Snap-on Announces Fourth Quarter and Full Year 2024 Results

Diluted EPS of $4.82 for the quarter compares to $4.75 in Q4 2023;

Operating margin before financial services in Q4 2024 improves 50 basis points to 22.1%;

Sales of $1,198.7 million in the quarter compares to $1,196.6 million last year

Snap-on Incorporated (NYSE:SNA), a leading global innovator, manufacturer and marketer of tools, equipment, diagnostics, repair information and systems solutions for professional users performing critical tasks, today announced 2024 operating results for the fourth quarter and full year.

• Net sales of $1,198.7 million in the fourth quarter of 2024 represented an increase of $2.1 million, or 0.2%, from 2023 levels, reflecting a $2.0 million, or 0.2%, organic gain and $2.1 million of acquisition-related sales, partially offset by $2.0 million of unfavorable foreign currency translation.

• Operating earnings before financial services for the quarter of $265.2 million compared to $257.9 million in 2023. As a percentage of net sales, operating earnings before financial services were 22.1% in the fourth quarter compared to 21.6% last year.

• Financial services revenue in the quarter of $100.5 million compared to $97.2 million in 2023; financial services operating earnings of $66.7 million compared to $67.9 million last year.

• Consolidated operating earnings for the quarter of $331.9 million, or 25.5% of revenues (net sales plus financial services revenue), compared to $325.8 million, or 25.2% of revenues, in 2023.

• The fourth quarter effective income tax rate was 22.5% in 2024 and 21.4% last year.

• Net earnings in the quarter of $258.1 million, or $4.82 per diluted share, compared to net earnings of $255.3 million, or $4.75 per diluted share, a year ago.

• Full year net sales of $4,707.4 million in 2024 represented a decrease of $22.8 million, or 0.5%, from 2023 levels, reflecting a $40.6 million, or 0.9%, organic decline and $5.5 million of unfavorable foreign currency translation, partially offset by $23.3 million of acquisition-related sales. Full year net earnings of $1,043.9 million, or $19.51 per diluted share, compared to $1,011.1 million, or $18.76 per diluted share, in 2023, an increase of $32.8 million or $0.75 per diluted share. In 2024, net earnings included a $17.5 million, or $0.32 per diluted share, after-tax benefit for the final payments associated with a legal matter, which were received in the first six months of 2024.

See "Non-GAAP Measures" below for a definition of, and further explanation about, organic sales.

"We are encouraged by our fourth quarter results as our businesses were again strong, achieving a positive balance and overall progress, with our operations serving critical industries and repair shop owners and managers advancing in both sales and profitability, and with the Snap-on Tools Group continuing to narrow the gap versus prior periods despite the environment of general uncertainty," said Nick Pinchuk, Snap-on chairman and chief executive officer. "In addition to reconfirming the special resilience of our markets and our enterprise, rooted in essential repair, the quarter demonstrates the considerable capabilities of our team, as is evident in the Tools Group success, pivoting our advantages in product, brand, and people to better match the current preferences of technicians for quick payback items. As we proceed into 2025, we'll enhance the franchise network by further refocusing our product development, manufacturing, and marketing, meeting the demands of the day, extend to critical industries by sharpening our ability to take full advantage of the growing need for customized solutions, and expand our already prominent position with shop owners and managers by serving the rising complexity of vehicle repair. At the same time, we'll engage our Snap-on Value Creation Processes, driving improvements across the corporation that when combined with our runways for growth, we believe will author substantial and strategic gain. Finally, I want to thank our franchisees and our associates worldwide for their many contributions, for their steadfast dedication, and for their deep confidence in our prospects as we move forward through this 105th year of our company and significantly beyond."

Segment Results - Fourth Quarter

Commercial & Industrial Group segment sales of $379.2 million in the quarter compared to $363.9 million last year, reflecting a $14.2 million, or 3.9%, organic gain and $2.1 million of acquisition-related sales, partially offset by $1.0 million of unfavorable foreign currency translation. The organic increase is primarily due to higher sales to customers in critical industries, with particular progress in the specialty torque arena.

Operating earnings of $63.5 million in the period compared to $54.1 million in 2023. The operating margin (operating earnings as a percentage of segment sales) improved 180 basis points to 16.7% from 14.9% last year.

Snap-on Tools Group segment sales of $506.6 million in the quarter compared to $513.3 million last year, reflecting a $7.3 million, or 1.4%, organic sales decrease, partially offset by $0.6 million of favorable foreign currency translation. The organic decline is due to lower activity in the U.S., partially offset by higher sales in the segment's international operations.

Operating earnings of $106.9 million in the period compared to $111.0 million in 2023. The operating margin of 21.1% compared to 21.6% a year ago.

Repair Systems & Information Group segment sales of $456.6 million in the quarter compared to $450.8 million last year, reflecting a $7.3 million, or 1.6%, organic sales increase, partially offset by $1.5 million of unfavorable foreign currency translation. The organic gain includes higher activity with OEM dealerships and increased sales of diagnostic and repair information products to independent repair shop owners and managers, partially offset by lower volumes of undercar equipment.

