%, and perpetual growth rates of 3%.

Based on the results of the Company’s annual impairment testing, it was determined that the fair value of each of its reporting units was substantially in excess of its carrying amount.

With respect to the quantitative tests, the key assumptions applied to the cash flow projections include a discount rate of 10% and a perpetual growth rate of 3% for both reporting units.

In addition, near-term cash flow projections for both reporting units included cumulative annual revenue growth rates in the mid-single digits (ranging from approximately 3% to 5%) and Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") margin rates in the mid to high-teens (ranging from approximately 15% to 19%), which are consistent with the Company's overall long-term financial targets as further discussed in "Strategic Objectives" in Item 7 .

These assumptions contemplated business, market and overall economic conditions.

Based on the results of this testing, the Company determined that the fair value for each of the reporting units exceeded its carrying amount in excess of 30%.

Furthermore, management performed sensitivity analyses on the estimated fair values from the discounted cash flow valuation models utilizing more conservative assumptions that reflect reasonably likely future changes in the discount rate and perpetual growth rate.

Management performed sensitivity analyses on the estimated fair values from the discounted cash flow valuation models utilizing more conservative assumptions that reflect reasonably likely future changes in the discount rate and perpetual growth rate.

The discount rate was increased by 250 basis points with no impairment indicated.

The perpetual growth rate was decreased by 300 basis points with no impairment indicated.

When a portion of a reporting unit is classified as held for sale, the Company allocates goodwill to the disposal group based on the relative fair values of the business to be disposed of and the portion of the reporting unit that will be retained.

The Company then performs a goodwill impairment test on the remaining reporting unit.

As of January 3, 2026, the Company classified the CAM business, which is included in the Engineered Fastening reporting unit, as held for sale and allocated a portion of the goodwill of the Engineered Fastening reporting unit to CAM.

The Company then performed a goodwill impairment test on the remaining reporting unit after the allocation of goodwill to CAM, which did not result in impairment.

The Company also tested its indefinite-lived trade names for impairment during the third quarter of 2025 utilizing a discounted cash flow model.

The key assumptions used included discount rates, royalty rates, and perpetual growth rates applied to the projected sales.

With the exception of the Lenox trade name discussed below, the Company determined that the fair values of its indefinite-lived trade names exceeded their respective carrying amounts.

During 2024, the Company continued its brand prioritization and investment strategy for its major brands, while leveraging certain of its specialty brands in a more focused manner.

As a result of these ongoing brand prioritization efforts, the Company recognized a $41.0 million pre-tax, non-cash impairment charge related to the Lenox trade name in the third quarter of 2024.

Subsequent to this impairment charge, the Lenox trade name carrying value totaled $115.0 million.

In the third quarter of 2023, the Company recognized a $124.0 million pre-tax, non-cash impairment charge related to the Irwin and Troy-Bilt trade names.

Subsequent to this impairment charge, the carrying value of the Irwin and Troy-Bilt trade names totaled $113.0 million.

The Company intends to continue utilizing these trade names indefinitely, which represented approximately 6% of 2024 net sales for the Tools & Outdoor segment.

With the exception of the Lenox, Troy-Bilt, and Irwin trade names discussed below, the Company determined that the fair values of its indefinite-lived trade names exceeded their respective carrying amounts.

During 2025, in conjunction with its annual long-term strategic planning, the Company updated its brand prioritization and investment strategy to transition targeted product categories to its priority global brands, while leveraging certain of its complementary brands on more focused product categories and regions where those brands hold more meaningful market positions and value to end users.

As a result of these strategic decisions, the Company recognized a $108.4 million pre-tax, non-cash impairment charge related to the Lenox, Troy-Bilt, and Irwin trade names in the third quarter of 2025.

Subsequent to this impairment charge, the carrying value of the Lenox, Troy-Bilt, and Irwin trade names totaled $119.6 million.

In the third quarter of 2024, the Company recognized a $41.0 million pre-tax, non-cash impairment charge related to the Lenox trade name.

The Lenox, Troy-Bilt, and Irwin trade names, which the Company intends to continue utilizing indefinitely in a more focused manner as described above, represented approximately 5% of 2025 net sales for the Tools & Outdoor segment.

In the event that future operating results of any of the Company's reporting units or indefinite-lived trade names do not meet current expectations, management, based upon conditions at the time, would consider taking restructuring or other strategic actions, as necessary, to maximize revenue growth and profitability.

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Discount rates are developed considering the yields available on high-quality fixed income investments with maturities corresponding to the duration of the related benefit obligations.

The Company’s weighted-average discount rates used to determine benefit obligations at December 28, 2024 for the United States and international pension plans were 5.55% and 5.04%, respectively.

