Summary of Snap-on (SNA) FY Conference Call - May 07, 2025 Company Overview - Snap-on is recognized as a premier tool company globally, particularly strong in the United States, with a brand that resonates with working men and women [2][3] - The company operates in critical environments such as automotive repair, aviation, oil and gas, and mining, where reliability and repeatability are essential [4][5] Market Position and Business Model - Snap-on has diversified its offerings beyond traditional hand tools to include software and other solutions, with 40% of its business now coming from its van channel [3][4] - The company emphasizes being present at the point of work to understand customer challenges and innovate accordingly [5][6] - Snap-on has 36 factories worldwide, with 15 located in the United States, allowing it to mitigate tariff impacts effectively [6][7] Financial Performance and Market Sentiment - The first quarter saw a significant drop in consumer confidence, with a 30 percentage point decline since December, impacting big-ticket item sales [20][21] - Despite the drop in confidence, Snap-on's pivot towards shorter payback items has been effective, with 30% of its product line being big-ticket items financed over several years [16][17] - The company reported a 3.7% increase in RSNI (Repair Systems and Information) business, with profitability at 25.7%, up 40 basis points [33][34] Challenges and Strategic Adjustments - The company faces challenges from geopolitical issues, including wars and economic uncertainty, which have led to consumer hesitance in making large purchases [12][15] - Snap-on is adjusting its product line to focus more on items with quicker payback periods, responding to shifts in consumer behavior [16][20] - The military segment has seen softness due to changes in administration, but there is an expectation for recovery as new systems are integrated [41][46] Software and Technology Integration - The software segment is becoming increasingly important, with Snap-on leading in diagnostic tools and electronic parts catalogs [75][76] - The company has a vast database of repair events, which aids technicians in diagnosing and repairing vehicles more efficiently [80][82] Capital Allocation and Liquidity - Snap-on maintains a strong cash position with $1 billion in foreign cash and $230 million in net cash, prioritizing working capital and dividends [54][56] - The company is open to acquisitions that align with its business strategy, particularly in enhancing its van channel and critical industries [57][59] International Market Dynamics - Snap-on remains committed to international markets, particularly in Asia, despite current turbulence, viewing them as long-term opportunities [66][68] - The company has experienced mixed results in Europe, with some regions showing weakness while others, like Germany, have improved [50][72] Conclusion - Snap-on is navigating a complex market landscape with strategic pivots in product offerings and a focus on maintaining strong customer relationships and operational efficiency [20][21][60] - The company is well-positioned to leverage its strengths in manufacturing and innovation to adapt to changing market conditions and consumer preferences [30][31][72]

Core Viewpoint - The stock market experienced an overcorrection due to tariff-induced fears, leading to a sell-off of fundamentally sound stocks that present deep value opportunities for investors as concerns subside [1][2]. Group 1: Snap-on - Snap-on reported mixed Q1 results but maintains a resilient business outlook, with expectations for stability in 2025 [2][4]. - The company has an attractive capital return strategy, with a dividend yield of 2.77% and share buybacks that enhance shareholder value [4]. - Balance sheet highlights include increased cash, inventory, and assets, with equity rising over 2% and low leverage [4]. Group 2: Whirlpool - Whirlpool's Q1 results showed a significant contraction in revenue and earnings, attributed to divestitures and repositioning efforts to capture the U.S. housing market recovery [5][6]. - The company is well insulated from tariff threats, with 80% of goods manufactured in the U.S., and its dividend yield stands at 9% [6]. - Q1 balance sheet highlights include reduced debt and a 13% increase in equity, indicating financial stability [6]. Group 3: Verizon - Verizon is not experiencing rapid growth but is leading the industry in size and scope, reaffirming its guidance for expanding free cash flow [9][10]. - The company has improved its free cash flow through debt reduction and strengthening its balance sheet, with a dividend payout expected to grow at a low single-digit pace [10]. Group 4: Cintas - Cintas' stock price pullback is linked to several factors, but the business remains strong with expected capital returns continuing [14][15]. - The company benefits from healthy labor markets, which support its growth trajectory [15]. Group 5: Lockheed Martin - Lockheed Martin's stock price decline is primarily due to the loss of a critical contract, but fundamentals remain strong with solid Q1 results and a robust outlook for U.S. government defense spending [18][19]. - The dividend yield is 2.85%, and share buybacks have reduced the share count by 2.6% year-over-year in Q1 [19].