Operating earnings of $121.4 million in the period compared to $113.3 million in 2023. The operating margin improved 150 basis points to 26.6% from 25.1% last year.

Financial Services operating earnings of $66.7 million on revenue of $100.5 million in the quarter compared to operating earnings of $67.9 million on revenue of $97.2 million a year ago. Originations of $285.1 million in the fourth quarter represented a decrease of $18.0 million, or 5.9%, from 2023 levels.

Corporate expenses in the fourth quarter of $26.6 million compared to $20.5 million last year.

Outlook

We believe that our markets and our operations possess and have demonstrated continuing and considerable resilience against the uncertainties of the current environment. In 2025, Snap-on expects to make ongoing progress along its decisive runways for coherent growth, leveraging capabilities already proven in the automotive repair arena, developing and expanding its professional customer base, not only in automotive repair, but in adjacent markets, additional geographies and other areas, including extending in critical industries, where the cost and penalties for failure can be high. In pursuit of these initiatives, we project that capital expenditures in 2025 will approximate $100 million.

Snap-on currently anticipates that its full-year 2025 effective income tax rate will be in the range of 22% to 23%.

Conference Call and Webcast on February 6, 2025, at 9:00 a.m. Central Time

A discussion of this release will be webcast on Thursday, February 6, 2025, at 9:00 a.m. Central Time, and a replay will be available for at least 10 days following the call. To access the webcast, visit https://www.snapon.com/EN/Investors/Investor-Events and click on the link to the call. The slide presentation accompanying the call can be accessed under the Downloads tab in the webcast viewer, as well as on the Snap-on website at https://www.snapon.com/EN/Investors/Financial-Information/Quarterly-Earnings.

Non-GAAP Measures

References in this release to "organic sales" refer to sales from continuing operations calculated in accordance with generally accepted accounting principles in the United States ("GAAP"), adjusted to exclude acquisition-related sales and the impact of foreign currency translation. Management evaluates the company's sales performance based on organic sales growth, which primarily reflects growth from the company's existing businesses as a result of increased output, expanded customer base, geographic expansion, new product development and pricing changes, and excludes sales contributions from acquired operations the company did not own as of the comparable prior-year reporting period. Organic sales also exclude the effects of foreign currency translation as foreign currency translation is subject to volatility that can obscure underlying business trends. Management believes that the non-GAAP financial measure of organic sales is meaningful to investors as it provides them with useful information to aid in identifying underlying growth trends in the company's businesses and facilitates comparisons of its sales performance with prior periods.

About Snap-on

Snap-on Incorporated is a leading global innovator, manufacturer, and marketer of tools, equipment, diagnostics, repair information and systems solutions for professional users performing critical tasks including those working in vehicle repair, aerospace, the military, natural resources, and manufacturing. From its founding in 1920, Snap-on has been recognized as the mark of the serious and the outward sign of the pride and dignity working men and women take in their professions. Products and services are sold through the company's network of widely recognized franchisee vans, as well as through direct and distributor channels, under a variety of notable brands. The company also provides financing programs to facilitate the sales of its products and to support its franchise business. Snap-on, an S&P 500 company, generated sales of $4.7 billion in 2024, and is headquartered in Kenosha, Wisconsin.

Forward-looking Statements

Statements in this news release that are not historical facts, including statements that (i) are in the future tense; (ii) include the words "expects," "anticipates," "intends," "approximates," or similar words that reference Snap-on or its management; (iii) are specifically identified as forward-looking; or (iv) describe Snap-on's or management's future outlook, plans, estimates, objectives or goals, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Snap-on cautions the reader that this news release may contain statements, including earnings projections, that are forward-looking in nature and were developed by management in good faith and, accordingly, are subject to risks and uncertainties regarding Snap-on's expected results that could cause (and in some cases have caused) actual results to differ materially from those described or contemplated in any forward-looking statement. Factors that may cause the company's actual results to differ materially from those contained in the forward-looking statements include those found in the company's reports filed with the Securities and Exchange Commission, including the information under the "Safe Harbor" and "Risk Factors" headings in its Annual Report on Form 10-K for the fiscal year ended December 30, 2023, which are incorporated herein by reference. Snap-on disclaims any responsibility to update any forward-looking statement provided in this news release, except as required by law.

Non-GAAP Supplemental Data

The following non-GAAP supplemental data is presented for informational purposes to provide readers with insight into the information used by management for assessing the operating performance of Snap-on Incorporated's ("Snap-on") non-financial services ("Operations") and Financial Services businesses.

The supplemental Operations data reflects the results of operations and financial position of Snap-on's tools, diagnostics, equipment products, software and other non-financial services operations with Financial Services presented on the equity method. The supplemental Financial Services data reflects the results of operations and financial position of Snap-on's U.S. and international financial services operations. The financing needs of Financial Services are met through intersegment borrowings and cash generated from Operations; Financial Services is charged interest expense on intersegment borrowings at market rates. Income taxes are charged to Financial Services on the basis of the specific tax attributes generated by the U.S. and international financial services businesses. Transactions between the Operations and Financial Services businesses are eliminated to arrive at the Condensed Consolidated Financial Statements.

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