The Company’s weighted-average discount rates used to determine benefit obligations at January 3, 2026 for the United States and international pension plans were 5.27% and 5.11%, respectively.

The Company’s weighted-average discount rates used to determine benefit obligations at December 28, 2024 for the United States and international pension plans were 5.55% and 5.04%, respectively.

As discussed further in Note K, Employee Benefit Plans , the Company develops the expected return on plan assets considering various factors, which include its targeted asset allocation percentages, historic returns, and expected future returns.

The Company’s expected rate of return assumptions for the United States and international pension plans were 6.47% and 5.45%, respecti vely, at December 28, 2024.

The Company will use a 6.57% weighted-av erage expected rate of return assumption to determine t he 2025 n et periodic benefit cost.

The Company’s expected rate of return assumptions for the United States and international pension plans were 6.72% and 6.37%, respecti vely, at January 3, 2026.

The Company will use a 6.55% weighted-average expected rate of return assumption to determine the 2026 net periodic benefit cost.

A 25 basis point reduction in the expected rate of return assumption would increase 2026 net periodic benefit cost by approximately $4 million on a pre-tax basis.

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The expected return on plan assets is determined using the expected rate of return and the fair value of plan assets.

Accordingly, market fluctuations in the fair value of plan assets can affect the net periodic benefit cost in the following year.

The projected benefit obligation for defined benefit plans exceeded the fair value of plan ass ets by $218 million at December 28, 2024.

A 25 basis point reduction in the discount rate would have increased the projected benefit obligation by approximately $44 million a t December 28, 2024.

Accordingly, market fluctuations in the fair value of plan assets can affect the net periodic benefit cost in the following yea r.

The projected benefit obligation for defined benefit plans exceeded the fair value of plan assets by $221 million at January 3, 2026.

A 25 basis point reduction in the discount rate would have

increased the projected benefit obligation by approximately $44 million a t January 3, 2026.

The primary Black & Decker U.S.

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As assessments and remediation progress at individual sites, the amounts recorded are reviewed periodically and adjusted to reflect additional technical and legal information that becomes available.

As of December 28, 2024, the Company had reserves of $275 million for remediation activities associated with Company-owned properties as well as for Superfund sites, for losses that are probable and estimable.

As of December 28, 2024, the range of environmental remediation costs that is reasonably possible is $192 million to $408 million which is subject to change in the near term.

As of January 3, 2026, the Company had reserves of $259 million for remediation activities associated with Company-owned properties as well as for Superfund sites, for losses that are probable and estimable.

As of January 3, 2026, the range of environmental remediation costs that is reasonably possible is $179 million to $396 million which is subject to change in the near term.

The Company may be liable for environmental remediation of sites it no longer owns.

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This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any goals, projections, planning assumptions or guidance of earnings, income, revenue, margins, costs or sales, sales growth, profitability or other financial items;

any statements of the plans, strategies and objectives of management for future operations, including expectations around the Company's ongoing transformation;

future market share gain, any statements concerning proposed new products, services or developments;

All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any goals, projections, guidance or planning assumptions or scenarios regarding earnings, EPS, income, revenue, margins, or margin expansion, costs and cost savings/reductions, sales, sales growth, organic growth, profitability, cash flow, leverage ratios, debt reduction or other financial items;

any statements of the plans, strategies, investments and objectives of management for future operations, including expectations around the Company's productivity and efficiency goals and future operational strategies following completion of the Company's transformation;

future market share gain, shareholder returns, any statements concerning innovation initiatives and proposed new products, services or developments and brand prioritization strategies;

any statements regarding future economic conditions or performance;

any statements concerning future dividends or share repurchases;

any statements relating to initiatives concerning environmental, social and governance matters;

any statements of beliefs, plans, intentions or expectations;

any statements and assumptions regarding possible tariff and tariff impact projections and related mitigation plans;

and any statements of assumptions underlying any of the foregoing.

Forward-looking statements may include, among others, the words “may,” “will,” “estimate,” “intend,” “could,” “project,” “plan,” “continue,” “believe,” “expect,” “anticipate,” “run-rate,” “annualized,” “forecast,” “commit,” “objective,” “goal,” “prospect,” “target,” “design,” “on-track,” “position or positioning,” “guidance,” “aim,” “multi-year” or any other similar words.

any statements and assumptions or scenarios regarding possible tariff and tariff impact projections and related mitigation plans (including price actions, supply chain adjustments) and expected timing and benefits related to such plans;

any statements concerning the consummation of the CAM sale transaction, the Company’s ability to maximize value for shareholders through active portfolio management and the impact of the transaction to fund debt reduction and support the Company’s capital allocation strategy and any statements of assumptions underlying any of the foregoing.

