Snap-on Inc Q4 FY2024 earnings call

• Markets: Vehicle repair is robust with increasing complexity, aging car parks, and tech demand. C&I has mixed geographies but opportunities. - C&I: Sales hit an all-time high, driven by customized kits and precision torque, with record profitability. - Tools Group: Sales down but narrowing the gap, franchise rankings highlight strength, new products like the Milwaukee hex driver developed through customer connections. - RS&I: Volume up, software and hardware margins improved, Mitchell 1 and APOLLO+ were successful, driving strong profitability.

C&I: Fourth quarter sales were $379.2 million, an all-time high, with a 3.9% organic sales increase and $2.1 million in acquisition-related sales, partially offset by $1 million in unfavorable foreign currency. OI was $63.5 million, up $9.4 million or 17.4% from 2023, and the operating margin was 16.7%, up 180 basis points. Tools Group: Quarterly sales were $506.6 million, down but narrowing the gap vs 2023. OI was $106.9 million, $4.1 million below 2023, with an operating margin of 21.1%. RS&I: Volume in the fourth quarter was $456.6 million, up organically 1.6%. Operating earnings were $121.4 million, an increase of $8.1 million or 7.1%, and the operating margin was 26.6%, up 150 basis points from the prior year.

• Corporate costs expected to be relatively in line with Q4 2024 levels (~$27 million per quarter). - Expected $6 million pre-tax per quarter in increased non-service pension costs. - Capital expenditures approximate $100 million. - Full year 2025 effective income tax rate expected to be in the range of 22% to 23%. - 2025 has 53 weeks of operating results, with no significant effect on total revenues or net earnings.

• Macro uncertainty from political and economic unpredictability, including ongoing wars, immigration disputes, and inflation. - Tariff unpredictability and its potential impact on sales and margins.

Q: Talking about tools, how close are we to turning positive and about shop level confidence?

A: Techs are uncertain, still prefer short payback items. Uncertainty would change if Washington calms and there's more predictable activity.

Q: Are Snap-on fully pivoted in making the product they want?

A: Encouraged by organic sales decline narrowing from 7% down to 1.4% down, indicating positive direction.

Q: Color on decline in originations?

A: Principally driven by lower tool storage sales, with APOLLO+ being a lower cost item handled on RA instead of EC.

Q: Thoughts on tariff and relative positioning?

A: More insulated from import tariffs than most, but not totally immune; ways to minimize impact exist.

Q: Order activity and margins for critical industries into 2025?

A: Order activity is good, critical industries business was strong, and profitable divisions with RCI provide good runway for margins.