Core Viewpoint - Snap-on's Q1 earnings report for May 2025 revealed weaknesses but also underscored the company's strong cash flow and diversified business model, making it a compelling investment despite recent challenges [1][3]. Financial Performance - Snap-on's revenue decreased by 3.4%, which was 500 basis points below analysts' forecasts, with the Snap-on Tools segment experiencing a 6.8% decline and the Construction and Industrial segment contracting by 2.9% [3]. - The company reported GAAP earnings of $4.51 and maintained positive quarterly cash flow, despite a larger-than-expected contraction in profit margins [4]. Dividend and Capital Returns - Snap-on offers a dividend yield of 2.92%, with an annual dividend of $8.56 and a 15-year track record of dividend increases, showcasing a strong commitment to returning capital to shareholders [7][10]. - The company has a dividend payout ratio of 44.82%, indicating a healthy balance sheet that supports ongoing dividend payments and increases [7][10]. Balance Sheet Strength - Snap-on's balance sheet is characterized as "ironclad," with increased cash, receivables, inventory, and total assets, while long-term debt remains flat compared to Q1 2024 [8][9]. - The total liabilities are less than 0.5 times equity, ensuring that cash flow remains unimpeded and reserves are available in case of economic downturns [9]. Market Outlook - Analysts have shown a bullish trend for Snap-on, with a consensus forecast suggesting a 15% upside by the end of the year, supported by increasing coverage and improving sentiment [11]. - Despite recent market pullbacks, critical support targets are in place to limit downside risk, including the uptrend line and long-term moving averages [12].

Financial Data and Key Metrics Changes - The company reported net sales of $1,100 million for the quarter, reflecting a 0.3% organic sales decline and a $13.9 million unfavorable foreign currency translation [63] - Operating income for the quarter was $243.1 million, down from $270.9 million in the previous year, with an operating margin of 21.3%, compared to 22.9% last year [11][66] - Quarterly EPS was $4.51, down 40 cents from the previous year, impacted by lower volume and higher pension amortization costs [13][66] Business Line Data and Key Metrics Changes - In the CNI group, organic sales decreased by 2.9%, with operating income of $53.2 million, and operating margins at 15.5%, a record for the first quarter [31][66] - The Tools group saw organic sales down 6.8%, with operating earnings of $92.4 million and an operating margin of 20% [40][71] - The RS&I group reported sales of $475.9 million, reflecting a 0.7% organic sales increase, with operating earnings of $122.1 million and an operating margin of 25.7%, an all-time high for the first quarter [51][74] Market Data and Key Metrics Changes - The automotive repair market remains strong, with household spending on car repairs increasing year-over-year, despite a drop in hours worked [14][15] - The U.S. car park is aging, with an average age of 12.6 years, leading to increased demand for repair services [14] - Sales to OEM and independent shop owners increased, but were offset by lower sales to technicians through the franchise van channel [63] Company Strategy and Development Direction - The company is focusing on pivoting towards quicker payback products to align with technician preferences amid economic uncertainty [18][41] - Snap-on is committed to maintaining investments in product development and branding to emerge from turbulence at full strength [12][90] - The company is leveraging its manufacturing strategy to produce in the markets where it sells, allowing for quick adjustments to changing production landscapes [27][28] Management's Comments on Operating Environment and Future Outlook - Management noted significant economic uncertainty impacting consumer sentiment, which has dropped 30% since December [9][10] - Despite challenges, management expressed confidence in the company's ability to navigate through turbulence and capitalize on opportunities in critical industries [25][91] - The company anticipates continued growth in critical industries and plans to strengthen its position through innovative product offerings [22][90] Other Important Information - The company reported a gross margin of 50.7%, up 20 basis points despite lower volumes [59] - Cash provided by operating activities was $298.5 million, representing 121% of net earnings [79] - The company has approximately $2.5 billion in gross financing receivables, with a 60-day plus delinquency rate of 2% [78] Q&A Session Summary Question: What is the game plan regarding technician confidence and product offerings? - Management indicated that the pivot to quicker payback items has shown traction, and they will continue to adjust their offerings based on market conditions [96][100] Question: What would the organic sales rates in RS&I be if intercompany declines were backed out? - Management estimated that the organic rate would be around 4% if intercompany declines were excluded [103][104] Question: How did military sales impact critical industries? - Management noted that military sales were affected by budget cycles and changes in administration, which typically slow down procurement processes [108][110]