Forward-looking statements may include, among others, the words “may,” “will,” “estimate,” “intend,” “could,” “project,” “plan,” “continue,” “believe,” “expect,” “anticipate,” “run-rate,” “annualized,” “forecast,” “commit,” “goal,” “target,” “design,” “on-track,” “position or positioning,” “guidance,” “aim,” “looking forward,” “multi-year” or any other similar words.

Although the Company believes that the expectations reflected in any of its forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of its forward-looking statements.

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Important factors that could cause the Company's actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in its forward-looking statements include, among others, the following:

(i) successfully developing, marketing and achieving sales from new products and services and the continued acceptance of current products and services;

(ii) macroeconomic factors, including global and regional business conditions, commodity prices, inflation and deflation, interest rate volatility, currency exchange rates, and uncertainties in the global financial markets related to the recent failures of several financial institutions;

(iii) laws, regulations and governmental policies affecting the Company's activities in the countries where it does business, including those related to tariffs, taxation, data privacy, anti-bribery, anti-corruption, government contracts, trade controls such as section 301 tariffs and section 232 steel and aluminum tariffs, and import and export controls;

(iv) the Company’s ability to predict the timing and extent of any trade related regulations, restrictions and tariffs as well as its ability to successfully assess the impact to its business of, and mitigate or respond to macroeconomic or trade and tariff changes or policies;

(v) the economic, political, cultural and legal environment in Europe and the emerging markets in which the Company generates sales, particularly Latin America and China;

(vi) realizing the anticipated benefits of mergers, acquisitions, joint ventures, strategic alliances or divestitures;

(i) successfully developing, marketing and achieving sales from new products and services and the continued acceptance of current products and services as well as successful execution of, and realization of expected benefits from, the Company’s brand prioritization and investment strategy, including potential licensing initiatives and related restructuring efforts, and its ability to estimate and mitigate negative consequences from the same including, but not limited to, reduced ability to generate sales;

(ii) macroeconomic factors, including global and regional business conditions, commodity availability and prices, inflation and deflation, interest rate volatility, currency exchange rates, and uncertainties in the global financial markets;

(iii) laws, regulations and governmental policies affecting the Company's activities in the countries where it does business or sources supply inputs, including those related to taxation, data privacy, anti-bribery, anti-corruption, government contracts, and trade controls, including but not limited to, tariffs, import and export controls, raw material and rare earth related controls and other monetary and non-monetary trade regulations or barriers;

(iv) the Company’s ability to predict the timing and extent of any trade related regulations (or any court rulings in response thereto), clearances, restrictions, including but not limited to, trade barriers, tariffs, raw material and rare earth related controls, as well as its ability to successfully assess the impact to its business of, and mitigate or respond to, such macroeconomic or trade, tariff and raw material and rare earth import/export control changes or policies (including, but not limited to, the Company’s ability to predict and respond to court rulings in response thereto, or to obtain price increases from its customers and complete effective supply chain adjustments within anticipated time frames and ability to obtain rare earth related supply clearances);

(v) the economic, political, cultural and legal environment in the U.S., Europe, and the emerging markets in which the Company generates sales, particularly Latin America and China;

(vi) realizing the anticipated benefits of mergers, acquisitions, joint ventures, strategic alliances or divestitures and the costs associated with such transactions;

(vii) pricing pressure and other changes within competitive markets;

(viii) availability and price of raw materials, component parts, freight, energy, labor and sourced finished goods;

(viii) availability and price of raw materials, rare earth materials, component parts, freight, energy, labor and sourced finished goods;

(ix) the impact that the tightened credit markets may have on the Company or its customers or suppliers;

(x) the extent to which the Company has to write off accounts receivable, inventory or other assets or experiences supply chain disruptions in connection with bankruptcy filings by customers or suppliers;

(xi) the Company's ability to identify and effectively execute productivity improvements and cost reductions;

(xi) the Company's ability to identify and effectively execute productivity improvements and cost reductions, including complexity reduction through platforming products and SKU reduction initiatives, and other manufacturing and administrative reorganization actions;

(xii) potential business, supply chain and distribution disruptions, including those related to physical security threats, information technology or cyber-attacks, epidemics, natural disasters or pandemics, sanctions, political unrest, war or terrorism, including the conflicts between Russia and Ukraine, and Israel and Hamas and tensions or conflicts in South Korea, China, Taiwan and the Middle East;

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(xiv) managing franchisee relationships;

