SNA | Q3 2024
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Overview
Non-GAAP EPS of $4.70 beats by $0.12.
Revenue of $1.15B (-0.9% Y/Y) misses by $10M.
Takeaways
In Q3 2024, Snap-on (SNA) showed mixed but mostly positive results.
Sales for the quarter reached $1.147 billion, which is 1% lower than the same time last year. Despite this, the company earned $324.1 million in operating income, raising its operating income margin to a record 22%.
Net income also increased to $251.1 million, up 3.3% from last year. This led to earnings per share (EPS) of $4.70, compared to $4.51 last year.
Snap-on's Tools Group, one of its main segments, saw a 3.1% drop in sales, mostly due to less demand for more expensive items.
However, hand tools and other shorter payback products sold well, and the group still reached a solid operating margin of 21.6%. A key part of the company’s strategy lately has been to focus on these shorter payback products, which are designed to meet the immediate needs of technicians who are hesitant to make larger purchases.
The Commercial & Industrial (C&I) segment stayed steady, with sales at $365.7 million. Operating income for this segment grew by 5% to $61 million, benefiting from more demand in industries like aviation and defense, which need increasingly specialized and reliable tools.
Snap-on’s Repair Systems & Information (RS&I) segment had a slight 1.9% drop in sales, but its operating income margin grew to 25.4%, thanks to the strong performance of the company’s diagnostic tools.
Moving on, Snap-on continues to capitalize on trends like an aging vehicle population, with the average age of cars in the U.S. now at 12.6 years. As cars age, they require more frequent and complex repairs, which boosts demand for the company’s high-tech diagnostic and repair tools.
While uncontrollable factors like geopolitical tensions and concerns over rising interest rates create some current customer hesitancy, Snap-on’s focus on essential industries and investment in advanced repair tools puts it in a good position for long-term growth.
Even with some challenges, Snap-on seems to be navigating things well and has impressively been able to grow its margins. All in all, I still feel great about owning this company from a long-term perspective.