Presentation Scott StemberROTH Capital Partners, LLC, Research Division Good morning, and thanks for joining us. The next meeting is going to be with Snap-on. With us today is President and CEO, Nick Pinchuk. Aldo Pagliari, CFO, is here as well. I'm your host, Scott Stember. I'm the senior analyst at ROTH. Anybody has any questions after this, they could shoot me an e-mail at sstember@roth.com. And thank you, everybody, for being here. Thank you, Nick. Thank you, Aldo. Maybe to start off... Nicholas Pinc ...

Key Takeaways Snap-on is advancing strategic priorities via its franchise network and strong customer engagement model.SNA benefits from vehicle tech complexity, boosting demand for diagnostics, tools, and repair solutions.New products and RCI initiatives support margin gains, productivity and expansion across key markets.Snap-on Incorporated (SNA) is making solid progress on its strategic priorities. SNA’s strengths are rooted in its powerful brand, differentiated business model and strong customer relatio ...

Company Overview - Snap-on Incorporated, based in Kenosha, Wisconsin, manufactures and markets tools, equipment, diagnostics, and repair information systems for professional users globally, with a market capitalization of $18.8 billion [1]. Market Position - Snap-on fits into the "large-cap stocks" category, reflecting its substantial size and influence in the tools and accessories industry [2]. Stock Performance - The stock reached a 52-week high of $390.13 on February 12 and has since declined by 7.2%. Over the past three months, the stock rose by 4.6%, underperforming the State Street Industrials Select Sector SPDR ETF's (XLI) 5.2% increase [3]. - Over the past 52 weeks, Snap-on's shares increased by 9.9%, but this was still below XLI's 22.7% rise during the same period [6]. Earnings Report - On February 5, Snap-on released its Q4 2025 earnings, reporting net sales of $1.2 billion, a 2.8% increase from the previous year, and adjusted EPS of $4.94, both surpassing estimates. However, the stock dropped by 3.2% following the announcement [7]. Investor Sentiment - Despite the earnings report, investor confidence has been declining due to disappointing organic revenue growth and flat EPS over the past two years. There are concerns about diminishing returns on capital [8]. - Compared to its peer, RBC Bearings Incorporated, Snap-on has underperformed, with RBC's stock surging by 63.3% over the past 52 weeks. The sentiment on Snap-on remains moderately optimistic, with a consensus rating of "Moderate Buy" among analysts and a mean price target of $376.86, indicating a 4.1% upside potential from current levels [9].

Question-and-Answer SessionTo start us off, Aldo, for those in the audience that might be a little less familiar with Snap-on, can you just give us an overview of business model, your core marketing positions in different segments?Aldo PagliariSenior VP of Finance & CFO Okay. Well, first off, Snap-on has been around for quite some time. It was founded in 1920 and was devoted strictly to auto repair. If you think about 1920, there's probably 100 different auto manufacturers in the United States, maybe not so ...