(xv) the impact of poor weather conditions and climate change and risks related to the transition to a lower-carbon economy, such as the Company's ability to successfully adopt new technology, meet market-driven demands for carbon neutral and renewable energy technology, or to comply with changes in environmental regulations or requirements, which may be more stringent and complex, impacting its manufacturing facilities and business operations as well as remediation plans and costs relating to any of its current or former locations or other sites;

(xvi) maintaining or improving production rates in the Company's manufacturing facilities, responding to significant changes in customer preferences or expectations, product demand and fulfilling demand for new and existing products, and learning, adapting and integrating new technologies into products, services and processes;

(xv) the impact of poor weather conditions and climate change and risks related to the transition to a lower-carbon economy, such as the Company's ability to successfully adopt new

technology, meet market-driven demands for carbon neutral and renewable energy technology, or to comply with changes in environmental regulations or requirements, which may be more stringent and complex, impacting its reporting processes and manufacturing facilities and business operations as well as remediation plans and costs relating to any of its current or former locations or other sites;

(xvi) maintaining or improving production rates in the Company's manufacturing facilities (including leveraging its North American footprint in connection with tariff mitigation), responding to significant changes in customer preferences or expectations, product demand and fulfilling demand for new and existing products, and learning, adapting and integrating new technologies into products, services and processes;

(xvii) changes in the competitive landscape in the Company's markets;

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operations, including sales to non-U.S.

(xix) the impact from demand changes within world-wide markets associated with construction and housing, general industrial, automotive, aerospace, outdoor and other markets which the Company serves;

(xix) the Company’s ability to predict the extent or timing of, and impact from demand changes within domestic or world-wide markets associated with construction, homebuilding and remodeling, aerospace, outdoor, engineered fastening, automotive and other markets which the Company serves;

(xx) potential adverse developments in new or pending litigation and/or government investigations;

(xxi) the incurrence of debt and changes in the Company's ability to obtain debt on commercially reasonable terms and at competitive rates;

(xxii) substantial pension and other postretirement benefit obligations;

(xxii) substantial pension and other post-retirement benefit obligations;

(xxiii) potential regulatory liabilities, including environmental, privacy, data breach, workers compensation and product liabilities;

(xxiv) attracting, developing and retaining senior management and other key employees, managing a workforce in many jurisdictions, labor shortages, work stoppages or other labor disruptions;

(xxv) the Company's ability to keep abreast with the pace of

technological change;

(xxv) the Company's ability to keep abreast with the pace of technological change;

(xxvi) changes in accounting estimates;

(xxvii) the Company’s ability to protect its intellectual property rights and to maintain its public reputation and the strength of its brands;

(xxviii) critical or negative publicity, including on social media, whether or not accurate, concerning the Company’s brands, products, culture, key employees or suppliers, or initiatives, and the Company's handling of diverging stakeholder expectations regarding the same, and (xxix) the Company’s ability to implement, and achieve the expected benefits (including cost savings and reduction in working capital) from, its Global Cost Reduction Program including:

continuing to advance innovation, electrification and global market penetration to achieve mid-single digit organic revenue growth;

streamlining and simplifying the organization, and investing in initiatives that more directly impact the Company's customers and end users;

returning adjusted gross margins to historical 35%+ levels by accelerating the supply chain transformation to leverage material productivity, drive operational excellence, rationalize manufacturing and distribution networks, including consolidating facilities and optimizing the distribution network, and reduce complexity of the product portfolio;

improving fill rates and matching inventory with customer demand;

prioritizing cash flow generation and inventory optimization;

delivering operational excellence through efficiency, simplified organizational design;

and reducing complexity through platforming products and implementing initiatives to drive a SKU reduction.

and (xxix) the failure to consummate, or a delay in the consummation of, the CAM sale transaction for various reasons (including but not limited to failure to receive, or delay in receiving, required regulatory approvals and meet customary closing conditions), and failure to realize the expected benefits of the Company’s value creation, debt reduction and capital allocation strategy.

Additional factors that could cause actual results to differ materially from forward-looking statements are set forth in this Annual Report on Form 10-K, including under the headings “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in the Consolidated Financial Statements and the related Notes, and other filings with the Securities and Exchange Commission.

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The Company does not undertake any obligation or intention to update or revise any forward-looking statements, whether as a result of future events or circumstances, new information or otherwise, except as required by law.

Any standards of measurement and performance made in reference to the Company's environmental, social, governance and other sustainability plans and goals are developing and based on assumptions that continue to evolve and may be subject to change, and no assurance can be given that any such plan, initiative, projection, goal, commitment, expectation, or prospect can or will be achieved.

The inclusion of information related to such goals and initiatives is not an indication that such information is material under the standards of the Securities and Exchange Commission.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis