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Snap-on Inc (SNA)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue was $1.20B (+0.2% YoY) and diluted EPS was $4.82 (+1.5% YoY); operating margin before Financial Services hit an all-time Q4 high at 22.1% and consolidated operating margin was 25.5% .
  • Segment balance drove results: C&I delivered record sales and 180 bps margin expansion (16.7%); RS&I posted record 26.6% margin on stronger software mix; Tools Group continued to “pivot,” narrowing its YoY decline to -1.4% organically with 21.1% margin .
  • Financial Services remained steady (revenue $100.5M; operating earnings $66.7M) while originations fell 5.9% YoY to $285.1M, consistent with lower big-ticket (tool storage) demand; effective tax rate was 22.5% .
  • 2025 outlook: capex ≈ $100M; full‑year ETR 22–23%; corporate expense guided to ≈$27M per quarter; +$6M pretax per quarter non-service pension costs in OI&E; FY2025 is a 53‑week year with historically immaterial effect; dividend declared at $2.14 per share payable Mar 10, 2025 .
  • Potential stock catalysts: durability of RS&I/C&I margin expansion, continued improvement in Tools Group trajectory, and read-through from originations/credit metrics; OI&E/pension headwind and mix toward smaller-ticket items are watchpoints .

What Went Well and What Went Wrong

  • What Went Well

    • RS&I margin mix: RS&I sales rose to $456.6M with operating margin up 150 bps to a record 26.6%, aided by higher software mix and new APOLLO+ handheld platform momentum; CEO: “It’s easy, fast and smart…representing a tech’s quickest payback access to the power of Snap-on Intelligent Diagnostics” .
    • C&I strength and torque: C&I sales reached $379.2M (record), +3.9% organic; operating margin +180 bps to 16.7%, driven by customized kits and specialty torque (“Torque is hot now…CTM 800…a superior tool that we believe has no equal”) .
    • Consolidated profitability: Opco operating margin improved 50 bps to 22.1% and consolidated operating margin was 25.5% despite macro uncertainty; CEO emphasized resilience and balanced performance across segments .

  • What Went Wrong

    • Tools Group softness in U.S. big-ticket: Tools Group sales fell to $506.6M (-1.4% organic), with margin down to 21.1%, reflecting lower U.S. activity and continued preference for quick-payback items over tool storage .
    • Originations and credit costs: Total originations fell 5.9% YoY to $285.1M; Financial Services operating earnings slipped to $66.7M as provisions for credit losses increased; CFO noted delinquencies and net losses trending upward but “relatively balanced” .
    • Higher corporate costs: Corporate expense rose to $26.6M in Q4 (vs. $20.5M LY) and management guided ~ $27M per quarter in 2025, with additional non-service pension costs of ~$6M pretax per quarter below operating income .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$1,179.4 $1,147.0 $1,198.7
Diluted EPS ($)$5.07 (incl. ~$0.16 legal benefit) $4.70 $4.82
Operating Margin before Financial Services (%)23.8% 22.0% 22.1%
Consolidated Operating Margin (% of revenues)27.4% 26.0% 25.5%
Effective Tax Rate (%)22.6% 22.9% 22.5%
Wall Street Consensus (Revenue, EPS)Unavailable (S&P Global request limit)Unavailable (S&P Global request limit)Unavailable (S&P Global request limit)

Notes: Q4 YoY comparisons: revenue $1,198.7M vs $1,196.6M; EPS $4.82 vs $4.75; opco operating margin 22.1% vs 21.6%; consolidated margin 25.5% vs 25.2% .

Segment performance

SegmentQ2 2024Q3 2024Q4 2024
C&I Sales ($MM)$372.0 $365.7 $379.2
C&I Operating Margin (%)16.7% 16.7% 16.7%
Tools Sales ($MM)$482.0 $500.5 $506.6
Tools Operating Margin (%)23.8% 21.6% 21.1%
RS&I Sales ($MM)$454.8 $422.7 $456.6
RS&I Operating Margin (%)25.0% 25.4% 26.6%

KPIs and Cash Returns

KPIQ2 2024Q3 2024Q4 2024
Financial Services Revenue ($MM)$100.5 $100.4 $100.5
Financial Services Operating Earnings ($MM)$70.2 $71.7 $66.7
Total Loan Originations ($MM)$308.1 $288.0 $285.1
Operating Cash Flow ($MM)$301.1 $274.2 $293.5
Purchases of Treasury Stock ($MM)$47.4 $59.9 $112.5
Cash Dividends Paid ($MM)$98.0 $97.9 $112.3

