Snap-on(SNA) - 2025 Q2 - Quarterly Results

Q2 2025 Earnings Release Summary Financial Highlights In Q2 2025, Snap-on reported net sales of $1,179.4 million, unchanged from the previous year, reflecting a 0.7% organic decline offset by favorable currency translation. Diluted EPS decreased to $4.72 from $5.07 in Q2 2024, with the prior year's results including a significant benefit from legal payments Q2 2025 Key Financial Metrics | Metric | Q2 2025 ($ millions) | Q2 2024 ($ millions) | Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,179.4 | $1,179.4 | 0.0% | | Gross Margin | 50.5% | 50.6% | -10 bps | | Operating Earnings before Financial Services | $259.1 | $280.3 | -7.6% | | Operating Margin before Financial Services | 22.0% | 23.8% | -180 bps | | Net Earnings | $250.3 | $271.2 | -7.7% | | Diluted EPS | $4.72 | $5.07 | -6.9% | - Net sales were flat year-over-year, as a $8.6 million (0.7%) organic sales decline was completely offset by an $8.6 million positive impact from foreign currency translation[3] - The decline in operating earnings and net earnings was impacted by the prior-year period (Q2 2024) including an $11.2 million benefit ($8.7 million after-tax, or $0.16 per diluted share) from final payments related to a legal matter[3] Management Commentary Management expressed encouragement with the Q2 results, highlighting the return of sales growth in the U.S. Tools Group and resilient margins despite macroeconomic uncertainty. The company successfully pivoted to 'quick payback items' to match customer preferences and saw gains in diagnostics and precision-torque solutions. The strategy remains focused on manufacturing in local markets and leveraging structural strengths to navigate challenges - The company is encouraged by the return to sales growth in the U.S. Tools Group and resilient gross margins[4] - Strategic actions were taken to overcome variation in confidence among vehicle repair technicians by focusing on product development and marketing of 'quick payback items'[4] - The company advanced with OEM dealerships and independent shops, particularly with its diagnostics platforms and precision-torque solutions[4] Segment Performance In Q2 2025, segment performance was mixed. The Snap-on Tools Group and Repair Systems & Information Group both posted organic sales growth of 1.6% and 2.3% respectively. Conversely, the Commercial & Industrial Group experienced a significant organic sales decline of 7.6%. Financial Services revenue grew slightly, but its operating earnings saw a small decrease Commercial & Industrial Group The Commercial & Industrial Group saw 6.5% sales decline and 7.6% organic decrease in Q2 2025, with operating earnings down 24.6% Commercial & Industrial Group Q2 Performance | Metric | Q2 2025 ($ millions) | Q2 2024 ($ millions) | Change | | :--- | :--- | :--- | :--- | | Segment Sales | $347.8 | $372.0 | -6.5% | | Organic Sales Change | -7.6% | N/A | N/A | | Operating Earnings | $46.9 | $62.2 | -24.6% | | Operating Margin | 13.5% | 16.7% | -320 bps | - The organic sales decline was primarily driven by reductions in Asia Pacific and European-based hand tools businesses and lower activity with customers in critical industries, partially offset by a rise in the specialty torque operation[5] Snap-on Tools Group The Snap-on Tools Group achieved 1.9% sales growth and 1.6% organic growth, maintaining a 23.8% operating margin Snap-on Tools Group Q2 Performance | Metric | Q2 2025 ($ millions) | Q2 2024 ($ millions) | Change | | :--- | :--- | :--- | :--- | | Segment Sales | $491.0 | $482.0 | +1.9% | | Organic Sales Change | +1.6% | N/A | N/A | | Operating Earnings | $116.7 | $114.8 | +1.7% | | Operating Margin | 23.8% | 23.8% | 0 bps | - The organic sales increase was driven by higher sales in the U.S., while international operations were essentially flat[7] Repair Systems & Information Group The Repair Systems & Information Group achieved 3.0% sales growth and 2.3% organic growth, improving its operating margin by 60 bps Repair Systems & Information Group Q2 Performance | Metric | Q2 2025 ($ millions) | Q2 2024 ($ millions) | Change | | :--- | :--- | :--- | :--- | | Segment Sales | $468.6 | $454.8 | +3.0% | | Organic Sales Change | +2.3% | N/A | N/A | | Operating Earnings | $119.8 | $113.6 | +5.5% | | Operating Margin | 25.6% | 25.0% | +60 bps | - Organic growth was driven by higher activity with OEM dealerships and increased sales of diagnostic and repair information products, partially offset by lower volumes of undercar equipment[8] Financial Services