Core Insights - Snap-on Inc. reported first-quarter 2025 results that missed both revenue and earnings estimates, with a decline in both metrics compared to the previous year [1][2] - The company faced challenges due to economic uncertainty, leading to mixed results, although it achieved record operating margins in certain segments [1] Financial Performance - Earnings per share were $4.51, missing the Zacks Consensus Estimate of $4.81, and declined 5.1% from $4.75 in the same quarter last year [2] - Net sales decreased 3.5% year over year to $1.141 billion, missing the Zacks Consensus Estimate of $1.196 billion, attributed to a 2.3% dip in organic sales and $13.9 million from unfavorable foreign currency translation [4] - Gross profit fell 3.1% year over year to $578.5 million, while gross margin expanded by 20 basis points to 50.7% [5] - Operating earnings before financial services totaled $243.1 million, down 10.3% year over year, with operating earnings as a percentage of sales contracting 160 basis points to 21.3% [6] - Consolidated operating earnings, including financial services, were $313.4 million, down 7.6% year over year, with operating earnings as a percentage of sales contracting 130 basis points to 25.2% [7] Segment Analysis - Sales in the Commercial & Industrial Group decreased 4.4% year over year to $343.9 million, impacted by a 2.9% organic decline and $5.6 million from unfavorable foreign currency exchange [8] - The Tools Group segment's sales declined 7.4% year over year to $462.9 million, driven by a 6.8% organic sales decline and $3.6 million from unfavorable foreign currency translation [9] - Sales in the Repair Systems & Information Group improved 2.6% year over year to $475.9 million, with organic sales growth of 3.7%, despite unfavorable currency impacts of $4.9 million [10] - The Financial Services business saw revenues rise 2.5% year over year to $102.1 million [11] Financial Snapshot - As of the end of the first quarter of 2025, Snap-on had cash and cash equivalents of $1.43 billion and shareholders' equity of $5.5 billion [12] - The company anticipates capital expenditures of $100 million for 2025 [12] Future Outlook - Management expects resilience in markets and operations against uncertainties, with anticipated progress in growth areas for 2025 [13] - The company plans to leverage capabilities in automotive repair and expand its customer base across critical industries [13] - An effective tax rate of 22-23% is expected for 2025 [13]

Quarterly Financial Review First Quarter 2025 Q1-2025 Quarterly Review © 2025 Snap-on Incorporated Q1-2025 Quarterly Review © 2025 Snap-on Incorporated Consolidated Results Cautionary Statement Q1-2025 Quarterly Review © 2025 Snap-on Incorporated 3 These slides should be read in conjunction with comments from the April 17, 2025 conference call. The financial statement information included herein is unaudited. Statements made during the April 17, 2025 conference call and/or information included in this prese ...

Company Performance - Snap-On reported quarterly earnings of $4.51 per share, missing the Zacks Consensus Estimate of $4.81 per share, and down from $4.75 per share a year ago, representing an earnings surprise of -6.24% [1] - The company posted revenues of $1.14 billion for the quarter, missing the Zacks Consensus Estimate by 4.59%, and down from $1.18 billion year-over-year [2] - Over the last four quarters, Snap-On has surpassed consensus EPS estimates two times and topped consensus revenue estimates just once [2] Stock Outlook - Snap-On shares have lost about 2.2% since the beginning of the year, while the S&P 500 has declined by 10.3% [3] - The current consensus EPS estimate for the coming quarter is $5.08 on revenues of $1.22 billion, and for the current fiscal year, it is $19.79 on revenues of $4.85 billion [7] Industry Context - The Tools - Handheld industry, to which Snap-On belongs, is currently in the top 36% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Snap-On's stock performance [5]

