SNA | Q1 2025

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Overview

• Non-GAAP EPS of $4.51 misses by $0.31.

• Revenue of $1.14B (-3.4% Y/Y) misses by $60M.

Takeaways

Snap-on (SNA) reported Q1 sales of $1.14 billion, down 3.5% from last year, including a 2.3% organic decline and $13.9 million from unfavorable currency moves.

Operating income before financial services was $243.1 million, compared to $270.9 million last year.

Gross margin improved slightly to 50.7%, even with the lower sales volume, while the operating margin came in at 21.3%, reflecting higher spending to keep investing in products, people, and brand strength.

EPS for the quarter was $4.51, down $0.40 year-over-year, partly because of pension costs and the lack of a legal settlement benefit they had last year.

Cash from operations was strong at $298.5 million, and Snap-on ended the quarter with $1.43 billion in cash and another $900 million available under credit lines. The company also returned $200 million to shareholders through dividends and buybacks.

During the call, CEO Nick Pinchuk described the current environment as being packed with challenges—everything from low consumer confidence to high tariff uncertainty.

Consumer sentiment is incredibly low, hitting the second-lowest reading ever, and it's especially hurting Snap-on’s technician customers, who are now hesitant to finance big purchases like tool storage units or diagnostics equipment. This shift led to a double-digit drop in Snap-on's credit originations.

To counter, the Tools Group has been pivoting toward faster-payback products, but the sudden drop in consumer confidence in the quarter still resulted in lower results.

With that said, Snap-on still sees a lot of strength in its core markets. The auto repair industry still looks healthy, with older vehicles on the road, rising household spending on car repairs, and growing technician wages.

Snap-on’s RS&I segment (which sells diagnostics and equipment to garages and dealerships) had a strong quarter, with 3.7% organic growth and a record 25.7% operating margin, which speaks to a growing demand for advanced software and diagnostics tools.

The C&I segment, which serves critical industries like aviation and the military, saw sales dip 2.9%, but margins actually hit a first-quarter record, and gross margin improved by a full 1.8%.

Regarding tariffs, Pinchuk said Snap-on is in a good spot. Thanks to their "make where we sell" manufacturing setup—36 factories globally, 15 in the U.S.—they’re ready to adjust if trade policies shift. Most major products are already made in America using American steel, and they’ve had no major trouble finding skilled workers, even with labor shortages across manufacturing.

Looking ahead, management said they’re confident, but staying alert. Snap-on believes its strong product lineup, iconic brand, and experienced team will help it come out of this "fog" of uncertainty even stronger. In the meantime, the company has a net cash position on their balance sheet, so at least they’re not at risk of going bankrupt anytime soon.

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