Snap-on’s Resilient Performance Amid Challenges

Snap-on Incorporated, a leading global provider of tools, equipment, diagnostics, repair information and systems solutions for professional users, has reported its financial results for fiscal year 2024. Despite facing a challenging economic environment, the company demonstrated resilience and continued progress on its strategic initiatives.

Overview of Financial Performance

In fiscal 2024, Snap-on’s consolidated net sales reached $4,707.4 million, a slight decrease of 0.5% from the previous year. This decline was primarily due to a 0.9% organic sales decline and $5.5 million of unfavorable foreign currency translation, partially offset by $23.3 million in acquisition-related sales.

Operating earnings before financial services were $1,068.8 million in 2024, including a $22.5 million benefit from the final payments associated with a legal matter. This represented an increase of 2.8% compared to the prior year. As a percentage of net sales, operating earnings before financial services improved to 22.7% from 22.0% in 2023.

Operating earnings, which include the financial services segment, were $1,345.7 million in 2024, up 2.7% from the previous year. The operating margin improved to 26.3% of revenues, compared to 25.7% in 2023.

Net earnings attributable to Snap-on were $1,043.9 million, or $19.51 per diluted share, in 2024. This included a $17.5 million, or $0.32 per diluted share, after-tax benefit from the legal payments. In comparison, net earnings were $1,011.1 million, or $18.76 per diluted share, in 2023.

Segment Performance

Snap-on’s operations are organized into four reportable segments: Commercial & Industrial Group, Snap-on Tools Group, Repair Systems & Information Group, and Financial Services.

The Commercial & Industrial Group saw net sales increase by 1.3% to $1,476.8 million in 2024, reflecting a 0.1% organic gain and $23.3 million of acquisition-related sales, partially offset by $6.3 million of unfavorable foreign currency translation. Segment operating earnings increased by 7.1% to $242.1 million.

The Snap-on Tools Group experienced a 4.8% decline in net sales to $1,989.2 million, due to a 4.8% organic sales decrease. Segment operating earnings decreased by 9.4% to $447.3 million.

The Repair Systems & Information Group reported a 0.9% increase in net sales to $1,797.9 million, driven by a 1.0% organic sales gain. Segment operating earnings grew by 5.1% to $455.2 million.

The Financial Services segment generated revenue of $401.0 million in 2024, up 6.1% from the previous year. Operating earnings from financial services increased by 2.4% to $276.9 million.

Strengths and Weaknesses

Snap-on’s key strengths include its diverse product portfolio, strong brand recognition, and focus on serving professional customers in critical industries and the vehicle repair market. The company’s continued investment in innovation, product development, and its Rapid Continuous Improvement (RCI) initiatives have helped it maintain a competitive edge and improve operational efficiency.

However, the company faces challenges in its Snap-on Tools Group segment, which experienced a decline in organic sales due to a mid single-digit decrease in the U.S. market. The company will need to address this weakness by enhancing franchisee productivity, developing new products, and improving customer service levels.

Outlook and Future Priorities

Snap-on remains optimistic about its future prospects, despite the current economic uncertainties. The company plans to focus on the following strategic priorities in 2025:

Commercial & Industrial Group

• Expanding business with existing customers and reaching new customers in critical industries and other market segments
• Leveraging investments in emerging markets to support growth initiatives
• Broadening the product offering for critical industry segments
• Increasing customer-connection-driven understanding of work across multiple industries
• Investing in innovation to deliver productivity-enhancing solutions
• Continuing to reduce structural and operating costs through RCI initiatives

Snap-on Tools Group

• Enhancing franchisee sales productivity, profitability, and satisfaction
• Developing new programs and products to match technician preferences and increase customer penetration
• Expanding investment in new product innovation and development
• Improving customer service levels and productivity through RCI initiatives and capacity investment

Repair Systems & Information Group

• Expanding the product offering with new products and services for repair shop owners and managers
• Continuing software and hardware upgrades to improve functionality and efficiency
• Further building proprietary databases to enhance software solutions
• Advancing productivity through RCI initiatives and resource optimization
• Increasing geographic penetration, including in emerging markets

Financial Services

• Delivering financial products and services that attract and sustain profitable franchisees and support Snap-on’s market expansion strategies
• Improving productivity and ensuring high-quality financial products and processes through RCI initiatives
• Maintaining healthy portfolio performance levels

By focusing on these strategic priorities, Snap-on aims to leverage its strengths, address its weaknesses, and capitalize on growth opportunities in its various markets.

Cash Flows and Liquidity

Snap-on’s strong cash generation and financial position provide the company with the flexibility to invest in its strategic initiatives, fund its operations, and return capital to shareholders.

In 2024, net cash provided by operating activities was $1,217.5 million, an increase of $63.3 million from the previous year. This was primarily due to a $34.3 million increase in net earnings and an $18.0 million change in net operating assets and liabilities.

Net cash used by investing activities was $204.1 million in 2024, which included $966.0 million in additions to finance receivables, partially offset by $837.8 million in collections. Capital expenditures in 2024 totaled $83.5 million, as the company continued to invest in new product development, efficiency improvements, and the enhancement of its global enterprise resource planning (ERP) systems.

Net cash used by financing activities was $649.8 million in 2024, which included $406.4 million in dividend payments to shareholders and $290.0 million for the repurchase of 952,000 shares of Snap-on’s common stock.

As of the end of 2024, Snap-on had a strong balance sheet, with $1,360.5 million in cash and cash equivalents. The company’s long-term debt and commercial paper ratings remain investment-grade, providing it with access to the debt markets and ample liquidity to support its operations and strategic initiatives.

Conclusion

Despite the challenges posed by the current economic environment, Snap-on has demonstrated its resilience and ability to navigate through uncertain times. The company’s diverse product portfolio, focus on serving professional customers, and commitment to operational excellence have enabled it to maintain profitability and continue investing in its strategic priorities.

Looking ahead, Snap-on remains optimistic about its future prospects and is well-positioned to capitalize on growth opportunities in its key markets. By executing on its strategic initiatives, the company aims to further strengthen its market position, enhance its operational efficiency, and deliver long-term value for its shareholders.