Snap-on (NYSE:SNA) 2026 Conference Summary Company Overview - Snap-on was founded in 1920, focusing on auto repair tools and services, initially targeting mechanics who were also garage owners [3] - The company has evolved to serve various segments, including individual mechanics, sophisticated car dealerships, and commercial industries [4][5] Business Segments and Revenue - Snap-on Tools Group accounts for approximately 34-35% of total company revenues, with expected organic growth of about 4% [4][5] - Repair Systems & Information Group is projected to grow at 5%+, benefiting from less penetration in the market [5] - Critical Industries, which includes sectors like oil, gas, aviation, and military, is expected to grow around 6% due to emerging markets and fragmented addressable markets [6] Market Dynamics and Sentiment - Recent sales in the Snap-on Tools Group have been flat, with a slight regression in Q4, attributed to a lack of technician confidence [11][12] - Technicians are described as "cash rich, confidence poor," with steady employment levels but hesitance to make large purchases due to economic uncertainty [12][13] - The average price of tool storage cabinets is around $8,000, which is considered discretionary spending [14] Economic and Geopolitical Factors - The ongoing unrest in the Middle East and its impact on sentiment and consumer behavior were discussed, with potential effects on miles driven and secondary impacts on the business [10][15] - Despite geopolitical tensions, there are expectations for GDP growth of 2.5%-2.8%, which could lead to increased investments [16][17] Customer Behavior and Purchasing Trends - There is a shift towards quicker return items rather than big-ticket purchases, with franchisees showing signs of increased confidence [15][24] - As confidence improves, Snap-on anticipates returning to a 4% growth rate in the tools group, driven by the increasing complexity of vehicles and the need for more tools and software [25] Margin and Pricing Strategy - Tools margins have remained strong post-COVID, attributed to Snap-on's ability to maintain operations during the pandemic and adapt to supply chain disruptions [26][27] - The company has benefited from inflationary pressures by introducing new products and maintaining premium pricing [28][29] Brand Building and Market Position - Snap-on is investing in brand building to reinforce its premium positioning, emphasizing the importance of customer service and long-term relationships [30][32] - The company recognizes the loyalty associated with its various brands and aims to maintain that while exploring synergistic acquisition opportunities [56][59] Industry Trends and Future Outlook - Key growth areas include aviation, military, and oil and gas, with significant demand for tools and services in these sectors [33][35] - The complexity of modern vehicles is driving demand for advanced diagnostic systems, which Snap-on is well-positioned to provide [38][39] - The company is aware of potential disruptions from AI and is prepared to adapt its offerings accordingly [42][44] Capital Allocation and Financial Health - Snap-on's capital allocation priorities include supporting organic growth, selective M&A, and maintaining a consistent dividend policy [48][49] - The company has a strong balance sheet, with a focus on coherent acquisitions that align with its core business [49][50] Conclusion - Snap-on's enduring heritage and commitment to observing and solving critical tasks position it well for future growth, despite current market challenges [64][65]

Company Overview - Snap-on Incorporated is a leading global innovator, manufacturer, and marketer of tools, equipment, diagnostics, and repair information for professional users in various sectors including vehicle repair, aerospace, military, natural resources, and manufacturing [2][3] - The company was founded in 1920 and is headquartered in Kenosha, Wisconsin [2][3] - Snap-on generated sales of $4.7 billion in 2025 and is recognized as an S&P 500 company [2] Upcoming Events - The Chairman and CEO Nick Pinchuk is scheduled to present at the 38th Annual Roth Conference in California on March 23, 2026, at 9:30 a.m. Pacific [1][4] - A live audio webcast of the presentation will be available on the Investor Events page of the Snap-on website, with an archived replay accessible for approximately 90 days [2] Financial Information - Snap-on declared a quarterly common stock dividend of $2.44 per share, payable on March 10, 2026 [6] - The company reported diluted EPS of $4.94 for the fourth quarter of 2025 [7]

Core Insights - Snap-On Incorporated's Tools Group showed resilience in Q4 2025, generating sales of $505 million, slightly down from $506.6 million in Q4 2024, while operating income increased to $107.3 million, raising the operating margin to 21.2% [1][9] Group 1: Financial Performance - The Tools Group's sales in Q4 2025 were $505 million, a marginal decline from $506.6 million in Q4 2024 [1] - Operating income improved to $107.3 million from $106.9 million, resulting in an operating margin increase of 10 basis points to 21.2% [1] - Gross margin rose by 150 basis points to 46.1%, despite flat volumes, indicating a focus on products with shorter payback cycles [2] Group 2: Product Innovation - The Tools Group is introducing products based on direct technician feedback, such as the 307RIPLMS Impact Flex socket set, which generated $1 million in sales shortly after launch [3] - The KTL1021 54-inch Master Series roll cab was launched, featuring substantial storage capacity and well-received by technicians [3] - Continuous rollout of innovative tools is enhancing repair efficiency and addressing market demand for smaller tool storage solutions [2][4] Group 3: Market Positioning - The Tools Group's focus on productivity-enhancing tools and resilient margins positions it well to navigate economic uncertainty while maintaining profitability [4] - The company is adapting to customer caution due to economic factors, emphasizing immediate value tools that improve shop profitability [2]