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Effective Tax RateFY2025—22%–23% New for FY25 (range consistent with prior FY24 outlook)
Effective Tax RateFY202422%–23% (from Q3 release) —Prior reference
Capital ExpendituresFY2025—≈ $100M New for FY25
Capital ExpendituresFY2024≈ $100M (Q3 update) —Prior reference
Corporate Expense2025 quarterly—≈ $27M per quarter New
Non-service Pension Cost (OI&E)2025 quarterly—≈ +$6M pretax per quarter (below OI) New
Fiscal CalendarFY2025—53‑week year; historically not significant to revenue/earnings New
DividendQ1 2025—$2.14/share payable Mar 10, 2025 Maintained run-rate post Nov increase (context)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2, Q3)Current Period (Q4)Trend
Tools Group pivot to quick-payback itemsQ2: U.S. Tools weakness; pivot toward shorter payback solutions; margin 23.8% . Q3: U.S. down low single-digit; international up; margin 21.6% .Tools organic -1.4%; margin 21.1%; CEO: techs prefer hand tools/diagnostics; narrowing the gap vs prior periods .Improving trajectory; not fully normalized
RS&I software and APOLLO+ adoptionQ2: RS&I margin to 25.0% . Q3: 25.4% margin; higher diagnostics/info .Record 26.6% margin; APOLLO+ “quickest payback” expanding subs; strong software mix .Strengthening
Specialty torque and critical industriesQ2: C&I up; critical industries gains . Q3: Torque cited; C&I margin 16.7% .C&I record sales; +3.9% organic; torque/custom kits “went bananas” .Strengthening
Financial Services originations/creditQ2: Originations -5.6% . Q3: Originations -5.6% .Originations -5.9%; yields stable; delinquencies/net losses trending up but “balanced” .Mixed: softer originations; credit metrics drifting up
Macro/tariffs—CEO: uncertainty persists; more insulated vs import tariffs; prepared to optimize if tariffs escalate .Monitor macro/tariff path
International vs U.S. ToolsQ2: International offset U.S. weakness . Q3: Similar dynamic .U.S. low-single-digit decline; international mid-single-digit gain .Stable pattern

Management Commentary

  • CEO (prepared remarks): “The Tools Group [is] successfully pivoting to match tech preferences and continuing to narrow the gap versus last year…RS&I…another profit high…C&I…operating margin…16.7%, up 180 basis points” .
  • CEO (on torque/custom kits): “Torque is hot now…CTM 800…a superior tool that we believe has no equal…customized kits…a great indication of our ability to roll out of the garage” .
  • CEO (on diagnostics): “APOLLO+…represents a tech’s quickest payback access to the power of Snap-on Intelligent Diagnostics…expanding the number of software subscriptions” .
  • CFO (outlook): “Corporate costs…about $27 million per quarter [in 2025]…approximately $6 million pretax per quarter of increased nonservice pension costs…CapEx will approximate $100 million…FY2025 will contain 53 weeks…not…significant effect” .

Q&A Highlights

  • Tools originations/big-ticket: Originations decline “principally driven by lower tool storage sales”; shift toward quick-payback items and lower-priced APOLLO+ also reduces extended credit mix .
  • Tools inflection: CEO highlighted sequential improvement from steeper declines earlier in the year to -1.4% organic in Q4, reflecting a successful pivot, while cautioning on macro uncertainty .
  • Torque focus/M&A: Specialty torque is an investment priority, with potential for further organic and inorganic actions; integrating acquired technologies (Norbar, Mountz) is creating differentiated products (e.g., CTM 800) .
  • Tariffs: Snap-on “more insulated” given U.S. manufacturing footprint; company has playbooks to minimize/optimize if tariff regimes change .
  • C&I demand/backlog: Customized kits demand remains strong; backlog normalized after expansion, but order activity is “pretty good” and profitability attractive .

Estimates Context

  • S&P Global consensus for Q4 2024 (revenue and EPS) was unavailable at the time of analysis due to data request limits; as a result, we cannot quantify beat/miss vs consensus for Q2–Q4 2024. Where available, we anchored all comparisons to company-reported actuals in press releases/8‑K and call commentary .
  • Implication: Without consensus, investors should focus on sequential/YoY trends and segment margin durability; RS&I/C&I outperformance and Tools Group trajectory remain the core narrative pending external estimate updates .

Key Takeaways for Investors

  • RS&I and C&I are carrying the story via mix and execution: record RS&I margin (26.6%) and C&I expansion (16.7%) reinforce resilient profitability levers beyond Tools .
  • Tools Group is improving sequentially; confirmation of continued narrowing in Q1/Q2 2025 would be a key stock driver, especially if U.S. big-ticket stabilizes .
  • Financial Services: watch originations and credit metrics (modest uptick in delinquencies/net losses but “balanced”); sustained softness in big-ticket could keep EC originations subdued near term .
  • 2025 P&L headwinds below OI: plan for ~$27M/quarter corporate expense and +$6M/quarter non-service pension costs in OI&E; limited top/bottom-line effect from 53rd week historically .
  • Cash generation supports returns: strong OCF and stepped-up repurchases ($112.5M in Q4) plus $2.14 dividend underpin capital deployment flexibility .
  • Capex ≈ $100M funds growth lanes (software, torque, customized kits) without compromising FCF .
  • Macro/tariffs: Snap-on’s U.S.-centric manufacturing and playbooks mitigate tariff risk vs peers; uncertainty still biases techs toward shorter payback purchases near term .