Snap-on Incorporated Q3 FY2025 earnings call

Key Points - Nick highlighted third quarter sales of $1,190,800,000, up 3.8% year-over-year, with organic sales up 3% excluding favorable currency. Operating income margin was 23.4% (21.5% excluding legal settlement). - Market insights: Auto repair market favorable with rising complexity; critical industries order book growing despite reticence; RS and I saw strong growth in diagnostics and OEM dealership sales. - Operational highlights: Third Quarter Sales and Service Conference (SFC) in Orlando with 9,000 attendees, strong SFC orders, and new products like the TAC two torque wrench and 14.4 volt cordless ratchet.

C and I Group: Sales were $367,700,000 in the third quarter, compared to $365,700,000 last year. Organic sales decreased by 0.8% excluding favorable foreign currency translation. Operating margin was 15.6%. Tools Group: Sales had a 1% organic gain, with an operating margin of 21.7%. RS and I Group: Sales reached $464,800,000, up 10% with an organic improvement of 8.9%. Operating margin was 30.4%.

Guidance - Corporate costs expected to approximate $27,000,000. - Expect $6,000,000 pretax in fourth quarter non-service pension costs. - Capital expenditures expected to approximate $100,000,000. - Full-year 2025 effective income tax rate expected in range of 22-23%. - Fiscal year 2025 has fifty-three weeks, with no significant effect on revenues/net earnings.

Risks - Uncertainties from tariffs, currency fluctuations, and political/economic headwinds affecting critical industries. - Continued reticence in some markets due to uncertainty about trade policies and economic conditions.

Q: Wanted to dive into some of the businesses at RS and I for the diagnostics and repair systems. I think, five quarters of growth now. More consistency than I've seen in the past. You know, usually, it's been a little lumpier with new product splashes and then some lulls. So I don't know. Anything to read into this kind of consistency?

A: I think we'd like to believe we've gotten the launches a little bit better. You said yourself TRITON was launched last quarter and had a good quarter last quarter. And this quarter, the other thing about it is this quarter, I think versus the prior quarter, we had pretty good performance on a sequential basis across the line. And this has been something that you kind of need. You can't just always depend on, you know, new launches. Although, as we go forward, you're gonna see more new launches happen in this year and things like that. You know, a launch would happen this year, so you get that in the but sort of the holy grail in diagnostics is to make hay with the launch, and then but not lose volume with the other business and that happened this quarter. So we feel kind of good about that. But we'll see how it goes going forward. We'd like to see that happen. And I think we're starting to get some understanding of how to promote both the launch and the existing platforms. Side by side.

Q: And then, yeah, just on the other two pieces, OEM, sounds like that kind of share accrual is kind of building on itself and has some legs. And then on the undercar, does that feel like that's stabilizing or still kinda firmly in a wall?

A: Yeah. It looks like undercar, it looked like it stabilized this quarter. I mean, it was down. You know? And okay. We don't like that. And it was down a lot less than in past quarters, so it didn't hurt RS and I as much maybe. It wasn't as much of an offset. It part of the idea of the 8.9%. I mean, that may not be the highest quarter RS and I ever had, but in this kind of environment, I think it's supersonic. So that worked out pretty well. And some of it had to do with narrowing in that gap, and you've rightly said it. That the OEM, you know, the OEM business is both programs happening and share gain. We used to talk about lumpiness, and it still could be, business, but we have a share gain component on top of this, which tends to offset some.

Q: Good morning, and thanks for taking my questions. Within tools, obviously, it sounds like diagnostics had the best performance. Could you maybe just flesh out how hand tools did? How power tools and tool storage just to give us a sense of how it broke up.

A: Yeah. Tool storage didn't have an had another occluded quarter. You know, you can I guess you can see part of it? You see hints of that. Is there originations. What was originations down 4.9% in total for EC? And that's about the same as last quarter. So they were down both. You know? So tool storage wasn't that strong, and that's despite the fact that there were good sales of diagnostics. Hand tools did not have a great quarter. Which happens from time to time. So that wasn't very positive in the quarter. Diagnostics was up big. And then we had some good news in things like air conditioning and other smaller items from out of shop and techs. Power tools didn't have a great quarter except at the end of the quarter, when it introduced a new product, it had a gangbusters month. And so we felt pretty good about that. And so while power tools didn't contribute so much for that, overall, it really helped at the end of the quarter. With its new products. Once the franchisees saw those babies, they loved them.