Company Overview - Snap-on Incorporated manufactures and markets tools, equipment, diagnostics, and repair information systems for professional users globally [2] - The company operates in a specialized niche, serving auto mechanics, truck and diesel technicians, aviation maintenance crews, industrial technicians, and military maintenance teams [2] Competitive Positioning - Unlike consumer-oriented tool companies, Snap-on does not compete on price or mass distribution, focusing instead on reliability and precision essential for professional users [3] - The tools are designed to withstand high-stakes use, minimizing risks of injury, downtime, or costly errors [4] Sales Model and Customer Loyalty - Snap-on's franchise-based dealer network ensures personalized visits to repair shops, integrating tools into daily workflows and increasing customer loyalty [5] - The company offers financing options and relationship-driven support, which raises switching costs and generates long-term recurring revenue [5] - Snap-on is expanding its offerings to include software subscriptions and shop management systems, adapting to the complexities of modern vehicles [5] Financial Performance - Snap-on generates approximately $5 billion in annual revenue with operating margins around 20%, supported by steady free cash flow [6] - The business remains resilient during economic downturns due to stable demand for repairs and maintenance [6] - By focusing on professional users and essential work, Snap-on has established a durable competitive moat, leading to sustainable profitability [6]

Core Viewpoint - Snap-on Incorporated has shown mixed performance in the market, with a notable increase in stock price over the past year, but underperformance compared to certain industry benchmarks [2][3]. Company Overview - Snap-on Incorporated, based in Kenosha, Wisconsin, specializes in manufacturing and marketing tools, equipment, diagnostics, and repair information systems for professional users globally. The company has a market capitalization of $20 billion and operates through various segments including Commercial & Industrial Group, Snap-on Tools Group, Repair Systems & Information Group, and Financial Services [1]. Stock Performance - Over the past 52 weeks, Snap-on stock has surged 14%, and it has increased 12% year-to-date (YTD). In comparison, the S&P 500 Index has returned 13% over the same period [2]. - However, Snap-on's stock has underperformed relative to the State Street Industrial Select Sector SPDR ETF, which rose by 28.6% over the past 52 weeks [3]. Financial Performance - Snap-on reported better-than-expected Q4 2025 earnings, with revenue increasing by 3.1% year-over-year (YoY) to $1.3 billion, surpassing Wall Street estimates. The adjusted EPS was $4.94, also exceeding expectations [5]. - Despite the positive earnings report, the company's core business has shown underperformance, particularly in organic revenue, and EPS has remained flat YoY for the past two years. There are indications of diminishing returns on capital [6]. Analyst Expectations - For the current year ending in December 2026, analysts project Snap-on's EPS to grow by 1.6% YoY to $19.86 on a diluted basis. The company's earnings surprise history is mixed, with three out of the last four quarters surpassing consensus estimates [7]. - Among the 10 analysts covering Snap-on stock, the consensus rating is a "Moderate Buy," consisting of three "Strong Buy" ratings, one "Moderate Buy," five "Holds," and one "Moderate Sell" [7]. Price Target and Analyst Ratings - Roth Capital analyst Scott Stember maintained a "Buy" rating for Snap-on and raised the price target from $385 to $409. The current trading price is above the mean price target of $368.29, with the Street-high target suggesting a potential rise of up to 6% [10].

Core Viewpoint - Snap-on Incorporated (SNA) reported mixed Q4 earnings, prompting a detailed analysis of the results and future outlook [1] Financial Performance - The earnings report for Q4 indicates variability in performance metrics, which necessitates a closer examination of the underlying factors influencing these results [1] Investment Strategy - The company emphasizes a long-term investment horizon, typically ranging from 5 to 10 years, focusing on a balanced portfolio that includes growth, value, and dividend-paying stocks, with a particular inclination towards value investments [1]