Stanley Black & Decker Strengthens Financial Flexibility with New 364-Day Credit Agreement Amid Ongoing Transformation
On June 23, 2025, Stanley Black & Decker, Inc. (NYSE: SWK), a leading global industrial company, announced the execution of a new 364-Day Credit Agreement valued at $1.25 billion. This strategic financial move, detailed in the company’s recent 8-K filing, underscores SWK’s commitment to maintaining robust liquidity and supporting its ongoing corporate transformation initiatives.
The 364-Day Credit Agreement, arranged by a consortium of top-tier financial institutions including Citibank, Bank of America, JPMorgan Chase, and Wells Fargo, offers Stanley Black & Decker a revolving credit facility that can be drawn in U.S. Dollars or Euros. The facility features flexible borrowing options with interest rates tied to Base Rate, EURIBO Rate, or Term SOFR plus an applicable margin. The agreement mandates repayment by June 22, 2026, with provisions allowing conversion of outstanding advances into a term loan, repayable within one year.
This credit facility replaces the previous 364-Day Credit Agreement dated June 28, 2024, reflecting the company’s proactive approach to optimizing its capital structure. The new agreement includes customary covenants such as maintaining an interest coverage ratio of at least 3.50 to 1.00, with a temporary allowance of 2.50 to 1.00 through mid-2026, and restrictions on liens, mergers, and sale-leaseback transactions.
Financial Context and Impact:
Stanley Black & Decker’s latest fiscal year ending December 28, 2024, reveals a total debt to capitalization ratio of 41.67%, indicating a moderate leverage position. The company’s debt to equity ratio stands at approximately 1.40, reflecting a balanced use of debt financing. Notably, the operating cash flow to net income ratio is a robust 3.76, highlighting strong cash generation relative to earnings.
Capital expenditure to revenue is modest at 2.3%, consistent with the capital-intensive nature of the industrial sector, while return on assets and return on equity are 3.99% and 3.38%, respectively, signaling steady asset utilization and shareholder returns.
Strategic Alignment with Corporate Transformation:
This credit agreement aligns with Stanley Black & Decker’s broader strategic goals, including its ongoing supply chain transformation and operational efficiency programs. In the company’s Q2 2024 earnings call, management emphasized a $0.5 billion savings target from supply chain initiatives and a trajectory toward adjusted gross margins exceeding 30%. The new credit facility enhances liquidity to support these initiatives, alongside organic growth investments and shareholder returns.
Looking Ahead:
With a strong liquidity position backed by a \(3.5 billion credit facility group and a clear deleveraging plan targeting total debt reduction to the low \)5 billion range by year-end 2025, Stanley Black & Decker is well-positioned to navigate economic uncertainties and capitalize on growth opportunities. The company’s focus on maintaining investment-grade credit ratings and disciplined capital allocation underscores its financial resilience.
In summary, Stanley Black & Decker’s new 364-Day Credit Agreement represents a critical financial tool that bolsters the company’s balance sheet flexibility, supports its transformation agenda, and positions it for sustainable long-term growth.
For full details, refer to the original 8-K filing: Stanley Black & Decker 8-K June 2025
Tags: SWK, Stanley Black and Decker, FY 2024, credit facility, corporate transformation, industrial sector liquidity