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Snap-on Inc (SNA)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 2026 results missed Street: revenue $1.141B vs S&P Global consensus $1.195B, and diluted EPS $4.51 vs $4.834; gross margin improved to 50.7% on RCI and mix, but technician demand for financed big-ticket items remained weak, compressing Tools Group margins . Consensus values from S&P Global.*
  • Management emphasized resilience: record first-quarter operating margins in C&I (15.5%) and RS&I (25.7%); consolidated operating margin 25.2% despite lower volume .
  • Key drivers: double-digit decline in extended credit originations (-10.9%) tied to tool storage; solid RS&I demand at OEM dealerships and independent shops; C&I mixed with military pauses offset by torque/custom solutions strength .
  • Guidance reaffirmed: FY2025 capex ≈$100M (Q1 spend $22.9M), effective tax rate 22–23%, corporate expense ≈$27M/quarter; non-service pension costs add ~$0.09 quarterly EPS headwind .
  • Potential stock reaction catalysts: consensus miss, technician financing caution, tariff/supply-chain narrative, and RS&I margin records; management’s confidence in U.S.-centric manufacturing footprint and ongoing product pivot .

What Went Well and What Went Wrong

What Went Well

  • RS&I delivered an all-time first-quarter operating margin record at 25.7% on 3.7% organic sales growth, driven by OEM dealerships and diagnostics/repair information for independent shops .
  • C&I recorded a first-quarter operating margin record (15.5%), with 180 bps gross margin expansion YoY on torque/custom solutions and RCI savings .
  • Gross margin expanded to 50.7% (+20 bps YoY) despite volume decline, reflecting RCI efficiency gains .
    “We are…encouraged by…record first quarter operating margins for both our Commercial & Industrial Group and Repair Systems & Information Group, and combined to drive higher overall gross margin.” — CEO Pinchuk

What Went Wrong

  • Tools Group organic sales -6.8%; operating margin fell to 20.0% (from 23.5% YoY) as technician confidence weakened and big-ticket tool storage demand declined; extended credit originations -10.9% YoY .
  • EPS declined to $4.51 (vs $4.91 YoY), reflecting lower volume and a prior-year legal payment benefit; pension amortization added ~$0.09 EPS headwind .
  • Military sales softness and European hand tools weakness pressured C&I organic sales (-2.9%); Asia-Pac and cross-border sourcing disruptions persisted into later quarters .

Financial Results

MetricQ1 2024Q4 2024Q1 2026Q3 2025
Net Sales ($USD Millions)$1,182.3 $1,198.7 $1,141.1 $1,190.8
Total Revenues (Sales + Fin. Svcs) ($USD Millions)$1,281.9 $1,299.2 $1,243.2 $1,291.9
Diluted EPS ($)$4.91 $4.82 $4.51 $5.02
Gross Margin %50.5% 49.7% 50.7% 50.9%
Operating Margin % (before Fin. Svcs)22.9% 22.1% 21.3% 23.4% (incl. legal settlement)
Consolidated Operating Margin %26.5% 25.5% 25.2% 26.9% (incl. legal settlement)
Net Earnings ($USD Millions)$263.5 $258.1 $240.5 $265.4
Financial Services Revenue ($USD Millions)$99.6 $100.5 $102.1 $101.1

Segment breakdown (Q1 2026 vs Q1 2024):

SegmentQ1 2024 Net Sales ($MM)Q1 2026 Net Sales ($MM)Q1 2024 Operating Earnings ($MM)Q1 2026 Operating Earnings ($MM)Q1 2024 Op Margin %Q1 2026 Op Margin %
Commercial & Industrial (C&I)$359.9 $343.9 $55.4 $53.2 15.4% 15.5%
Snap-on Tools$500.1 $462.9 $117.3 $92.4 23.5% 20.0%
Repair Systems & Information (RS&I)$463.8 $475.9 $112.9 $122.1 24.3% 25.7%
Financial Services (Finco)$99.6 $102.1 $68.3 $70.3 ——

KPIs (Q1 2026):

KPIQ1 2026YoY/Context
Extended Credit Originations ($MM)$268.7 -10.9% YoY (lower tool storage, big-ticket)
Finco Expenses ($MM)$31.8 Flat YoY (vs $31.3)
Provision for Credit Losses ($MM)$19.1 +$0.3 YoY
Yield on Finance Receivables (%)17.6% 17.7% prior year
Yield on Contract Receivables (%)9.1% 9.0% prior year
U.S. 60-day+ Delinquencies (Extended Credit)2.0% +20 bps vs Q1 2024; unchanged vs last quarter
Cash from Operations ($MM)$298.5 121% of net earnings
Capex ($MM)$22.9 Part of ~$100M FY plan

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Capital ExpendituresFY 2025≈$100M ≈$100M; $22.9M incurred in Q1 Maintained
Effective Tax RateFY 202522–23% 22–23% Maintained
Corporate ExpensesRemainder of 2025≈$27M per quarter ≈$27M per quarter Maintained
Non-service Pension CostsFY 2025~$6M pretax/quarter; ~$0.09 EPS drag ~$6M pretax/quarter; ~$0.09 EPS drag Maintained