Financial Performance - Net sales for Q1 2025 were $1,141.1 million, a decrease of $41.2 million, or 3.5%, from 2024 levels, with an organic decline of $27.3 million, or 2.3%[4] - Operating earnings before financial services were $243.1 million, or 21.3% of net sales, compared to $270.9 million, or 22.9% of net sales in the previous year[4] - Consolidated operating earnings for the quarter were $313.4 million, or 25.2% of revenues, down from $339.2 million, or 26.5% of revenues in 2024[4] - Net earnings for the quarter were $240.5 million, or $4.51 per diluted share, compared to $263.5 million, or $4.91 per diluted share in 2024[4] - Net earnings for the three months ended March 29, 2025, were $246.7 million, a decrease of 8.8% compared to $269.6 million for the same period in 2024[24] - Operating earnings before financial services decreased to $243.1 million in Q1 2025, down from $270.9 million in Q1 2024, reflecting a decline of 10.3%[29] - The company reported a gross profit of $578.5 million for the three months ended March 29, 2025, down from $596.7 million in the same period last year, a decrease of 3.4%[29] Revenue Segments - Financial services revenue increased to $102.1 million from $99.6 million in 2024, with operating earnings rising to $70.3 million from $68.3 million[4] - The Repair Systems & Information Group segment saw sales increase by $12.1 million, or 3.7%, to $475.9 million, driven by higher activity with OEM dealerships[8] - The Snap-on Tools Group segment reported a sales decrease of $33.6 million, or 6.8%, to $462.9 million, primarily due to lower activity in the U.S.[7] - Financial services revenue for the three months ended March 29, 2025, was $102.1 million, compared to $99.6 million in the same period last year, representing a growth of 2.5%[29] Expenses and Liabilities - Corporate expenses increased to $24.6 million from $14.7 million in the previous year, which included a benefit from legal payments[10] - Total current liabilities rose to $999.9 million in March 2025, up from $961.5 million in December 2024, indicating an increase of 4.0%[22] - Total liabilities increased to $1,303.9 million from $1,270.4 million, marking a growth of 2.6%[32] Assets and Equity - Total assets increased to $8,069.0 million in March 2025, up from $7,896.8 million in December 2024, representing a growth of 2.18%[22] - Total current assets grew to $3,427.5 million, compared to $3,282.5 million, reflecting a rise of 4.4%[32] - Total shareholders' equity attributable to Snap-on Incorporated increased to $5,520.8 million in March 2025, up from $5,394.1 million in December 2024, an increase of 2.34%[22] - Total shareholders' equity attributable to Snap-on reached $5,520.8 million, up from $5,394.1 million, showing an increase of 2.3%[32] Cash Flow and Dividends - Cash and cash equivalents at the end of the period increased to $1,434.9 million, compared to $1,360.5 million at the beginning of the year, marking a rise of 5.5%[24] - Cash dividends paid increased to $112.2 million in Q1 2025, compared to $98.2 million in Q1 2024, reflecting a rise of 14.0%[24] - The company’s net cash provided by operating activities was $298.5 million for the three months ended March 29, 2025, down from $348.7 million in the same period in 2024, a decrease of 14.4%[24] Tax and Capital Expenditures - The effective income tax rate for Q1 2025 was 22.2%, consistent with the previous year[4] - The company expects capital expenditures in 2025 to approximate $100 million, with $22.9 million incurred in the first quarter[11] Inventory and Receivables - Trade and other accounts receivable – net increased to $851.4 million from $815.0 million, a growth of 4.5%[32] - Inventories – net rose to $961.2 million, compared to $943.4 million, indicating an increase of 1.8%[32] Other Financial Metrics - Cash and cash equivalents rose to $1,434.7 million, up from $1,360.4 million, indicating an increase of 5.4%[32] - Long-term debt and intersegment long-term debt remained stable at approximately $2,002.0 million[32] - The company reported a slight increase in accrued benefits to $72.8 million from $67.2 million, reflecting an increase of 8.3%[32] - Goodwill increased to $1,077.7 million from $1,056.8 million, representing a growth of 2.0%[32]

Group 1: Zacks Premium and Style Scores - Zacks Premium offers various tools for investors to enhance their stock market strategies, including daily updates on Zacks Rank and Industry Rank, Equity Research reports, and Premium stock screens [1] - The Zacks Style Scores are complementary indicators that rate stocks based on value, growth, and momentum methodologies, helping investors identify stocks likely to outperform the market in the next 30 days [2][3] Group 2: Style Score Categories - The Value Score focuses on identifying undervalued stocks by analyzing ratios such as P/E, PEG, Price/Sales, and Price/Cash Flow [3] - The Growth Score assesses a company's financial strength and future outlook by examining projected and historical earnings, sales, and cash flow [4] - The Momentum Score identifies optimal times to invest based on price trends and earnings estimate changes [5] - The VGM Score combines the three Style Scores to highlight stocks with attractive value, strong growth forecasts, and promising momentum [6] Group 3: Zacks Rank and Stock Selection - The Zacks Rank is a proprietary model that uses earnings estimate revisions to simplify portfolio building, with 1 (Strong Buy) stocks achieving an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [7][8] - Investors are encouraged to select stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B to maximize returns [9] - Stocks with a 4 (Sell) or 5 (Strong Sell) rating, even with high Style Scores, are likely to have declining earnings forecasts and increased risk of price drops [10] Group 4: Company Spotlight - Snap-On Incorporated - Snap-On Incorporated, based in Kenosha, WI, is a global provider of professional tools and equipment for various industrial users, including vehicle service centers and OEMs [11] - Snap-On has a Zacks Rank of 3 (Hold) and a VGM Score of B, with a Momentum Style Score of A, indicating a 2.4% increase in shares over the past four weeks [12] - The company has seen a positive revision in earnings estimates for fiscal 2025, with the Zacks Consensus Estimate rising to $19.79 per share and an average earnings surprise of 1.1% [12][13]

In its upcoming report, Snap-On (SNA) is predicted by Wall Street analysts to post quarterly earnings of $4.81 per share, reflecting an increase of 1.3% compared to the same period last year. Revenues are forecasted to be $1.2 billion, representing a year-over-year increase of 1.2%.The current level reflects an upward revision of 0.2% in the consensus EPS estimate for the quarter over the past 30 days. This demonstrates how the analysts covering the stock have collectively reappraised their initial projecti ...