Financial Services reported a 1.2% revenue increase to $101.7 million, with operating earnings decreasing 2.8% Financial Services Q2 Performance | Metric | Q2 2025 ($ millions) | Q2 2024 ($ millions) | Change | | :--- | :--- | :--- | :--- | | Revenue | $101.7 | $100.5 | +1.2% | | Operating Earnings | $68.2 | $70.2 | -2.8% | | Originations | $293.0 | $308.1 | -4.9% | 2025 Outlook Snap-on anticipates continued progress in 2025 by leveraging its capabilities in automotive repair and expanding into adjacent markets and critical industries. The company projects capital expenditures to be approximately $100 million and expects a full-year effective income tax rate between 22% and 23% - The company expects to make ongoing progress along its runways for coherent growth, including expansion in automotive repair, adjacent markets, and critical industries[11] - Projected capital expenditures for 2025 are approximately $100 million[11] - The full-year 2025 effective income tax rate is anticipated to be in the range of 22% to 23%[12] Consolidated Financial Statements Condensed Consolidated Statements of Earnings For the three months ended June 28, 2025, net sales were flat at $1,179.4 million. Gross profit slightly decreased to $595.5 million. Due to higher operating expenses and the absence of a prior-year legal benefit, operating earnings fell to $327.3 million from $350.5 million. Net earnings attributable to Snap-on were $250.3 million, resulting in a diluted EPS of $4.72 Q2 2025 vs Q2 2024 Statement of Earnings | Metric | Q2 2025 ($ millions) | Q2 2024 ($ millions) | | :--- | :--- | :--- | | Net sales | $1,179.4 | $1,179.4 | | Gross profit | $595.5 | $597.3 | | Operating earnings | $327.3 | $350.5 | | Net earnings attributable to Snap-on | $250.3 | $271.2 | | Diluted EPS | $4.72 | $5.07 | Condensed Consolidated Balance Sheets As of June 28, 2025, Snap-on's total assets increased to $8.20 billion from $7.90 billion at year-end 2024, driven by higher cash and inventories. Total liabilities remained stable at $2.46 billion. Total shareholders' equity grew to $5.74 billion from $5.42 billion, reflecting retained earnings growth Balance Sheet Summary | Metric | June 28, 2025 ($ millions) | Dec 28, 2024 ($ millions) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $1,458.3 | $1,360.5 | | Total current assets | $4,219.6 | $3,989.4 | | Total assets | $8,201.8 | $7,896.8 | | Liabilities and Equity | | | | Total current liabilities | $941.5 | $961.5 | | Long-term debt | $1,186.0 | $1,185.5 | | Total liabilities | $2,462.3 | $2,479.8 | | Total equity | $5,739.5 | $5,417.0 | Condensed Consolidated Statements of Cash Flows For the first six months of 2025, net cash provided by operating activities was $535.7 million, a decrease from $649.8 million in the prior year, mainly due to changes in working capital. Net cash used in investing activities was $78.0 million. Financing activities used $364.5 million, primarily for dividends and treasury stock purchases, resulting in a year-to-date increase in cash of $97.8 million Six Months Ended Cash Flow Summary | Metric | Six Months Ended June 28, 2025 ($ millions) | Six Months Ended June 29, 2024 ($ millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $535.7 | $649.8 | | Net cash used by investing activities | $(78.0) | $(123.4) | | Net cash used by financing activities | $(364.5) | $(292.1) | | Effect of exchange rate changes on cash | $4.6 | $(3.1) | | Increase in cash and cash equivalents | $97.8 | $231.2 | Supplemental Information Non-GAAP Measures and Supplemental Data The report provides supplemental non-GAAP data to offer insight into the separate performance of Snap-on's core non-financial services Operations and its Financial Services business. This data presents the Financial Services segment on an equity method basis within the Operations results, clarifying the distinct financial performance and position of each business unit. For Q2 2025, the Operations segment generated $250.3 million in net earnings, while the Financial Services segment contributed $38.1 million - Supplemental data is provided to show the performance of Snap-on's non-financial services ("Operations") and Financial Services businesses separately[28] - The supplemental data for Operations reflects results with Financial Services presented on the equity method[29] Q2 2025 Non-GAAP Net Earnings Attributable to Snap-on Inc. | Metric | Operations ($ millions) | Financial Services ($ millions) | | :--- | :--- | :--- | | Q2 2025 | $250.3 | $38.1 | | Q2 2024 | $271.2 | $38.8 |