Earnings Call Themes & Trends

TopicQ4 2024 (Q-2)Q3 2025 (Q-1)Q1 2026 (Current)Trend
AI/Technology in dataMitchell1 database 3B records; intelligent diagnostics expansion Triton/APOLLO+ upgrades; decorated products NLP/AI improving database ingestion; faster subscription growth; SOLUS+/ProLink+ launches Strengthening capabilities
Supply chain/tariffsU.S.-centric manufacturing strategy; advantaged vs import tariffs “Fog of tariffs,” FX headwinds; resilience in gross margin Heavy tariff narrative; quick adjustment enabled by 15 U.S. plants, 36 global factories Persistent macro focus
Technician demand/mixPivot to quick payback items; tool storage soft; originations -5.9% Diagnostics up; tool storage weak; EC originations -4.9% Tools down 6.8% organically; EC originations -10.9%; diagnostics at low-end gaining Weak big-ticket; low-end diagnostics offset
Regional trendsRS&I and C&I strong; Tools int’l mid-single gains Tools: int’l up; U.S. slight; C&I Asia-Pac weakness; critical industries strong Tools U.S. down high-single; int’l low-single up; military down; Europe hand tools down Mixed; Asia-Pac/C&I volatile
Regulatory/legalLegal payments boost prior-year comps; no quarterly guidance policy Q3 legal settlement +$0.31 EPS No new legal; prior-year benefit noted in YoY comps Normalizing
Manufacturing/R&DU.S. factory expansions; product launches (torque, aligners) Capacity supports momentum; new product cadence Expanded U.S. plants; rapid product pivot; numerous facility mentions Continued investment

Management Commentary

  • “Grassroots…technician customers…accelerated their reluctance to purchase financed products…we are encouraged by…record first quarter operating margins for both our Commercial & Industrial Group and Repair Systems & Information Group…and [a] higher overall gross margin.” — CEO Pinchuk
  • “Operating margin before financial services of 21.3%…gross margin improved 20 bps to 50.7%…first quarter effective income tax rate was 22.2%…Net earnings per diluted share of $4.51.” — CFO Pagliari
  • “We believe strongly in our…strategy to largely produce in the countries and regions where we sell and in our broad manufacturing capacity in the U.S., fortified by extensive facilities…structural advantages that position us well.” — CEO Pinchuk

Q&A Highlights

  • Technician sentiment and pivot: Management sees continued traction in quick-payback items (e.g., SOLUS, roll carts) but acknowledges confidence “got overrun” by macro/tariff headlines; pivot expanding to “bottom-end of bigger ticket” diagnostics and storage .
  • Tools sell-in vs sell-through: Q1 truck-level sell-through matched sell-in; no material destocking noted; diagnostics lift weighs on Tools gross margin due to margin-sharing with RS&I .
  • Military and C&I: Military downturn tied to procurement timing with new leadership; without military softness, C&I “would have been up” .
  • Financial services: Extended credit originations fell on tool storage weakness; yields stable; delinquencies up modestly yet “balanced” given environment .
  • Cost outlook: Corporate expenses ≈$27M/quarter; non-service pension ~$6M pretax/quarter; ~$0.09 quarterly EPS drag expected through 2025 .

Estimates Context

Actual vs S&P Global consensus for Q1 2026:

MetricActualConsensus# of Estimates
Revenue ($USD)$1,141,100,000 $1,195,038,120*8*
Primary EPS ($)$4.51 $4.834*5*
EBITDA ($USD)—$366,500,000*—

Notes:

  • Revenue and EPS missed consensus; EPS miss ~$0.32; revenue miss ~$$53.9M.*
  • Values retrieved from S&P Global.*

Key Takeaways for Investors

  • RS&I is the structural earnings engine: record first-quarter margin (25.7%) with OEM and independent shop demand; software/database scale remains a durable advantage .
  • Tools Group pressure persists in big-ticket categories; diagnostics at lower price points and quick-payback hand tools/power tools partially offset — watch mix and margin-sharing effects .
  • C&I profitability quality improving despite mixed demand: torque/custom solutions and RCI drove record first-quarter margins; timing-related military softness is transitory per management .
  • Cash generation robust (CFO: $298.5M CFO, 121% of net earnings) supports buybacks/dividends and capex; capex tracking to ~$100M FY with $22.9M in Q1 .
  • Macro/tariffs narrative remains central: Snap-on’s U.S.-centric manufacturing footprint and flexibility mitigate tariff risk; FX impacts seen in certain geographies .
  • Near-term trading: consensus misses and cautious technician financing could weigh; watch subsequent quarters for Tools pivot traction and RS&I continuation .
  • Medium-term thesis: resilient auto repair end market, expanding RS&I software/data, torque/custom solutions in critical industries, and advantaged manufacturing footprint underpin margin durability .